Transition

Introduction

The transition from a debt-based monetary system to a system where money is created debt-free and spent directly into the economy is not just a change in how money originates. It is a deep and far-reaching transformation that touches every corner of economic and political life. While the end goal is a clear, an economy where money serves the public good, rather than serving private financial interests, the path to get there is anything but simple. The existing system is not a blank slate that can be replaced overnight; it is a dense web of interdependent systems, built over decades, that have embedded debt creation into everything from mortgages and pensions to public infrastructure and international trade.

For less financialized economies, the transition can be rapid and direct. With fewer entrenched financial interests and a more immediate need for development, these economies can move quickly to implement transaction taxes, introduce debt-free money, and invest in infrastructure, education, and healthcare. For highly financialized economies, the process will be far slower and more delicate, requiring years, perhaps decades, of careful unwinding of the financial sector’s dominance. In both cases, however, the sequence of steps is the same: introduce transaction and balance taxes to stabilize revenue and collect vital data, begin preparing the economy for debt-free money by building productive capacity, and gradually shift the economy’s foundation from financial speculation to real production.

This chapter will lay out the practical, step-by-step process of managing that transition, recognizing that the transition itself is every bit as important as the final result. It will emphasize that economic stability during the shift is paramount; confidence must be preserved at every stage. If the public loses faith in the process, or if inflation spikes before productive capacity catches up, the entire reform effort could collapse before it achieves its goals.

The transition is also more than economic; it is political and cultural as well. Power must shift, away from financial elites and entrenched corporations and toward local communities, small businesses, and ordinary citizens. That redistribution of power will be resisted, especially in developed economies, where wealth has been concentrated through financial engineering and political lobbying. This means the transition must not only be well-planned, but politically strategic, ensuring that the benefits of the new system are visible and widely distributed as early as possible.

Ultimately, this chapter will show that the transition to debt-free money is not just a technical fix for the monetary system, but a fundamental reimagining of what money is for, a transition from money as a tool for extracting wealth to money as a tool for building wealth. Done correctly, it can unleash creativity, rebuild communities, and restore economic stability. Done poorly, it could trigger financial panic and political backlash. Navigating this transition carefully and intelligently is the key task for governments, policymakers, and citizens alike.

The Transaction Tax

The first and most essential step in the transition to a debt-free money system is the introduction of a transaction tax. This tax is not just a revenue tool; it is the foundation upon which the new system is built. Without it, governments remain blind to the true flow of money within the economy, forced to rely on outdated economic indicators like GDP and abstract financial reports. The transaction tax, however, offers something radically different: a real-time map of economic activity, captured directly from the source.

Every time money moves, from wages paid to stock trades executed, from purchases made to derivatives exchanged, that movement generates a tiny tax, and with it, a data point. This creates a living economic map that allows policymakers to see exactly where money is flowing, which sectors are thriving, and where speculative excess may be building. This new layer of understanding, called minieconomics, focuses not on broad national aggregates, but on the fine-grained movements of money within specific industries and transaction types.

The importance of this visibility cannot be overstated. Financialized economies thrive in the shadows; layers of complex instruments obscure real economic activity, and critical data is hidden within corporate silos or lost in the opacity of global capital flows. The transaction tax forces this activity into the light, exposing how much money is moving through productive businesses versus speculative financial trades. This single change immediately makes bubbles easier to detect and creates the possibility of preventing crises before they explode.

The tax itself can be set at a very low rate, especially at first. Even fractions of a fraction of a percent on each transaction will generate enormous revenue in highly financialized economies where trillions of dollars change hands daily in financial markets. In these economies, the financial sector will bear most of the tax burden, a stark contrast to current tax systems, which disproportionately tax the productive economy through income, payroll, and sales taxes.

This shift in the tax base has profound implications. As the financial sector takes on more responsibility for funding public spending, governments can begin to reduce or eliminate taxes on wages and productive businesses. This not only stimulates economic growth in the real economy but also begins to rebalance the relationship between finance and production, shifting capital toward investment in goods, services, and infrastructure rather than speculative assets.

If possible, a balance tax should be introduced at the same time, even if only at a token rate. This tax, levied on idle bank balances, provides a second layer of revenue.  In less financialized countries this is necessary to prevent excessive transaction taxes.  In highly financialized countries it will be needed in the future as financialization declines.

However, the transaction tax must be prioritized. Its passage is essential, even if political opposition forces a delay in implementing the balance tax. The two taxes should be legislated separately, ensuring that resistance to the balance tax does not jeopardize the transaction tax.

Once the transaction tax is in place, its usefulness extends beyond revenue generation and economic visibility. It becomes a tool for managing public debt directly. Whenever governments wish to increase spending beyond current revenues, they can simply raise the transaction tax slightly, closing the gap without borrowing. This makes debt ceilings irrelevant, replacing them with a transparent and immediate feedback mechanism that ties government spending to the actual flow of money within the economy.

In less financialized economies, the transaction tax acts less as a financial sector correction and more as a tool for improving transparency and efficiency. Many developing economies suffer from weak tax collection systems where large portions of economic activity escape taxation entirely. The transaction tax captures every exchange that touches the banking system, making tax evasion nearly impossible and simplifying compliance for both businesses and individuals. This strengthens fiscal independence, allowing governments to reduce their reliance on foreign borrowing.

In both cases, whether applied in a highly financialized economy or a less developed one, the transaction tax shifts the focus of taxation away from productive work and onto financial churn, aligning the tax system with the broader goal of rebalancing the economy toward production and real wealth creation. It is, quite literally, the first brick laid in the foundation of a healthier economic future.

The simplicity of the tax, combined with its transparency and effectiveness, makes it the ideal first step. It generates immediate benefits, both in revenue and data, while forcing the financial sector to finally contribute to the public good in proportion to its activity.

Most importantly, the transaction tax does not require abandoning the current system. It fits within the existing framework, allowing governments to test its effectiveness while still relying on familiar tools like income taxes and bond issuance. But once the benefits become clear, richer economic data, reduced debt pressures, and increased fairness in taxation, the argument for the next steps in the transition will only grow stronger.

For both governments and the public, the transaction tax offers something rare: a reform that can begin immediately, requires no ideological leap, and offers tangible benefits from day one.

Halting Public Debt Growth and Shifting Taxation

The implementation of a transaction tax is not a permanent solution to the problems created by a debt-based monetary system. It is a necessary first step, but by itself, it cannot fully resolve the imbalances baked into the existing system. If governments lean too heavily on the transaction tax to eliminate public debt while leaving the financial sector otherwise intact, that sector will inevitably find new ways to create private debt to satisfy its need for profitable lending opportunities. The result could be a surge in private sector borrowing to replace declining public debt, shifting the burden without eliminating the underlying addiction to debt. The transaction tax alone may provide relief for a decade or even several decades, but without deeper reforms, the underlying forces driving financial instability will reassert themselves.

That said, the transaction tax immediately transforms the fiscal landscape for any government that adopts it. Today, governments have no satisfactory mechanism for balancing their budgets, they either cut spending or raise taxes. The transaction tax offers another option, one that is both flexible and responsive: governments can adjust the transaction tax rate as needed to maintain balanced spending without raising the existing debt level.

This is particularly valuable in highly financialized economies like the United States, where fiscal policy is held hostage by debt ceiling debates and political brinkmanship. Once the transaction tax is in place, the government no longer needs to increase borrowing to cover deficits.  If more spending is needed, a small upward adjustment in the transaction tax rate brings in the necessary revenue. The result is a complete shift in how public spending is managed, replacing unpredictable borrowing with a transparent link between spending and revenue.

In heavily financialized economies, this change also has the potential to rebalance the tax burden between the productive economy and the financial sector. Today, wages, profits, and property ownership bear the brunt of taxation, while financial transactions, often speculative and non-productive, flow largely untaxed. The transaction tax reverses this imbalance, ensuring that the financial sector contributes proportionally to the public good. As transaction tax revenue rises, governments can lower or even eliminate income taxes on wages and productive businesses, giving the productive economy more breathing room to invest, innovate, and grow.

