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Grand Pursuit Anyone?

Post By gaia1 in Transformation versus reform


Tuesday, February 14, 2012

In her recent book “Grand Pursuit. The Story of Economic Genius” Columbia university business and journalism professor Sylvia Nasar presents an important story of about half a dozen men (and one woman).  They asked the hard questions of their times and presented their answers or rather their vision that bound those answers together. It is such grand pursuit that is needed today where the monetary, financial, economic and commercial systems are not working.

How can the global privately-owned banking systems get working for the public good?

Presently, the European banks are flooded with cheap credit with little oversight how they going to use these cheap funds. Is it used to quickly buy unstable sovereign credit of the PIGS governments and making a quick buck while taking a great risk down the line when their economies are not strong enough to generate jobs and increase productivity? Or are they to invest in their home economies rather than the casino world of global finance?

Presently, the USA the Volcker Rule is being hotly debated and lobbied on by banks and their corporate legal helpers. They do not want to give up their betting with their proprietary funds and emphasize that they are not to be prevented from market making. Though it is difficult for the five regulatory agencies to stipulate the demarcation line, the overall tone seems to favor the banking industry, thus endangering the US economy. At the same time, the political stalemate also seems to favor the financial industry.

One thing that is becoming clear is that global cooperation has become a necessity. Both Europe and the USA need one another and so do the BRICS countries. The upcoming Rio 2012 Earth Summit should hammer out a global governance system of monetary, financial, economic and commercial norms and institutions that is characterized by this high level of needed global cooperation.

What is not clear how that global governance structure is to be guided, so that it is able to devise the grand pursuit of the 21st century as Engels and Marx, John Stuart Mill and Alfred Marshall did in the 19th century and Irving Fisher and John Maynard Keynes did in the 20th century. That global governance structure is to be embedded into a vision that is able to integrate the social, economic and environmental dimensions of sustainable development.

The International Institute for Monetary Transformation is proposing a solution that is “innovative” according to Maurice Strong and that is  “visionary and highly practical” according Hazel Henderson of It is not a reform proposal like the most recent monetary reform proposal by the Palais Royal Initiative. It proposes transforming the international monetary system by basing it on a carbon standard, i.e. a specific amount of tonnage of CO2e per person. By adopting such carbon-based international monetary system present day government, business and civil society leaders would combat this century’s greatest challenge, i.e. climate change which is wreaking great havoc on people, species and planet. Simultaneously, this carbon-based international monetary system would place humanity on the road to low carbon and climate-resilient development.

The guiding principle of this carbon-based international monetary system is monetary justice which is further explained in an international petition at   that the reader is asked to consider  signing. For more detailed information, consult my forthcoming book “The Tierra Solution: Monetary Transformation, Climate Change and Sustainable Development.”



To Reform or to Transform?

Post By gaia1 in Transformation versus reform


April 2, 2011

This is the 10th post on this important question which shows the basic choice in approaching a change strategy to the international monetary system. Based upon the following six categories of shortcomings the strategy is to be one of transformation rather than reform. In order to deal with this century’s greatest challenge of controlling climate change the reformist route has also potential by having an international reserve asset be developed that is based upon environmental bonds. However, given the need for a global governance system that is organized around the climate change challenge, the transformational route is preferable. In such global governance system the international monetary system becomes its linchpin. The following pages are from the penultimate draft of the Tierra Solution book.

Summary of categories of shortcomings


Using contextual sustainability framework and its applications to economics, trade and development in the global North and South the first major shortcoming of the international monetary system is its adherence to a free market philosophy with its outdated economic and financial theories that influence monetary policies. It is this philosophy that stands in the way for an enlightened US monetary policy that is both beneficial both domestically and internationally.

A second category of shortcomings are the financial imbalances that are inherent in the system on account of the imbalances in the current and capital accounts in nations’ balance of payments. Related to these imbalances are the unregulated capital flows that can enter and leave economies with the hitting of a couple of computer buttons.

