Democratic Money and the New Corona Virus Economy

Photograph Nathaniel St. Clair

Here in the United States, we don’t like to talk about class. The dominant metaphor projected by the media is the great big competition that we are all participating in as individuals (the meritocracy or free market). Within the competition, there are winners and losers. As independent competitors, most people don’t belong to a class. They are instead working hard not to become “losers” and struggling toward that elusive category of “winner.” Nevertheless, it is helpful to talk about class when discussing the economic system because as a matter of observable fact and applicable law, the economic system treats people very differently depending upon what class they are in. Indeed, at a very fundamental level, we have four separate economic systems in the United States; one for each of the four different economic classes. If the systems could be unified into one, then we could maybe say that we have a real free and fair market. But the blatant unfairness of the oligarchic money supply system makes that impossible. The recent economic response to the Corona Virus epidemic demonstrates this fundamental unfairness in easy to understand, black and white terms.

The distinct economic classes in the United States are as follows:

01% of the adult US population owns 50% of the financial markets. This is the “ruling class” for purposes of discussion. You probably know who they are in your town. They pull the levers of power. They own lots of stuff. This is not to say they are good people or bad people. It is only to recognize the reality of their position in the economic system.

09% of the adult US population owns 35% of the financial markets. This is the “managerial class.” This is the lawyers and accountants and corporate bosses and administrators that are always telling everyone else what to do. They are the levers of power that get pulled. This is not to disparage the character of “professionals,” but it is to recognize them as a distinct economic class within the economic system. The 09% managerial class.

40% of the adult US population owns 15% of the financial markets. This is the useful good guy working class. Firefighters and nurses, teachers and emts. All those nice little people with 401ks and retirement pensions and/or a small portfolio of stocks. For purposes of discussion, they are the financialized working class. They have been led to believe that the financial markets are a good thing that serves their interests because they are invested in them but they don’t really understand the reality of how financial markets function.

50% of the adult US population own 0% of the financial markets. This is the precariat class that seriously struggles to meet basic needs. They have low wage jobs, temp jobs, gig positions, illegal jobs, social service survival payments, disability payments, unemployment payments, worker’s comp. payments, public housing, subsidized housing, homeless shelters and food pantries. This is not to disparage the precariat class. It is to recognize them as a distinct economic class within the economic system. It is the class of people that does not participate in the financial markets so they have to get their currency (money) they need to survive from another source.

This essay advocates for the transformation of the money supply system from an oligarchic money supply system to a democratic money supply system. This one fundamental change to the very foundations of the economy would transform society in significant ways. There is little doubt that the proposed change would be greatly beneficial to the precariat class. If they could be made to understand the proposal they would all agree to it. There is also little doubt that the proposed change would be greatly beneficial to the financialized working class. They, however, might hesitate to accept the transformation because of the small benefit they receive from the present oligarchic money supply system and the heavy dose of propaganda that accompanies that small benefit. Some of the managerial class may agree to the proposed change because they will see how it will improve their quality of life for them and everyone around them. But many in the managerial class will oppose it because they receive way too many benefits from the oligarchic money supply system. Same with the ruling class. A few may like the proposal from an intellectual perspective as a mechanism for organizing society. But most just get way too much benefit from the oligarchic money supply to even consider it. The ruling class controlled media will wage a full spectrum attack against the concept because it challenges the foundations of the economic system.

So let’s start with the oligarchic money supply system that exists now. How much is a loaf of bread? How much was a loaf of bread twenty years ago? How much is a potato? How much was a potato? How much is your rent or “mortgage payment?” How much was your rent or “mortgage payment” thirty years ago? How much to get treated for Corona Virus now? How much to get treated for measles or polio then? Inflation is a fact of life. Inflation is a reality. When I was young, a millionaire was fantastically rich guy and billionaires were only in cartoons (Scrooge McDuck). Now there are millionaires on every corner and billionaires bloviate all over the main stream media. They have replaced movie actors as the gods of the modern religion.
So the big question is; where did all the new money come from?”

