A European monetary dividend: a new monetary policy in the age of technological deflation

Every year, the European banking system spends € 500 billion in debt, of which at least € 300 billion does not even finance growth. This 300 billion is intended to stabilize the level of prices, but it also reduces purchasing power. Instead of producing them as debt, it would be more efficient to distribute them to European residents without compensation. This form of monetary creation, which the ECB has already mentioned, is one of its instruments, which would enable it to fulfill its task of stabilizing inflation much better. It would make the economic system more robust and make the banks more resilient to crises. It would encourage governments to budget. The French receive between € 50 and € 100 per person per month, including children.

Technical progress lowers prices . We see this with electronic products, but this phenomenon has been applicable to all goods for centuries. Jean Fourastié [2] (French economist) has shown that the price of wheat has been divided by 400 since Louis XV: it was then necessary to work more than 6 hours to buy a kilogram of wheat; today it takes less than a minute. If we are still in 1910 and we pay with our current euros, the baguette would cost us € 4, 1 kilo of beef € 92 and a bicycle more than € 5000  Only the hairdresser, € 13, remains reasonably accessible: that technology (nvdr haircuts) has not changed for a century, so the price has not changed.

Yet we see it, prices are rising. This phenomenon, inflation, did not always exist, Thomas Piketty qualifies it as “invention of the twentieth century”. This is because we earn a lot of money every year. And it is this abundance of money that drives up prices, especially in the case of real estate. The more money, the higher the price.

This money is created by the banking system in the form of loans. $ 500 billion is created in the euro zone every year. This is a considerable amount, much larger than the wealth created by growth, 200 billion in 2018. So we create more debts than our needs, and we do that by lowering prices: interest rates are kept at a high level. artificially low level to encourage borrowing and this literally “at the expense of everything.” These low rates destabilize the economic system, weaken the banking system and create bubbles. And the debt increases to the infinite.

This surplus money is spent to stabilize the price level. It therefore represents the purchasing power that is created by lower prices and it is converted into debt. It is a deep and unfair mechanism that robs euro-area citizens 300 billion euros a year . It is at the source of the crisis of the purchasing power of the middle class, much more than the increase in the carbon tax (4 billion) or the ISF (5 billion – “the solidarity of the fortune (ISF) – ed: is the old French property tax paid by natural persons and couples with net taxable assets that are strictly superior to a certain entry threshold on January 1 of the year in question, it was established in 1989 and replaced on January 1, 2018 by the Real Estate Fortune Tax (IFI). [1]

There is a solution proposed by Milton Friedman, winner of the Nobel Prize in Economics in 1976. It consists of creating money and distributing it directly to the citizens without any compensation. This money creation makes it possible to stabilize the price level. It only gives consumers the necessary additional purchasing power that they are deprived of by money creation through debts.

Specifically, every French citizen would receive a monthly variable amount, between € 50 and € 100. Underage children would receive the same amount, distributed among their parents.

As surprising as it may seem, the ECB is aware of this possibility. Peter Praet, one of his leaders, said in March 2016 that he was part of the bank’s toolbox. It would make it much easier for the ECB to fulfill its mission to stabilize inflation. The banking system would be considerably strengthened by avoiding artificially low rates. The economy would be more resistant to crises. The prices of real estate would fall. And the inequalities would be reduced.

Photo: https://www.positivemoney.eu/helicopter-money/

The ECB must now seriously consider this instrument, for implementation before 2021. This is the only solution to prevent a very serious economic and social crisis.

The consequences in a few words

This memo describes a new monetary policy instrument to enable the ECB to achieve its objective of price level stabilization in a context in which technology is constantly nip. These are the consequences, in a few words and for different stakeholders.

For everyone: € 50 to € 100 per month

The monetary dividend will result in a sum of money that is received every month without compensation from euro area residents, including children . This amount varies from country to country. In France it should be around € 50 to € 100 per month per person. It will tend to increase as the economic situation deteriorates and decrease in the event of the economy overheating.

This dividend is not a gift. It is reflected in a purchasing power gain resulting from the fall in prices associated with technological progress. Creating money records this profit in purchasing power, which is then legally redistributed to households via the dividend.

This distribution should represent between € 200 and € 400 billion on a European scale, replacing an equivalent amount that has been spent today in the form of debt. The interest rates will rise to a moderate level. The rise in property prices is likely to slow.

For bankers: a return to a normal rate situation

The monetary dividend will take away the unnatural role of the debt to stabilize the price level. The debt can then be focused on the only legitimate goal, the financing of projects and investments. The interest rates will be reduced to a chosen and unaffected level, positive in real terms. The downward pressure on prices will be compensated monthly by the inadvertent issue of a dividend to euro area residents. The amount depends on each country and will be adjusted to stabilize inflation at the same target level throughout the euro area.

This dividend will complement the current ECB resource box , which lacks an effective means of fighting deflation. The resources implemented in the last ten years have limited effectiveness and have produced significant side effects of unsuitability. These disappointing results are largely related to the deflationary effect of technology on costs and the transfer of prices through the mechanisms of competition. This permanent deflation must be neutralized by a permanent issuance of money, and not by definition a debt issue.