A third category of shortcomings deals with the volatility of exchange rates and disputes about managed and flexible exchange rates. The volatility led to widespread currency speculation, while quite a few countries engaged in currency manipulation to promote their exports. The inability of the G20 to resolve these exchange problems has led to have foreign exchange companies construct their own world currency such as the Wocu. It also has led to a steady increase in the gold price, starting with some $300 per troy ounce in the 1970s to some $1440 in spring 2011 with a prediction that it may go up to some $5000 within the next five years.

A fourth category of shortcomings deals with the presence and the operation of a costly global reserve system that is needed on account of the lack of a monetary standard which would make national currencies convertible or lead to a world currency. Such standard would replace the need for the various proposals of non-national reserve currencies such as the SDR or other currencies based upon a basket containing a greater number of currencies or some sort of global purchasing power parity.


A fifth category of shortcomings deals with the liquidity problems in the present system. There is no global lender of last resort that is able to infuse credit and liquidity when financial crises occur. Thus, it is a significant event that during the financial crisis the big French-Belgian bank Dexia borrowed some $30 billion from the discount window at the US Federal Reserve during 2008 and 2009 and smaller amounts at the end of 2009.[i]

A sixth category of shortcomings deals with the moral shortcomings of the monetary system on account of the unfairness of its seignorage system, the payment of very low interest rates for funds from non-reserve currency countries, weakness of procedural justice in voice and representation at the IMF and other IFIs, and last but not last lack of consideration of climate justice.

Given these various serious and systemic shortcomings the question has to be raised whether the system is to be reformed or transformed, i.e. changing the present form or changing to a new form that transcends the present form.

To reform or to transform?


The answer to this question depends upon one’s criteria to assess the present international monetary system: low criteria lead to the reformist option, strong criteria lead to a search for the transformational option.

Perhaps one of the best presentations of present day reformist thinking took place in early March 2011 at the IMF 2011 research conference. Notwithstanding its name of New Ideas for a New World, a series of interviews of participants by the external relations division of the IMF [ii] the new monetary ideas were not matched with the requirements of a new world that, once and for all, would abandon the tenets and practices of free market capitalism. [iii]

While the above UNDESA and UNCTAD reform proposals deal with the shortcomings of the global reserve system in an attempt to make the system more workable, they do not address most of the systemic shortcomings of the international monetary system itself. As long as the international community remains unable to establish an intrinsically valuable monetary standard, the reserve system problem will be with us.

In response to my question “Should and could the international community devise a monetary standard that would make reserves such as the US Dollar and SDRs unnecessary and thus remove the costly global reserve system?” economist Erturk wrote  that “getting rid of reserves as such does not strike me as viable even as an abstract possibility”. On the other hand investigating how environmental objectives can guide the fashioning of alternative reserve assets is potentially a very fruitful way of improving the global reserve system. He thinks the real policy challenge is “to figure out how to use international development bonds as reserve assets. In principle, I suppose, that could also be green bonds, provided that the political will is there.”[iv] This clear answer shows the differences between a reformist and a transformational approach: an environmentally based reserve system versus an environmentally based international monetary system that would function as the linchpin for a global governance system that aims to control climate change. The choice made in this book is the latter approach.


In last instance such transformation will depend on the question whether this process of monetary evolution will be intelligently directed or whether it will simply be driven by events. Economist Judy Shelton answered that question in her 1999 testimony before the US House or Representatives Committee on Banking and Financial Services. In her opinion, political leadership can play a decisive role in helping to build a more orderly, rational monetary system than the current free-for-all approach to exchange relations. She concluded by stating: “Ideally, every nation should stand willing to convert its currency at a fixed rate into a universal reserve asset. That would automatically create a global monetary union based on a common unit of account. The alternative path to a stable monetary order is to forge a common currency anchored to an asset of intrinsic value.”[v] Her “universal reserve asset” could be an environmentally based asset—a reformist route—or her “asset of intrinsic value” could be a carbon standard—a transformational route.


