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Apr
01

Relocated, but not retired!

Post By gaia1 in IIMT

 RELOCATED, BUT NOT RETIRED

March 3, 2013

The last three months have been hectic for my and my spouse Anita Wenden in the selling of our Queens cooperative apartment and our Hampton Bays bay front coop and in moving from the City to Chapel Hill in North Carolina. After about 3 weeks of moving into the beautiful continuing care retirement community of Carolina Meadows, I consider myself to be relocated but not retired. Much of the work done in the City will be done now on line in my spacious study that looks out on the Carolina pines and on landscaped bushes and trees frequented by lively birds. Note the new address and telephone numbers in the attached signature file.

I will resume my blogging for IIMT and responding to monetary/financial articles. My pen name for the latter activity is now fcvnycinc, indicating my locaton i(n), n(orth), c(arolina). So, in googling my internet contributions after 2013 the longer 9 letter term has to be used. I also plan to become a regular contributor to several magazines, basically focusing one the ten chapters of The Tierra Solution. I also plan to produce a dozen UTube videos that would present The Tierra Solution.

Any assistance in carrying out the enormous challenge of The Tierra Solution—which is well described in the two unsolicited reviews of the book on Amazon.com—would be most welcome.

Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist,

Adjunct Associate Professor Sustainable Communities at Pace University, NY (2009-13)

Founding President, International Institute for Monetary Transformation (IIMT) www.timun.net (2008-present)

Sustainability Fellow at the Green Institute in Washington, D.C. www.greeninstitute.net

(20004-present)

UN ECOSOC representative for the International Peace Research

 Association (IPRA) (2000-2013)

Director, Sustainability Research and Education

Earth and Peace Education International (EPE), (1998-present),  http://www.globalepe.org,

327 Carolina Meadows Villa, Chapel Hill, NC 27517, USA
voice: 1+ (919-240-7164); fax 1+(919-240-7164); cell 1+(917-617-6217); Skype: fcvnyc, gaia1@rcn.com; fcvnyc@gmail.com; franscv@yahoo.com

 

“The intuitive mind is a sacred gift and the rational mind is a faithful servant.  We have created a society that honors the servant and has forgotten the gift”

Albert Einstein

 

 

 

 

Dec
12

Monetary justice as guiding principle

Post By gaia1 in IIMT

 

 

 

 

MONETARY JUSTICE:

The guiding principle for the structure of the zero draft of the outcome document?

 

Presented at the Second Intersessional of Rio 2012 Earth Summit

 

Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist

 

International Institute of Monetary Transformation (IIMT) , www.timun.net; gaia1@rcn.com

UN Headquarters, 14-16 December 2011

 

As to methods there may be a million and then some, but principles are few. The man

who grasps principles can successfully select his own methods. The man, who tries

methods, ignoring principles, is sure to have trouble.”

Ralph Waldo Emerson, 1890s

INTRODUCTION

 

Monetary justice is the ethical principle that underlies the Tierra Fee & Dividend (TFD) system, the IIMT’s carbon-based international monetary proposal. The TFD is presented as a transformational pathway of an integrated solution to a non-working international monetary system, an increasing global threat of catastrophic climate change and an unsustainable model of development.

 

A main theme of Tierra Fee & Dividend (TFD) system, following Emerson’s observation, is the need to first search for principles before searching for methods. One of the main shortcomings in UN conferences and negotiations seems to be a basic lack of interest, unwillingness, or inability in dealing in a substantial and coherent way with the ethical dimension of the various global challenges the UN and the world community face.

 

Thus, the main premise of the TFD system is that no stability in the monetary, financial, economic and commercial systems is possible without the principles of equity and sustainability. Underlying the principle of monetary sustainability is the principle of monetary justice not only in its social, ecological, procedural and intergenerational meanings, but especially in its transformational meaning as the ethical foundation of a carbon-based international monetary system. Monetary justice is proposed here to be the main guiding principle that unifies many other important principles as spelled out in the recent Bonn DPI/NGO Declaration. Monetary justice is proposed here to function as the organizing principle for the much discussed integration of the three pillars of sustainable development as called for by the UN SG Report of December 2010 and in various DESA Reports. Consequently, monetary justice is suggested to be the guiding principle for the structure of the Zero Draft, the three main parts of which would consist of the explanation and application of the monetary justice principle, the various suggestions in the Compilation document that deal with the development of a global institutional framework and the more numerous suggestions that deal with green economies and low-carbon and climate resilient development.

