My upcoming course, Exchange and Finance for the New Economy: Principles and Practice.
LEARN * WORK * PLAY
Come to Greece next summer to participate in my week-long course
in innovative finance, exchange, and economics, and collaborate with like minded peers to create a new economy that works for everyone, while enjoying a delightful summer holiday on the magical Pelion peninsula.
This course is designed especially for social entrepreneurs, enthusiastic agents of change, local government officials, and serious students who are eager to co-create a new sustainable and convivial economy from the bottom up. In this highly participatory workshop, we will use a combination of presentations, discussion groups (some on the beach), videos, and simulation games, to dive deeply into the process of exploring and developing innovative methods of finance and exchange, like community currencies and credit clearing exchanges.
Our venue is the beautiful, modern and comfortable Hotel Alexandros, a calm and serene retreat center perched on the hillside overlooking the Aegean Sea within walking distance to the pristine Plaka beach and the clear waters of the Mediterranean.
Course fees are extremely affordable but a few fee concessions may be a available for qualified low income participants.
The course runs from June 24 thru July 1. Course description and registration form can be found at http://www.kalikalos.org/exchange-finance. Space is limited so register early.
The Big Short and other revealing sources
If you have not seen the movie The Big Short, I encourage you to do so. It is based on the book by Michael Lewis, a former Wall Street insider with an unusual talent for telling a good story and making complicated things understandable. In this book and others of his that I’ve read (Boomerang and Flash Boys), Lewis does a superb job of describing Wall Street corruption and providing important insights about our dysfunctional systems of money, banking and finance.
I also recommend the new book, Healing Capitalism, by my friend Prof. Jem Bendell. The printed book is priced for the academic market (pricey) but the digital format is much more reasonable. In the introduction, which you can read for free, Bendell quotes E. C. Riegel: “we need not petition Congress and we need not waste time to denounce bankers, for they can neither help nor hinder our natural right to extend credit to each other, and this is the perfect basis for a money system.” You can download the Introduction here, and links to free downloads of Riegel’s works can be found at http://reinventingmoney.com/library/.
On a personal note, it is in sadness that I report the passing of my dear sister, my only sibling, Mary Lillian (we always called her Marylil) on the second day of the new year. Marylil was a genuinely nice person who was loved by everyone who knew her. Her absence is deeply felt.# # #
About four years ago I realised that my work with local exchange systems could be much more impactful if I concentrated on commercial business barter rather than on LETS and time banks.
I joined the LinkedIn group, Think Barter and voiced some ideas about reducing costs and increasing interoperability with open source software. The response was disappointing to say the least. I heard a lot of parroted and wrong prejudices against open source and was treated mostly with indifference. hanging around for so long with people who want to change the world for the better, I wasn't expecting to face such retarded and defensive views. So I continued working where there was almost no competition because there was no money, and where making a difference wouldn't involve competing for money with people who value little else.
I'm still deeply entrenched on that path, spending about half of my working life simply maintaining a body of software that allows any group of people to keep accounts amongst themselves. I don't have time or the range of skills to 'bring a product to market', nor do I have a business model nor investors. But the lost potential in that sector is agonising me.
You see, the whole industry seems to be shaped by the software providers, and for the software providers. A money system is a network, and thus is most efficient when it is entire i.e. a monopoly. The software providers all dream of being that monopoly. Each company has created a walled garden and seeks to entrap its member exchanges - and their members - within it, so as to feed off the fees generated. If the industry was run in the interests of paying members those systems would be interoperable, but no, paying members are income generating assets more than customers.
The industry has long been plagued by high failure rates. Barter systems, as well as some LETS and time banks, sometimes 'freeze up'. The loss of liquidity has a very obvious cause to people who understand the first thing about exchange accounting. If everyone understands that taking and giving are in equilibrium, but some accounts (i.e. the management) are taking very much more than they are giving, then the rest of the members are all giving more than they are taking, and when they realise this, they drop out, often puzzled. Meanwhile the law usually fails to acknowledge or understand that a theft has taken place, albeit obfuscated by the multilateral nature of the exchange.
The most expensive network Bartercard which has a disappointing track record of national franchises failing and rebooting. However by raising investment capital from the stock market, it has now become the largest in the industry. Aint it always so! Disruption of this industry is needed now more than ever. Barter is one the tools we need to get through the next decade when the scarcity of dollars and Euros will inhibit trade and cause widespread poverty. Corporate leviathans like Bartercard will become the new banks, mediating all transactions, blocking for political reasons, reporting everything to government, and raking in a share of everything.