Money does not grow on trees. It can’t be picked. Money is not buried in the ground. It can’t be dug up or mined. But money does exist and there is a lot more of it circulating through the economic system now than there was thirty years ago. So where does this new money come from? How does it get added to the economic system when it wasn’t there before? For that matter, what, exactly… is money? Money is the symbolic representation of the legal right to use economic value within the jurisdiction of the government that created the money. In other words, all new money must originate from the federal government or it is, by definition, counterfeit. Therefore, all of the trillions of dollars that are now circulating through the system that were not circulating thirty years ago must have been somehow added to the flow by the federal government. In other words, the government supplied the currency to the system. How did they supply it? Who did they supply it to?

In reality, new money is added to the economic system on a regular basis through two separate mechanisms. The US Treasury department writes checks to corporations, individuals and government agencies as official Federal spending and the Federal Reserve “loans” money to the financial markets through its role as the central banker. In both cases, money is also subtracted from the economic system to theoretically balance out the system. In the case of official Federal spending, the US Treasury subtracts money from the economic system through imposing taxes on citizens and selling government bonds. But the trick of government accounting is there is no bottom and there is always a lag between what the government puts out in spending and what it takes in through taxes and bond sales. US Treasury checks don’t bounce. They can’t as a matter of law. As the deficit grows larger and the lag between spending and money collecting grows longer more and more money circulates through the economic system. In the case of Federal Reserve loans to the financial markets, the Federal Reserve subtracts money when it collects the payments on the loans. But the Federal Reserve is in the same position as the US treasury. They can’t bounce a check. Accordingly, they lend out more money than they have coming in through loan payments thereby increasing the total amount of money in circulation. If the Fed wants to increase the money supply it “lends” more money. If it wants to contract the money supply it stops lending and increases debt collection.
That is how it is designed to work.

Oligarchic money supply means simply that when new money is added to the system, it is always distributed into the system to the upper levels of the economic hierarchy. Theoretically, the money trickles it’s way downward within the system to eventually reach everybody in the economic system. Democrats and Republicans argue about who in the economic hierarchy should get the new money but neither party is interested in democratizing the money distribution itself. Democratic money means simply that all new money is introduced equally to all participants in the economic system.

Presently, the US economic system faces a crisis brought on by the Corona Virus. That crisis is being responded to by both arms of the money supply system. Originally the Fed proposed a 1.2 trillion shot of liquidity to increase the money supply but they have now upped that to “whatever it takes”. Meanwhile, Congress and the White House are talking up various plans for about two trillion in liquidity from their side of the money supply system. As a matter of observable fact, both arms of the system will be distributing their combined four trillion dollars using an oligarchic mechanism rather than a democratic mechanism. That is the thing that needs to change.

For clarity of understanding, let’s look at the difference between democratic distribution versus oligarchic distribution with this proposed Corona Virus rescue economic package. If we have a two trillion dollar package, like Congress is now proposing, all we have to do to distribute it democratically is figure out how many people are in the economic system and divide it up equally. I would include everyone living within the borders in this number but politicians no doubt will seek to somehow shrink the size of the class. For the sake of discussion, I use the approximate number of 300 million human people in the US who are subject to the US economic system. Three hundred million people goes into a two trillion dollar fund, six thousand six hundred and sixty six times. That’s $6,666 dollars per person. Instead, the congressional corona virus two trillion under discussion will be passed out very differently. Much of it is going directly to corporations in large amounts instead of small amounts to individuals. Theoretically, it will trickle down to the employees who work for those corporations in the form of wages and paid sick leave and the opportunity to work again. Another large chunk of the two trillion will go into government bureaucracies like unemployment and Medicaid. This money too will trickle downward into the community through the hands of the employed bureaucrats and into the hands of the displaced workers if they prostrate themselves before the state and beg for it by “applying for unemployment.” It is doubtful that any of the displaced workers will receive more than $6,666 in benefits. Finally, a small chunk of the trillion, about 200 million(10%) will be distributed somewhat democratically… to everybody. Not sure exactly who will be included in this group, all taxpayers, all voters, all residents… But they are saying $1200 per adult and $500 per child. I would like to specifically emphasize that even this small bit of democratic money will be advertised as a handout or safety net for the unfortunate instead of as a recognition of basic economic rights.