 

            The world over,  millions of people are demonstrating and protesting  the gross inequality between people and demand basic overhaul of the monetary, financial, economic and commercial systems, because these systems do not work for the 99% of them as these systems continue to enrich the few, impoverish the many and imperil the planet. It is most important that government, business and civil society leaders in the Rio process respond to this demand for fundamental and transformational change in the world’s global systems which unlike physical systems are human made and, consequently, can be changed and even transformed. It is possible to achieve this global

 

 

transformation if the world’s most basic global system, i.e. international monetary system is transformed. By introducing a carbon standard, not a pure or flexible gold standard, this transformed international monetary system would not only transform the dysfunctional international monetary system, but, at same time, provides a realistic pathway to stabilize the climate and to bring about a low-carbon  and sustainable model of development. Such monetary transformation is a practical, though very challenging way, to integrate the three pillars of sustainable development, a main objective of the Rio 2012 Earth Summit.

 

 MONETARY JUSTICE in its regular and transformational sense

 

International monetary justice is not only the application of social, environmental, procedural and intergenerational justice principles to the present international monetary system, but also the application of these various forms of justice to a transformed international monetary system. International monetary justice in the latter, transformational or integrated sense, argues that, as a matter of justice, government, business and civil society are to pursue a carbon-based international monetary system that would remove monetary injustices such as the global reserve system, would honor the right of a stable climate in the interest of both Earth and human wellbeing and would promote human rights.

There is little social, environmental (climate), procedural and intergenerational justice in the present international monetary system, the climate system and the human relations system. These injustices can reduced simultaneously by the pursuit of the proposed carbon-based international monetary system which is described in some detail in the Stakeholder Forum’s http://www.earthsummit2012.org/index.php/pubs/sf-publications/412-sdg-thinkpieces and in great detail in the forthcoming Cosimo book-length publication THE TIERRA FEE AND DIVIDEND SYSTEM: Using a transformed international monetary system to combat climate change and advance low carbon and climate resilient.

Such carbon-based international monetary system is possible if government, business and civil society and particularly their leaders are able to think outside the box. Such thinking  is demonstrated by Maurice Strong who believes that basing the international monetary system on a carbon standard is “innovative” and that such system “seems to be very promising particularly in light of the stalemate in post-Kyoto prospects” (October 8, 2010 email); by author Bill McKibben, leader of the global www.350.org  who believes that a carbon-based international monetary system is on “one of the remaining possibilities” given that  physics and politics increasingly narrow our possible paths of action ; by those who signed an international petition entitled “Make monetary justice the basis of your Rio negotiations”  at http://www.change.org/petitions/g20-and-rio-summitteers-make-monetary-justice-the-basis-of-your-negotiations Needed for this transformed international monetary system is a plan that would lead to a financial system that is credit- rather than debt-based and that would be democratically governed by a Global Central Bank. The Chicago Plan of the 1930s was proposed by many outstanding economists to deal with the Great Depression. It withdrew the privilege of fractional reserve banking by privately-owned banks, making them utilities without the privilege of creating money and of owning over 90% of the money supply.

 

CONCLUSION

 

The September 2011 DPI/NGO Bonn Conference’s Declaration states in line 265 that governments, among many other things, are “to rethink the monetary system based upon a carbon standard.” Given that the Earth Summit wants to develop “New Foundations for the Future”, it is  essential that among those foundations the monetary foundation is going to be considered because it is the international monetary system functioning as glue, as a lubricant for the other international system that can be considered to be the linchpin of those systems. As a consequence it is crucial that the Rio 2012 Earth Summit process basing itself on the requirements of monetary justice give priority to monetary governance as the basis of governance systems for the 21st century.

 

 

Dec
12

The Tierra Monetary Compact

Post By gaia1 in IIMT

The Tierra Monetary Compact

Monday, December 12, 2011

This new nomenclature of the Tierra Fee & Dividend system, the Tierra system or The Tierra Solution is only new in terms of name, not in terms of content. It was first used on December 7, 2011 as part of the 5th High Level Dialogue of Financing for Development at UN Headquarters. The Dialogue’s focus was on the two main UN conferences on financing for development: the Monterrey Consensus of 2002 and the Doha Declaration. It was suggested in the IIMT’s 2 sided, one page golden rod circular that a monetary compact of a carbon-based international monetary system might be the ultimate goal in financing of not only development, but also of climate measures. The circular can be found in the IIMT Documents section, http://www.timun.net/documents.php?dcat=3

Twice I was given the opportunity to speak to the feasibility of considering the Tierra Monetary Compact (TMC), once in a side event and, more importantly, in an official General Assembly Dialogue meeting. In both cases, participants paid attention without being able to respond to the interventions.  They, the 100 circulars and personal interactions are part of making people think outside the box for a pathway that integrates three major global problems of a dysfunctional international monetary system, ineffective climate negotiations and an unsustainable development model.