In less developed countries, the role of the transaction tax is somewhat different. There, the goal is not primarily to tame the financial sector, but to improve fiscal transparency and expand the tax base. Many developing economies suffer from chronic tax evasion and weak enforcement, with large portions of economic activity occurring outside the formal tax system. By capturing every transaction that passes through the banking system, the transaction tax provides a straightforward and nearly unavoidable method of tax collection. In these economies, the transaction tax allows governments to reduce reliance on external borrowing, strengthening their fiscal sovereignty and reducing vulnerability to external creditors.

However, in less developed economies, the transaction tax phase should be brief. Once implemented, it provides useful data and initial revenue, but these countries should move quickly to the next steps: establishing balance taxes, preparing for the introduction of debt-free money, and setting up UBI infrastructure. These nations have the advantage of not being heavily financialized, meaning they can transition into the new system faster and with far less resistance.

For all economies, the transaction tax is a foundation, not a finish line. It brings immediate fiscal stability and shifts the tax burden away from productive activity, but it does not eliminate the system’s deeper flaws. Without further reform, the financial sector will seek new ways to restore its control over the economy, particularly by driving private borrowing. Full transition requires much more than just taxing transactions; it requires rethinking how money itself enters the economy. That step, the introduction of debt-free money, will be described in the next section.

Preparing for UBI and Debt-free Money

With the transaction tax in place, the next step is to prepare the legal, institutional, and economic framework for introducing Universal Basic Income and debt-free money. This preparation is critical because without it, attempts to introduce UBI could backfire catastrophically, particularly if the money for UBI is created through debt-based borrowing rather than through direct government spending of newly created, debt-free money.

This preparation begins with the legal foundation. In most countries, the legal system assumes that all government spending must be financed through taxes or borrowing. This assumption locks governments into the debt spiral, even though more rational alternatives exist. Legislation must be enacted to authorize governments to create money directly and spend it into existence without issuing debt instruments. This is not a technical change; it is a fundamental redefinition of how money enters the economy. In highly financialized countries, such a change will face intense opposition from the financial sector, which benefits enormously from government borrowing.

In countries where the central bank is owned fully or partially by private entities, this process also requires nationalizing the central bank. In the United States, for example, this would require folding the Federal Reserve into the Treasury Department or giving the Fed the power to create debt-free money. This is a politically daunting step, but without it, debt-free money cannot be implemented, and UBI would become just another driver of public debt.

At the same time, governments need to build technical infrastructure to support UBI. Every citizen must have a government-linked account that can receive UBI payments directly. In developed countries, this can be handled through the existing banking system, though care must be taken to insulate these accounts from government surveillance and arbitrary seizure. In less developed countries, where banking infrastructure may be limited, other solutions will be needed: mobile phone-based banking, postal banking, or new public financial platforms specifically created for UBI. The goal is simple: every adult citizen must have direct, secure access to their share of newly created debt-free money.

This technical work goes together with economic modeling and scenario testing. Governments need to simulate the impacts of debt-free money introduction, projecting how new money will flow through the economy, where it will concentrate, and how much productive capacity exists to absorb it. The key danger is flooding the economy with money faster than production can expand to meet demand, which would lead to inflation and the erosion of trust in the new system. These models will need to be adjusted frequently, incorporating real-time data from the transaction tax system to guide how much debt-free money can be introduced without overheating the economy.

This preparation phase also involves rethinking government spending priorities. Debt-free money, particularly in the early stages, should flow first into productive investments: infrastructure, education, healthcare, sustainable energy, and public transportation. This expands the productive capacity of the economy, ensuring that new money is matched by new goods and services, rather than simply inflating existing prices. In the very beginning, increasing the production of consumable goods can be particularly useful, as consumables are both easier to produce and represent recurring purchases that help absorb the initial flood of money into the economy.

Governments also need to work closely with the private sector during this phase, encouraging businesses to ramp up production and hire more workers. This is not just about increasing output, it is about restructuring the economy to prioritize production over speculation. In heavily financialized economies, the private sector has grown accustomed to extracting profits from financial manipulation rather than productive investment. That culture needs to change.

For less developed countries, this preparation phase can move quickly, because they have less financial complexity to unwind. In these economies, government-led investments in agriculture, infrastructure, energy, and education can rapidly increase productive capacity, allowing debt-free money to flow more directly into real production rather than financial speculation. In more developed economies, the pace will need to be slower, as governments must navigate the entrenched power of financial institutions and carefully manage the unwinding of existing debt-based financial structures and infrastructure.

Throughout this process, public communication is essential. The introduction of debt-free money is not just a technical change, it is a cultural shift, challenging deeply held beliefs about government finance, taxation, and the role of money itself. People have been conditioned to believe that government spending must be funded by taxes or borrowing, and that printing money inevitably causes hyperinflation. These beliefs are deeply rooted, reinforced by generations of financial propaganda. Governments must explain the logic of debt-free money clearly and consistently, demonstrating why direct public money creation is both more efficient and more democratic than relying on private banks to create money through debt issuance.

Finally, governments must expect resistance, especially from financial institutions, wealth managers, and large corporate interests. These entities profit enormously from the current system, and they will use every political, legal, and media tool at their disposal to block, delay, or discredit the transition to debt-free money. This is why the preparatory phase must also build political alliances with labor unions, small business associations, consumer advocacy groups, and environmental organizations who all stand to benefit from a monetary system that prioritizes real production over financial manipulation.

By the time UBI is introduced, the legal framework, technical infrastructure, economic modeling, public communication, and political alliances should all be firmly in place. With that preparation complete, the introduction of debt-free money and the first direct, debt-free UBI payments can happen smoothly, marking the moment when a nation’s money truly belongs to its people, not its creditors.

Challenges Unique to Developed Countries

In highly developed and heavily financialized economies, the path to debt-free money is not just an economic transition, it is a political, institutional, and cultural battle. These economies have spent decades, or even centuries, building their financial sectors into towering structures of wealth and power, and those structures will not come down without a fight. The productive economy, the part that creates goods and services people need, has been shrunk, sidelined, and subordinated to the demands of financial markets. This leaves developed economies especially fragile, despite their apparent wealth.

Much of the unraveling of the financial sector can be accomplished without introducing debt-free money. The transaction tax can fund many of the changes required even before debt-free money is introduced. There is always the risk that the financial sector will attempt to enmesh the productive economy deeper into debt to fuel further expansion, so the sooner debt-free money is introduced, even if cautiously, the safer the transition.

The first challenge is the sheer size and political power of the financial sector itself. In countries like the United States, the financial sector does not simply participate in the economy, it drives policy, shapes legislation, and dictates the terms under which the productive economy operates. Politicians are dependent on campaign financing from financial firms, and laws are often written directly by lobbyists and industry associations. Regulatory agencies are captured by the very industries they are supposed to regulate, ensuring that every reform attempt faces immediate, well-funded opposition.

The second challenge comes from the diversity of jobs tied directly or indirectly to financialization. A large percentage of workers in developed economies depend on the financial sector for their livelihoods, not just in banking or trading, but also in accounting, legal services, consulting, real estate, and financial media. These workers are not enemies of reform, but they are embedded in a system that has rewarded them for maintaining the status quo. If the financial sector contracts, millions of people will lose their jobs unless a careful, gradual plan is in place to absorb them into productive work.

One particularly sensitive area is the tax preparation industry. If income taxes are significantly reduced or eliminated, entire sectors of tax accountants, tax lawyers, and tax consultants will need to transition into new roles. This does not need to be an economic disaster.  These are skilled professionals who can adapt.  But they will need time, retraining, and a clear understanding of the path forward. If this is handled well, they could become a new class of financial planners, economic advisors, or compliance officers focused on helping businesses thrive under the new system.

