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Jan
24

Trump and trade

Post By gaia1 in American Monetary Matters

 The Trump Administration, for whatever clear and dark reasons, wants to shake things up including scrapping the PTT which took place on January 23 as fulfilling one of his ill-founded promises. This would isolate the USA and pursue an America First strategy which in this globalizing world will not work. The Jared Bernstein’s New York Times article  at https://www.nytimes.com/2017/01/24/opinion/ditching-tpp-wont-solve-the-trade-deficit.html and its comments shows where the present thinking is on trade, currency and export facilitation. I wrote the following comment on the article:

 If Mr. Trump really wants to be a transformative president who would take of Americans and other people he could at least pursue two interrelated policies. Replace the WTO with the UN Conference on Trade and Development and pursue an enlightened international monetary policy.

That monetary policy would consist of two radical steps: move the U.S. dollar as international transaction currency towards an enhanced SDRs which, through challenging international negotiations, can be replaced by becoming part of a carbon-based international monetary system with its monetary standard of a specific tonnage of CO2e per person. The conceptual, institutional, ethical and strategic dimensions of such carbon-based international monetary system are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net. Climate specialist Bill McKibben who will not be Trump’s best friend said about this system: The further into the global warming area we go, the more physics and politics narrows our possible paths of action. Here’s a very cogent and well-argued account of one of the remaining possibilities.” End of my NY Times comment

The Trump Administration with its many white billionaires are the least like persons to engage in such transformative thinking, let alone policy action. However, resistance is building fast and wide and the women’s marches in the USA and globally amounting to about 2 millions marchers is one evidence. Given the unrealistic economic and trade policies of the US, Americans and a great part of the world community will reap the sad fruits by another recession in the next couple of years. It is also possible that he and several of cabinet members may leave the scene before the end of his first term.

 

Nov
11

Resistance and boldness after the Trump election

Post By gaia1 in American Monetary Matters

 Resistance and boldness are needed in these climate-constrained and liminal times where the Trump Administration has almost unlimited power to take the wrong direction, not only in respect to the looming climate catastrophe but also in respect to world governance where winning is to be superseded by cooperative relationship. Wherever possible, resistance to the wrong direction by various  levels of government and private, for profit and non-profit, is paramount during these next four years and this resistance has to start now, particularly in respect to the appointments to transition team.

At the same time boldness is needed to develop a vision that can work after four disastrous Trump years. Such vision could include a radical transformation of both the global financial and monetary systems. The world has to be weaned from the privately owned banking systems, going beyond Dodd/Frank in the direction of public banking where banks with 100% reserves would become utilities, thus  unable to create money.

The world could also start discussing basing the unjust, unsustainable and, therefore, unstable international monetary system on a carbon standard such as a specific tonnage of CO2e per person. The conceptual, institutional, ethical and strategic dimensions of these two radical transformations are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net. Bill McKibben stated the following about this carbon-based international monetary system on May 17, 2011: The further into the global warming area we go, the more physics and politics narrows our possible paths of action. Here’s a very cogent and well-argued account of one of the remaining possibilities.”  

 

Jun
03

The US Tierra Progressive Party

Post By gaia1 in American Monetary Matters

Updated Bull Moose platform for a US 2020 Tierra Progressive Party and Progressive Party Movement
 
In the June 20-27 Issue of the Nation magazine its Editor-at-Large raised the question “What’s Next for Bernie Sanders’s Grassroots Army?”and he observed that “The campaign may be coming to an end, but its activists plan to keep the revolution alive.”  Using wide-ranging interviews he came up with four organizational forms or approaches to his question. They are: 1. The Occupy Democrats, who see the Democratic Party as ripe for a takeover;  2.  Brand New Congress, an effort launched last month to elect a Congress in 2018 that will “enact Bernie’s program” regardless of who’s in the White House and would use a highly internet-based approach that was used by Lenchner who with his “People for Bernie has had 2.5 billion interactions—shares, posts, comments, Facebook likes; 3. The Working Families Party, which in many states provided the ground troops for the Sanders campaign and is now benefiting from—and struggling to digest—a huge influx of new recruits; 4. The People’s Summit, an alliance of National Nurses United and People for Bernie—the latter a coalition of activists and online groups like Vets for Bernie and Jews for Bernie—that has called a “gathering of the tribes” in Chicago on June 17–19 and represents more of the “movement” elements of the Sanders campaign. The Nation’s at large editor D.D. Guttenplan concludes that “None of these people want Sanders to drop out before the convention or to run with one hand tied behind his back. But the groups do differ—on strategy, tactics, and most of all on their degree of distance from the Democratic Party. Like many divisions on the left, you can also read that as a contest between pessimism of the intellect and optimism of the will.” http://www.thenation.com/article/whats-next-for-bernie-sanderss-grassroots-army)
 
On June 2 I proposed a fifth approach which I submitted as follows: “Bernie Sanders’s campaign for social and political transformation which foremost was an idea and vision campaign has attracted millions of people who have put their money where their mouth is. The Nation’s editor at large rendered a service by categorizing the future of the Sanders philosophy into four approaches based upon his wide-ranging interviews.
 