[i] The New York Times, April 1, 2011

[iii] If the IMF participants would have spent a session on discussing  Ha-Joon Chang’s views of the world economic system, some genuinely new and important  ideas could have been accepted as building blocks of their vision of a new world. More promising than the IMF conference would probably be the Soros Bretton Woods conference in April 2011 where Cambridge professor Chang is a speaker.

[iv] Email of January 24, 2011

[v] Marshall, o.c. p. 11



International monetary reform according to France

Post By gaia1 in Transformation versus reform

International Monetary Reform According to France

5 March 2011

Sarkozy has been threatening to reform the international monetary system for some time and at different venues. He has rightly placed the U.S. dollar’s position as a major element for that reform. Like de Gaulle in the sixties he now objects to the “exorbitant privilege” of having one country’s currency function as the world’s currency. However, after his January visit to the White House he has been forced to tone down his proposals about diminishing the role of the U.S. dollar in his reform efforts. The importance of the global position of the U.S. dollar and its “exorbitant privilege” has become topical, not in the least by the recent Eichengreen publication by that name.

His finance minister Christine Lagarde, an iron lady according to some, is singing the same diminished tune. A few days before the Paris meeting of the G20 finance ministers and central bankers on the February 19 weekend she Lagarde, speaking ahead of a G20 finance ministers meeting in Paris on Friday and Saturday, said that the world had to move on from the 'non-monetary system' it now has to one 'based on several international currencies'. She wants the yuan to become part of the SDR basket of currencies, so that China does not need to accumulate huge foreign reserves and thus reduce financial imbalances.

Those imbalances with the U.S. dollar are, however, not only due to China’s exchange rate policies and reserve positions. They are also due to U.S. dollar’s position as the world’s main reserve and transaction currency which is able to fund the huge US deficits. It is most telling that on March 4 Lagarde repeated on a Bank of France Conference that France does not want to undermine the dollar. "We are not trying to find the perfect system. We are not trying to restore fixed exchange rates around the globe. We are not trying to or thinking of trying to unsettle major currencies -- particularly the U.S. dollar.”  France wants to identify the “areas of coordination” and also seeks to "reduce the need for the accumulation of foreign reserves" which is clearly the result of mistrust and lack of confidence, and is not the optimal use of reserves, Lagarde noted. Does she mean Resources instead of Reserves?

Why should France not suggest the perfect international monetary system and start building towards it? What should it not support a UN Commission to explore a perfect international monetary system, a system that very probably would not need a costly global reserve system



Beyond Monetary Pussyfooting

Post By gaia1 in Transformation versus reform


February 17, 2011

The Urban Dictionary defines pussyfooting as “To act or proceed cautiously or timidly to avoid committing oneself, like a cat circling carefully around something it finds distasteful”. The G20 nations in their last Summit in Seoul and the upcoming one this weekend can be called pussyfooters because they cats circling around something distasteful circle around global financial imbalances and other difficult monetary matters such as volatile exchange rates.

Though many nations in the G20 such as Canada and Germany and at other venues have pointed to need to remove national or regional reserve currencies and have suggested having those reserve currencies transit into SDR substitution accounts, no decisions are taken even in this highly plausible reformist monetary measure.

More radical would be the decision to remove the global reserve system altogether because it costs non-hard currency countries some $100 billion annually and, more importantly, it maintains unjust, unsustainable, and, therefore, unstable international monetary system.

This global reserve system could be removed when nations decide to base the international monetary system upon a monetary standard. Basing such system upon carbon standard nations would be able to find an integrated solution to the major problems of an unstable international monetary system, the climate crisis and unsustainable development. The carbon standard would push nations to decarbonize their societies because the value of their currencies would be determined by the extent of their decarbonization.