 

Nov
09

.."link the standard to what matters"...

Post By gaia1 in IIMT

…“LINK THE STANDARD TO WHAT MATTERS”…..

Wednesday, November 09, 2011

These are the works of John Maynard Keynes in his 1924 book Gold in 1923 in his discussion of a currency reform. That reform has two objectives: “to remedy the credit cycle and to mitigate unemployment and all the evils of uncertainty.” In order to do this  he advises to link the monetary standard “to what matters, namely, the value of staple articles of consumption, instead of to an object of oriental splendor, it is true, and one to which Egyptian and Chaldean bank directors attributed magical properties, but not otherwise useful in itself and precarious in its future prospects”.” In his own inimitable way Keynes clearly indicated that gold is not what matters.

This blog has spent considerable thought over the years on gold as a standard. Searching the site with the term gold delivers 4 blogs over the years. I have appended below the most recent comparison between the gold and carbon standard; it is the version that will appear my forthcoming book. The earlier comparison chart was from the June 14, 2010 blog.

COMPARING THE GOLD AND THE CARBON STANDARDS

====================================================

Features                       Gold standard             Carbon standard

Usage                          for about 100 years     proposed

Proponents                  declining                     increasing

Basis of standard        gold                           de-carbonization

Origin                          leading nations            international community

Coverage                     mostly Western           universal

Availability                 gold supply limited     CO2e too much

Price volatility             high                             none

Rigidity                       rather high                   less so

Effectiveness              moderate                     promising

Enforcement               national authorities      Global Central Bank

Financial system        debt-based                    credit-based

Banking system           privilege of money creation    no such privilege

Future                          no future                     good prospects

C IIMT 2011

 

 

Oct
18

Monetary Justice and Monetary Transformation

Post By gaia1 in IIMT

MONETARY JUSTICE AND MONETARY TRANSFORMATION

Tuesday, October 18, 2011

For about two months I have been using the term monetary justice instead of monetary transformation. This linguistic change is more educational than anything else. People understand what justice is and does. What is monetary justice and what does it are then the two questions to be answered. Monetary justice is the presence of justice to the monetary field.  It is to remove or at least reduce the many monetary injustices that are present in the international monetary system and less so in national monetary systems. So the end result is monetary transformation as proposed in the Tierra system of a carbon-based international monetary system.

The use of the monetary justice term and approach was first publicly used at the DPI/NGO Conference in Bonn in the beginning of September. During most of the general assembly and working group meetings I was able to connect the issue at hand with the international monetary system while at the same time circulating a statement during the conference. The outcome of this and other activities lead to the inclusion in the final Declaration that governments, among many other things, are “to rethink the monetary system based upon a carbon standard”. This Declaration is presented by the German government to the Rio +20 Bureau that is overseeing the preparatory process. (See http://www.earthsummit2012.org/index.php  for the Declaration and www.timun.net for the circular in its Documents Section called Monetary Peace.)

The use of the term of monetary justice has also contributed to far greater interest in monetary transformation by the CoNGO Sustainable Development Committee of which the Working Group on Monetary transformation, the climate crisis and sustainable development is part. We are now working on having monetary justice become part of a Compilation Document that would form the basis of the Rio Outcome document.

Finally, I have launched an international petition on www.change.org addressed to the G20 and the Secretary General of the Rio Conference to consider taking monetary justice as the basis of their negotiations. At http://www.change.org/petitions/g20-and-rio-summitteers-make-monetary-justice-the-basis-of-your-negotiations the reasons for doing so are given. If a thousand people were to sign this petition which in essence presents an answer to the Wall Street Protests and a post Rio governance framework governmental negotiators would take heed. Are you part of those who are going to sign the Petition?

 

 

 

Jun
14

Comparing the classical gold standard and the carbon standard

Post By gaia1 in IIMT

The new carbon standard has several features in common with the historical gold standard. Both monetary systems have standards that fix exchange rates among nations based upon those standards. This leads to relative stability and predictability because the value of the unit of account stays the same and thus currency fluctuations need not to be taken into account when planning a business transaction or a leisure trip. Of course, prices for goods and services may go up or down based upon many economic and fiscal factors, but they are always expressed in the value of the currency that remains the same.