I would suggest a fifth approach: the establishment by 2020 of a third party to be called the US Progressive Party with a platform that updates Theodore Roosevelt’s 1912 platform http://www.pbs.org/wgbh/americanexperience/features/primary-resources/tr-progressive. His emphasis on economic concentration and other Sanders’s emphases can be updated in this age of globalization. TR’s views on currency or in today’s parlance of money creation are more radical than Sanders’s unclear breaking up banks and should become an integral part of such updated platform.”
 
It was the 1912 Bull Moose platform stated on Currency that I quoted in another comment in the same Nation I issue when they were discussing Sanders’s banking views. The platform states under "Currency: 
We believe there exists imperative need for prompt legislation for the improvement of our National currency system. We believe the present method of issuing notes through private agencies is harmful and unscientific.
The issue of currency is fundamentally government function and the system should have as basic principles soundness and elasticity. The control should be lodged with the Government and should be protected from domination manipulation by Wall Street or any special interests.
We are opposed to the so-called Aldrich currency bill, because its provisions would place our currency and credit system in private hands, not subject to effective public control."
 
Personally, I would go a step beyond public banking and would include in the 2020 platform of the US Progressive Party the need for monetary transformation  in which a just, sustainable and, therefore, stable international monetary system would be proposed in this climate-constrained world disorder.  Most of the conceptual, institutional, ethical and strategic dimensions of such carbon-based international monetary system with its monetary standard of a specific tonnage of CO2e per person are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net.”
 
This proposal for the US Tierra Progressive Party and a global Progressive movement informed by the values of the Earth charter and the philosophy of Thomas Berry was submitted to Thomas Palley, AFL-CIO Senior Economic Policy Advisor, for their conference entitled Monetary Policy, Globalization and Security. As background information I added the monetary document on global governance that Stakeholder submitted to the 2012 Earth Summit and the financial PowerPoint presentation to the NGO Committee on Financing for Development at the UN Headquarters. It was pointed out that these documents could also be part of the background  materials for bringing about a global central bank the strategy for which could apply the Hamiltonian principles of repayment, discrimination and assumption.
 

 

Mar
06

Crisis Depending On Inadequate Supply

Post By timun in American Monetary Matters

As we all know monetary system of US and other nations are based on debt which means a unit has to owe to own an amount of money. And of course this systems have a lot of disadvantages like insufficient supply of natural sources to people. In order to maintain a balance of consuming we need to get informed about shopping items. Which are really needed in your house and which products you need to consume to sustain your life at maximum saving. But this saving doesn't mean you will get hungry after a while. For example visit one of those weekly ads to see important deals of that week at Kroger, Ralphs or any kind of store you like. These will help you to get informed about important deals for organic food or something like that. With this way customers only purchase what they need for their food need.

Working hours in USA also effects the supply. Some of the stores working 24/7 may be not helpful for people. Considering their human power consuming long hours and their supply to consumers we can find a lot of disadvantages of this 24/7 system. Customers can find hours of stores of Costco on various websites.
To keep economy of small businesses we also need to keep saving of customers healthy. Coupons of Hobby Lobby may be an important point to hit at this time. Because of small things we loose a lot of money unnecessarily. However, coupon is a good discovery to shop for lower prices. And it allows you to buy only what you need.
With weekly ads of Kroger and similar sort of supermarkets you can find fresh meat, organic food and especially these would be good priced products. Since the prices are fair the quality meets with the true value and over consuming is not possible with this system. This unneeded shopping can be also seen on pharmacy products. Products of CVS pharmacy is a good example for it. A lot of pills that are causing health disorders can be retailed at these stores but people love to use them just for a temporary relaxation. Advertisements can cause consuming more without thinking with these stores. Of course one of the most popular store is Walmart and its ads are very popular. Similarly Walmart retails its products. Walmart ad is published every month which is one of the elementary part of the daily consuming. They supply everything and one day these supplying may find a finish.