As far as I am aware, not a single barter network has introduced blockchain accounting. This is because most of them do not want interoperability, and many do not want transparency. Similarly to banks who own the fiat money payments infrastructure, they fear a technology which brings the real cost of transactions to zero. Interoperability and zero operating costs are disasters waiting to happen, and the barter industry has neither the wit nor the legal clout to fend off blockchains as the bank/state did with Bitcoin.
What makes a trade exchange thrive is the quality of the brokering. More than trades being initiated between members, exchange owners usually spend most of their time phoning and visiting members to make trades happen. In a more open network with a fair commission system, anyone with talent and connections could derive income from brokering; and those who brokered their own trades would save on fees.
I'm working on a white paper proposing the 'credit commons', a protocol that would support this kind of activity and replace the whole rotten industry with a voluntary market free of government and currency manipulation. The credit commons would be peer-to-peer infrastructure which would not yield a return itself, but would allow members to avoid global deflationary recession by clumping into nested trading networks that help each other with liquidity. Its no larger project than any silicon valley startup, but there's no rewards for venture capitalists.
So how can we get this built?
Solar Dollars: How to promote renewable energy by providing local liquidity
A concept paper by Thomas H. Greco, Jr. Sept. 23, 2013 (rev. Dec. 13, 2015)
In good times and bad, local economies find themselves short of liquidity. Communities always find that, to some degree or other, there is unused business capacity alongside unmet consumer needs. What is lacking is sufficient money circulating in the community to connect these unmet needs with the unused supplies. This situation derives from our banking system that is increasingly centralized and reluctant to provide credit to local businesses, especially the small and medium-sized enterprises (SMEs) that are the backbone of every economy. If and when banks do provide credit, it is on onerous terms, including high interest rates, burdensome repayment schedules, and the demand for collateral assets to secure the loans.
The defects and instabilities inherent in our system of money and banking increasingly appear to be insoluble. In the credit expansion phase, banks create asset price bubbles based on government guarantees, subsidies, or the expectation of government bailouts when the loans go bad; then, in the contraction phase, they become risk averse, choosing to invest in “safe” government securities rather than financing the legitimate needs of businesses in their communities, especially SMEs.
At the same time, industrialization and population growth are causing other problems including despoliation of the natural environment and climate destabilization. It is clearly desirable to shift our energy production from fossil fuels to renewable sources but the incentives for doing that have not been adequate to propel this shift quickly enough to stave off severe environmental, economic, and political consequences.
Solar Dollars (SD) are intended to address both of these problems simultaneously. SD can provide liquidity to the local economy while at the same time providing a strong incentive for energy providers to shift from fossil fuels to energy from renewable sources.
Q1. What are Solar Dollars (SD)?
A1. Solar Dollars are currency vouchers that are issued into circulation by a local Electric Power Company in some limited proportion to the annual amount of energy from renewable sources that the company is selling to its customers.
Q2. How are Solar Dollars issued into circulation?
A2. Solar Dollars are spent into circulation by the utility as payment to suppliers and employees who are willing to accept them as partial payment for the goods and services they have rendered to the company.
Q3. Why would suppliers and employees want to accept SD instead of taking all that is owed to them in US dollars. What makes Solar Dollars valuable?
A3. SD are valuable because the company stands ready, willing, and able at all times to accept SD back as payment for the electric services it provides, or for any other payment owed to the company. SDs represent credit obligations of the issuing company that are solidly backed by the energy that it produces and/or sells.
Q4. What’s the point? What can be accomplished by such a project.
A4. There are several advantages that derive from a project of this sort, including the following:
1. Financial and Economic Benefits
* Vouchers, such as SD, that are spent into circulation provide an interest-free source of working capital to the issuing company. As such, they provide significant savings over the interest costs on bank loans.
* Vouchers spent into circulation by a trusted entity such as a local utility company provide the local community with home-grown liquidity, i.e., a supplemental means of payment that is independent of the monetary policies of banks and central government, providing the community with a greater measure of self-determination and making the local economy more resilient.
* Vouchers, such as SD, that are spent into circulation by a trusted issuer can change hands many times between their issuance and their redemption, thus stimulating local business.
* Home-grown liquidity based on the production of real goods and services provides sound exchange media that stays local and encourages local economic development. Locally issued currency vouchers, by their nature, stimulate local production and prosperity because they tend to stay within the community, and even if they do range more widely, must ultimately come back home to be redeemed by the issuer when accepted as payment for utility bills.