The real estate market is another vulnerable sector. Much of its current value is inflated by cheap credit and speculative finance, not actual productive value. If the financial sector contracts, particularly if leveraged debt is curtailed, property values could fall sharply, triggering a cascade of losses throughout the system. This is particularly dangerous in countries like the United States where housing wealth represents a large portion of household net worth. If the transition is too abrupt, it could trigger a wave of personal and corporate bankruptcies, damaging public confidence in the reform process.

Corporate power represents a third major obstacle. In developed economies, large corporations have grown so dominant that they effectively set economic policy. These corporations are not particularly innovative, nor are they especially efficient.  Their power comes from regulatory capture, monopolistic practices, and control over supply chains rather than superior products or services. This corporate bloat stifles competition and innovation, making the entire economy less adaptable to change. In the transition to debt-free money, corporate dominance must be challenged through vigorous antitrust enforcement, changes to campaign finance laws, and a rebalancing of power toward small and medium enterprises.

These corporate giants are also deeply tied into global trade networks, which presents an additional vulnerability. Many multinational corporations rely heavily on financial engineering, tax arbitrage, and complex international debt structures to boost profits. A move toward debt-free national economies disrupts this entire model, creating both economic and political friction at the international level. Corporations that see their global profits threatened will not hesitate to lobby their home governments to resist the transition, even if that resistance comes at the expense of the broader economy’s health.

The two-party political systems common in developed economies, particularly in the United States, exacerbate these problems. In the U.S., the two major parties are both deeply beholden to corporate and financial interests, leaving voters with no real choice when it comes to economic policy. The parties exploit cultural and social divisions, a technique mastered in the colonial era, to keep the electorate distracted, ensuring that serious economic reform never reaches the legislative floor. Breaking this political gridlock will likely require structural reforms like ranked-choice voting, which would allow new parties with alternative economic visions to emerge without automatically splitting the vote.

Finally, there is the cultural mindset itself, the belief, deeply ingrained in developed economies, that money only has value if it is scarce and that government spending is inherently wasteful or inflationary. This cultural conditioning has been reinforced by decades of financial propaganda, convincing both policymakers and the public that debt-based money is the only “responsible” way to finance government spending. Overcoming this belief will require a sustained public education campaign, one that does not just explain the mechanics of debt-free money but reframes the entire purpose of money as a public utility rather than a commodity controlled by banks.

In short, developed economies are trapped in a system where financial power, corporate dominance, political dysfunction, and cultural myths all work together to block necessary change. The technical steps of the transition; introducing transaction taxes, preparing for debt-free money, creating UBI accounts; are relatively simple compared to the political and social engineering required to actually implement them.

The good news is that these obstacles, while formidable, are not insurmountable. But overcoming them will require patience, creativity, and persistence. Developed economies will need to move slower, negotiate more carefully, and build broader coalitions than less financialized countries. The reward, however, is a fundamental liberation from financial servitude, the chance  to restore the balance between finance and production, giving the real economy space to innovate, prosper, and finally serve human needs instead of financial profits.

Eliminating Income, Sales, and Property Taxes

One of the most transformative steps in the transition to a debt-free money system will be the gradual elimination of income taxes, followed closely by the elimination of sales taxes and property taxes. This is particularly important in developed economies like the United States, where these taxes have not only become entrenched, but have also distorted economic behavior and fueled inequality for generations.

In the case of income taxes, the distortions are obvious. Workers’ wages are taxed heavily, while capital gains, the profits made from financial speculation, are taxed at much lower rates or avoided entirely through loopholes. Businesses are taxed on their productive earnings, while financial maneuvering often allows the wealthiest corporations to pay little or nothing at all. The result is a system where the productive economy is penalized, while the financial sector is rewarded for extracting value rather than creating it.

The introduction of the transaction tax creates an opportunity to reverse this dynamic. Because every movement of money is taxed, the financial sector, which thrives on rapid, high-volume trading and complex financial instruments, becomes the primary taxpayer. As transaction tax revenue rises, the need for income taxes diminishes. Over time, the goal is to eliminate income taxes entirely, allowing workers to keep their full wages and productive businesses to reinvest earnings directly into growth and innovation.

But income taxes are only part of the story. In the United States and many other developed economies, sales taxes and property taxes represent a significant source of revenue for state and local governments. These taxes are regressive, falling disproportionately on the poor and middle class, and they discourage spending and home ownership, exactly the opposite of what a productive economy needs. If the transition to debt-free money is to create a truly fair and productive economic system, these taxes must also be eliminated.

This creates an institutional challenge, because sales and property taxes are generally collected by state and local governments, not the national government. In a system where the sovereign national government controls the issuance of money and collects the bulk of tax revenue through transaction and balance taxes, a new mechanism must be developed to redistribute some of that revenue back to the states and localities. Without such a mechanism, state and local governments would face crippling revenue shortfalls, making it politically impossible to eliminate these taxes.

This redistribution of national revenue is not just a technical adjustment, it represents a fundamental shift in power. The goal is to create a debt-free money system where the sovereign national government holds the ultimate power over money creation and taxation. This level of centralized power is dangerous if left unchecked, creating the potential for overreach, abuse, or the gradual erosion of local autonomy. The solution lies in deliberate diffusion of that power, ensuring that state and local governments retain meaningful authority over how funds are spent, even if they no longer control the primary mechanisms of collection.

The fairest and most transparent way to accomplish this is to distribute national tax revenues to the states on a per capita basis. Every state would receive a share of the collected transaction and balance taxes proportional to its population. This ensures equal treatment, while still allowing for local priorities and governance structures to dictate how the funds are used. To address the reality that some states face greater economic challenges, either from historical underdevelopment, geographic disadvantages, or structural shifts, the national government could add a system of targeted grants, specifically aimed at developing productive enterprises in struggling regions.

This approach does more than replace lost tax revenue.  It creates a new, decentralized model for economic development. With states receiving guaranteed revenue flows untethered from their own taxing authority, they become free to focus on development, infrastructure, innovation, and education, rather than constantly battling over how to balance budgets with regressive taxes.

The result is fiscal autonomy at the state level without the burden of designing and maintaining inefficient tax systems. States and local governments become economic laboratories, each experimenting with different approaches to development, public investment, and social programs, all supported by stable funding from the national level. States could compare notes, borrow successful ideas from one another, and continuously improve their approaches.

This diffusion of power from the national government to the states and from states to localities is critical to preserving democratic accountability in a debt-free money system. The danger of centralizing all fiscal power at the national level is that it can lead to authoritarian economic control, where local voices are silenced, and local needs are ignored. By ensuring that the money created and taxed at the national level flows back to states and communities, the system retains the flexibility and responsiveness needed to support diverse local economies.

In short, the elimination of income, sales, and property taxes is not just about economic efficiency, it is about democratic resilience. It ensures that workers keep their full wages, consumers are not penalized for spending, homeowners are not punished for owning property, and local governments retain the resources they need to serve their citizens. At the same time, it breaks the link between taxation and economic strangulation, removing the constant pressure on state and local governments to balance budgets by raising regressive taxes.

In the process, this shift also helps rebuild trust in the government itself. When people see that they keep what they earn, pay fair taxes only when they move money, and watch their communities thrive through productive investment, the perception of government changes. Government is no longer seen as a parasitic force draining wealth, but as a partner in building shared prosperity.

This combination, eliminating regressive taxes, decentralizing spending power, and ensuring national revenue supports local development, turns what could have been a dangerous concentration of power into a new kind of cooperative federalism. National government would become the source of money creation and tax collection, but the states and localities become the primary stewards of how money is spent to improve lives. This is the balance that preserves local democracy while building a stronger national economy.  Most of this reform can be done simply by introducing the transaction tax.

The Contraction of the Financial Sector

In highly financialized economies, the financial sector has swollen far beyond its natural size, becoming a dominant force not only in the economy but also in politics and public policy. This dominance exists because the creation of money itself is tied to debt, and the financial sector’s profits depend on the constant creation, trading, and layering of that debt. As the economy transitions to debt-free money, the financial sector will inevitably shrink, but that process must be carefully managed to avoid economic collapse.