 

Nov
19

Bitcoin and the Tierra system

Post By gaia1 in American Monetary Matters

Yesterday, the Senate Committee on Homeland Security and Governmental Affairs held a hearing on the potential risks, threats and promises of virtual currencies. Later today, a Senate Banking Committee will hold a similar hearing. The focus is on Bitcoin, a virtual currency that operates completely outside of U.S. financial regulations and protections. Critics argue the current lack of oversight offers anonymity to those hoping to skirt U.S. laws, but others say it’s a frontier in electronic commerce with important consumer benefits. Diane and her guests talk about Bitcoin and the future of virtual currencies.

 Guests

Jennifer Shasky Calvery director, Financial Crimes Enforcement Network, U.S. Treasury Department

James Freis attorney, Cleary, Gottleib, Steen and Hamilton specializing in financial regulatory and enforcement issues.

Jamila Trindle senior reporter, Foreign Policy Magazine

Jon Matonis executive director, Bitcoin Foundation

Francois Velde senior economist, Federal Reserve Bank of Chicago

MY COMMENT:

This was a most interesting show exploring a new “currency”. Any critical exploration for alternatives to our present international monetary system is to be applauded.

However, any currency is to be situated in an infrastructure that is to be part of our globalizing world. May be such infrastructure emerging for the bitcoin, which I doubt.

I developed the conceptual, ethical, institutional and strategic dimensions of a new international monetary system that is based not on a gold, but carbon standard of a specific tonnage of CO2e per person. This Tierra standard makes the value of currencies—either the national or regional ones—or of a global currency fixed within a small band. Those interested in exploring this currency proposal with its global institutions of a global central bank, a balance of payments of both financial and ecological debts and credits can google monetary transformation or read The TIerra Solution: Resolving the climate crisis through monetary transformation, published in 2012 by Cosimo Books.

http://thedianerehmshow.org/shows/2013-11-19/lawmakers-and-regulators-take-closer-look-bitcoin#disqus_thread is the website where also a half dozen videos on bitcoin are listed. The show’s home page started with the picture below.

 

This April 3, 2013 photo shows bitcoin tokens at 35-year-old software engineer Mike Caldwell's shop in Sandy, Utah. Caldwell mints physical versions of bitcoins, cranking out homemade tokens with codes protected by tamper-proof holographic seals, a retro-futuristic kind of prepaid cash. With up to 70,000 transactions each day over the past month, bitcoins have been propelled from the world of Internet oddities to the cusp of mainstream use, a remarkable breakthrough for a currency which made its online debut only four years ago.

(AP Photo/Rick Bowmer)

 

Oct
03

The decline of US Pre-eminence

Post By gaia1 in American Monetary Matters

 An important contribution to the rapid U.S. government ascension to a world power status after WW II is its monetary dominance by way of the Bretton Woods UN conference during end of the war. The conference’s acceptance of the dollar/gold exchange standard was pushed forward through the political might of the US though the Keynesian plan, also supported by the Canadian delegation, held a far greater promise for global reconstruction and prosperity.

The U.S. government could loose its financial predominance if it is unable to resolve its debt ceiling conflict. It would become one nation among others that would have to compete notwithstanding its deep financial structure with a plethora of good (and dangerous) financial services. Thus, more instability would emerge in international monetary system that already is unstable and rudderless.

One way to counteract the global impacts of such financial crisis—they are more devastating than the domestic impacts—is for the U.S. government and other stakeholder to start negotiating towards a new international monetary system with an international transaction currency not bound to the US financial system or to a regional financial system such as the Euro. Time would seem to be ripe to again raise the issue of Special Drawing Rights (SDR), the basket of currencies that would replace the U.S. dollar as transactional currency. This reform would greatly improve monetary, financial, economic and commercial systems because the monetary system, like glue, binds those systems together.

It is during this time of negotiation and debate of a just, sustainable, and therefore, stable international monetary system that stakeholders in the global North and South consider the feasibility of developing a monetary standard upon which national or regional currencies can be pegged. The 2012 book The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation presents the case of taking a very specific tonnage of CO2e per person as the monetary standard by discussing the conceptual, ethical, institutional and strategic dimensions of such carbon-based international monetary system. This carbon standard would not only transform the international monetary system and lead to a just, sustainable, and, therefore, stable system but would also combat this century’s greatest challenge of climate change and advance low carbon and climate-resilient development in both the global North and South.

 

Sep
20

US Government shutdown and internnational action

Post By gaia1 in American Monetary Matters

 Hardly anyone in the US points to the adverse international impacts of the looming government’s shutdown on account of crazy demands on budget and debt ceiling by Republicans. IMF’s Christine LaGarde points to the uncertainty these US financial actions cause to business, governments and civil society the world over. However, she does not mention any action that the international community should consider taking.

