Rents, Not Rackets

The Presidential Election has ended and Trump has won his second term, and unlike a lot of Progressives on here who are talking about how Market Capitalism and deregulation isn’t going to fix the climate crisis, although they are correct. Instead of that, I’m going to do what I always do in times of crisis, distract myself with devising new monetary policy. Some people drink, some people smoke, I smoke and stare at numbers all day, we all have our vices.

One thing that I hear from some Democrats but a lot more Republicans is a preference towards “The Gold Standard” which was essentially a monetary policy where the government couldn’t print money unless it had gold supply to back the value of the dollars it printed. This was a way of securing the value of the dollar and limited the ability of the government to print money and risk potential inflation. I’m a bit of a Post-Keynesian and would side-eye the idea that printing money alone caused inflation, but that’s what many Republicans believed and still believe.

Despite my reservations about what does and doesn’t cause inflation, I agree that inflation is something that should be curbed if at all possible, and that monetary policy should indeed build in guardrails to limit inflationary tendencies for future governments. I’m on the hard-left of the Progressive wing which might strike you as somewhat strange given that i just used “guardrail” (in reference to excessive spending) and “Progressive” in the same paragraph. I’m sure many progressives believe in high print, high spend policies and I do too, to an extent. But I’m also a tad frugal and still believe in the sanctity of market mechanisms for core parts of the economy.

I’m a Market Socialist at my core, and rather than giving you a deep-dive history on that idea, I’d rather give you the basic understanding which is that I don’t just believe that the state should needlessly own the entire economy. Rather that the state should own certain productive assets that have a tendency to be easily monopolised in right wing free market economies, for example but not limited to; Water, Energy, Internet, Healthcare, National Transportation, Postal, etc.

Market Socialists largely see nationalisation or state-sponsored collectivisation of these assets as a means to an end, ensuring that those assets meet the needs of the people who use them the most. As well as ensuring that the needs of the people working in those organisations have their needs met as well, rather being stepped on by corporate bosses. “Its all well and good socialising healthcare, water, energy, etc. But why not Socialise the market” comes to mind.

We all kind of want an economy that gives back to everyone equitably, doesn’t inflate easily, and is still fluid enough to bounce back in terms of economic down turns caused by the global market. The Traditional left believes in some kind of command economy like central planning, unsurprisingly, I don’t believe in that and have been a critic of that for much of my political and academic life. Nor do I believe in free-market principles in the typical sense, because I’ve grown up in various iterations of free-market third-way economies that go in with “good intentions” and end up making the situation worse.

Instead I believe in Option E, which is an Asset Based Economy, which is a system of my own making.

An Asset Based Economy

An Asset-Based Economy (ABE) is a kind of Resource-Based Economy (RBE) — an idea that dates back around 185 years to Utopian Socialist thinkers like Charles Fourier (1772–1837). While Fourier and other early thinkers emphasized social harmony and collective resource ownership, ABE builds upon these principles to create a sustainable, regulated approach to monetary policy.

In an ABE, the state’s ability to print currency is directly constrained by its capacity to generate value through its assets, specifically by generating “rents.” However, these rents are not collected from the state’s own citizens. Instead, the state leverages the productive assets within its own economy — like healthcare supply chains, utilities, and essential services — to provide affordable or even free services to its population, while offering access to these supply chains at a profit to other countries. Smaller, less developed economies often lack the leverage needed to negotiate prices or terms that bolster their economies. An ABE leverages historical influence, size, and stability to negotiate lower costs (for instance, on pharmaceuticals or technology) and then monetizes these gains by offering access to other countries on favourable terms.

Revenue generated from these external transactions is termed “rents” here, and those funds directly enable the central bank to issue currency at an equivalent value. The guiding principle is that the state cannot print money unless it has already generated value to back it. This ensures the money supply is inherently stable, rooted in actual productive value rather than abstract expectations or market speculations.

The currency generated through these rents has an additional restriction: it can only be spent in High-Liquidity Areas — such as public sector wages, social benefits, infrastructure, and similar high-impact areas that circulate money effectively and with a low risk of causing inflation through speculative investments (e.g., inflated asset prices due to speculative activity). This process transforms the central bank into a self-sustaining entity, somewhat like a commercial bank but focused on long-term value.

Inflation Control and Monetary Resilience

The ABE model inherently stabilizes currency value by linking it to productive assets and rents, reducing the likelihood of two common forms of inflation:

1. Asset Inflation: In traditional models, new money can lead to inflated prices in private asset markets due to speculation. In an ABE, money flows directly into high-liquidity areas rather than speculative assets, lowering the risk of such inflation.
2. Foreign Exchange Speculation: Since the currency in an ABE isn’t allocated for foreign exchange reserves or speculative international holdings, its value is not subject to as many fluctuations in the foreign exchange markets. This stability insulates the economy from some of the volatility driven by speculative global trading.

While ABE doesn’t eliminate inflation entirely, it minimizes the risk of inflation generated by domestic monetary policy. It’s important to note that external, global market inflation could still affect domestic prices. However, the design of an ABE provides a level of resilience against inflationary pressures that are common in more speculative, market-driven economies.

Exceptional Circumstances: Countercyclical Flexibility

The system has a single exception to its print constraints, providing for situations of national or global recession. In such cases, the central bank, while still independently governed, is permitted to issue up to 10–20% more currency than what has been backed by rents or other assets. This measure functions as a countercyclical buffer to support economic stability. After this period, the central bank must acquire new solid assets to balance any extra money issued, restoring the value integrity of the currency.

The Drawbacks

An Asset Based Economy isn’t a flawless system, it does have its drawbacks like its over-reliance on other countries for rents, which do make it susceptible to economic downturns, but this can be curbed by extra flexibility in extreme global recessions that last more than a couple of years. This of course would need to be temporary and only an emergency measure.

The system itself is also at risk of Demand-Pull inflation wherein the over investment of printed money in wages creates an over demand for certain goods which may outweigh the supply. But this can be curbed by redirecting some funds towards supply-side supports like business investment or strengthening private supply chains.

There are other drawbacks but this is something I’m still working on and likely will be working on for quite a while. But its an idea, its a blueprint that is still being worked on and I'd love to talk with other Economists or Economics students especially progressive ones who are likely more aware of monetary economics than I am. I’m the first person who will admit that I’m not a whizz at macroeconomic policy, I’m a business economist primarily. Monetary policy is just interesting to me from a speculative point of view.