by Francisco Oliveira
(Open Science Repository Economics)
Abstract: This article proposes the creation of a global price unit/scale independent from currency units as a way to achieve stabilization of the world economy. It is based on the reasoning that prices do not need to be expressed in terms of currency units and that such traditional way of expressing prices is wrong and misguides decisions of investment or disinvestment, leading economies to crises. As an alternative to the use of currency units to express prices, the use of an abstract price unit/scale, similar to other scientific abstract scales, like the Kelvin scale, associated with the use of variable conversion rates to relate the abstract price unit to currency units, is proposed. With such new global price system composed of an independent price unit and conversion rates, markets can lessen monetary effects upon prices and have a clearer view of real relative price variation, achieving economically sound decisions of investment or disinvestment and, thus, stabilization of the world economy. Since this proposal has a enormous potential impact on the global economy, further discussions and experimental tests are still necessary.
Keywords: economics, economic crisis, monetary reform, price theory, price system, price unit, currency reform, poverty solution, economic stabilization.