The other Corona stimulus rescue package is coming from the other arm of the money supply system; The Federal Reserve. Originally, the Fed said they were going to inject 1.2 trillion of additional money into the corporate bond market (I.e. lend corporations new money). They later upped that amount to 1.5 trillion and have now upped that amount to whatever it takes to keep the credit markets flowing. It is important to understand, that this money too, is distributed oligarchically rather than democratically. 50% of US adults have no investments in the financial markets at all so they get no share of the 2 trillion Fed stimulus. Even among the hundred million US adults who are invested in the financial markets, the money is not distributed democratically. If it was distributed democratically, every person invested in the market would receive $20, 000. Instead, they will receive a share of the stimulus in proportion to their total investment in the market. The ruling class of 2 million people will get 50% or 1 trillion. If they broke it down democratically among themselves that works out to five hundred thousand dollars each. They, of course, break that down, oligarchically as well. The more you have the more you get. The managerial class of approximately 10 million people will get there 35% or 700 billion. If they broke their share down democratically they would get seventy thousand dollars each. And finally, the financialized working class of approximately 80 million people would get 15% or about 300 billion. If they broke their share down democratically, they would get $3600 each (significantly less than $6,666).

Think of it this way. The federal government is not adding any economic value at all to the economic system with it’s Corona Virus economic stimulus package. They are, instead, re-organizing the distribution of the legal right to utilize already existing economic value so that we as a nation respond effectively to the Corona Virus attack. Since money is the symbolic representation of the money holders legal right to use economic value, by adding 4 trillion new dollars to the system they reduce the value of the already existing money by a significant percentage. This will manifest as inflation in the near future. The cost of food and shelter will go up. If this new money was democratically distributed, the amount received by each person would more than make up for this increased inflation. But since the money is distributed oligarchically, 90% of the population actually gets ripped off in the Corona stimulus transaction. Do you really think it’s such a good deal? $4 trillion dollars increases the amount of money in circulation by 20%. That means the value of the money in your hand goes down by 20%. That means the cost of your rent and food is going to go up by 20% in the next few years. $1200 in cash now in exchange for a much higher survival prices in the near future. How much do you get in unemployment? Sort of makes you wish you got the $13,333 that would be your fair share if the whole four trillion was distributed Democratically. But alas, Congress and the President and the Fed stabbed us all in the back. They made a big show of handing us a dollar while they snuck a ten spot from our proverbial wallets.

So what if we did things differently? What if we responded to the Corona Virus Crisis with an economic stimulus based on democratic principles instead of oligarchic principles? How would it work? What would a real democratic money supply stimulus look like? Is it possible to impose an emergency alternative economy on top of the crumbling broken economy and thereby create a stable hybrid economy that is radically different and significantly more ethically sound than the present one? I don’t know. But under the extreme circumstances we are now facing, it is certainly worth considering.

The most important thing to understand about money supply is that a healthy economic system must be designed so that money circulates through it. If there is an in door, there has to be an out door. Under the present system, the Fed normally gives out loans and takes back interest payments. But the bottomless checkbook makes it possible to give loans faster than they take back payments and thereby increase the amount of money in circulation.
Similarly, the treasury gives out by writing checks for Congressional spending. They take in by collecting taxes and selling bonds. But they too, have a legally bottomless checkbook that allows them to spend more than they collect and thereby increase the money supply. Both government offices (treasury and the Fed) have the power to increase or decrease the money supply at will. You can’t have one without the other. That’s why the system so strongly opposes the idea of free money. If you just add money but don’t increase the amount of economic value available, all you do is decrease the value of the money already available.