Presently the 192 nations of the UN system are preparing for the Rio 2012 Earth Summit. One of the three objectives of that Summit is “Assessing new and emerging challenges”. It would be most appropriate to have the Rio Summit tackle this monetary challenge. A first step would be the passing of a UN General Assembly resolution to establish the UN Commission on Monetary Transformation, Climate Change and Sustainable Development so that both the UNFCCC and the RIO Summit can profit of the Commission’s recommendations that could form the contents of Monetary Agenda for Climate and Development Action that could be included in the Summit’s Agenda 21 which would set the direction of the international community for several decades to come.




Dare to Dream and Bigger is Easier

Post By gaia1 in Transformation versus reform

Saturday, January 29, 2011

On January 27, 2011 President Nicolas Sarkozy addressed an overflowing room of international politicians, business leaders and civil society opinion-makers at the World Economic Forum. He urged them and particularly the G20 leaders to “Dare to Dream”, because these carbon-constrained and turbulent times needed innovative solutions in the three main problems that he as president of the G8 and G20 for the 2010-cycle vowed to attack. During his speech and the extended questions and answer period he presented his thinking on the need of reform of the international monetary system, on the need to define financial imbalances and policies to counteract them and on the need to reduce the volatility in the commodities markets, particularly food.

People who dare to dream are also likely to agree with NY Times columnist David Brooks’ belief that “Bigger is Easier”. He argued in his column of December 17, 2010 that if one presents modest proposals everyone is on familiar ground. However, if one presents a big idea everyone is on new ground. In that situation people are more likely to go after a larger common goal.

Though he applied this theory to president Obama’s predicament  after the shellacking of the Democrats one month earlier, this theory can also applied to the pursuit of a carbon-based international monetary system. If people become convinced that the integration of the three major problems of an ineffective international monetary system, the climate crisis and unsustainable development  into  one coherent global governance system is the way to proceed, this common goal would enable all to participate in finding the ways to accomplish a carbon-based international monetary system.



Monetary evolution: From payments system to a carbon-based global governance system

Post By gaia1 in Transformation versus reform

MONETARY EVOLUTION: From payments systems to a carbon-based global governance system

Wednesday, January 19, 2011

The earliest phase of monetary evolution can be considered to consist of the barter system. On account of its limitations humanity without abandoning it altogether quickly engaged in using all kinds of materials such as cowries, nails as means of payments. Greater transnational interaction led to the introduction of precious metals of silver and gold as means of payments. Their value was clearly defined in terms of weight and price. Thus a simple monetary system came into existence that worked reasonably well till about the beginning of the 20th century.

This monetary system came to an end on account of two world wars in the 20th century and its inter-war period. In its place came the Bretton Woods (BW) Institutions of the IMF and Worldbank together with the Bank of International Settlements that was supposedly to be abolished according to the IMF’s Articles of Agreement. At this crucial time of negotiations during the UN Bretton Woods monetary conference of  July 1944 the fateful decision was made not to accept the British/Keynes plan of the International Clearing Union with its synthetic, non-national trading currency of the bancor, but to opt for the American/White plan where the dollar was made convertible with gold and thus became the world’s reserve and trading currency.  That system lasted till August 15, 1971 when the Nixon Administration closed the gold/dollar exchange window. This decision gave rise to the present non-system of floating exchange rates, currency manipulation and speculation.

Many monetary observers are in favor of a BW II where the 1944 bancor trading currency would be replaced with another  synthetic reserve currency. One candidate is the IMF’s Special Drawing Rights (SDRs) which was created around the 1970s but hardly used until the IMF was told to issue $250 billion worth at the height of the financial panic in 2009. Unbeknownst to many of these observers is the fact that Keynes considered the International Clearing Union to be only the beginning of a new international monetary system. His view was “more ambitious and innovative insofar as its underlying logic included a framework for global governance” according to world-systems specialist Marc Pilkington in his 2010 article for the American Sociological Association. Keynes wrote: “The Clearing Union might become the instrument and the support of international policies in addition to those which it is its primary purpose to promote. This deserves the greatest possible emphasis. The Union might become the pivot of the future economic government in the world.”

