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The new normal and the Tierra Solution

Post By gaia1 in Economic crisis

The new normal and the Tierra Solution.

The following comment was published yesterday in Paul Krugman’s column in the NY Times dealing the permanent slump which seems to become the new normal. Note how the NY Times informs you about the comment.


Why not push harder in this globalizing world for international solutions in the realm of monetary policy? Part of US trade deficits is the US Dollar functioning as an international currency making it easy for the US to borrow in its own currency. Why not push harder for the expansion of SDRs and even start discussing using the international monetary system to deal with this century’s greatest challenge of climate chaos by basing it on a carbon standard?

c The New York Times




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Need foran integrated global taxation system

Post By gaia1 in Economic crisis


The need for an effective/just/integrated international taxation system

This blog post reflects the comment I made to the New York Times May 21, 2003  article entitled Apple’s Web of Tax Shelters Saved It Billions, Panel Finds.


“The tax policies of Apple and other multinationals show how the international taxation system does not work for the common good. Apple, Inc and others even believe that their subsidiaries are beyond the reach of any taxing authority. Thus they are able, legally, to avoid their fair share of taxes.

The loopholes in the American corporate tax code cannot be closed without considering its international dimension, i.e. the international taxation system.

Though Apple asserts that it welcomes “an objective examination of the U.S. corporate tax system, which has not kept pace with the advent of the digital age and the rapidly changing global economy”, it does not advocate an international tax overhaul where it would be subject to national taxing authorities.

Any international taxation system cannot be separated from its nexus with the global financial and monetary systems. An integrated policy has to be developed based upon the integrated social and ecological forms of justice. A proposal for such policy is made by basing it on carbon-based international monetary system as described in The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation .”



Los Cabos and Rio

Post By gaia1 in Economic crisis

Los Cabos and Rio

Tuesday, June 19, 2012

Barack Obama, Angela Merkel and David Cameron are attending the G20 meeting in Los Cabos, Mexico and have decided for different reasons not to attend the Rio 2012 Earth Summit which directly follows their G20 meeting. It is a mistake for the politicians (leaders?) of these three important countries not to attend the Rio summit where very basic issues are being raised about the global economy and global governance in this world where the global economy has put millions of people out of a meaningful job and where national governments are rationally pursuing their limited goals without sufficient political will to improve, let alone overhaul, the global systems which enrich the few, impoverish the many and imperil the planet.

Their forthcoming statement will highlight their wisdom of sustainable growth over austerity without realizing that growthism, even accompanied with the adjective sustainable, is an unrealistic economic pursuit. It does not include the recognition of the natural limits that humanity is up against in these carbon-constrained times of peak oil, peak water, peak food, etc. The unsustainability of growthism is very clearly described in Richard Heinberg’s recently updated book The End of Growth

As suggested by Herman Daly for many years or even decades the term growth is to be abandoned for development. Thus it would be most appropriate to speak of and write about sustainability prosperity which is the purpose of economic activity anyway. Not doing this means one is engaged in goal displacement.

What is needed and being pursued in Rio but not in Los Cabos is a new vision that is able to integrate the social, economic and environmental dimensions of this sustainable prosperity for people and planet. One of the very few proposals for integrated global governance that is not yet widely recognized is the International Institute for Monetary Transformation’s proposal called The Tierra Solution where the climate crisis is conceptually, institutionally and strategically resolved by working towards a carbon-based international monetary system. Details are available on this website with a book length treatment in the recently published The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation.



Integrated global governance needed

Post By gaia1 in Economic crisis


Op-ed article submitted to the New York Times

June 1, 2012

The world’s monetary, financial, economic and commercial systems are singly and jointly in a mess. They do not work, singly or jointly. They are unsustainable now and they will be unsustainable in the medium and long-term. Greece’s and Spain’s present monetary, financial, economic and commercial systems will not create jobs, increase quality of life for people and planet. The other euro-zone countries’ monetary, financial, economic and commercial systems, even of Germany, The Netherlands and other more or less well-off countries are also not sustainable without structural changes as ECB’s president Draghi has made clear in his recent speech to the European parliament. What is needed is bold leadership to stop the forces of divergence and push for convergence of common values and vision, of fiscal unity, of Europe-wide governance to start with.

What is needed for Europe, China, the USA and the rest of the world is bold leadership for global governance that would integrate not only the nation’s monetary, financial, economic and commercial governance but also its social and environmental global governance. It is this task that essentially faces the world’s heads of state (can they called leaders?) at the forthcoming Rio Earth Summit this month.