Democratic money is not free money. It is money that goes out into the system through one door gets passed around society and then goes back to home base through another door. Similar to a loan or a bond, it is money that comes with an agreement. In the case of the proposed Corona Virus Economic Stimulus, it is an agreement to participate in the emergency Corona economy for a specified period of time. By way of example, I recommend a 1.5 trillion dollar stimulus for the total US population of 300 million distributed democratically for a term of three months. That works out to $4500 per person which is an average of $1500 per month as the foundational economic investment. That money will then be spent into the economy by the participants to pay for food and shelter and basic necessities. In exchange for that foundational investment. All participants in the emergency economy agree to return (voluntary tax) of 50% of everything they earn on the free market during that designated time period. Of course many people will not earn anything at all during the three months because they are home in quarantine. Some people will earn only a little during that three months and pay back in voluntary taxes way less than they receive as the foundational investment. Anybody who makes $9000 or less for the three month term, receives more from the foundational investment than they pay in taxes. Anybody who makes more than $9000 over the three month period will pay back more to the fund than they receive in foundational investment. Hopefully, enough people who participate in the fund make more than $9000 for the three months so that the fund is able to at least break even when the term is complete. Might even make a profit. If, however, the fund operates at a loss (collects less than it puts out) that would cause some inflation. But really, the goal of the stimulus is to organize society for a proper response to a pandemic. A little bit of inflation is a small price to pay if it helps our society weather the Corona crisis before us.

Of course, participation in the Corona Virus Democratic Money stimulus program has to be completely voluntary. Nobody has to do it if they don’t want to. No one has to agree to accept the $4500 investment and thereby agree to return 50% of everything they earn on the free market in the next three months. So the question becomes, will anybody who earns more than $3000 a month want to join the program? They will, after all, end up paying more into the program than they receive in stimulus.

I, personally, am an independent stone mason, and I usually earn between $4000 and $5000 a month during the spring months. As such, I am in a perfect position to answer this question. If I earn my normal $15,000 during the three months, I would have to pay $7500 back to the fund at the end of the term. If I only get $4500 to start, I will lose a total $3000 to the stimulus program. Nevertheless, I will choose to accept the stimulus agreement without hesitation for several very good reasons. First, and most importantly, because of the Corona Virus, my normal planned stonework projects might get cancelled because clients have financial issues associated with the virus so perhaps I will make significantly less than my normal hoped for $15,000 anyway. Secondly, I or a family member could get sick with the virus and we would have to quarantine. Having the $4500 peace of mind to meet my monthly bills if I can’t work at all will give me the psychological crutch I will need to choose a quarantine that I or my family might need. Thirdly, I would like to participate in my community, my state, and my nation to help out during this time of crisis. Stonework is not especially helpful for assisting the sick and I am not skilled at nursing. But if this medical crisis becomes severe it may become necessary to abandon my normal work altogether and volunteer to help medical professionals in some way they think is useful. I would like to have the minimum financial security of the $4500, to be able to volunteer my strong arms to help those good doctors and nurses who are on the front lines if they need and want my help. Finally, even if the Corona Virus Pandemic proves to be not severe and I’m able to do my stonework all Spring and the weather is good and I have a great three months and I manage to make $20,000, and therefore have to pay $10,000 back to the fund, I will still be glad I accepted the $4500 at the start because I can’t think of anything better to spend an extra $5500 on than helping my community get through a health crisis.