 

Both international monetary systems have convertible currencies because they are anchored in a standard that determines the value of the currencies. The gold standard was defined in a precise amount of gold for a precise amount of value in the unit of account (Pound sterling in the 19th century and US dollar in the 20th century). The carbon standard is defined in a precise targeted tonnage amount of CO2e  emissions per person expressed in the precise amount of value in the Tierra, the TFD’s unit of account. There are two ways that a carbon-based monetary standard is applied: national currencies become carbon-based or a carbon-based world currency is created. In both cases nations can trade with convertible national currencies or the single carbon-based global currency. In the latter case, the Tierra is not only a unit of account, but also an international means of exchange. It has become a vehicle currency, that can be banked and receive interest. As such it has become a store of value, the third major characteristic of money in modern societies.

 

Both systems have a more or less automatic mechanism of balancing their financial accounts. The balance of payments during the gold standard was accomplished by transferring gold from the debtor nation to the creditor nation. During the gold/dollar standard the U.S. government balances were settled in dollars which were convertible to gold at $35 per ounce. The balance of payments during the carbon standard would be accomplished when carbon-debtor nations transfer their carbon-based national currencies or their world currency of Tierras to carbon-creditor nations to balance their carbon and financial accounts.

 

Both systems agree that the present monetary system with its heavily fluctuating exchange rates, rampant currency manipulation and speculation and costly global reserve system has to be removed. There is no standard in the non-system which Nobel laureate Robert Mundell has called a ‘criminal’ system because of its instability, unpredictability, inequity and unsustainability.

 

Why should the carbon-based monetary standard be preferred over the gold standard? There are four main reasons: a monetary, a philosophical, an ecological and a fiscal reason.

 

The classical gold standard suffered from the following monetary shortcomings. It did not possess the capacity to create credit for a growing international economy. During the gold/period of 1945-71 credit flowed into the international economy through the use of the convertible US dollar which, by the way, gained interest unlike the sterile gold in central banks’ vaults. The drawback of the latter system’s credit infusion became clear in 1958 when the BW system under the IFM was most successfully implemented. The U.S. government was developing a huge balance of payments because its own currency was also the main world’s reserve currency (Cf. Volcker’s 1992 Changing Fortunes, p.20)

 

The classical gold standard had also the built-in rigidity of very narrow bands of its fixed exchange rates. The difficulty of adjusting exchange rates is a perennial problem from Florentine bankers, the British supported classical gold standard in the 19th century, to the U.S. government supported gold/dollar standard. It always a great systemic challenge to adjust fixed exchange rates to the changes in a nation’s economy that causes its balance of payments to go grossly in the surplus or deficit direction. Letting the exchange rates float or having “managed” floating exchange rates that China adheres to are monetary strategies that are wrought with problems, particularly systemically.

 

“Barbaric relic” is the epithet that John Maynard Keynes gave to the gold standard. Its limited availability even with new discoveries is unable to meet the demand of an expanding global economy.

 

The Tierra monetary architectures would not suffer from these three monetary shortcomings of the classical gold standard. Its UN World Central Bank has the global authority to create credit in amounts that it sees fit in the face of debt-laded nations that are trying to cope with both the economic and climate crises. Setting bands around its fixed exchange rates is part of its functions as the global institution of monetary governance. Like always, the Bank would be faced with the challenge to adjust a nation’s carbon-based currency by setting its par value with the Tierra, thus either devaluing or revaluing its currency. Obviously, CO2e is an ample standard because much reduction of CO2e has to take place before the standard has to be changed to another standard that is intrinsically valuable at the end of the 21st or the beginning of the 22nd century.

 

The philosophy of most gold standard proponents is libertarian: less government, freedom to individuals and markets. They are followers of the so-called Austrian school of economics of Friedrich von Hayek and Ludwig von Mises and its American adherents such as Milton Friedman, Murray Rothbard, Judy Shelton and others. Their main supporting organizations are the Von Mises Institute and the Cato Institute.  For them the return to the gold standard means that politicians whether central bankers or finance ministers are not able to subject their citizens to their manipulation of the money supply and of price levels robbing them of the value of their assets. These monetarists would set a percentage of growth in the money supply and the system of efficient markets would automatically adjust to this monetary straightjacket.