BW II should not only consist of an international reserve or trading currency, but of a global governance system that would respond to the real exigencies of the 21st century. Given that life on the planet during this century will be mostly determined how humanity responds to the severe global problem of climate change, it would make sense to put his human system of international monetary relations in the service of dealing with the climate problem. This is possible by using a carbon monetary standard for the 21st century international monetary system. Such standard would be set by nations working together rather than by the market. Thus, the standard based upon the targets of the IPCC could be set at a specific tonnage of CO2e per person.

The proximity of a nation’s decarbonization level to this universal carbon standard would determine the strength of its economy and its currency. Thus, the value of a nation’s currency would not be floating against other currencies but would be fixed within a short band to the carbon standard. Consequently, there would be no need for nations to keep hard currency reserves in their balance of payments accounts, because their own currencies would be convertible. Also, a costly global reserve system that costs non hard currency nations some $100 billion annually would not be needed anymore.

Nations can also decide to go directly to the establishment of a world currency within this carbon-based international monetary system without going to the laborious step of determining the value of each nation’s currency. The value of this world currency, called the Tierra in the monetary global governance system proposed by the International Institute for Monetary Transformation, would be set not by the market but by governments using procedures that would be part of the Articles of Agreement.

Carbon balances between nations in this carbon-based international monetary system would have to be settled via their balance of payments. So, nations do not only have to balance their financial imbalances, but also their carbon or ecological balances. Fortunately, nations in the global North who are financial creditors, but carbon debtors can negotiate with nations in the global South who are financial debtors and carbon creditors to settle those types of imbalances by negotiating exchanges of one for the other.

 Additional components of this monetary global governance system are a global central bank and a global monetary court. The former administers, monitors, regulates and spends credit into circulation without depending on privately-owned banking systems which would have become utilities without the privilege of money creation; the latter settles the disputes that would arise in the operations of this  global governance system.

This global governance system phase of monetary evolution goes beyond the many monetary reforms that are presently being suggested. Even transitioning from the reserve currencies of the US dollar and the euro to a non-national reserve currency as advocated by the UN Stiglitz Commission and by the BRIC countries in 2009 is still in a stalemate, particularly given that the U.S. government wants to stick to the US dollar as reserve currency without having a monetary vision for the future. The January 2011 Senate bill is a case in point. As long as nations cannot decide on this first step of a non-national reserve or trading currency, the prospects of this 21st century phase of a carbon-based global governance system are dim. However, the present geopolitical shifts, the increasingly disastrous effects of climate change, the shortage of financing for climate and development measures and the need for new money beyond the transfer of funds from debt-laden and austerity-budget constrained nations in the global North are some of the reasons that could lead to the advent of the needed Great Monetary Transformation of the 21st century.





Davos at a dangerous crossroads

Post By gaia1 in Transformation versus reform

For forty years professor Klaus Schwab has corralled business leaders, politicians and NGO leaders to come to Davos and to work together. In preparation for these annual meetings many other meetings are held and there are many ongoing initiatives that promote trans-institutional collaboration.


This week some 2500 participants, half of whom are corporate business leaders, will congregate under the ambitious theme “Rethink, redesign and rebuild.” As a matter of fact, the World Economic Forum (WEF) has a special initiative dedicated to redesign. “The Global Redesign process is integrating the Forum’s diverse communities through a series of meetings and activities structured to promote integrated thinking and develop concrete proposals to update and upgrade structures of international cooperation in a wide range of areas.”


Both the WEF and the world are at a dangerous crossroads, both are at an inflection point where hard choices are to be made, that bring either death or life to people, species and planetary systems. Though redesigning, particularly the redesign of global financial structures, receives top attention, the WEF rethinking focus is weak. It stops at some reformist proposals while the international monetary, financial, economic and commercial systems continue to their work, i.e. enriching the few, impoverishing the many and imperiling species and planet.


At this dangerous crossroads of an aggravating climate crisis, an economic crisis that continues to keep millions of individuals out of work, and a financial system that is still out of control transformational rethinking would include at least three major components. They are integrated in a transformational system, called the Tierra Fee & Dividend (TFD) system.