The biggest danger comes from moving too fast. The financial sector employs millions of people, directly and indirectly, from bankers and traders to legal, accounting, IT, and administrative staff. If the sector contracts abruptly, those jobs disappear overnight, creating a sudden spike in unemployment that ripples through commercial real estate, consumer spending, and local economies. Financial hubs could see property values plummeting, leaving office towers vacant and undermining even the collection of transaction taxes the governments are relying on.

The financial sector’s deep entanglement with the real estate market makes this even more dangerous. Much of the current inflated value of real estate, both residential and commercial, depends on easy credit and speculative finance. If credit contracts faster than the productive economy can absorb, property prices crash, triggering a wave of bank failures, corporate bankruptcies, and mortgage defaults. This, in turn, would feed back into the financial sector, amplifying the downturn.

The only way to avoid this is through deliberate, gradual unwinding, with the productive economy expanding as the financial sector shrinks. This requires continuous monitoring and modeling, watching money flows, lending patterns, asset prices, and employment data to slow the contraction if signs of economic instability emerge. The goal is to replace speculative financial activity with productive investment, not simply to shrink finance for its own sake.

This process will take decades. It may take a century to fully reduce the financial sector to its appropriate size, one where it serves the productive economy rather than driving it. The key is to maintain economic stability throughout the transition, ensuring that finance gradually shifts from speculation to genuine service, matching savers with borrowers and facilitating productive investment rather than churning debt to create profit.

The path forward is not destruction, but transformation. The financial sector has a future in service to the productive economy.  But that future will only emerge if the transition is managed with care, foresight, and patience. The goal is not to punish finance, but to restore balance, ensuring that money creation serves production and innovation. 

The transaction tax alone, even without the immediate introduction of debt-free money, can slowly reduce public debt, one of the financial sector’s key structural supports. If that reduction is handled gradually, with clear communication to the financial sector that debt-free money is coming, financial institutions will have the necessary time to unwind their positions. As it becomes evident that the era of runaway financialization is ending, finance will begin to lose its allure as a career path, gradually shifting talented individuals toward more productive and creative fields.

Corporate Dominance and Political Barriers

In heavily financialized economies, corporate dominance is not just an economic issue, it is a political reality woven into the fabric of governance itself. Large corporations, particularly multinational giants, have spent decades consolidating economic power, but they have also captured the political process, ensuring that laws, regulations, and tax codes favor their continued dominance. This corporate stranglehold will be one of the most formidable barriers to any meaningful transition to a debt-free money system.

The problem is compounded by the fact that corporate dominance is self-reinforcing. These companies have used their economic power to shape the legal and regulatory environment in ways that further entrench their position. They use their financial resources to fund political campaigns, flood the media with favorable narratives, and sponsor think tanks and research that supports their interests. The result is a system where the boundaries between public policy and corporate interests have almost disappeared, leaving the average citizen effectively voiceless in economic decisions that shape their lives.

This is not just about lobbying and campaign donations, it’s about the systemic creation of an economic environment where smaller businesses are crushed under regulatory burdens, while larger corporations can navigate and manipulate those same regulations to their advantage. In such a system, competition dries up, innovation slows, and economic power concentrates into fewer and fewer hands. Over time, this concentration creates an oligarchic feedback loop, where the largest corporations write the rules of the game to ensure they stay on top.

This corporate dominance extends deeply into the financial sector itself, with large corporations often relying on financialization not just for funding, but as a core part of their business strategy. They issue debt to buy back shares, boosting stock prices without improving productivity. They engage in tax arbitrage across borders, leveraging global financial networks to minimize or eliminate their tax burdens. In short, they extract wealth from the system rather than creating it, and they have the legal and political power to keep that system in place.

This level of economic and political capture means that any attempt to transition to debt-free money will face relentless opposition from these same corporate forces. They will fund disinformation campaigns, warning of inflationary spirals, capital flight, economic collapse, and government overreach, even though those outcomes are far more likely under the debt-based system they defend. They will use their control over the media to discredit reformers and manipulate public opinion to make alternatives appear radical, dangerous, or impractical.

Adding to this challenge is the two-party political structure common in the United States. The two major parties have become dependent on corporate money, with both sides relying heavily on corporate donations, PAC money, and direct financial support from the very entities that the transition would disempower. As a result, both parties, despite their surface-level ideological differences, are largely united in protecting the corporate financial order.

This creates a particularly toxic dynamic, where any serious attempt at reform is immediately framed as extremist by both major parties, and alternative political movements are starved of funding and media attention. What should be a broad, rational debate about the future of money and economic governance instead becomes a manufactured culture war, where voters are distracted with social wedge issues while the economic system remains untouched.

Structural political reforms, such as ranked-choice voting, proportional representation, and limits on corporate political spending, must be part of the larger dialog. Without political reform, economic reform will always hit a wall, as the same corporate powers will continue to dictate the limits of permissible change.

This is why the transition to debt-free money is not just an economic project, it is a democratic project, aimed at restoring genuine public control over economic policy. It seeks not just to change how money is created, but to change who has the power to decide where money flows. That power should reside with the people and their local communities, not with distant corporations who answer only to their shareholders.

Ultimately, breaking corporate dominance requires shifting the incentives that allowed it to arise in the first place. In a debt-free system, with money entering the economy through public spending rather than private lending, and with local and regional governments empowered to direct investment into productive sectors, the financial mechanisms that fueled corporate consolidation begin to unwind. Corporations will find it harder to access unlimited cheap debt to finance monopolistic acquisitions. Instead, they will have to compete in a landscape where small and medium enterprises have access to capital through reformed banks (or public banks) and community-driven investment.

This process will take years, even decades, but the outcome is not just a more balanced economy, it is a more democratic society, where economic power is distributed widely, and political power follows. The end of corporate dominance is not a side effect of the transition to debt-free money, it is a central goal, because economic democracy and political democracy are inseparable.

Most of these reforms can begin before debt=free money is introduced.  As a transaction tax begins to relieve some of the tax burdens on the productive economy, it can begin the process of increased production necessary with the introduction of debt-free money.

Reimagining Nuclear Energy

As the world transitions to debt-free money and productive investment becomes the primary driver of economic planning, energy infrastructure will become one of the most critical sectors to rethink. In that context, nuclear energy deserves a fresh and rational evaluation, free from both the ideological baggage of past debates and the artificial constraints imposed by debt-driven financial planning.

While renewables like wind and solar have made enormous strides in the last two decades, their limitations are becoming clearer. Intermittency requires backup power sources, and these backup stations, typically powered by natural gas, add costs and complexity that rarely appear in the glossy cost comparisons presented to the public. On top of that, land requirements for large-scale solar and wind farms are extensive, often displacing agriculture, ecosystems, or portions of communities. For nations aiming to electrify transportation and industry, renewables alone will not meet the demand without an impractical expansion of infrastructure.

That leaves nuclear, a technology that has been demonized, overregulated, and left to stagnate in many parts of the world. Yet, recent research in fusion energy, particularly breakthroughs in China, suggests that the long-predicted arrival of practical fusion power may finally be within reach. However, until fusion becomes commercially viable, the most promising nuclear technology available today is thorium-based reactors.

Thorium offers several advantages over conventional uranium reactors. It produces far less long-lived radioactive waste, operates inherently more safely, and its fuel source is far more abundant. Yet despite these advantages, the debt-based financing model that dominates today’s energy planning has discouraged investment in thorium development, largely because the upfront costs are significant, and the return on investment is too long-term for financial markets obsessed with quarterly profits.

In a debt-free money system, this short-termism disappears. The question is no longer, “Can investors make a quick profit?” but rather, “What is the most productive and sustainable way to provide energy for society?” With the government able to create money directly for productive investment, thorium reactor research and development could be fully funded without concern for immediate profitability. Instead, the focus would shift to long-term national and global benefit, clean, reliable energy that supports industrial development, technological innovation, and improved quality of life.

