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Distributed liquidity

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Distributed liquidity is a monetary policy tool that allows us to manage economic crises by injecting liquidity directly into the entrepreneurial and productive fabric whilst simultaneously supporting consumption. It is a meritocratic mechanism of distribution and not a form of welfarism revisited/new currency. The instrument was formulated by Alessandro Nosei in December 2015 and is described in detail in the publication Liquidità Distribuita (June 2016) [1] and Distributed Liquidity (July 2019). [2]

How it Works[edit]

A liquidity distribution mechanism[edit]

This type of monetary intervention takes the form of a complete detaxation of profits produced in countries with economic problems by foreign firms from efficient and virtuous countries that, compared to the country of the intervention, reveals significant differences in spread, in the model taken as a synthetic performance indicator.

As regards consumption, all purchases made using e-money in the country in difficulty by a citizen in a virtuous country, see an immediate accrediting of VAT by the institute responsible, financed through monetary expansion. In this way we promote consumption and the corresponding supply chain, thus reactivating the real microeconomy, and simultaneously benefitting citizens of virtuous countries and stimulating the emergence of the submerged economy (individuals who pay transactions in cash in the country being helped are not entitled to benefit).

Quantitative aspects[edit]

It is precisely the differences in the spread between virtuous countries and countries in difficulty, in proportion to their size, that quantifies the value of monetary intervention in support of industrial investments of virtuous firms in countries in economic crises, and directly on consumption. At the same time, the monetary stimulus defined for a country, is divided among all the other countries in the system, in proportion to their size and competitiveness.

Advantages[edit]

Compared to traditional instruments used by central banks that promote public debt issue and entrust the distribution of liquidity to the banking system, Distributed Liquidity means issuing currency for firms in virtuous countries wishing to invest in countries with economic problems and which also stimulates consumption directly at source.

The debate, Keynesians vs. Monetarists[edit]

Expansive monetary policy by increasing the money supply is always at the center of the debate between economists, who fear imbalances between the world of finance and the real economy. By contrast, distributed liquidity is defined as the perfect synthesis of Keynesian and monetarist policies. On the one hand, monetary expansion is carried out directly on the real economy, and on the other hand, there is no risk of producing inflationary effects insofar as the injection is selective and goes precisely where the economic depression is greatest, thus guaranteeing a harmonization of prices/long-term costs. It also has the advantage of treating all economic actors involved fairly and is politically sustainable since it configures a win-win solution for all citizens and firms belonging to countries of the same economic community.

Note[edit]

  1. Nosei, Alessandro (2016), Liquidità Distribuita - Una soluzione monetaria per il bilanciamento dei sistemi economici asimmetrici, ISBN 9788899698003 Search this book on Amazon.com Logo.png., Edizioni Italia.
  2. Nosei, Alessandro (2019) Distributed Liquidity: How Game Theory applied to Helicopter Money can solve Euro crisis, ISBN 9781073656677 Search this book on Amazon.com Logo.png., GESTA.cc.

External links[edit]

Article by Il Sole 24 Ore, an Italian business and economy newspaper: "Liquidità distribuita per il rilancio dell'economia", 22 of November 2017

Article by Filosofia del Debito, an Italian webzine about Philosophy and Economics: "LA RARITA’ CHE FA CAPOLINO: L’AMBIZIONE ETICA DELLA MONETA IN UN’OPERA EUROPEISTA", 6 of September 2017

Website of the movement supporting the adoption of Distributed Liquidity in Europe www.distributedliquidity.eu




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