I for one and I am not the only one that favors the replacement of the U.S. dollar with Special Drawing Rights (SDRs) which were first proposed in the middle seventies after the Nixon Administration had  closed the dollar/gold exchange window. Civil society and perhaps business should start agitating and pressuring their countries’ financial authorities to have the IMF change its articles so that the US with its 18% voting rights is unable to block the decoupling of the U.S. dollar from being the international exchange currency. Once this process is underway, I for one and not many others yet, believe that we can use this reformed international monetary system to make a final transformational change by basing it on a carbon standard. This transformational change is needed because we are headed towards a climate catastrophe and we need drastic changes in global climate policies if we do not want to imperil people, species and planet.

 

Sep
16

The transformational challenge of the new US Fed chairperson

Post By gaia1 in American Monetary Matters

This comment was submitted to the NY Times on September 16 when Dr. Summers withdraw his probable nomination by the Obama Administration.

Given that the US Fed in the absence of global central bank is the nearest to a global central bank its new chairperson has the obligation to not only deal with monetary matters at home but also play a leading role in making the unjust, unsustainable and, therefore, unstable international monetary system less unjust, unsustainable and unstable. Optimally this would mean that s/he consider transforming the role of the dollar by not having it play the role of an international currency.

As proposed during the middle seventies and emphasized by the UN Stiglitz commission after the financial collapse in 2009 moving into SDR (Special Drawing Rights) realm would be to the benefit of the US and global economy.

A really transformational international monetary policy for the new US Fed chairperson would be the basing of the international monetary system on the carbon standard of a specific tonnage of CO2e per person. In that way the international monetary system would become stable, just and sustainable. Should the various monetary unions in the USA, South America, Europe, Africa and Asia not begin to discuss the feasibility of a global central bank with its appropriate administrative, regulatory and monetary functions? The conceptual, institutional and strategic dimensions of such carbon-based international monetary system are presented in a recently published book entitled The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation.

 

Aug
23

Krugman's Age of Bubbles

Post By gaia1 in American Monetary Matters

 The following is an expanded version of my shortened response to Krugman’s column in the New York Times of August 23, 2013. It may also function as the basic information for an OPED piece in the New York Times.

Why did so many bubbles happen during the last couple of decades while they were absent during the 50s and 60s and early 70s? There are many reasons, but the most important one is often not mentioned, let alone studied.

It was during this period that the international monetary system was a stable system, based as it was on the dollar/gold standard. When the Nixon Administration in August 1971 removed that standard, instability started to creep into the monetary, financial, economic and commercial systems. The latter systems were affected because the international monetary system acts a glue of those systems: change that basic monetary system and all other global systems change.

So the question becomes of how we can return to a stable international monetary system in the 21st century. The Stiglitz UN Commission of June 2009 investigating the effects of the financial meltdown of 2008 on developing countries argued that no one country’s currency should be the international transaction currency nor should the currency of a regional monetary union act in that way. The Commission and quite a few other monetary economists starting in the late 1970s came up with the solution of Special Drawing Rights or SDRs.  This would a first major step in the right direction.

Given that all global systems, i.e. monetary, financial, economic and commercial systems have to deal with this century’s greatest challenge of a changing climate that affects all dimensions of social and ecological life on this planet, it is my argument that we can use the world’s most basic system of monetary relations to also deal with this climate crisis. Thus, I have proposed the Tierra Solution that would resolve the climate crisis through monetary transformation, i.e. basing the international monetary system on the carbon standard of a specific tonnage of CO2e per person. The conceptual, institutional and strategic dimensions of such transformational change far exceeding the paltry reform efforts of the IMF are presented in a 350 page book published in 2012.  Applications of this carbon-based international monetary system can be found at various places on the internet by googling my initials of fcvnyc and on the website of International Institute for Monetary Transformation, i.e. www.timun.net.

In this Age of Bubbles where the future of social and ecological wellbeing is at stake it behooves serious people to consider and debate transformational changes such as the feasibility of carbon monetary standard that would force nations to decarbonize in their pursuit of low carbon and climate-resilient development in the global North and South.

 

Jul
05

kEYSTONE XL PIPELINE

Post By gaia1 in American Monetary Matters

 GRADUATING FROM THE DISCUSSION OF KEYSTONE XLTHE PIPELINE TO ONE ABOUT THE WHY, WHAT AND HOW OF CARBON MONETARY STANDARD

 

I am opposed to the pipeline and support 350.org's and James Hansen's 350 ppm standard. I also  believe that a global carbon tax is needed in the sense of a fee and dividend as proposed by the above two proponents and US representative van Hollen's legislation.

 If the international community and particularly civil society were really serious about dealing with the all-pervasive challenge of the climate crisis, they might start discussion transforming the international monetary system of exchange rates and balance of payments by introducing the carbon standard of a specific amount of CO2e per person as presented in the Tierra Solution: Resolving the climate crisis through monetary transformation as proposed by Dutch-born sustainability sociologist Frans C. Verhagen.