A major barrier to nuclear development in countries like the United States is the excessive regulatory burden placed on new plants. Current regulations require companies to pay for government nuclear engineers to review every aspect of their designs and construction plans, with rates often exceeding $300 per hour per engineer, resulting in one hundred thousand hours or more generating millions of dollars in review costs before construction even begins. This approach makes no sense in a debt-free economy, where the government’s goal should be to encourage safe, productive investment, not to create barriers to entry.

A more rational system would invert this process. Instead of private companies paying to navigate a regulatory labyrinth, the government itself could design and preapprove standard reactor designs, particularly small modular reactors (SMRs) that can be deployed individually or cascaded to meet larger power demands. This preapproved design library would eliminate the need for extensive design reviews for each new project, allowing companies to focus their resources on construction and operations, rather than fighting through red tape.

Even the site-specific environmental reviews required for each new plant could be streamlined, with government experts assisting directly in preparing these reports rather than merely reviewing them after the fact. This partnership would not weaken safety, it would improve both safety and efficiency, ensuring that regulators and developers work together to deliver the safest, most cost-effective energy infrastructure possible.

The shift to debt-free money doesn’t just lower financing costs for nuclear power, it completely reframes the question of whether nuclear is “too expensive.” Under the current system, every major project is filtered through the cost of borrowing, the expected return on investment, and the time horizon required to repay lenders. This often kills long-term investments that could benefit society for generations, simply because financial markets cannot wait that long.

In a debt-free economy, these artificial constraints disappear. The question is no longer whether private investors will finance a reactor, it is whether society needs the energy and whether nuclear offers the best long-term solution for reliable, clean, abundant power. With money creation directly linked to productive investment, the return on investment shifts from short-term financial profits to long-term societal value.

This also opens the door for international cooperation, particularly in developing nations that currently rely on fossil fuels for their energy needs. A globally coordinated effort to deploy thorium reactors, funded directly by debt-free public investment, could accelerate the transition to clean energy across the Global South, eliminating energy poverty while reducing carbon emissions at the same time.

Ultimately, nuclear power, particularly next-generation thorium and, potentially, fusion reactors, could become the foundation of a productive, sustainable, debt-free economy. It offers baseload stability that wind and solar cannot match, and it frees nations from dependence on fossil fuels and fragile global energy markets.

For decades, debt-based financing and short-term profit-seeking have artificially stunted nuclear development, leaving societies dependent on energy sources that either pollute the planet or require constant subsidies and technical workarounds to remain viable. In a debt-free money system, those days could end. Energy policy could finally be rational, forward-looking, and driven by the actual needs of society, a future where energy is plentiful, clean, reliable, and produced for the public good, as well as generating corporate profit.

Many of the changes in the energy sector can be funded without increasing public debt by using the transaction tax.  Debt-free money would make it easier, but not necessary.

Laying the Foundation

With the transaction tax in place, the initial data gathered, and early stabilization achieved, the focus shifts to preparing the legal and economic groundwork necessary for introducing debt-free money. This step differs sharply between highly financialized economies and those that are less developed financially. In highly financialized economies, the sheer size and influence of the financial sector means that the introduction of debt-free money must proceed cautiously, ideally only after some measurable unwinding of financial sector dominance has already begun. In less financialized economies, however, the introduction of debt-free money can proceed far more swiftly, even in parallel with the initial imposition of transaction and balance taxes.

The primary legal reform necessary is changing the laws governing money creation itself. In countries like the United States, this would require nationalizing the central bank and ensuring that money creation becomes a direct function of the central bank or national treasury rather than the banking sector. In less developed countries, this process may be simpler if their financial systems are less encumbered by legacy laws and entrenched interests. In either case, the goal is to ensure that new money enters the economy through direct public spending, not through debt issuance.

The first flows of debt-free money should not flood directly into the hands of individuals through large-scale UBI programs, particularly in developing economies. Introducing UBI too quickly and at too high a level could overwhelm productive capacity, leading to inflation and a loss of confidence in the reforms before they have a chance to demonstrate their full benefits. Instead, a modest UBI, just enough to ensure every adult citizen establishes a financial account capable of receiving the payments, should be introduced. This small foundational UBI serves a critical structural purpose: it guarantees that everyone is connected to the financial system, allowing for future economic steering through adjustments to transaction taxes, balance taxes, and UBI levels.

The bulk of initial debt-free money should enter the economy through public investment: funding infrastructure projects, education programs, renewable energy development, and entrepreneurial ventures. This approach not only builds productive capacity, it also demonstrates to both the public and private sectors that debt-free money is real, effective, and beneficial to society as a whole. The focus is on building the bones of a productive economy, not just increasing consumer demand.  Some level of inflation is quite likely during this phase of transition.

In less developed economies, this process also helps avoid the debt traps that have historically accompanied development financing. Rather than borrowing in foreign currencies or relying on predatory international lenders, these countries can finance their development internally, creating the money they need without excessive external debt. In highly financialized economies, this shift lays the foundation for gradually replacing public debt financing, providing governments a direct tool to invest in long-term national development without constantly negotiating with bond markets.

This gradual, productive introduction of debt-free money allows the population to see the benefits firsthand: better infrastructure, more educational opportunities, improved healthcare access, and support for small businesses. As confidence in the new system grows, the scope of debt-free money can expand. At the same time, ongoing monitoring and modeling, informed by the minieconomics data collected through transaction taxes, will ensure that money creation stays aligned with productive capacity, preventing inflationary surges.

In both developing and developed economies, this phase is critical. It builds practical experience, public trust, and the institutional capacity needed to scale debt-free money into the full replacement for debt-based money. It ensures that the transition is not a leap into the unknown, but a carefully guided evolution toward a system where money creation serves society rather than the financial sector.

Reshaping the Banking System

The transition to debt-free money represents a profound disruption for the banking sector, whose current business model depends heavily on creating money through lending. Today, banks do not merely act as intermediaries, matching savers with borrowers; they create new money every time they issue a loan. This ability to conjure money into existence gives banks an outsized influence over the entire economy, determining who gets credit, under what conditions, and at what cost.

In a debt-free system, that power disappears. Money will only enter the economy through public spending, not through private lending. Banks will still provide loans, but only with money they already have, either from deposits, retained earnings, or outside investors. This change alone fundamentally alters the banking landscape, forcing banks to return to their traditional role as financial intermediaries rather than money creators.

This change will be particularly disruptive in financialized economies, where a significant share of bank activity involves financing financial sector borrowing, loans to hedge funds, private equity firms, and other financial institutions that rely on borrowing against existing debt instruments. When banks can no longer create new money for this purpose, the entire debt pyramid begins to wobble. This is one of the primary reasons the transition must be slow and carefully managed, allowing both the banking and financial sectors to adjust their operations gradually.

Even after this transition, banks will remain essential to a healthy economy. Individuals, especially the young and those seeking to move upward economically, will still need loans for homes, education, and family growth. Entrepreneurs will still need capital to start businesses, and existing businesses will need financing to expand. Banks will still play a crucial role in evaluating credit risk, matching savers with borrowers, and ensuring that productive investments get funded.

However, the terms of lending will change. Without the ability to create money from nothing, banks will need to compete for funds, offering depositors better returns and charging higher interest rates and fees to borrowers. These higher costs may alarm some borrowers, but they will be offset by the much larger gains from eliminating income taxes, sales taxes, and property taxes. Additionally, UBI will cushion households against these higher borrowing costs, making loans more affordable even at higher rates.

If banks become too predatory in their lending, charging excessive interest rates or imposing unreasonable terms, the government has a powerful counterbalance available: public banking. States and local governments can establish their own publicly owned banks, operating not for profit but to provide fair and accessible credit to individuals and productive businesses. These public banks would compete directly with private banks, helping to curb excesses and ensure that access to credit remains affordable.