The TFD first of all addresses itself to the climate crisis and proposes a Fee & Dividend system rather than the going cap-and-trade system. The latter is a second rate carbon reduction methodology, because it is not fast, formidable and fair enough.


While this fee and dividend system or similar tax systems will soon regain the upper hand among the half dozen carbon reduction methodologies, the Tierra Fee & Dividend system’s second component of adding a carbon-based monetary dimension to this Fee & Dividend system is at the bottom rung of acceptance, because it has only recently been proposed and it demands an integration of three distinct disciplines. The International Institute of Monetary Transformation is working on a re-carbonization monetary standard with its carbon-based international reserve currency of the Tierra that would be part of an updated International Clearing Union, proposed by John Maynard Keynes during the Bretton Woods UN Monetary and Financial Conference of 1944. This carbon based monetary system’s international reserve currency and its Tierra International Clearing Union also derive some its rationale from the recommendations of the UN Stiglitz Commission of June 2009.


In order for this TFD system to work the public sector has to reclaim the money creation function from privately-owned banking systems and engage in efficient regulation of financial flows via the Tierra International Clearing Union which, in Soros’ words, is to be the “global sheriff”. This governmental role is to be fully coordinated across the G192, because otherwise “financial arbitrage” is going to take place, particularly by the TBTF financial corporations.


At this crossroads that is full of peril, but also full of promise, the choice becomes choosing between a route of muddling with some minor reforms here and there, and a route of transformational rethinking and redesign that addresses the economic and climate crises systemically and builds towards an equitable, sustainable, and, therefore, stable international monetary system that, as Barry Eichengreen has it, is the glue that binds monetary, financial, economic and commercial systems together.





Post By gaia1 in Transformation versus reform


29 June 2009


In present macroeconomics thinking central banks are to be independent. They are supposed to be beyond politics. They have to focus on avoiding inflation which is considered to be combated by all means.


There are several assumptions here that make this position untenable. The most egregious assumption is that monetary policies can be above politics. The second one is that inflation is the most important or sole policy objective of central banks. A third one is that monetary policy, related to the first assumption, is to be developed by the macro-economic discipline.


One of the main shortcomings of macroeconomics, according to Jonathan Kirshner, is its focus on aggregate statistics with the neglect of distributional ones. By focusing on the aggregate one is not forced to look at the politics of a monetary decision which always deals with the distribution of benefits and burdens across groups. Thus, setting monetary policy is as much a macroeconomic effort as it is a monetary diplomacy or a sociology of money effort.


Given that a central bank has to set monetary policies that benefit all groups and, in these times of climate emergency, the planet, it necessarily is to be part of the political process and is not to be separated from a messy democratic process. Consequently, a central bank is to be part of the public sector’s democratic process and not to be placed above or below it. The US Constitution, as a matter of fact, stipulates to that effect, though the 1913 Federal Reserve Act, by a very political (and unfair) process, officially placed it outside the public sector.


Why is it that central banks have such missionary zeal in pursuing the inflation objective? Because it is in the interest of the financial community and of privately owned banks that owe most financial assets. They do not want them to be devalued by inflation. Notwithstanding the 1913 stipulation that the Fed is run by an equal number of financial and non-financial governors, the financial community has held sway and thus inflation fighting continues as its most important objective. During this financial and economic crisis that was caused by that financial community the Fed is now pursuing other objectives, one of them, unfortunately, is giving priority to bailing out big international banks without transforming them and the international monetary, financial, economic systems.


What has the IMF to do with central banks? In this blog that is mostly focused on the international dimension of the monetary system the answer is: quite a lot. It is mainly guided by a macro-economic approach that is neo-liberalist in its approach. It was in May 1997 that a drastic revision in its Articles of Agreement was proposed to have its powers of balancing payments of states—poorly done given the endless excesses and surpluses in the balance of payments –was to be augmented by promoting the neo-liberal economic philosophy adhered to by Washington and other members of the G7. Thus, the IMF became the globalizer par excellence of that economic approach with its Structural Adjustment Policies and, of course, with the requirement that member states establish “independent” central banks. It is more than any other international institution together with its sister organization, the World Bank, that has made the present economic crisis a global crisis.