2. Environmental Benefits
* Anyone who is concerned about problems like global warming, pollution, depletion of fossil fuels, the ill effects of resource extraction like fracking and offshore drilling, will want to encourage a shift to renewable energy sources. Accepting the company’s own solar energy vouchers as payment will provide that encouragement and help move the company toward the goal of providing more of its energy from renewable sources. The more renewable energy the company produces or distributes, the more Solar Dollars it will be allowed to issue, providing it with a greater amount of interest-free credit.
3. Public Relations, Publicity, and Image
* There has been for some time a great and growing amount of media interest in stories about community currencies, local self-help initiatives, green energy, and alternative finance. This innovative project can provide a tremendous image boost to the utility company, the municipality, and the state, and establish the region as a hub of creativity and innovation. As the significant benefits of the project become apparent, all the involved entities will gain in prestige, and other communities will follow its lead.
4. Educational Benefits
* A private local currency that is spent into circulation by some trusted issuer like an electric utility is an important step in promulgating new memes and weaning the public away from their illusions about political currencies, like the U.S. dollar, as the only way to pay bills or settle accounts.
Q5. What form will Solar Dollars take?
A5. We’re talking about using the credit of the local utility to provide local liquidity. That can manifest in a variety of forms: Paper vouchers or coupons, stored value cards, prepaid debit cards, or ledger credits that can be accessed with cards and point of sale card readers, or via mobile phones. There are advantages and disadvantages to each of these and it will probably be advantageous to use some combination of these forms depending on the local availability and cost of the required technologies.
The essence of a currency, its form of manifestation, and methods of transmittal are three separate things. This point must be thoroughly understood by anyone who contemplates the issuance of a currency.
The essence of a currency is credit, it is the issuer’s i.o.u. or promise to reciprocate, i.e. to provide real value and accept his currency back as payment for whatever products or services he sells.
A currency can manifest as a paper note, a number in a ledger (written or computerized), a smart card balance, etc.
It can be transmitted hand to hand or electronically.
Of course, the same concept that has been articulated above for SD issuance could be applied to monetizing ANY locally produced goods or services, like locally grown organic farm produce, that we wish to promote and are in general demand.
This article develops the idea from my recent post, Is money like energy
Money is very difficult to understand; it seems to behave like nothing else in the universe such that every analogy captures only a part of its behaviour. Its properties as both a commodity and as an agreement seem deeply paradoxical. This may be an indication that we need to look at it from a level. It is easy to examine the tokens which move from hand to hand - their inscriptions and their value, or the transactions - their form and meaning. The tokens flow in the opposite direction to the goods and services; their value is a counterweight that enables every transaction to balance and indeed to close without the need for risky credit.
This describes very well how gold money works. But most money has no value-in-itself. By this view fiat money is a massive fraud foisted on the people using legal tender laws which inject into the tokens some kind of value based on fear of bailiffs.
But that flowing tokens model is even more inadequate when it comes to explaining credit money, which makes up 97% of modern money and even precedes coinage.
Bank deposits have value because they are (supposedly) matched by equal and opposite liabilities. A bank deposit comes into existence through a contract which creates an asset and a liability simultaneously ex nihilo. It then moves around (the banking system) until it is reabsorbed when used to repay a loan. These bank deposits have another property that differentiates them from a commodity: they lack individuation; there are no individual tokens which enable the route of any particular dollar to be traced.
It seems to me too far-fetched that this bank-deposit money is some kind of bastardised pretend commodity, and that another analogy is far more fitting. Credit money viewed from the perspective of a trader, may be like a particle with mass which bounces against against other particles, but viewed from the perspective of a whole system it looks more like a wave.
In physics, a wave is an oscillation accompanied by a transfer of energy that travels through space or mass... Wave motion transfers energy from one point to another, which may or may not displace particles of the transmission medium. Wikipedia.
The full analogy has not revealed itself to me yet (PhD thesis, anyone?) but I invite you to consider.
Instead of value being exchanged for liquid value, what if money had negative value which pulled goods and services into it?
- What if the economy was a field through which money flowed?
- Does the wave split into two, with one half staying in the bank and the other half going through the economy?
- Or do both the positive and negative sides of the wave travel along a trajectory of transactions.
- How does the practice of interest and the perpetual deferment of debt repayments (such as national debts) affect the wave dynamics of the field?
- What happens when one side of the wave is used as collateral to emit another wave? This is what Paul Grignon calls twice-lent money?