How can they accomplish such momentous task while the nations are less focused on moral, cultural and political convergence and more on divergence, bickering among themselves while hundreds of millions of people are unemployed, ill-housed and of deteriorating health and when the prevailing global monetary, financial, economic and commercial systems enrich the few, impoverish the many and imperil species and planet?

Though the Summit’s pursuit of a green economy and an integrated institutional framework for development may produce some desirable outcomes, they will not be sufficient to match the task for integrated global governance. The focus should be on two priority areas: the acceptance of a common value base and the transformation of the international monetary system.

 Though the Rio 1992 Earth Summit produced its Rio Principles, which was a poor reflection of the various Earth covenants that were circulated by civil society, the Rio 2012 Earth Summit should finally become serious in adopting the integrated social and ecological values of the Earth Charter. It should follow the example of UNESCO and countries such as Costa Rica which have taken this common value vision as the basis of their policies. The importance of values and principles over methods is well expressed by American transcendentalist Ralph Waldo Emerson when he stated at the end of the 19th century: “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.”


The international monetary system acts as glue binding together the monetary, financial, economic and commercial systems. That monetary system if working properly would also lubricate those systems, so that they would work smoothly. The international monetary system can be considered to be the linchpin of those global systems. Transforming that most basic of the world’s global systems would drastically change those other connected systems.

That transformation would take place when the international monetary system was to be based upon a carbon monetary standard with its guiding principle of monetary justice. It would lead to the proposition that the more a nation decarbonizes its society, the stronger its economy and currency become. Most importantly, it would combat the looming climate catastrophe and advance low carbon and climate-resilient development in communities in the global North and South. Unfortunately, organizers of the forthcoming Rio Summit deemed it politically not feasible to include the climate issue as part of their development pursuits in the Summit as if the two realities can be separated. Thus, real integrated global governance based upon a common value system and encapsulated in the overarching value of monetary justice  will have to wait till the world’s monetary, financial, economic and commercial systems will become even less functional and people’s demonstrations become more wide-spread. It was only due to people pressure that FDR was forced to pass enlightened legislation in the 1930s. It was also at that time of the Great Depression that outstanding economists such as Irving Thomas and other members of the Chicago School promoted the idea of having a banking system based upon 100% reserves and a financial system based upon money rather than credit. These transformational ideas are resurfacing during these times of the Great Recession. They have to be combined with the transformational idea of a carbon-based international monetary system to redirect the world’s monetary, financial, economic and commercial systems.

Frans C. Verhagen, M.Div., M.I.A., Ph.D., a sustainability sociologist with the International Institute for Monetary Transformation, is the author of The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation, published last month by Cosimo Books.  































the monetary dimenison of the sustainable communities development model

Post By gaia1 in Economic crisis


Saturday, April 28, 2012

Note that rather than using the terminology of sustainable development the terminology of sustainable communities development (SCD) is used here. The latter terminology is preferred to make the point that the SCD model points to the need of development of sustainable communities both in the global North and South while sustainable development (SD) model is mostly geared to SD in the global South as if the global North does not need development and as if the global North and South are not interconnected.

One of the four main elements of sustainable communities according to the Institute of Sustainable Communities in Montpelier, Vermont, USA is economic security. The others being ecological integrity, empowerment and responsibility, and social wellbeing.

Two of the five subcategories in this economic security category are listed as “a diverse and financially viable economic base” and “reinvestment of resources in local economy”. Both these conditions for a sustainable community, be it a city in the North or a village in the South, can be applied to a diverse monetary base, where local, national and global money intertwine.

In Local Money. How to Make it Happen in Your Community Peter North, a geographer and member of the Transition movement, presents in very understandable prose the various expressions of local money: Local Exchange Trade Schemes (LETS), Time Banking, Ithaca Hours, Creditos, Deli Dollars, Berksharess, Totness Pounds, Credit Unions, Community Banks, Local Bonds. One can add to these monetary modalities the contributions of the microcredit movement, particularly those that are not made by commercial institutions that entered the field after Yunus’ original drive.

Local money, particularly the money modality that is owned and managed locally, is able to empower local people to start small businesses which would produce for the local economy. Such economic activity keeps both the monetary and economic resources within the community, strengthening it. A beautiful example is the Self Help Groups in South Africa as described in and viewed at The example also shows how the presence of a locally owned monetary base contributes to the strengthening of many other good characteristics of a sustainable community.