 

Nov
29

The UN target year 2015

Post By gaia1 in American Monetary Matters

THE UN TARGET YEAR OF 2015

November 29, 2012

Two main areas of discussion and negotiations among UN member states have taken the year of 2015 as their target in the achievement of their goals. These two most important areas of development and climate policies are discussed and negotiated as if they are unrelated. The 2015 target year is proposed here as a point in time where serious global discussions of an integrated global governance approach are to commence.

The development strand called the post-2015 sustainable development framework wants to come up with a sustainable development framework that will succeed the framework of the Millennium Development Goals or MDGs that ends in 2015. This development strand also includes on an equal level of importance the discussions dealing with the Sustainable Development Goals or SDGs that were initiated as part of decisions taken at the Rio June 2012 Earth Summit. Both development strands and discourses only tangentially deal with the 21st century’s main challenge of the changing climate.

The second major area of discussion and negotiation, dealing with the climate crisis, takes place mainly within the confines of the UN Framework Convention on Climate Change (UNFCCC) of June 1992 and its Kyoto Protocol whose second implementation in 2013 is being discussed during its present two weeks conference in Doha. This UNFCCC conference and the ones of 2013 and 2014 are geared towards the establishment of a New Accord in 2015 which would replace the Kyoto Protocol with its many shortcomings. The official climate negotiations have even less connection with the development issue than the official development community’s connection with the climate issue.

Though those two UN strands of discussions and negotiations hardly make any connections with development and climate, civil society on the other hand generally make connections between development and climate. However, its connecting the dots between the two is still inchoate and needs far greater emphasis and far more resources to arrive at an integrated global governance system.

The connection or rather integration of development and climate is the major focus of a proposal by the International Institute for Monetary Transformation. The proposal called The Tierra Solution or the Tierra Fee & Dividend system or the Tierra System for short, presents the conceptual, institutional and strategic dimensions  of an integrated global governance system. It is based upon the transformation of the international monetary system which is the most basic of global system that as glue binds together the monetary, financial, economic and commercial systems. It can also be considered the lubricant of those global systems making them work smoothly and even as their linchpin. This global money system is to be transformed by the introduction of a carbon standard of a very specific amount of tonnage of CO2e per person. The introduction of this standard makes exchange rates stable by having currencies pegged to the standard or by the introduction of a single global currency.

This carbon-based international monetary system is predicated on at least two major new institutions. One of them is a balance of payments system that accounts not only for financial credits and debts, but also ecological (climate) debts and credits. Given that countries in the global North are financial creditors and ecological debtors and countries in the South ecological creditors and financial debtors, negotiations of converting financial debt into ecological credit become a real possibility. The second new institution is the Global Central Bank which would not only administer, regulate the new system, but would be the only institution that together with its regional central banks engages in money creation. Limits to money creation as described in the 1865 US Senate document are set by the imagination of responsible public officials. Transformational financing for the enormous needs in development and climate change areas becomes possible without the straitjacket of austerity.  Gone are the privately-owned banking systems with their fractional reserve systems, because they have become financial utilities without the privilege of money creation. People and their public officials direct their ample financial resources where they are needed as was done by the public banks in various countries during the 1930s.

There are two main strategies by which this carbon-based international monetary system with its fixed exchange rates, its transformed balance of payments system and Global Central Bank can become a reality. One is the top-down, UN strategy and the other is the bottom-up, grassroots strategy. They are fully described in the last chapter of The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation, the June 2012 Cosimo publication that also describes in detail the earlier mentioned conceptual and institutional dimensions. For additional information, see www.timun.net.

The Tierra Solution went public for the first time during UNITAR/YALE Global Governance conference in September 2010 and has been presented at various UN meetings in preparation for the Rio 2012 Earth Summit and at the two NGO Committees on Sustainable Development and Financing for Development at UN Headquarters. It is hoped that the year 2015 will be the year that serious discussions will take place in the UN development and climate communities about this integrated global governance proposal, propelled and pushed by the leadership of civil society.

 

 

Oct
23

Recession or redirection?

Post By gaia1 in American Monetary Matters

 RECESSION OR REDIRECTION?

OPED article submitted to the New York Times by

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

Tuesday, October 23, 2012

We live in turbulent and carbon-constrained times where government, business and civil society are increasingly forced to make major decisions in the next ten years that will influence life on the planet for the rest of the century. At this cross roads the stark decision to be made is whether the world permits itself  to drift into another recession—bigger than the one In 2008— or is willing to generate the courage and insight to redirect the global monetary, financial, economic and commercial systems that enrich the few, impoverish the many and imperil species and the planet. It is argued here that the world will drift into recession within the decade unless we use the reset button and pursue approaches to integrated global governance that emphasize low-carbon and climate resilient sustainable communities development in the global North and South.