It is clear to me that the difficulty we have conceiving of money is because it can be viewed on many levels, much like the particle/wave duality
I am often told that money is like energy; that it flows around the community creating economic activity remaining essentially the same, never being destroyed. But this metaphor doesn't satisfy me. it works quite well for cash whether fiat or backed, but most of our money is not cash and in fact behaves very differently.
It is tempting when exploring the True nature of money, as theologians study the bread in the Eucharist, to study the tokens and the exchanges. One popular approach is to posit a substance called 'value' which resides in the tokens, either intrinsically because the tokens are made of some valuable stuff (use value), or by government decree (exchange value). This is a bit like the theory of transubstantiation in which the bread 'changes' into into the body of Christ.
But this whole approach assumes that money is some kind of stuff which moves from hand to hand. Even fiat money is a commodity insofar as I value it more than what it can buy.
When we look at the different ways of issuing money, we see clearly that 97% of modern money is NOT a commodity. It comes from nothing and exists only on bank balance sheets. This is accounting money, the kind used in mutual credit systems. And it has some other interesting properties:
- For every unit of money created as a liability, there is a corresponding asset created with equal and opposite value
- The money flows into circulation and at the appointed time some money - not necessarily the same money is pulled out of circulation and cancelled out against the asset, leaving nothing.
- When we look at cash we might imagine each piece moves around the economy independently of other money, like a ball bouncing randomly around a pinball machine. But with accounting money you can't mark the bills and track one piece of money just like you can't pinpoint an electron. A better analogy is a field
At least, that's when it works.
When we treat money as a commodity, the flows get out of sync. When we hoard money and relend the same money twice we prevent it from returning to source. When we just read the peaks and not the troughs, we miss the coming tsunami.
When, for cultural reasons, borrowers take all the responsibility and risk, while lenders charge rent on their absent 'property' the two parties will never dance well together, leading to gluts and dearths and arhythmia.
So I think that credit money, accounting money is very much like electricity, and the conceptual leap we need to make if we want master it is as big as from Newtonian mechanics to Quantum mechanics.
Here’s a short and sweet video that reports on court case (Daly v First National Bank of Montgomery) in which it was clearly shown how banks create money by making loans, and the illegitimacy of that process.
And if you are facing foreclosure on your mortgage, the three magic words that might forestall the action are “produce the note.” This Fox news report explains it.
In this edition
- Back in the USA
- My latest article: 50 Ways to Leave the Euro: Greece and the Global Crisis
- Raising the debt ceiling—again…, and again…, and..!
- Seizing an Alternative—conference recordings
- Homage to Peter Etherden
- The case of Iceland – Is democracy more important than financial markets
- Gates Foundation chooses Cyclos for E-pay Innovation Award
Back in the USA
I’ve been back in Tucson since early October, resting and recuperating from five months of travel and an exhausting summer tour of Europe. I’m corresponding, writing, advising and waiting to see what new opportunities might present themselves.
My tour of Europe included presentations, interviews, and/or workshops in Greece, Italy, and Ireland. As recordings of my presentations become available, I will be posting them on my website http://beyondmoney.net/. So far I’ve posted interviews from Athens and Sardinia, and the slide show from the workshop I conducted in Athens. The audio of my August 28 Dublin presentation, The Liberation of Money and Credit, can be heard at https://soundcloud.com/flanagankev/thomas-greco-dublin-august-28-2015.
My latest article
Common Dreams has just published my latest article, 50 Ways to Leave the Euro: Greece and the Global Crisis. In this article I provide my prescriptions for how Greece (and other countries) might relieve their impossible debt burden, and I describe ways in which domestic liquidity can be created apart from the euro regime and without inflation. You can read it here. I’ve also posted it on my website as a PDF file.
As an aside, in addition to Greece’s economic and financial problems, the country has been overwhelmed by a flood of refugees and migrants. It is reported that more than a half million have arrived on Greek islands just in the past 10 months. This refugee crisis that is now threatening all of Europe is a direct result of the destabilizing actions by the Western powers attempting over the past several years to reshape the politics of the Middle-east and North Africa. Their agenda goes way beyond oil, but few people are paying any attention. Former Reagan administration official Paul Craig Roberts is one of many sources that provide deeper insights, for example in his article, The Re-enserfment of Western Peoples.
Raising the debt ceiling—again…, and again…, and..!
Every few years the U.S. Congress goes through the charade of debating whether or not to raise the limit on the government debt. In the end they always do. According to Wikipedia, “the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush, and five times under Barack Obama.”
