Trying to change a system as huge and complex as our existing monetary system can seem overwhelming, but cultures do change and things that could never happen, do happen. Once upon a time human kind could never fly, but we do.

Besides working for policy-level change, there are ways that people can go around the existing model and start creating something better—in small ways or big ways. Maybe such efforts can grow into actually replacing the existing system or maybe not, but in either case they can improve the immediate situation and make people less vulnerable.

Below are brief descriptions of some policy level and ground level ideas put forth by some smart, qualified researchers and thinkers.

Government Creation of Money

This is the system, often referred to as Sovereign Money, that many people think we already have. It’s probably the simplest solution to conceive of from a money-oriented perspective.

This solution has been proposed or done in a number of times and places in history, including Abraham Lincoln’s use of Greenbacks during the civil war and the Chicago Plan proposed in 1933. Two economists at the International Monetary Fund published an IMF Working Paper in August 2012 entitled The Chicago Plan Revisited, which discusses the feasibility and benefits of this form of money creation.

The main argument against it has been that it would create inflation. Key to preventing that would be taking the money-creation power away from the banks and setting up restraints on government money creation. To implement this solution, the government would need to take three basic actions:

  • Enact and/or repeal legislation to take the money creation power away from the banks. The current banking system has actually been protected and supported a great deal by governments. In the U.S. were it not for the existence of the Federal Deposit Insurance Corporation, the Federal Reserve Bank and various other institutions and regulations that prop up the banking system, the practice of fractional reserve banking could be prosecuted for fraud the first time there was a run on a bank. It might have gone out of style on that basis a long time ago.
  • Interpret, clarify, or amend the constitution to bring the money creation power under government control. In the U.S. that would put money creation under congress and the treasury department. The U.S. constitution already states that congress shall have the power “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” (Article 1, Section 8, see but they argue over whether that includes paper and other kinds of money or only coins.
  • Using the money creation power, create money as cash or account entries and use it to pay off existing government debt and also put it into circulation by spending it on government programs and compensation to government employees, and/or pay it out to the people as a dividend or basic income. Since paying off bank debt extinguishes money, the use of government-created money to pay off such debt, would have no net effect on the money supply (as long as banks weren’t creating new debt-money). The supply of money would need to be monitored and, when needed, taxation could be used draw back or recirculate money to prevent over-supply and inflation.

Government creation of money is advocated in the U.S. by the Alliance For Just Money and the American Monetary Institute (AMI) among others. A bill to enact this was introduced in congress in 2010 (HR6550) and again in 2011 (HR2990) by Congressman Dennis Kucinich. Both bills died in committee, but efforts are ongoing to reintroduce legislation for monetary reform. A new and active campaign in the U.S. is the How We Pay for a Better World campaign.

On a global level, The International Movement for Monetary Reform supports and connects monetary reform organizations around the world that are advocating for this type of reform.

Reworking the Whole System

There is a quote attributed to R Buckminster Fuller: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Doughnut Economics

Doughnut Economics: Seven Ways to Think Like a 21st Century Economist by Kate Rayworth is a holistic redesign of economics, presented as a broad collection of coordinated design principles on which a new model can be built. The ‘Doughnut’ refers to a diagram in which a doughnut shape represents the sweet spot in which humanity’s needs are being met without over taxing or depleting the natural environment. Outside the doughnut, natural resources are overtaxed, and inside the doughnut hole, basic needs are unmet for sectors of the human population.

Doughnut Economic Action Lab:

The Next System Project

The Next System Project is an initiative of The Democracy Collaborative aimed at bold thinking and action to address the systemic challenges the United States faces now and in coming decades. Deep crises of economic inequality, racial injustice and climate change—to name but three—are upon us, and systemic problems require systemic solutions.”

“The mission of The Democracy Collaborative is to help catalyze a moral and political transformation of the US political economy into a next system that is inclusive, just, and ecologically sustainable—in contrast to today’s amoral economy of financial extraction.”

State Banking

State banking would not fix the dysfunctional fractional reserve banking system, but it would create state-owned banks with a mandate to serve their communities. These would be structured to feed bank profits into state coffers to be used for public purposes rather than into corporate profits where they may be used for risky parasitic purposes.

An organization advocating state banking in the US is the Public Banking Institute.

Alternative Exchange Systems

One criticism of government-created money is that it would or could give the government an unhealthy monopoly on money, vesting too much power with the government and opening the door to tyranny. Alternative exchange systems can be used alongside bank-created or government-created money, or they might be expanded to replace the existing system completely.

Credit Clearing

In the existing money system, people ordinarily think of money as a thing. Even if it isn’t in the form of cash or coins, it is still generally thought of as something that has existence independent of its use as a medium of exchange. Credit clearing is a whole different way of thinking of “money.”