Though I am an optimist, I consider the likelihood for recession—larger than the 2008 0ne— to be strong within the next couple of years if present global monetary, financial, economic and commercial policies are not changed and nations continue pursuing national policies that may be rational in terms of national priorities, but irrational in terms of global priorities.

During the recent IMF/WB Annual meeting in Tokyo Yi Gang, vice governor of the China’s central bank, pointed out that the lowered forecasts by the IMF/WB for 2012 from 3.3 percent to 2.2 percent is too optimistic. He saw “an increasing possibility of growth below 2 percent” with the consequence that the developed countries would have plunged into further recession while emerging economies encountered further dramatic slowdown. He considers the global economy to be “on the brink of recession” and he pointed to the European debt crisis, mounting US deficits and stagnant growth in developing countries.

To this analysis we could add recent developments in the US society, where the Dodd-Frank regulations are fought tooth and nail by the banking and financial industry and where Too Big To Fail does not have sound conceptual and political support in the direction of capping the size and complexity of the megabanks. Fortunately, the Volcker rule that would separate investment/ trading/speculation from commercial banking, is now being supported by reports in Britain and the EU, respectively by economist John Vickers and central Finnish banker Erki LiiKanan.

Notwithstanding the emergence of this hopeful tool that would go back to the Glass-Steagall Act of the early thirties, the overall US monetary, financial, economic and commercial situation is still precarious, particularly also due to the political paralysis in Washington. The Federal Reserve System is pushed to carry the main or almost exclusive load to make the economy recover given the stark absence of fiscal legislation by a U.S. Congress which has received the lowest ratings in several decades. Thus, the FED is pushed into an open-ended quantitative easing policy that makes sense nationally, but not globally. IMF head Christine Lagarde rightly points to the need for global cooperation without the power to do much to make this happen. 

It is the lack of global governance institutions that makes the global monetary, financial, economic and commercial systems so fragile and prone to causing a recession. Strong emphasis has to be placed on the challenge of strengthening global governance, particularly integrated global governance where separate social, economic and environmental governance systems are to be integrated. Rightly the Rio 2012 Earth Summit adopted the formulation of such an integrated global governance system as its second theme, calling it Institutional Framework for  Sustainable Development. It did not, however, produce a formulation for such a global governance system, let alone an agenda for pursuing it. Now, notwithstanding its pursuit of Sustainable Development Goals by organizing Post-2015 Global Consultations and other means it still has not pushed the reset button in its formulation of integrated global governance, let alone in its pursuit.

What is needed is an all-out approach to find alternative global governance systems that would redirect the unjust, unsustainable, and, therefore, unstable monetary, financial, economic and commercial systems. One of those alternative global governance systems has been proposed in my recent publication entitled The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation. It presents the conceptual, institutional and strategic dimensions of an international monetary system that would be based upon a carbon standard with, consequently, fixed exchange rates, a Global Central Bank and a balance of payments system that would balance not only financial debts and credits but also ecological (carbon) debts and credits. In such a balance of payments system nations in the global North who are financial creditors and carbon debtors can start negotiating with nations in the global South who are financial debtors and carbon creditors. Equally important, the Global Central Bank in such a carbon-based international monetary system would behave like the central bank in the EU or in the USA in its administrative, regulatory and financial functions.

Since the end of the 19th century when John Stuart Mill advocated a global central bank and during the 20th century when several US Fed Chairmen, including Paul Volcker, and quite a few other observers pointed to the need for such bank in our ever globalizing world, the time has come in the early part of this 21st century to have such central bank. Without it the only main beneficiaries will be the global financial services companies and their affiliated global companies which no longer have any loyalty to nation states or to the people who inhabit them.  Without de-financialization of the globalization process and the adoption of a value-based planning framework that integrates social and ecological values such as are reflected in the Earth Charter the world has no other direction than to drift into another, monstrously large recession with disastrous impacts on people and the planet.

 

Frans C. Verhagen, M.Div., M.I.A., Ph.D., a sustainability sociologist, is the founding president of the International Institute for Monetary Transformation and the author of The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation published by Cosimo Books in June 2012.

 

 

 

Sep
26

The Tierra Solution and Brazil's call for transformation at the UN

Post By gaia1 in American Monetary Matters

THE TIERRA SOLUTION AND BRAZIL’S CALL FOR TRANSFORMATION AT THE UN

Wednesday, September 26, 2012

Yesterday Brazilian President Dilma Roussef made a strong statement about the need for a global effort to deal with the economic crisis. Appended is the UN summary of the speech.