Why continue the pretense that there is any choice about it? Why can’t the government balance its budget and why does the national debt keep increasing? The real answer, which I wrote a quarter century ago, will probably surprise you. To learn what it is, see my recent post at http://beyondmoney.net/2015/10/15/why-cant-governments-balance-their-budgets/.
Seizing an Alternative—conference recordings
Recordings made at last June’s Seizing an Alternative conference at Pomona College are being compiled and made available at the Pando Populus website. These include several sessions from Track 6: Political Collapse in which I participated.
Session 1 featured presentations by John B. Cobb, Jr., Ellen Brown, and Thomas Greco. In this recording, John Cobb’s introduction is followed by Ellen Brown’s presentation (starting at minute 6:45) and Thomas Greco’s (starting at minute 22:24 and ending at minute 44:15). A Q&A session runs from minute 44:15 to the end. In my portion I provide a brief overview of private currencies and exchange systems and present some of my early prescriptions for addressing the Greek debt crisis.
Session 7 featured presentations by Ellen Brown, Thomas Greco, and Kevin Clark. My presentation begins at minute 27:18 and ends at minute 54:30. In it I answer the fundamental questions about money and the exchange process, and how to reclaim the credit commons. _______________________________________________
Homage to Peter Etherden
I was very sad to learn recently that Peter Etherden has passed away. Peter was one of my very good friends with whom I always enjoyed visiting and discussing our mutual interests. I’m glad that I got to see him a few weeks ago in London just prior to my return to the U.S.
I first met Peter in 1986 in Zurich where we both attended the Fourth World Assembly that was organized by John Papworth. Over the subsequent years we corresponded regularly and we were able to meet several times during my visits to England. One of my fondest memories is of my visit in 2002 when he and his partner Connie lived aboard their boat in Rye harbor. During that visit the three of us sailed across the English Channel to Bologne where we spent a few days at mooring in the harbor. I also recall 2001 when my then partner Donna and I visited Rye and the four of us went off to explore Devon and Cornwall, a very beautiful part of Britain.
Peter was a diligent researcher and prolific writer whose interests were wide ranging. He will be greatly missed. Many of his research compilations and his writings under various pen names can be found at http://www.cesc.net/.
The case of Iceland – Is democracy more important than financial markets?
In his 2012 CBC interview, the President of Iceland very articulately describes the situation as it played out in his country during the global financial crisis that began in 2008. He describes the ways in which the failure of Icelandic banks was handled, the strong reaction from the British and Dutch governments, the reasons behind his government’s actions, and what really is at stake, not only for Iceland but for every country in the world. See it at https://youtu.be/7zlzC_X MQzI.
Gates Foundation chooses Cyclos for E-pay Innovation Award
In case you missed the news, as I did, the Social TRade Organisation (STRO) last year was chosen by the Bill and Melinda Gates Foundation to receive the prestigious E-pay Innovation Award for its Cyclos secure payments platform. Cyclos was chosen to receive the award over 9 other contenders from around the world. The $50,000 award was given at a ceremony at the annual conference of the Electronic Transactions Association in Las Vegas.
Finally, as Thanksgiving day in the U.S. approaches, I’m reminded of how blessed my life has been. It is in the spirit of gratitude that I thank you for your support and wish you all a happy holiday season.
Neal Gorenfo in Shareable did a great job of introducing the upcoming platform cooperativism conference by explaining the rise of Death Star platforms and a counter-proposition that these platforms could or should be run as cooperatives.
I'm dubious about the way in which these horizontal platforms conceive of community. As Gorenfo said,
Platform coops may be able to create a deeper community experience than Death Stars, which routinely feign community ethos for profit.
This is because the 'community' in one of these horizontal platforms is a group oriented around one particular need. Surely the communities we want to be modelling and supporting with our solidarity architecture, is local, meatworld, communities?
We should not take it for granted that Death Star platforms should be overcome with another kind of platform. This 'platforms' model of the internet was defined and developed by the monopolistic, centralised, money-hungry forces, so maybe we should be a bit more open to other ideas about the social web architecture we want?
I've been working on a platform for 7 years, but the idea that it had to take over the world never occurred to me. Local community groups want simple platforms that manage their identity and relationships and data in one place that they trust i.e. under local control, and to plug in globalised 'features' that enhance their community life but while giving them a degree of privacy.
Local hubs need to connect to global services through open APIs. Many global services like payments, transport and communication do tend towards monopolies and these need to be especially carefully governed.