For economic and political leaders: a more stable environment

The monetary dividend will ensure a more stable macroeconomic environment with predictable interest rates and inflation. It will reduce the likelihood and magnitude of financial bubbles. It will strengthen the soundness of the banking system by increasing the reserve percentages. It contributes to the reduction of inequalities and supports the purchasing power of the most modest. It will encourage governments to impose fiscal restrictions, because any policy based on the budget deficit will naturally lead to a fall in the monetary dividend. It will strengthen the homogeneity of the euro area.

Author : François-Xavier Oliveau, April 25, 2019

About the Author
Former consultant at the Boston Consulting Group François-Xavier Oliveau has held positions in companies, from startups to large companies. In a French investment company, he currently supports the development of ETI, in particular in the field of their digital transformation and the implementation of artificial intelligence instruments.

For twenty years he has contributed to working on technology and its economic and social impact based on his operational experience. He has worked with Andrew McAfee in 2001 on Network Borders (Fighting Network Borders, MIT Management Review, 2002) and has contributed to Christian Wit’s report on competitiveness clusters (For an Ecosystem of Growth, 2005).

In his first trial Microcapitalism (PUF, collection Generation Free, 2017), analyzes the impact of the technological revolution on society and the economy. He proposes a detailed overview of our social model, around the values ​​of Liberty and Solidarity. The book received the Jury Prize from the Turgot Committee in 2018.

From 2016 he studied interactions between technology, price and currency, both based on the work of technology experts (Schumpeter Fourastie, Henderson, Rifkin, Kurzweil, Rifkin, Brynjolfsson, McAfee) and economists coins (Bodin, Cantillon, Smith, Fisher, Keynes, Friedman, Hayek, von Mises, Bernanke). This memorandum summarizes its conclusions.

He is vice-president of the Association for the Establishment of a Livelihood Income (AIRE) and regularly contributes to the work of the Sapiens Institute and the Generation Libre .

Source : https://www.institutsapiens.fr/pour-la-creation-dun-dividende-monetaire 
Translation : Christina Lambrecht

The full report (in French) can be downloaded here: http://www.institutsapiens.fr/wp-content/uploads/2019/04/Rrapport-dividende-mon%C3%A9taire.pdf


  • [1] https://fr.wikipedia.org/wiki/Impôt_de_solidarité_sur_la_fortune
  • [2] https://www.universalis.fr/encyclopedie/jean-fourastie/
    Jean Fourastié was passionate about the development and analysis of long series of prices and wages. In the evolution of long-term prices (1969), in Why do prices fall? (1984) and in other works, he has pointed to the magnitude of real income increases generated over a hundred and fifty years by technological progress and productivity growth. To this end, he systematically calculated the ratio between the main prizes and the hourly wage of the unskilled worker and was thus able to determine the number of hours that such a worker works at different times per kilo of bread, a pair of shoes or, more recently, a car. Similar techniques have made it possible for Jean Fourastié to study the evolution of wages according to qualifications in the twentieth century.


Euro-Dividend as Sociopolitical Pillar of Europe

Conference at the University of Freiburg

In October 11-12, 2018 about 50 participants from both social sciences and Basic Income movement all over Europe met at an interdisciplinary conference at the University of Freiburg, Germany. They discussed the Euro-Dividend as sociopolitical pillar of the EU and its member countries.

The public debate about a Universal Basic Income (UBI) is usually a national one. In recent years, though, a European version of a UBI attracted more and more attention – primarily pushed by a suggestion of Philippe Van Parijs titled by him as a “Euro-Dividend”.

The conference aimed to shed light at pros and cons of a EU wide UBI regulation and its relation to national approaches from an interdisciplinary perspective. The first day the conference addressed general issues of a UBI while the topics of the second day were the Euro-Dividend and other EU-related concepts.

Keynote speakers were Philippe Van Parijs (Université Catholique de Louvain), Olli E. Kangas (KELA, Finland), Malcolm Torry (London School of Economics) and Antje Schrupp (political scientist)

UBIE core group at Freiburg 2018:  Barbara, Hilde, Daniel, Leire, Ulrich

Also UBIE members held a contribution:

  • Alexander de Roo: A realistic Basic Income needs two pillars. Answer to the trilemma (work incentives, inclusiveness and fiscal costs)
  • Ulrich Schachtschneider: Ecological Euro-Dividend – a Step to Unconditional Basic Income in Europe
  • Leire Rincon: Understanding the impact of basic income experimentation on policy-maker attention
  • Hilde Latour: How self owning autonomous machines can generate a basic income for mankind

Find more information about the Conference here.