Of course, the more a person earns above $3000 per month, the less likely it is that he or she will be interested in participating in the proposed democratic money Corona economic stimulus. This is where the power of community advertising comes into force. We could mount an Internet campaign against the movie stars and billionaires to convince them to join the Corona Virus Fund. Can’t you just imagine their dramatic displays of magnanimity and solidarity with the Everyman as they accept their $4500 checks on camera and agree to turn over half their earnings for the next three months to the cause of protecting America from this horrible threat. More to the point, will the upper middle class that usually earns $6000-$10,000 a month agree to join the fund. I don’t know. Again, the power of advertising and community persuasion. Humans are social animals. Everyone may want to participate as much as possible in an economic program designed to protect us all from a Corona Virus as much as possible.

Finally, before closing, I would like to emphasize that the existence of a $1.5 trillion democratic money stimulus does not preclude traditional government investment in a newly created economic value as well. In this particular case the new economic value that the government must account for is medical treatment for Corona Virus. The people who perform the service of treatment have to be paid and the equipment and medicines used in the treatment has to be paid for as well. Once again, the federal government could create a Corona Virus Treatment Fund out of thin air. All future hospital, Doctor or medical bills associated with Corona Virus would be submitted to the fund for payment instead of to insurance companies or to presently existing government bureaucracies. Theoretically, all of the doctors and nurses and medical suppliers and hospitals and clinics etc., would submit all bills related to the Corona Virus to the Treatment Fund to be paid. It’s hard to know how much this targeted stimulus would be because it is hard to know exactly how much treatment is going to be needed. But I would recommend adding it on to the democratic money stimulus agreement as a service provided in lieu of currency. That way the fund would be replenished through the voluntary 50% tax. I would recommend 500 billion for the targeted Corona fund to make the overall initial stimulus of democratic money 2 trillion dollars. In other words, the US Federal Government would thereby make the following offer to every single person living inside it’s borders. We will pay you $4500 in cash and promise to pay for all medical services associated with Corona Virus if you agree to live your life for the next three months with the Corona threat in mind and return 50% of everything, you do earn over the three months period back to the Corona Treatment Fund.


It is unlikely that the US government will adopt democratic money any time soon. As I stated at the beginning of this essay, democratic money is a concept that would be beneficial to at least 90% of the population (the precariat and the financialized working class). Unfortunately, the people who are not benefitted by the concept, control the government and the media and the conversation. Accordingly, the concept of “democratic money” will be kept as far away from the general public’s consciousness as possible. It will be ignored and despised and be-littled. But really; it is the most sensible way to organize a modern economy. It is the way of the future… if we ever get there. So put it on your webpages and your social media; put it on tee-shirts and baseball hats. Tell your friends about it in chat rooms and restaurants. Democratic Money! Demand it of your “democratic government.” Write essays about it. Critique it? Talk about it. I think it would be fun to teach a class about it. How about; Democratic money as the foundation of an organic economic system? Would anybody take such a class? I wonder if I could teach it online?

I personally think that the United States is way too big with too many people for a unified democratic currency system. I would break it up into regions with maybe 20 or 30 different democratic currency regions depending on ecosystems and available resources. But trying to think about that break-up is so complicated it gives me a headache to consider. Perhaps the territory of the democratic economic system could be smaller. It needs to be large enough geographically to sustain the basic needs of all the people who live within it but small enough to be managed democratically. Maybe each state could have it’s own democratic money. Right now the Constitution only allows the Federal Government to create “new money.” So the battle between the Federal government and the state government over this issue would be epic. I am ever hopeful that some smart young whipper snapper somewhere will run for governor of some small state with “democratic money” as their campaign platform. I’m not a political person myself though. About all I can really do is take the concept of “democratic money” and toss it out there in the ether and hope some other people will pick it up and run with it. If you have any questions, give me a shout. I’ll be working on a stone wall somewhere.

Stay safe. Don’t forget to wash your hands and welcome to the New Corona Virus Economy.

Pat Ryan was a corporate lawyer and a Legal Aid lawyer in the early 1990s.  Frustrated by a broken legal/economic system, he abandoned his career for the simple life in early 1995.  He has been an independent stone mason for the last 25 years.