While most local money modalities are complimentary to the national currency, it is also possible to have national currencies be owned by the public when the state establishes its own bank by pooling its financial resources in such bank rather than depositing them in privately-owned banking systems. This was done, particularly in the 1930s by the Social Credit parties in Canada and New Zealand and by the state of North Dakota in the USA, and which is now being considered in 14 states in the USA according to

Unfortunately, global money and its international monetary system are in its infancy. There is no Global Central Bank that could administer a system that not only regulates capital flows, but also be the sole creator of new money and credit. In order for that to happen nations, business and civil society have to come to the realization that without monetary unification the present monetary, financial, economic and commercial systems can not function properly in this highly interconnected world that continues to globalize.

Such awareness could grow if, at the same time, governments, business and civil society would be willing to take serious steps to deal with the climate crisis. In that case they could consider taking a specific tonnage of CO2e per person as a standard for a 21st century international monetary system.

If such carbon-based international monetary system were to come in place where not scarcity and austerity were the norm, but plenitude and monetary freedom, many of the other local and national monetary modalities would change dramatically and the world would be place where humans would change social systems in order to adjust to immutable physical systems.

It is in the interconnected world of ours that local, national monetary modalities are to be considered in a global monetary modality that opens up the wellspring of creativity for the wellbeing of people, species and planet. It is this global modality that has been presented in detail in The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation which will be published in early May.




Financial crises accoring to Geithner

Post By gaia1 in Economic crisis


The 2 page article on Secretary of the Treasury, Timothy Geithner, in the NY Times of April 27 ends with his definition and challenge of financial crises. He is reported as saying: “All crises are a fight over how much losses the government ultimately takes on.” And every decision “requires we balance how to achieve the most benefits in terms of improving confidence and the flow of credit at the least risk to taxpayers.”


A financial crisis and, especially the present one with its global impact, is more than a discussion of how much government funding is needed. It is to be a discussion of causes and consequences and of strategies to overcome the crisis. For him to preempt that discussion by bringing it back to government bailouts is counterproductive and does not inspire confidence. It is improving confidence that he thinks is to be balanced with the “flow of credit at the least risk to taxpayers.”


With his training in international finance, experience in the Clinton Administration, at the IMF and as president of the NY Fed he seems to be captive of a narrow angles on the crisis. He is so much part of the mindset of Wall Street and its big commercial and investment banks that he seems unable to see the crisis for what it is. It is the logical outcome of an industry that since the 1980s was able to become creative in taking enormous risks with other people’s money. This risk-taking was made possible by pushing Congress to relax oversight and to reduce reserve requirements. As a matter of fact, even he himself as president of the NY Fed wanted them further reduced as the article shows. At that time, May 2007, Citigroup and JPMorgan were pushing for these reductions because “they said would make them more competitive.” Mr. Geithner believed that “the standards would make the banks more sensitive.”


Part of resolving the financial crisis in the US and globally is to reevaluate the fractional reserve system all together rather than playing with a few percentage points in raising capital requirements. It was started in the privately owned Bank of England in the 17th century and imported, under duress, to colonial America. As shown in monetary histories of the US such as the one of Murray Rothbard there has been a constant struggle, particularly in the middle and late 1800s to have the money creation function returned to the public sector. However, the large Wall Street banks managed to establish a privately owned central bank which for strategic reasons was a called the US federal reserve. Its twelve privately owned regional banks continued to oversee the small state banks which are not part of their board of governors. It is not only the US monetary structure that has to be changed, but also the central banks of most nations that have the same ownership and fractional reserve banking characteristics. A start with this transformation can be made by having those central banks agree on a non-national reserve currency which, in consideration of the overwhelming importance of the climate crisis, is to be based on a system of reducing GHG emissions. The Tierra Solution and its TIMU Architecture has been presented for several months as a plausible way forward.



Mispricing the risk in the economic and climate crises

Post By gaia1 in Economic crisis

Thomas Friedman in today's NY Times called "The Price Is Not Right" makes the excellent point the mispricing and externalization of costs to the economic and Mother Nature are the major reasons of the world's deplorable predicament where millions of humans and other sentient beings suffer and Mother Nature is being afflicted by human-caused degradation of her basic processes, that is the flowing of energy, the cycling of matter and the webbing of life.

Let's hope that the G20 heads of state and their finance ministers and the IFIs consider London and Copenhagen together, If they do this, they may also come to the conclusion that the Tierra Solution and its TIMU architecture make sense. It will finally build the confidence and trust that is needed, particularly if they accept to remove the fractional reserve system from their privately owned commerical banks.