 

The role of government under the TFD system, adhered to by economists with the Keynesian approach, is an active one. It is to regulate the financial sector and to direct the economy in a way that a level playing field is created, so that private enterprise can flourish within a clearly determined and fair economic framework. In this conception of the role of government the question is not less or more government, but the right level of government. It is this role of government that underlies the Tierra Fee & Dividend system where the international monetary system is being used to make the Fee & Dividend carbon reduction method more effective in reducing GHG emissions.

 

The ecological reason why the carbon-based international monetary system is to be preferred above the gold-based one is its ability to effectively deal with the climate crisis. By having nations anchor their currencies on the Tierra—the TFD’s unit of account—they are forced to engage in decarbonizing their societies by reducing coal-fired power plants, investing in renewable energy technologies, increasing energy efficiency and conservation, etc. The strength of their economies is mainly determined by their energy infrastructure which in turn is reflected in the strength of their currencies the value of which is expressed in the amount of Tierras their currencies can command.

 

In conclusion, the ability of providing extra liquidity to global economic system makes the carbon-based Tierra Fee & Dividend system superior to a gold-based international monetary system that does not deal with the century’s most important ecological challenge and that is prevented from having governments take an active role in determining a pathway to an equitable, sustainable, and, therefore, stable international monetary system. Through its UN World Central Bank, an anathema for libertarians, governments are able to provide liquidity by issuing extra allocations of Tierras based upon a per capita system rather than the quota system through which the IMF allocates its synthetic currency of Special Drawing Rights (SDRs). There is no equivalent international monetary institution for libertarian economists because they have rejected the IMF as an intrusive international institution that is not needed in a gold standard. They do not have a lender of last resort that is able to circulate credit into a global economic system where millions of people are unemployed, where sovereign debt burdens are severe, where currencies sometimes fluctuate by 50% in a decade’s time and where hundreds of billions of dollars (Tierras) are needed to finance low carbon and climate-resilient development.

 

The following chart presents a comparison of the classical gold standard  with the carbon standard, summarizing most of the above  information. Note that the balance of payments schedule in the classical gold standard was seemingly a rather rigid adjustment mechanism to balance financial accounts between nations. The balance of payments in the TFD system is less rigid because there is an international monetary institution the Board of Governors of which has a global authority to make the balance of payments work in a flexible way. However, its adjustment mechanism of balancing the carbon accounts of nations can only flexibly become in operation after a convergence period that would narrow the wide gap between carbon debtors in the global North and the carbon creditors in the global South. Both the flexibility and convergence issues are  part of the negotiations that precede the signing of the Tierra Treaty.

 

 

 

 

 

COMPARING THE CLASSICAL GOLD AND THE CARBON STANDARD

Features                       gold standard                            carbon standard

Usage                           mostly in 19th century                being proposed for 21st century

Present proponents       mostly libertarian                       mostly Keynesian

Standard                      precise gold price                     precise CO2e per person target

Exchange rates             fixed with rigid bands                fixed with managed bands

Currency                      national gold-based                   national carbon currencies

Unit of account an ounce of gold                       Tierra based upon standard

World currency            no proposals                             Tierra carbon-based world currency

Balance of payments     rigid automatic adjustment         auto adjt after convergence period

BOP accounts              financial                                    financial and ecological/carbon

Governance                  Britain and USA                       UN World Central Bank

Provision of liquidity      none/SDRs under IMF as needed for best system operation

Relevance for 21st Cty too many shortcomings  directed to serve the climate crisis

C- International Institute of Monetary Transformation   

 

 

 

 

 

 

 

 

 

Mar
18

Welcome to the Tierra Solution of IIMT

Post By gaia1 in IIMT

Dear Reader:         NYC March 18, 2009

This is the first blog for the International Institute for Monetary Transformation. However, I have been dealing or searching for a transformed international monetary system full time since December of 2008. These blogs are still available on www.fcvnyc.blogspot.com and are part of the history of IIMT. It was also at that time that I set up the yahoo group for the same purpose. The Yahoo Group is incorporated in the design of the IIMT website and functions as its virtual discussion site. Clicking on the home page's button of Discussion will bring you there.

I hope that you after reading the Tierra Solution and its TIMU architecture you will click on the Actions button where you have the oppportunity to engage in four different and related activities.

I conclude with the slogan of the responsibility project on NPRwhich runs: One responsible act can make an unforgettable difference.