Within the context of this entrenched neo-liberal architecture that is promoted by the G8/20 in their conferences and summits is to be placed the efforts of United Nations which pursues the wellbeing of all peoples and groups and the wellbeing of the planet. Outstanding in this regard is the outcome document of recently concluded Conference On The Financial And Economic Crisis And Its Impact On Development and the opening and closing address of the president of the General Assembly, Father Miguel D'Escoto Brockmann, MM. The Commission of Experts of the President of the UN General Assembly on Reforms of the International Monetary and Financial System or the Stiglitz commission made several important monetary proposals that became part of that outcome document.


The Tierra International Monetary Paradigm goes one step further in its monetary proposals as does the Stiglitz Commission. They constitute transformational change in the international monetary system. In its pursuit of the integration of the challenges of the economic and climate crises, the Tierra paradigm bases its monetary architecture on a reserve currency that is a carbon based. It would become part of the carbon account in a nation’s balance of payments. The development of the Tierra Monetary Paradigm is using an integrated approach of the disciplines of sustainability economics, the sociology of money, climate science and climate ethics. Its vision is based upon the Earth Charter, the 21st century successor of the Universal Declaration of Human Rights of the 20th century. Its historical challenge is seen in the context of the emerging sustainability revolution that is the successor of the earlier agricultural and industrial revolutions. 



Tierra as a transformational road

Post By gaia1 in Transformation versus reform


May 18, 2009


About six months ago during the acute global economic crisis and the ongoing climate crisis I set out with the determination that I as a sustainability sociologist with experience in international relations and development should be able to come up with a plausible direction forward.


I think I found that plausible direction in the pursuit of carbon based international reserve currency, called the Tierra. It is a demanding direction that represents a transformational change in the international monetary system.


Transitioning from the present national international reserve currencies system of dollars, euros, and yen is being advocating by the UN GA President's Commission on Monetary and Financial Crises and also pushed by China as part of the G20 process. We will see nations changing their nationally-based reserve currencies into Special Drawing Rights (SDRs). However, we need a second transition from these SDRs to Tierras. That transition is transformational and, ipso facto, difficult, demanding, but necessary if we want to resolve the economic crisis through resolving the climate crisis.


In his New York Times column “The Perfect, The Good, The Planet of May 18 economist Paul Krugman thinks that “It’s decision time on climate change.”  He supports the Waxman-Markey bill on cap-and-trade, arguing that the pursuit of a perfect bill should not prevent the good of an imperfect bill to emerge. Cap-and-trade is a start and better than a carbon tax. However, the Tierra is a transformational carbon reduction methodology that would provide an institutional mechanism via the carbon account of a nation’s balance of payments to transfer funds from ecological debtor nations in the global North to ecological creditor nations in the global South.


Transitioning to the Great Transformation of the Tierra and its Tierra International Monetary Union (TIMU) Architecture is where the two parallel universes and humanity's hope comes in. There is the Questionable Quad universe and the universe of humanity's hope’.


The Questionable Quad universe is the universe that is supported by the G8 and, by extension, the G20. This universe is questionable and has to be challenged. In its reformist economic proposals it still is on a road that does not consider the economic and climate crises simultaneously. The universe of humanity's hope, the United Nations, is on a road that starts considering the two crises simultaneously. If the UNFCCC, the UNGA President’s Commission and UNCTAD and other UN organizations were to go for the Tierra and its TIMU Architecture we would have a transformed international monetary system where a World Central Bank would start administering the carbon accounts of the nations and become the instrument for the financing for development and the necessary climate mitigation and adjustment measures.