She emphasized that monetary policies in the developed world cause currency problems in the emerging nations and that monetary policies have to be wedded with fiscal policies. She understands that only a global cooperative effort can result in effective economic policies for all.

The Tierra Solution proposes integration of monetary and financial policies where a global carbon-based international monetary system is wedded with a financial system that is based not on debt and privately-owned banking system, but on money or credit. One of the economic departments in the USA that has done most work on such monetary and financial system is the one of the University of Missouri-Kansas City with its modern monetary theory or MMT. They are have been taken their MMT views outside their university such as in the well-organized course at Columbia University entitled Modern Money and Public Purpose. http://www.modernmoneyandpublicpurpose.com/index.html

When will the time come when leaders in government, business and civil society are going to pursue an integrated approach to progress and prosperity by simultaneously focusing on resolving the economic and climate crises?

 

BRAZILIAN PRESIDENT CALLS FOR JOINT EFFORTS TO CONTAIN CONSEQUENCES OF GLOBAL ECONOMIC CRISIS
New York, Sep 25 2012  1:05PM
One of the first world leaders to address the United Nations General Assembly’s high-level debate today, Brazilian President Dilma Rousseff called on countries to boost international efforts to tackle the global economic crisis, stressing that a balance must be found to stimulate growth while at the same time controlling public spending without resorting to extreme austerity measures.

“The grave economic crisis that began in 2008 has taken on new and worrisome contours,” she said. “The choice of orthodox fiscal policies has been worsening the recession in the developed economies, with repercussions for the emerging countries.”

Scores of the world’s heads of state and government and other high-level officials are attending the Assembly’s General Debate, at UN Headquarters in New York, and are expected to present their views and comment on issues of individual national and international relevance over the coming days.

In her remarks to the gathering, President Rousseff stressed that countries must find a path that combines appropriate fiscal adjustments with measures to stimulate investment and demand to halt the ongoing recession and ensure future economic growth.

In particular, the Brazilian President noted that monetary policy cannot be the only response to growing unemployment and poverty as this is causing imbalance in exchange rates, which, in turn, is creating an artificial appreciation of emerging countries’ currencies.

“There will be no effective response to the economic crisis without strengthened coordination efforts between United Nations members and multilateral bodies such as the G20 [Group of 20], the IMF [International Monetary Fund] and the World Bank,” she said.

She added, “This coordination must attempt to reconfigure the relationship between fiscal and monetary policy, in order to prevent the deepening of the recession, control the currency war and once again stimulate global demand.”

Countries must build a comprehensive pact for the coordinated resumption of global economic growth, President Rousseff said, noting that this is crucial to prevent social unrest and despair prompted by high unemployment rates, and social inequality.

The Brazilian leader emphasized that Brazil has addressed the crisis domestically by exerting strict control over public spending, while simultaneously increasing investments in infrastructure, education and social inclusion.

“We have overcome the incorrect view according to which measures to stimulate growth are incompatible with austerity plans. This is a false dilemma,” she said. “Fiscal responsibility is as necessary as growth measures are indispensable, for fiscal consolidation can only be sustainable in a context of economic recovery.”

President Rousseff also spoke of the need for multilateral action to achieve all the commitments made at the UN Conference on Sustainable Development (Rio+20) which Brazil hosted in June. The Conference, she emphasized, helped to set a starting point for a sustainable development agenda for the 21st century, and give countries guidance as to how to address challenges such as climate change, poverty and exploitation of natural resources.

“Rio+20 shone a powerful light on the future we want. We have an obligation to heed the many warnings being sounded by science and society,” Ms. Rousseff said. “In a context of environmental challenges, economic crises and threats to peace in different parts of the world, Brazil continues committed to working with its neighbours to build an environment of democracy, peace, prosperity, and social justice.”

Earlier today, the Brazilian President met with Secretary-General Ban Ki-moon, who thanked her for making the Rio+20 Conference a success and expressed his appreciation for Brazil’s contribution to UN peacekeeping operations in Haiti.
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Aug
24