Public banking is not an afterthought in this process.  It is a critical tool for economic democracy, ensuring that credit creation serves local development and community priorities rather than the speculative goals of distant financial markets. Public banks can also support key sectors like infrastructure, renewable energy, and local agriculture, aligning credit allocation with broader public goals.

In this new environment, banks will return to their proper role, serving as stewards of existing money, ensuring it flows toward productive use, rather than creating speculative bubbles through unchecked money creation. Their profits will come from sound lending practices and providing valuable financial services rather than financial engineering and rent extraction.

This shift does not spell the end of banking. It spells the rebirth of banking as a socially useful institution, one that supports upward mobility, productive investment, and community development rather than financial speculation and wealth extraction. With the productive economy restored to its central place, banking would become a pillar of support, rather than the economic master it has become today.

Retirement, Pensions, and Insurance

As the transition to a debt-free money system unfolds, the way societies provide for retirees and manage financial risk will undergo a profound transformation. The path will look very different for developed and developing economies. In highly financialized countries, pension funds and insurance companies have become deeply entangled with financial markets, requiring careful unwinding to prevent economic instability. In less developed economies, where formal social security systems and private retirement savings are rare, the transition presents an opportunity to establish financial security for retirees in a way that is both sustainable and free from the distortions of financial speculation.

One of the most immediate benefits of the transition will be retirement security. In developed economies, social security programs have long been framed as financial liabilities, reliant on payroll taxes, trust funds, and constant legislative battles to remain solvent. This framing has always been misleading, a way to impose artificial constraints on government spending. Once a transaction tax is in place, social security payments can be fully funded without requiring payroll deductions or government borrowing. The concern that an aging population will overwhelm the workforce’s ability to fund retirees is no longer an issue because a government, that creates its own money, does not need to extract taxes from workers to make payments to retirees. In these economies, existing retirees will immediately benefit from the transition, and younger workers will no longer need to worry about whether pension systems will still exist when they reach retirement age.

In less financialized economies, where formal pension systems may not exist at all, the transition provides an opportunity to implement an effective and universal retirement security system. Since these economies can move to debt-free money much sooner than financialized nations, they can introduce a retiree-specific increase in UBI at the same time they roll out basic UBI payments to the general population. This ensures that every elderly person, regardless of past earnings or savings, has enough income to afford necessities like food, housing, and healthcare. The question that dominates many economic discussions today, how societies will fund retirees with fewer workers, simply vanishes in a system where money is created to serve productive capacity rather than as an obligation attached to debt. The true demographic challenge is not funding retirees but ensuring that there are enough workers and productive resources to meet the needs of an aging population. If worker shortages become an issue, governments can explore labor-saving technologies, expand training programs to maximize workforce participation, import goods from abroad, or encourage immigration from labor-surplus countries to meet demand.

While the outlook for retirees is promising, the transition will be more complicated for pension funds and insurance companies, especially in financialized economies. These institutions have long relied on financial markets to generate returns, investing in speculative assets such as stocks, bonds, and real estate. As financial markets begin to contract, these investment strategies will become less viable, forcing pension funds to rethink how they generate income. A major shift will occur as banks, which will no longer be able to create money, begin to seek new sources of capital for lending. Pension funds and insurance companies, managing large pools of savings, will become prime sources of funding for banks, shifting their role from speculative investors to stable capital providers for productive economic activities.

As pensions and insurance shift away from financialized investments, some adjustments will be necessary. Pension systems that relied on high investment returns may require workers to save more during their careers, and insurance companies may have to adjust premium structures to compensate for lower financialized profits. However, this will be offset by the fact that retirees will have guaranteed support through expanded social security programs or increased UBI. Because financial markets will no longer be the primary driver of retirement security, individual retirees will not be subject to the volatility of stock market crashes or bond market fluctuations. Their financial stability will be tied instead to real economic output, ensuring a more predictable and equitable system.

In developing nations, the pension and insurance transition will be more straightforward. Many of these countries do not yet have large-scale pension funds or sophisticated insurance markets. Rather than dismantling a broken system, they will be able to build new retirement security models from the ground up, basing them on direct productive investment rather than speculative finance. Governments in these countries will be able to ensure retirement security without reliance on payroll taxes or foreign-denominated debt, allowing them to bypass the financial constraints that have traditionally hindered economic development.

As debt-free money becomes more established, retirement security will cease to be dependent on taxation or investment speculation. The shift in economic planning will move away from worrying about how to pay for retirees and focus instead on whether enough productive capacity exists to meet their needs. This transition will also affect insurance, which has become increasingly financialized in many parts of the world. With debt-free money stabilizing the economy and transaction tax revenues providing a steady source of funding for public services, insurance will no longer be required to serve as a substitute for weak or absent public safety nets. Instead, it can return to its original function, managing genuine risks rather than serving as an alternative to a properly funded healthcare or social security system.

For the first time in history, every elderly person could have financial security, not as a privilege of wealth, but as a fundamental function of economic design. In developed countries, this will mean dismantling the financialized pension and insurance industries in a controlled and gradual manner, while in developing economies, it will allow for the creation of new retirement security models free from the distortions of financial speculation. The global challenge will not be how to pay for retirees but how to ensure that there are enough workers, resources, and infrastructure to support a stable, prosperous, and long-lived population.

Housing and Real Estate

The role of housing and real estate during the transition to debt-free money will diverge sharply between developing and developed economies. In developing countries, the problem is straightforward: there is not enough adequate housing to meet current and future demand. In these nations, housing and real estate offer a natural outlet for newly created debt-free money, providing both immediate social benefits and a way to absorb the influx of money into the economy without excessive inflation. Simply put, productive capacity in construction can be expanded directly through public investment or private developers receiving support and funding through direct investment programs.

Debt-free money can fund infrastructure development alongside housing construction. ensuring that water, power, sanitation, and transportation networks grow alongside residential and commercial development. The housing boom created by debt-free investment would not be driven by speculative bubbles, but by actual need and productive capacity, ensuring that the housing sector becomes a stabilizing force for the economy rather than a source of volatility. In developing economies, this investment becomes a foundation for both economic growth and improved living standards, fulfilling basic human needs while building productive capacity at the same time.

In developed economies, the situation is far more delicate. Housing and real estate have become deeply entangled with the financial sector, serving not only as shelter and infrastructure but also as vehicles for speculation, leverage, and asset appreciation. A substantial portion of financial sector profits comes from packaging, securitizing, and trading mortgages and commercial property debt. As the financial sector contracts, this speculative demand will dry up, putting downward pressure on prices, particularly in areas that experienced real estate bubbles driven more by financial gamesmanship than by actual housing demand.

This process of unravelling financialized housing markets must be managed cautiously to avoid triggering cascading failures in the financial sector, municipal budgets, and local economies. The plan is to eventually replace property taxes with grants to cities and states.  But, before that is implemented, cities that rely heavily on property tax revenues could see their tax bases shrink if real estate prices collapse too quickly. Commercial real estate, already vulnerable due to shifts toward remote work and changing retail patterns, could face an accelerated crisis, with buildings abandoned, maintenance deferred, and entire business districts hollowed out.

The key to avoiding such a hard landing is ensuring that productive investment increases in parallel with financial contraction. As speculative demand exits the market, real estate should transition into the hands of end users, families needing homes and businesses needing workspaces, rather than remaining an asset class for financial institutions to trade among themselves. The introduction of debt-free money can facilitate this by funding public infrastructure improvements, providing low-cost financing for homebuyers, and encouraging local entrepreneurial development that reuses vacant commercial spaces.

As incomes rise through wage growth tied to productive investment, more people will be able to purchase homes. In time, the very concept of real estate as an investment vehicle will fade, replaced by a rational view of housing as shelter and commercial space as a productive resource. This transition will not happen overnight, but it can progressively stabilize the housing market, ensuring that real estate serves its intended purpose, providing places to live, work, and create value, rather than serving as the core of speculative finance.