Presently, the Questionable Quad and the UN universes are still parallel universes which, with some minor linkages, are to be brought into the one universe that represents humanity’s hope, i.e. a reformed UN. It is a UN that is able to measure up to the integrated social, economic and environmental vision of the Earth Charter, the value base of the sustainability revolution and its sustainable communities development paradigm. The latter paradigm expresses itself in a bioregional economics approach with frugal trade structures that replaces uncontrolled corporate globalization with its market fundamentalism and privatization philosophy.


This Tierra proposal may not seem plausible because it reaches beyond the   general bounds of present thinking on either the economic or climate crises. Start thinking in solving the two crises simultaneously, the proposal becomes more plausible. People are asked to think outside the box, in other words to think transformationally. Here is proposal which may seem far out and it is, because it is not re-formist, but trans-formist or transformational. It does not use the present form; it goes beyond the present form of the international monetary system. It is radical, because it goes to the root of the monetary, financial, economic systems by making a small change with big consequences in the international monetary system which is the glue that binds those three systems together.


 Details about the context and constraints, the six components of the TIMU Architecture and the challenges of the global community, the UN and the US are presented in TIMU: The Transformative Approach to Monetarily Solve the Economic Crisis by Solving the Climate Crisis which is to be published at end of the summer of this axial year 2009. For a summary see the various versions of the Tierra Manifesto of 2009 on  



The Battle for the Soul of Capitalism

Post By gaia1 in Transformation versus reform



These terms were used in NPR’s reporting about the G20 Summit this morning. At the same time the Wall Street Journal (4/2/2009) had an article by Daniel Henninger entitled “Is This the End of Capitalism?”

Henninger argues that capitalism doesn't need a fundamental fix and didn't subvert the
US economy. Overbuilt housing did. Inflated housing also undermined the economies of the UK, Ireland, and Spain. Yet new "saviors" of capitalism--oblivious to this--are appearing every day, including China, the IMF, and France's Sarkozy. Henninger says that far from running from masses of protesting anticapitalists, the G-20 summit is notably short because its goal was accomplished before the first delegation arrived. He suggests that the recession of 2009 provides the Left with the opportunity it has craved since Reagan took the White House to turn America back toward public-sector power and away from free enterprise. (Summary by


Knowing and understanding the thinking of one’s opponents is an important part of coming to a solution that all sides can agree upon.


In order to come to such solution it is more important to have the different parties surface their basic biases, assumptions, and values and try to find a common value base. One such process has been happening in the last ten years or so, all over the world, across disciplines and classes. It resulted in the Earth Charter which can be considered the 21st century successor of the 20th century Universal Declaration of Human Rights.


Battling for the soul of capitalism is taking place, not only now, but for many decades. One of the outstanding proponents for a transformed capitalism is William Greider who wrote a book about the soul of capitalism and many other related issues. The many civil society organizations or CSOs that are engaged in monetary and financial matters particularly in relation to the G20 Summit in London such as,  and are also in diverse ways working towards transforming monetary, financial, economic systems which, in essence, is a battle for the soul of capitalism. It is to be a monetary, financial, economic system that integrates the social and ecological demands of the times within a vision of a thriving Earth Community on a thriving planet as elaborated in the earlier mentioned Earth Charter.



US Bailout plan is a poor substitute for transformational banking change

Post By tierrasolution in Transformation versus reform


The bailout plan is a poor substitute for a real, transformational approach to remedying

the economic crisis. Notwithstanding the 500 points rise in the Dow, the NY Times

editorial of March 24 explains the weak points and concludes that reality has to be faced

and that some of the most insolvent banks have to go.

I would go one step further. Commercial banks ought to be taken out of the business of

creating money by the fractional banking system. Government is to stop delegating the

right and responsibility of the coin (Article 1, section 8 and 10 of the Constitution) to

them. The banks are to revert to lending utilities and compete with one another on

efficiency, quality of service, etc. not on creative ways to play with the public’s coin.

Like the 1890s a national debate is to take place during this decade to restructure the

domestic financial structure, including the revision of the 1913 Federal Reserve Act and

of the privately owned Federal Reserve and its 12 regional banks.