New Financial Model introduces Concept of Future Money. Future money is basically a monetary incentive on the consumption to encourage consumption in short run. Presently, entrepreneurs/distributors use a number of strategies (discounts, advertisements, festival sales, other schemes & programs) to encourage consumption of their products in the short run. FM money will become another option to encourage consumption in the short run and will provide a number of benefits to all the components of the economic unit.

It will benefit the economy from both sides: Increasing consumption on the one side and Investment on the other. It will increase the consumption by discouraging short term savings and build the long term savings which will be available for investment.

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Important things for the economic unit implementing the concept:

1. Every consumer like you and me will have a unique Consumer number (or other centralized numbers from government authority).

2. Every consumer will have a future money account (FM account with monetary authority, banks as regulated by laws)

3. There will be a Future Money Council in the economic unit made by the authorities and this FM Council will decide the future money rate (FM rate) and number of years (n)

4. Value of Future money, FM rate, Number of years can be zero to maximum depending upon various things (Range decided by FM council, market forces, economic situation etc.)

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Working: When a consumer having a unique consumer number will purchase any final goods/services, he will get future money (monetary incentive) deposited in his FM account automatically. The Amount of Future Money will depend upon the FM (future money) rate (% of final goods price).

For example: Suppose you go to buy a thing. Say the price of that good is $100 and $5 is future money (5% is FM rate). When you buy that thing, you will get the $5 as future money in your future money account.

Important thing in this concept is that this future money will not be available to consumers immediately, but after the retirement or N number of years or time decided by the FM council, market forces as proposed by this model.

Who will deposit the Future money?

It is the seller/entrepreneur/distributor/Government who is going to deposit the Future Money in the consumer’s account to give incentive to the consumer for the consumption of final goods/services. It is up to seller/entrepreneur to give incentives or not (if no minimum limit is set by regulating authorities)

Won’t the Future Money hit the seller’s margins and reduce their profits if he has to deposit 5% of goods price in the consumer’s FM account.?

This is not the case. Entrepreneurs/others don’t have to deposit the entire amount of Future Money, but the present value of Future Money. Amount which entrepreneurs will deposit in the consumer’s FM account will depend upon N (number of years) and prevailing interest rates. Suppose $5 is future money, interest rates are 5% and N = 30 years (after which the amount will be available). According to calculations, entrepreneurs need to deposit only $1.16 in the future money account and this $1.16 will become $5 in the future. See the table below

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Table.3. Suppose Final Goods Price: $100, FM rate: 5% So Future Money will be = $5
Future Money	N (number of years)	Interest rates	Country
$5	15	3%	$2.41
$5	15	6%	$2.09
$5	30	3%	$2.06
$5	15	5%	$2.09
$5	15	10%	$1.2
$5	30	5%	$1.16
$5	20	4%	$2.28

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Important Points from the above table

1. Entrepreneurs/Others don’t have to deposit the entire amount of Future Money but the present value of FM, which will be calculated from the below formula

Future Money = Present Money * (1+ FM %) ^N

So, Present Money = Future Money/ (1+ FM %) ^N

2. Future Money will not be available to consumers immediately but after the number of years.

3. Also, we can analyze the table that doubling the time has more impact on the present value than doubling the interest rates.

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So above is the Concept of Future Money. Using this concept, New Financial Model is introducing following new things:

New Financial Tool: Future Money which will help central banks, corporates, governments manage aggregate demand & ensure the sustainable economic growth which is important for the employment generation. (Read chapter 7th, 8th and 9th of New Financial Model for detail)

New and Universal Pension System: which will ensure is Old age security.

New Income Equation: New financial model make a very important change in the present income equation. In new income equation, income of $100 generates output of more than $100. Because of the consumption multiplier, more value is being added on both sides: consumption as well as investment in the economic unit.

For detail, you can download New Financial Model from the below link