Local platforms can then be built using any of several technologies to suit a range of cultural needs. My work is Drupal, but many comparable community platforms exist, like Odoo, WordPress, Joomla, which can be extended in many directions with open source modules. Most communities can find somebody to manage such platforms for them, and they can work together to pool resources. My organisation, Community Forge offers free hosting & support for 140 active communities, some of which donate back to pay expenses. That project became what it is without writing any invoices, incurring any risk or any debt.
These 'local' platforms also need to interoperate - ideally they would all be groups in one massive social network with locally controlled 'pods', as the diaspora project (an alternative to Facebook) has shown us, though it didn't reach critical mass.
I was particularly intrigued, in the article above, to read therefore about GNU social adding a 'module' called GNU BnB. I've been looking out for years for the right decentralised social networking platform which can be modularly extended to connect to web services. Could GNU social be the way forward?
We surely can't raise the kind of money needed to compete with Death Star capitalists. In a saner world, government would be showing interest in making such services public services - financed by the government, and run by the public for the public. Even without finance, we have huge resources in our passion and our desperation to forge a new politics using the devolved power that technology can give us. We are held back because too many of us are too engrossed in our own projects to go lend a hand where it is most needed.
Gorenfo also talked about incubating the templates and deep cooperation. Lets not forget, as we launch a new movement, that cooperatives have been around for 150 years; that existing local communities and grass roots movements like the Mutual Aid Network are struggling with a plethora of disjointed tools; other projects like the Global Ecovillage Network and Transition Towns are investing in highly customised platforms because they don't know what else to do.
Maybe as well as looking at the Death Star we want to destroy, we should be looking at the seeds of the economy we want to nurture. Isn't that the cooperative approach?
For some years I have been drawn towards the Global Ecovillage Network (GEN) and around 3 years ago started talking to them about exchange and the benefits of not using money. This was never going to be a quick win for me or the movement and I have been employing all my relationship-building skills, my deep listening, my nomadic powers, my Drupal expertise, and my patience in order to serve them.
Last year I attempted to get a sense of ecovillage economies by touring several to share explicitly on that subject. It turns out that many in the movement are aware of economics and the benefits of exchange. Many ecovillages have informal exchange agreements with their neighbours and other ecovillages. There are currencies within Auroville and Findhorn, and Damanhur has a very long history with, I think every possible monetary model having been tried.
Then I was invited to the Green Pheonix festival last year, where many of the movements leaders have time to nurture relations and discuss matters in a more conducive and serendipitous environment than the sterile and tiring Skype which mediates most of their meetings. The exchange project idea received 1000CHF unsolicited donation which was a clear sign that it should go ahead. The money is being used so far to support my expenses to attend events.
So I was given a slot at this year's GEN international conference in Findhorn to explore the idea with a larger group and gage interest. The interest gaged was sufficient and the critical question of the (first) unit of account was decided to be based on existing bilateral agreements between ecovillages, which is to say, on hospitality.
In Green Phoenix last week the topic was one of the main themes. Green Pheonix has been a small but intense festival in which experts were given time to go deeply into their subjects, but this year the format changed and it became even small and more intense! We were 35 people mostly in one room. The only two people not living in an ecovillage were Jamie Brown and I. With my laptop out of order and my fees paid it seemed like a sign from the universe to attend (most of) the sessions. The discussion on global exchange has resulted in the formation of a new working group which will elicit a directory of ecovillage needs - it being felt that an offer-driven marketplace would reveal less useful information, and needs would reveal more actionable gaps in the economy.
Green Pheonix wishes to recast itself as a thinktank for GEN, and in order to continue going deeper, has asked for a three year commitment. I'm deeply honoured to be in such a forum, and with such people!
My two month visit to Greece last summer prompted me to develop some proposals that might be applied in Greece and other countries where the government has become insolvent. I’ve written these up in an article that was recently published in the online journal, Common Dreams. You can read it there or here below. It was also republished on Resilience and can be found there.
50 ways to leave the Euro: Greece and the global crisis
By Thomas H. Greco, Jr.
The problem is all inside your head, I told the Greeks
The answer is easy, you need only stop the leaks
The power is yours to claim the freedom that you seek
There must be fifty ways to leave the Euro
(Apologies to Simon and Garfunkel)
Following the resounding “NO” vote by the Greek people on the bailout conditions in the July referendum, the negotiations between the Greek government and “the institutions” resumed with the expectation that a better deal for Greece would ensue. The outcome was quite the contrary. Greek negotiators ended up agreeing to a bailout deal that was far more onerous than the one the voters had rejected. Why?