The most dangerous moment in developed economies will come when financial institutions begin to realize that real estate is no longer a reliable path to speculative profit. That realization could trigger a disorderly sell-off, especially in regions already experiencing demographic decline or economic stagnation. To counteract this risk, governments may need to intervene directly, buying distressed properties for conversion into affordable housing, green spaces, or public-use facilities. Simultaneously, governments must ensure that productive economic activity grows fast enough to make real estate genuinely useful again, not as a financial instrument, but as an essential element of real economic life.

For both developing and developed economies, housing and real estate would become key battlegrounds in the transition to debt-free money. In developing economies, the goal is expansion, building housing to meet basic needs and drive productive growth. In developed economies, the goal is transformation, shifting real estate from a speculative asset to a productive and social good. In both cases, the measure of success is not the value of real estate on a balance sheet, but whether people have affordable, quality places to live and work that support a stable, productive economy.

Education

Education stands at the very heart of the transition to a debt-free money system because raising the productivity of the economy ultimately depends on having a well-educated, well-trained population capable of working in and building the productive economy. Without skilled workers, the introduction of debt-free money could drive inflation, not because too much money is created, but because there wouldn’t be enough productive capacity to absorb it. If businesses can’t find qualified employees, and if entrepreneurs lack the training to launch and manage new enterprises, the productive expansion required to balance new money creation stalls, threatening the success of the entire transition.

However, one of the first obstacles to improving education is the current shortage of educators themselves. Simply declaring education to be free for all will overwhelm the system if there aren’t enough teachers, professors, and technical instructors ready to meet the demand. This is why, during the phase between the implementation of the transaction tax and the introduction of debt-free money, some of the transaction tax revenue should be allocated directly to educating the educators. This targeted investment ensures that the workforce required to expand educational capacity exists before universal free education becomes policy.

Education reform during the transition must also broaden its focus beyond just higher education. Too often, economic plans emphasizing education concentrate solely on college degrees and technical training, overlooking primary and secondary education, the very foundation upon which future workforce skills are built. This is particularly relevant in the United States, where decades of school consolidation have centralized education into fewer, larger schools, under the belief that bigger schools are more efficient. The result, however, has been a decline in the quality of the educational experience, especially in social and emotional development.

In these large, consolidated schools, typical student populations can range from 450 to over 1000 students, with 70 to 250 students per grade level. These large, impersonal institutions make it harder for educators to maintain safety, to prevent bullying, and to identify students struggling with mental health or social adjustment problems. Large schools also limit student participation in extracurricular activities, including sports, because the sheer number of students makes competition for spots on the team overwhelming. These structural problems lead to disconnected students who feel anonymous within their own schools, eroding both educational outcomes and community cohesion.

Even without debt-free money, transaction tax revenue alone could fund a systemic shift toward smaller, safer, more community-focused schools. Smaller schools would allow for smaller class sizes, giving teachers the ability to focus more attention on each student, improving both academic outcomes and social development. Smaller schools are also easier to secure, allowing for more effective safety protocols without turning schools into prison-like environments. Smaller schools restore the personal connection between students, teachers, and the broader community, turning schools back into centers of community life rather than anonymous educational factories.

These schools, once built, should be fully equipped with the tools and resources necessary to prepare students for life in a rapidly changing economy. This includes not only traditional academic subjects but also financial literacy, civic education, environmental stewardship, and hands-on technical skills. In the transition, students should not just be trained to pass standardized tests, they should be prepared to contribute meaningfully to society and to take pride in their role as productive citizens.

A particularly bold and innovative reform could come in science education, where schools shift from passive learning of scientific facts to active participation in scientific discovery. Today, much of the scientific process, from research to peer review, is biased toward reinforcing the existing scientific paradigm. Research that confirms what is already expected receives funding, while research that challenges accepted beliefs don’t get published. Even more troubling, replication of published research, one of the cornerstones of the scientific method, receives almost no funding at all.

One way to address this is to embed replication science directly into high school and undergraduate science education. Rather than merely learning science from textbooks, students could select published research papers to replicate as part of their coursework. By providing students with tools, equipment, and materials to conduct these replications, the education system could both strengthen scientific literacy and create a nationwide system of independent verification for scientific claims. Specialized journals could publish verifications or challenges to the research results.  This would not only improve education but also restore integrity to the scientific process, as students would approach research with both curiosity and healthy skepticism.

In short, the role of education during the transition to debt-free money is not just to produce qualified workers, it is to rebuild education itself into a fully integrated, lifelong process that prepares every citizen to be a thoughtful, productive, and engaged member of society. This transformation, funded first through transaction tax revenue and later through debt-free money, ensures that the transition does not merely change how money is created, but who society produces, and for what purpose. Education becomes not just a personal investment but a collective commitment to the long-term health and productivity of the entire economy.

Healthcare

The transition to a debt-free money system holds the potential to transform healthcare into a universally accessible public good, but the shift cannot happen overnight. One of the first realities to face is that many countries simply do not have enough healthcare professionals to meet the surge in demand that would come from removing financial barriers to care. As with education, the period between implementing the transaction tax and the full introduction of debt-free money must be used to rapidly expand training programs for healthcare workers, ensuring that capacity grows ahead of demand.

This training effort should not be limited to physicians and specialists. It should also encompass nurses, medical technicians, community health workers, mental health professionals, and public health experts. The goal is to increase healthcare capacity at every level, from preventive care to complex surgeries. With transaction tax revenues providing a stable and increasing source of funding, governments can invest immediately in scholarships, tuition waivers, and expanded training facilities, removing costs as a barrier to entering the healthcare professions. In return, newly trained healthcare workers could be offered incentives to work in underserved areas, ensuring that both urban and rural populations gain improved access to care.

But healthcare reform during the transition cannot focus solely on treatment, it must also emphasize prevention. Many of the chronic conditions driving healthcare costs today, diabetes, heart disease, certain cancers, and metabolic disorders, stem directly from poor diet, environmental exposures, and unhealthy lifestyles. Addressing these root causes will require systemic reforms far beyond the healthcare system itself.

One obvious target is industrial agriculture and food processing. Pesticides and herbicides that accumulate in food, combined with the heavy use of ultra-processed ingredients, added sugars, and excessive salt, have contributed to an epidemic of diet-related disease. These agricultural and food processing practices persist not because they produce the healthiest food, but because they are profitable for agribusiness and food corporations. During the transition, independent, university-based research, funded through transaction tax revenue rather than corporate grants, should thoroughly study the long-term health effects of these practices. This independent research is essential to break the current cycle where industry-funded science downplays risks to maintain corporate profits.

Special attention should be paid to genetically modified organisms (GMOs) and their associated pesticide use. While GMOs themselves may not inherently pose health risks, the farming methods that accompany them, heavy applications of herbicides like glyphosate, may have far-reaching health and environmental consequences. Government-funded, independent research can clarify these risks, allowing policy to be based on evidence rather than corporate lobbying.

Food processing practices should also be reviewed with public health in mind. The modern food industry optimizes for shelf-life, flavor enhancement, and addictive qualities, often at the expense of nutrition and health. Reforming these practices to preserve nutrients, reduce harmful additives, and shifting the balance of available foods toward whole and minimally processed options will be a critical part of reducing preventable disease.

Even before debt-free money is introduced, transaction tax revenues can fund programs to ensure that healthy foods are affordable and accessible to everyone. This could take the form of expanded food assistance programs, subsidies for locally grown produce, or tax incentives for retailers who prioritize nutritious foods. By reducing income taxes alongside these programs, governments could improve household budgets, leaving more room for people to choose healthier foods rather than being forced into the cheapest, most heavily processed options.

The goal is not merely to expand access to healthcare, but to reduce the need for healthcare in the first place. By building a healthier food system, investing in preventive care, and promoting healthier lifestyles, the burden on the healthcare system can be reduced even as access expands. This approach ensures that the transition to debt-free money creates a healthier population, not just a better-funded medical industry.