As one result some participants agreed upon forming a scientific working group on the issue of the feasibility of a Euro-Dividend


First published: https://www.ubie.org/euro-dividend-as-sociopolitical-pillar-of-the-eu-and-its-member-states/

QE – for the people? Monetary policy after the Great Financial Crisis

In September 2008, the American investment bank Lehman Brothers fell. What followed was a financial crisis of unseen proportions that drew the entire world economy. In order to contain the crisis, central banks were forced to take exceptional measures. Probably the most controversial measure was QE, or quantitative easing: the massive purchase of financial assets with the aim of reducing the long-term interest rate and thus encouraging investment. On December 13, ten years after the outbreak of the Great Financial Crisis, the European Central Bank will in all probability announce that they too will stop their QE program. Time, therefore, to learn from the monetary policy after the crisis and to make an evaluation of ten years of macroeconomic stabilization policy.

This evaluation for Think Tank Minerva by Mattias Vermeiren and Hielke Van Doorslaer, researchers at Ghent University specialized in monetary policy, shows that the QE program of the European Central Bank (ECB) was largely inefficient, due to a lack of flanking expansionary fiscal policy. The defects in the structure of QE itself, however, point the way to a monetary crisis policy adapted to the current economic context: monetary financing of the government, or helicopter money: QE – for the people. Continue reading “QE – for the people? Monetary policy after the Great Financial Crisis”

Is the end of quantitative easing near? maybe later!

Despite the supposed end of quantitative easing in December 2018, future reinvestments promised by the European Central Bank mean it will purchase at least another 180 billion euros of bonds in 2019. This offers ample room for channeling the money created by the ECB more effectively.

At Thursday’s meeting of its governing council, the European Central Bank (ECB) announced that it “anticipates” ending quantitative easing (QE) by December 2018. It is the first time that the ECB has explicitly put a possible end date to its programme. This led the euro to fall, with markets worrying that the ECB’s withdrawal from its stimulus would negatively impact the Eurozone economy.

However, from a closer look it appears that the ECB’s announcement does not quite mean that quantitative easing will disappear by December. In fact the stimulus programme is here to stay for quite a long time. Continue reading “Is the end of quantitative easing near? maybe later!”

Euro-Dividend could be one of the greatest achievements of humanity

Reflecting on the critical global challenges that we are soon to confront, it is important to consider the repercussions that an Unconditional Basic Income (UBI) for all European citizens would have for entrepreneurship, progress, fairness and sustainability, and to define a realistic, clear and consistent liberal approach. Continue reading “Euro-Dividend could be one of the greatest achievements of humanity”

Basicincome & EuroDividend as sociopolitical pillars of the EU and its member countries


Interdisciplinary Conference at the University of Freiburg, Germany October 11-12, 2018

In Europe, the public debate about a universal basic income (UBI) is usually a national one. In recent years a European version of a UBI has attracted more and more attention – primarily pushed by the suggestion of Philippe Van Parijs titled a “Euro-Dividend”.

This conference aims to shed light at pros and cons of a EU wide UBI regulation and its relation to national approaches from an interdisciplinary perspective. Both UBI approaches shall be analysed and discussed with respect to justice, economic and migration effects, legal aspects, creation of
solidarity in the EU, and political viability. On the first day, the conference will address general issues about UBI while the schedule of the second day contains EU-related concepts just like the Euro-Dividend.

CALL FOR PAPERS Continue reading “Basicincome & EuroDividend as sociopolitical pillars of the EU and its member countries”

Helicopter Money is liked by 54% of Europeans

Recent survey shows that a broad majority (54%) of the European population would support a “helicopter money” from the European Central Bank while only 14% would be against.

In case this wasn’t already obvious already: most Europeans would like to receive money directly from the ECB. This idea, which is most known under the nickname ‘helicopter money’ is gaining traction since the CB engaged in quantitative easing back in 2015.

recent survey carried out by the polling company Ipsos for the Dutch bank ING shows that no less than 54% of the respondents think ‘helicopter money” would be a good idea, while only 14% are against. Continue reading “Helicopter Money is liked by 54% of Europeans”

 Introducing Positive Money Europe

Europe is at a crossroads. 9 months from now, the European Central Bank (ECB) is expected to start phasing out quantitative easing. And in 18 months, the next European Parliamentary elections will take place.

Now is also a good time for us to start planning ahead. So what is next for the QE for People campaign?

Here is the big news: QE for People is transforming into a brand new, shiny organisation called Positive Money Europe!

QE for People was created in 2015 as a direct response to the ECB’s QE programme. Initially the campaign was launched by a coalition of 20 civil society organisations. Among them was Positive Money UK, a research and campaign organisation which focuses on the money and banking system. Continue reading ” Introducing Positive Money Europe”

  Helicopter money and a basic income

How the Bank of England might create new money to pay into the economy as  a Basic Income

In televised debates during the recent general election campaign, several politicians made reference to there being no “magic money tree”. When in fact, there sort of is. This, together with a survey in 2014 that showed that only one in ten MPs know where money comes from, exposes a huge education gap amongst our most powerful elected officials, on one of the most important aspects of our economy: money. Continue reading ”  Helicopter money and a basic income”