The basic operation of a credit clearing system is that people register or get an account in a system and then carry on transactions with other members of the system using debits and credits to accounts. When you buy a product or service you take a debit to your account and the seller takes an equal credit. When you sell something you get a credit and the buyer gets an equal debit. Credit could be thought of as “created” when needed to facilitate the exchange of existing goods and services. Account balances go up and down, but there is no “money” as we currently think of it, and there is no lending and no interest. Usually there are limits set on how far above or below zero an account is allowed to go.

There are numerous different forms of this type of system in existence throughout the U.S. and the rest of the world. Most of them operate on a relatively small scale. One fairly large application of this principle is the WIR Bank in Switzerland, which reportedly has over 62,000 members. The WIR is a business-to-business system that actually combines credit-clearing principles with traditional banking principles.

Broad application of credit clearing could employ the same kinds of software systems that are now used to administer bank accounts and credit card accounts and could also employ principles similar to those used by seller networks such as Amazon and EBay.

Beyond Money/Credit Clearing
Community Information Resource Center

Local Exchange Trading Systems

Local Exchange Trading Systems (LETS) are one example of this kind of system. Members earn credits in the system by providing goods or services to other members; they spend credits to obtain goods or services.

Local exchange trading system – Wikipedia, the free encyclopedia

Time Banks

Similar to LETS, these are networks for exchange of services. Units of time are used as the “currency.”

Time-based currency – Wikipedia, the free encyclopedia
TimeBanks USA

Complementary Currencies Backed by the National Currency

The term “complementary currency” is often used to refer to all alternative exchange systems including the credit clearing systems mentioned above. Another type of complementary currency operates more like traditional money and is directly tied to the national currency of the country.

BerkShares in the Birkshire region of western Massachusetts are a good example. Berkshares are printed notes that are sold by participating banks in the Birkshire region. They’re sold at a 5% discount and redeemed at the same rate. In other words, the buyer pays 95 cents for a $1 BerkShare, and if the business or person that accepts it in payment wants to redeem it in U.S. dollars, they receive 95 cents per BerkShare from the bank. Ideally the receiver circulates the BerkShares they receive by using them to pay for goods or services from others . The intention is to encourage local commerce and keep resources in the local area.

Being tied to the national currency, such local currencies cannot be used to actually replace debt-created money or remedy the debt-money trap, but they can help to strengthen and unite a local area, making it more resilient and possibly better prepared for changes or upheaval that may be generated by the existing system.

Gift Economies

A gift economy is simply a system of people helping each other by sharing goods and services. Gift economy doesn’t involve market or barter or trading, it’s just plain giving and sharing. The concept may seem strange to many people raised in the money economy, but whole societies have operated on this basis, and when you think of it, this is the way most families and social groups operate.

Churches and charities all over the world operate on gift economy, and in recent years more and more activities that might be considered profitable enterprises are being taken up by non-profit organizations or interested individuals and carried on as gift economies. The Internet, for example, offers a huge wealth of cultural data and collected human knowledge, and most of it is made freely available to anyone who wants to look it up. Wikipedia is a vast collection of shared knowledge contributed by a broad base of knowledgeable people from thousands of different fields. In my own area, my favorite radio station operates on gift economy. It broadcasts free and without advertisements for anyone who wants to listen. A few times a year they ask for donations, and individual listeners choose for themselves whether or how much to give. Pure gift economy.

This form of economy is growing and has the potential for broad application. For example The Gifting Earth is a web based network for gift economy. It’s set up so that members post their needs and their offered gifts, and gifting is arranged by agreement between members—there is no compulsion to give or receive even after posting a gift or need, but a degree of balance between gifting and receiving is required. Each gift transaction is rated by both sides, and thus participants build up ratings similar to the seller ratings on Amazon. The Gifting Earth web site includes simple clear explanations of its operation and philosophy.

Transition Movement

The Transition movement was begun in the UK by a Permaculturist (see below) named Rob Hopkins. He started it as a response to oil depletion and climate change, but it was soon seen as an answer to economic breakdown as well. Transition is a network of groups working to form strong resilient communities and make lifestyle changes to a more sustainable way of life. The idea is to become less and less dependent on the big dysfunctional system and more independent at the local level. There are over a thousand transition initiatives worldwide.

Welcome | Transition Network
Welcome | Transition US
Economy | Transition Los Angeles


Permaculture is a word coined from the two words “permanent” and “culture.” The basic idea is to build a sustainable resilient culture starting with individuals, families, and communities. The core principles focus on gardening and plant management techniques that use natural ecosystems and manage them in clever ways. The concept extends to other aspects of life as well. “Permaculture is an ecological design system for sustainability in all aspects of human endeavor. It teaches us how build natural homes, grow our own food, restore diminished landscapes and ecosystems, catch rainwater, build communities and much more.” quoted from the Permaculture Institute website.

Permaculture – Wikipedia, the free encyclopedia
Permaculture Institute

Last modified: July 10, 2022