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Over the past half-century, the global economy has entered a phase of structural instability characterised by three interlinked failures:
- Debt Overhang: The accumulation of unsustainable private debt burdens, particularly in households, undermines aggregate demand and heightens crisis vulnerability.
- Misallocated Credit: A growing share of bank lending flows into speculative asset markets, inflating bubbles while under-financing productive, socially necessary sectors.
- Life-System Degradation: Economic growth has proceeded largely independent of, and often in opposition to, the reproduction of universal life necessities and ecological integrity.
The Life-Coherence Monetary Governance Model addresses these failures by embedding three mutually reinforcing components within a coherent policy architecture:
- Normative Compass: Life-Value Onto-Axiology (McMurtry) defines the legitimate purpose of monetary systems as the provision and protection of universal life necessities — clean air, water, food, shelter, healthcare, education, community, and a viable environment — across generations.
- Operational Engine: Modern Monetary Theory clarifies the operational realities of sovereign currency issuance, enabling fiscal policy to be calibrated to real-resource constraints rather than artificial funding limits.
- Twin Drivetrains:
- Stock Correction (Keen): A targeted, rules-based Debt Jubilee retires destabilizing household debt, restoring balance sheet resilience.
- Flow Steering (Werner): Credit Guidance mechanisms regulate bank lending toward productive, regenerative activities while constraining speculative uses.
Policy implementation is coordinated through a Macro-Coordination Layer — comprising the Treasury, central bank, financial regulator, public development bank, and an independent Life-Value Council — and guided by three guardrails: the LVIA, a green/amber/red credit taxonomy, and a resource-capacity monitoring board.
Outcomes are measured and reported quarterly via a Public Dashboard tracking: (1) Life-Value Index, (2) Debt Harm Index, (3) Credit Map, (4) Resource & Inflation Map, and (5) Distributional Accounts. Sequenced implementation proceeds through five stages: Diagnose → Correct Stocks → Steer Flows → Stabilize → Audit & Iterate.
The framework is designed for adaptability across jurisdictions with monetary sovereignty and can be aligned with broader climate, housing, and social policy agendas. By uniting normative purpose, operational clarity, and targeted intervention, the Life-Coherence Monetary Governance Model offers policymakers a viable pathway to monetary systems that are stable, equitable, and life-supportive by design.