The harsh reality is that the Greek government is insolvent. Having been lured into the debt-trap and the shared euro currency by western oligarchs using a combination of measures, including outright fraud, Greece was forced to accept the onerous conditions attached to the first two bailouts. Now it has been bludgeoned into accepting a third. The weapon of choice is the euro currency itself which is being wielded by the European Central Bank (ECB). By throttling the flow of euro currency into the country, the ECB last summer created near chaos in the Greek economy. This, and the threat of even more severe punishment in the future, was enough to bring the Greek government to heel.
With sovereign debt up around 180% of GDP, there is no way that the Greek government will ever be able to grow its way out of the current mess. The draconian measures demanded by the creditor institutions will just make it worse. Even the IMF has acknowledged (with apparent reluctance) that some debt relief is necessary for the Greek economy to recover. The new agreement forces the Greek government to yield even more sovereignty and to open its economy and its people more fully to exploitation by corporate interests and transnational banking institutions. Read the entire article…
In a landslide vote Texas lawmakers approved (by a margin of 140 to 4 in the Texas House and 27 to 4 in the state Senate) a bill to establish a gold depository bank. The bill was signed into law in mid-June by Republican Governor Greg Abbott.
In this interview Texas State Representative Giovanni Capriglione, author of the bill explains how this new law came into being and what it does.
The full interview can be heard here.
This is a surprising turn of events that is reminiscent of the private NCBA (National Commodity and Barter Association), a gold depository that was harassed and finally put out of business by government thirty years ago.
This bank, if it ever comes into being under the aegis of the Texas state government, will not so easily be quashed by the feds, After all, you “don’t mess with Texas.” It could lead to a payment system that is independent of the Federal Reserve and provide depositors with some protection against the continuing inflation of the US dollar.
But the gold market is very much manipulated and controlled by the big holders, the various central banks and national governments around the world. It would be better to hold an assortment of basic commodities on deposit to better assure that depositors’ purchasing power will be maintained. Better yet, state governments should support the creation of credit clearing exchanges that enable buyers and sellers to trade with one another without using money at all but simply offset each trader’s payments for purchases against their receipts from sales. In that case, the commodity assortment need only be used to define a unit for denominating members’ account balances. This and other innovative approaches to exchange are all explained .in my books, especially The End of Money and the Future of Civilization, and in my various interviews and presentations on this website.
# # #
- Our offers and wants (30 mins)
- One sheet of paper each. Make a big list. Think for each other. We can do more than we think!
- Relations with the village (15 mins) Take previous list and ask: What can we offer the local people and the world? What do we need?
- trading floor game (90 mins) WHILE Stewart put all the offers and wants into his SAM software and produce a printed directory
- Look at new offers and wants directory. Write some cheques for imaginary transactions, enter them in SAM and browse.
- How does money flow through Skala & members
Map collective and individual economic inputs and outputs
- Core business ideas.
ASK everyone what kind of work creates flow, is effortless for them
Discuss - where are the harmonics in the group
Enquire: what is the economic situation now - how could it be developed?
- Land Ownership & commitment
- ASK everyone to plot on 4 axes: how much of them is in skala: heart, relationships, capital, income.
- Enquire: What do other ecovillages do about ownership, commitment, participation in governance, and helping to shape the vision.
- ASK everyone what would encourage them them to move towards the 'full' commitment which Anna and Nikiforos think is necessary
- Discuss: Is it possible and helpful to make full commitment (on those 4 axes) but for review after a time period, such as 5 years?
- ASK everyone what they would like to discuss next.
A long time ago, when Stewart was an estate agent, interest rates jumped from 5% to 15% in a day (Thanks to George Soros) and three of his clients committed suicide. Stewart decided to design a new, less money-centric life, and started New Morray LETS in Forres, near Findhorn, Scotland twenty years ago. His energy and commitment helped the LETS to grow steadily and now he reckons 60% of his economic life is through LETS. Working with a friend, he developed and fine-tuned a MS Access application to administer the whole system, including printing the directories. Soon he was travelling all over Scotland setting up LETS, sharing software and even had email-relay intertrading network which works to this day!
When he flew to Japan to extoll the virtues of local exchange that he smelled a paradox and returned home to focus on local issues where he is now a local counsellor and organiser. That is why I had never heard of him until this summer, when I visited Findhorn for the GEN conference. Fate construed that Stewart was at a turning point in his life and accommodated me with probably the only ecovillager who could and would connect us. So Stewart's intuition to come to Greece was confirmed by my going there, and so we hooked up for this two weeks.