As healthcare capacity grows, more of the healthcare system’s costs can be funded directly from transaction tax revenues, reducing the reliance on private health insurance or debt-financed government spending. In this way, healthcare becomes a public good funded directly by the economy’s productive activity, not by private profit motives or financial speculation. This shift, managed gradually during the transition, builds public trust in the system and demonstrates how debt-free money serves the real needs of the population, rather than enriching financial or corporate elites.

In the end, the transition to debt-free money is not just about changing how healthcare is funded, but about redefining what healthcare is for. Instead of being a profit center for insurers, pharmaceutical companies, and hospital chains, healthcare becomes a societal commitment to ensuring every person has access to the care they need and building the healthy environment that makes care less necessary in the first place. This shift in mindset, combined with the practical steps of expanding educational capacity, reforming food systems, and ensuring universal access, will set the stage for a healthier population and a stronger, more productive economy in the decades to come.

Balancing Production, Spending, and Imports

The early phases of transitioning to debt-free money present a unique balancing act, one that revolves around managing the flow of money into the economy while ensuring the production of goods and services grows fast enough to absorb it. This is particularly challenging in developing countries, where productive capacity is limited and the introduction of debt-free money or expanded transaction tax spending can quickly outpace the ability to produce enough goods to meet rising demand.

This imbalance is especially visible in education, healthcare, and infrastructure development, sectors that governments are subsidizing so that consumers are not expending money. While these investments strengthen the economy’s productive foundation in the long term, they do not immediately produce consumption that can absorb household incomes. This creates a risk of inflation if rising incomes chase too few available goods.

Housing and construction play a crucial role in managing this transition, but not simply through the act of building homes or infrastructure. Their true value in absorbing excess money comes from mortgage repayment and long-term financing. Housing and commercial buildings are high-ticket items, meaning families and businesses allocate significant portions of their incomes to mortgage or loan payments. These ongoing payments act as a buffer, steadily absorbing excess purchasing power and redirecting it into the financial system, where it can then be reinvested into new productive projects or accumulated so that balance taxes can extract excess money from circulation.

The public must see and feel the benefits of the transition in tangible ways, from better housing to easier access to education and healthcare to a broader range of consumer goods and services that improve quality of life. Removing too much money through taxation dampens this positive feedback loop, which is crucial to maintaining public support for the transition.

This balancing act extends beyond domestic production. Imports become an important release valve during the transition, especially in developing countries where domestic industries cannot yet meet the full spectrum of consumer demand. Allowing higher levels of imports enables rising incomes to be spent on foreign goods, relieving immediate inflationary pressures without demanding that the domestic economy instantly produces everything people want. This temporary opening to imports buys time for nascent industries to develop without immediately being overwhelmed by surging consumer demand.

But managing imports requires care. If imports are too freely allowed, they can crush the very industries that need time to grow, leaving the country permanently dependent on foreign production. That’s why governments need flexible, sector-specific trade policies during the transition. Essential consumer goods, raw materials, and high-tech components might be imported freely, while sectors where domestic entrepreneurs are beginning to establish themselves might need temporary protective barriers to foster local production.

In highly developed economies, this balancing act is less severe because these countries already produce a wide range of goods and services. Their challenge lies more in redirecting existing productive capacity away from financial sector servicing and back into real economic production. But in developing countries, the gap between demand and domestic productive capacity can be massive, especially once public spending accelerates and incomes rise across the population. In these environments, balancing taxation, trade, and government spending becomes a delicate, ongoing process.

The goal is to build a productive capacity fast enough to meet rising demand, but not so fast that overinvestment creates bubbles, and not so slow that inflation destroys confidence in the new system. Similarly, trade policy must walk a line between affordability and self-sufficiency, ensuring foreign goods help stabilize prices temporarily without stunting local production in the long run.

Ultimately, the government’s role is to act as a conductor, adjusting transaction and balance tax rates, targeting spending toward productive investment, fine-tuning trade barriers, and supporting nascent industries until the economy is strong enough to stand on its own productive foundation. This careful orchestration is more critical for developing countries because they start from a weaker productive base, but even in developed economies, getting this balance right is what determines whether the transition builds lasting prosperity or descends into stagflation and public distrust.

The key lesson is that money creation and taxation alone are not economic management. The real test is how well the government can align money flows with real goods and services, making sure every dollar, peso, or rupee created is matched by something useful that improves people’s lives. If that balance holds, the transition can unleash tremendous prosperity. If it doesn’t, the risk of inflation, economic dislocation, and loss of public faith will loom over the entire process.

Summary

The transition to a debt-free money system is not a single policy shift, but a complex process requiring careful sequencing, deep economic restructuring, and constant monitoring. While the end goal is to replace the debt-based monetary system with publicly created money spent directly into the productive economy, the path to that goal varies between highly financialized developed economies and less financialized developing economies. The core steps, however, remain the same for both.

The first step is to implement the transaction tax, which serves both to generate stable revenue and to provide detailed economic data through the lens of minieconomics, tracking activity sector by sector, rather than relying on the blunt and often misleading tool of GDP. In highly financialized economies, the transaction tax begins the process of shifting the tax burden away from the productive economy and onto financial speculation, while in less financialized economies, it offers an immediate way to fund development without increasing external debt.

Once the transaction tax is in place, the growth of public debt can be halted, removing the political weapon of debt ceiling brinkmanship and replacing it with a more transparent and democratic process.

The next critical step is preparing for the introduction of debt-free money and the rollout of UBI. In highly developed economies, this may need to wait until the financial sector has begun its slow unwinding, but in less developed economies, debt-free money can be introduced almost immediately to fund public investment, infrastructure, and productive capacity. UBI, however, must start modestly, designed initially not to reshape the economy, but to ensure universal access to the banking and financial system. In all cases, government spending should prioritize building productive capacity, ensuring the economy can absorb new money without triggering inflation.

The most challenging part of the transition occurs in highly financialized economies, where the financial sector has grown far beyond its productive role. The contraction of this sector must be carefully managed to avoid triggering financial panics that cascade into the productive economy. This requires slowly reducing public debt, providing clear guidance to financial institutions about the coming changes, and creating new opportunities in the productive economy to absorb displaced workers and capital.

At the same time, banks must undergo fundamental reform, shifting from money creation through lending to lending of existing money. The reserve system can be abandoned.  This change will raise interest rates and banking fees, but the elimination of income, sales, and property taxes, combined with the new UBI, will more than offset those costs for ordinary households. States and local governments can receive funding directly from transaction tax revenue, ensuring they can eliminate their own income, sales, and property taxes without losing essential services.

The transition also faces political obstacles, especially in countries where corporate dominance over legislation protects the existing system. Large corporations, especially multinational conglomerates, have long shaped tax, regulatory, and trade policy to their advantage, blocking innovation and stifling smaller competitors. The success of the transition may hinge on breaking up corporate monopolies and ensuring that the new financial flows benefit entrepreneurial activity and broad-based prosperity, not just entrenched corporate power.

Certain sectors, like nuclear energy, healthcare, and education, will be central to the success of the transition. Nuclear power, especially next-generation thorium reactors, offers a reliable way to provide the energy needed for expanded infrastructure and industrial development. Healthcare, long distorted by profit-seeking incentives, will need to become a publicly funded service, focusing as much on prevention and public health as on treatment. Education must expand quickly and creatively, training not only the workforce needed for a more productive economy, but also the educators, healthcare workers, and entrepreneurs who will carry the economy forward.

Finally, the government must manage the inherent imbalance between new money creation and productive capacity during the early stages of the transition. In developing countries, imports can temporarily absorb some excess money, preventing inflation until local production catches up. In developed economies, the unwinding of financial speculation combined with targeted productive investment can achieve the same result. In both cases, the key is to balance taxation, trade policy, and public investment to gradually align the flow of money with the creation of real wealth.

This chapter has laid out the framework for a managed transition, where the order and pace of reforms matter as much as the reforms themselves. With careful planning and continuous adjustment based on real economic data, the transition can unlock vast new possibilities for prosperity, transforming not only how money works, but what money in the economy is for.