First for the Festival for Solidarity and Commons economy where we each had 90 mins in a crowded cafe. I had planned to run the trading floor game, but on seeing the venue I hashed together a script in which we presented the history of money in a lively way, which seemed appreciated. He gave a talk about his experience but also drawing social and monetary parallels between his LETS and natural systems which won a much greater response.
And so to Volos where the beleaguered TEM team has been appreciative of outside experts this last couple of years, but (in my opinion) has received much more theoretical advice than practical. Whereas I work like a dog on my software and give it to everyone and no-one in particular, Stewart's approach is to travel offering direct exchange. He probed and learned that our host had a tonne of logs which needed moving up 3 flights of stairs. TEM doesn't publish a directory, so she had only asked two people who had declined. But the very next day, those logs were moved and I had reciprocated directly for once! Stewart all but decided there and then to move to Volos for six months a year, and hopefully from there to do the same for Greece as he once did for Scotland.
Then to Thessaloniki where we had to decide how best to serve a local activist group in a 2 hour evening session. We settled on a conversational format - I explained what's wrong with money and why mutual credit systems are an appropriate citizen's response, Stewart talked about how LETS works to build community; then there was a barrage of questions I thought would never end.
Our final destination was Skala a small ecovillage which is looking to formalise its structure and build the local economy, but more endogenously than many ecovillages which get money from hospitality, courses and benefactors.
Stewart lives by intuition and exudes spine-tingly stories about how guidance and knowledge come, sometimes reliably, from nowhere, so its been an honour to spend this time, and I look forward to seeing the fruits of his next year's labours.
This is a question I answered more than a quarter century ago in Part I of my book, Money and Debt: A Solution to the Global Crisis. It is a question that gets scant attention from politicians and economists who are willing to speak only about the need for perpetual economic growth and keeping the government debt at “manageable” levels, never asking why government debt is necessary or how it might be eliminated.
When I first undertook to answer this question, the debt crisis was already well underway and global in scope. Since then the situation has become more critical with debt levels reaching astronomical levels.
What I said in 1990 began with this:
The whole world today seems to be awash in a sea of debt which threatens to drown us all. Many Third World countries, despite their huge increases in production for export, are unable to pay even the interest due on their accumulated indebtedness to Western banks and governments. In the U. S., the levels of both public (government) and private debt are increasing at alarming rates. The Federal budget deficits of recent years far exceed anything thought possible just a decade ago. Why is this happening and why is it a problem? In order to understand that, one must first understand some financial facts of life.
Here are the essential points of my argument:
- Almost all of the money in every country is created by commercial banks when they make loans either to the private sector or to governments (by purchasing government bonds, notes, etc.),
- Money is extinguished when loan principal is repaid,
- The interest that banks charge on these loans causes the amount owed to grow as time passes,
- Causing the aggregate amount owed to banks to always exceed the supply of money in circulation,
- Requiring that banks make additional loans to keep the supply of money in circulation from falling behind the amounts needed for existing loans to be “serviced” (repayment of part of the principal plus the interest due) in order to avoid a cascade of defaults and economic depression,
- And that this “debt imperative” that is built into the global money system is the driver of the economic “growth imperative” that results in superfluous economic output and its attendant depletion of physical resources, despoliation of the environment, increasing disparities in income and wealth distribution, and many other problems that plague modern civilization.
- That physical limits to economic output on a finite planet make this money system unsustainable over the long term.
- That there are practical limits to the amount of debt that the private sector is able or willing to incur.
- That chronic government budget deficits are therefore a political expedient that is necessary to keep this flawed system from collapsing as governments assume the role of “borrower of last resort.”
- That politicians are quite willing that governments play this role since it gives them the power to take much more value out of the economy than the revenues available by means of overt taxation.
- That bankers, for their part, by monopolizing the allocation of credit in the economy and charging interest on it, are able to enrich themselves and exercise tremendous power over the political process making a sham of democratic government.
The empirical evidence strongly supports my analysis. You only need to look at charts showing the growth of debt over time to see it growing at an accelerating rate (geometrically), a pattern that reflects the compound interest function that is an inherent feature of our global political money system.
You can read my original 1989 exposition of these points at Money and Debt: a Solution to the Global Crisis, Part I, and their subsequent elaboration in my latest book, The End of Money and the Future of Civilization, http://beyondmoney.net/the-end-of-money-and-the-future-of-civilization/.
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