Ryan's monetary policies and the Tierra Solution

Post By gaia1 in American Monetary Matters

RYAN’S MONETARY POLICIES AND THE TIERRA SOLUTION

Friday, August 24, 2012

Paul Krugman’s column in today’s New York Times entitled “Galt, Gold and God” is the inspiration for this blog post. He shows and other authors show the danger of Ryan’s monetary views and how they are based upon the extreme market fundamentalism and extreme individualism of Ayn Rand that has been rejuvenated by the Atlas Society. He would repeal the dual mandate of the Federal Reserve, i.e. inflation fighting and employment creation, in favor of inflation fighting only, leaving unemployed people who are considered “moochers” anyway, to fight for themselves. Furthermore, he would raise the interest rate in recessionary times in order to draw investors into the market, a position that runs counter to economic thinking and the historical evidence of the Hoover Administration during the Great Depression. He takes Fed Chairman Bernanke to task in his House Budget hearings spewing arrogantly his impossible ideas as if he is a genuine monetary policy wonk. He, together with other republican pundits, believes in hard currency rather the fiat money and in return to a gold standard or at least a commodity standard, so that the FED is unable to print money and engage in quantative easing. Together with Ron Paul and other libertarian politicians he would use its shrinked mandate to reduce government involvement in monetary matters.

The Tierra Solution also proposes a monetary standard, but not one based on gold or a set of commodities, but one that can be set according the requirements of the times. In these carbon-constrained times it would be a standard of a specific tonnage of CO2e per person. Unlike the libertarian position, the Tierra system is based upon an explicit value-based planning system of sustainability economics with a strong role of governmental engagement in these complicated times where the free market is not delivering the social, economic and ecological results for sustaining futures. Finally, unlike the dangerous Ryan system which is only domestically focused,  the Tierra system is globally focused where cooperation rather than competition between states is the preferred mode of co-existence.

 

Mar
19

Greg Smith's Op-ed piece on GoldmanSachs, Robert Reich's and my comments

Post By gaia1 in American Monetary Matters

Blog: Smith’s Op-ed piece on Goldman Sachs, Robert Reich’s and my comments

http://readersupportednews.org/news-section2/320-80/10467-focus-goldman-loses-22b-after-scathing-op-ed shows how Goldman Sachs lost 3.4% of its stock, i.e. $2.2 billion after Smith’s Op-ed in the New York Times. Robert Reich rightly shows how Smith’s critique is way too narrow. I think the national and global financial community have to be subjected to a discussion of an alternative financial and monetary system.

 

Why Greg Smith's Critique Is Way Too Narrow

By Robert Reich, Robert Reich's Blog

17 March 2012

 

http://readersupportednews.org/images/stories/alphabet/rsn-G.jpgreg Smith, a Goldman Sachs vice president, resigned his post Wednesday with a stinging public rebuke of the firm on the oped page of the New York Times - accusing it of no longer putting its clients before its own pecuniary goals.

But if Mr. Smith believes his experience at Goldman is something new, he doesn't know history. In 1928, Goldman Sachs and Company created the Goldman Sachs Trading Corporation, which promptly went on a speculative binge, luring innocent investors along the way. In the Great Crash of 1929, Goldman's investors lost their shirts but Goldman kept its hefty fees.

If Mr. Smith believes such disregard of investors is unique to Goldman, he doesn't know the rest of Wall Street. In the late 1920s, National City Bank, which eventually would become Citigroup, repackaged bad Latin American debt as new securities which it then sold to investors no less gullible than Goldman Sachs's. After the Great Crash of 1929, National City's top executives helped themselves to the bank's remaining assets as interest-free loans while their investors and depositors were left with pieces of paper worth a tiny fraction of what they paid for them.

The problem isn't excessive greed. If you took the greed out of Wall Street all you'd have left is pavement. The problem is endemic abuse of power and trust. When bubbles are forming, all but the most sophisticated investors can be easily duped into thinking they'll get rich by putting their money into the hands of brand-named investment bankers.

Moreover, finance has become so complex that investors don't even know when they're being taken for a ride, and so can't possibly hold a brand-name bank responsible for their losses - or for gains that are a fraction of what they might otherwise have been.

That's why we have regulations. After millions of investors lost everything in 1929, the federal government stepped into the breach with the Securities Acts of 1933 and 1934 and the Banking Act of 1933, sponsored by Senator Carter Glass and Congressman Henry Steagall.

But starting in the 1970s and 1980s, Wall Street made sure these and the regulations issued under them were steadily watered down - which contributed to the junk-bond and insider trading scandals of the 1980s, the dot-com scams of the late 1990s and early 2000s, the Wall-Street enablers of Enron and other corporate looters, and the wild excesses that led to the crash of 2008.

Wall Street's shenanigans have convinced a large portion of America that the economic game is rigged. Yet capitalism depends on trust. Without trust, people avoid even sensible economic risks. And when they think the game is rigged, they're easy prey for political demagogues with fast tongues and dumb ideas.

The Street has only itself to blame. It should have welcomed new financial regulation as a means of restoring public trust. Instead, it lobbied intensely against the new Dodd-Frank Act and refused to resurrect Glass-Steagall.

The cost of such cynicism has leached deep into America, finding expression in Tea Partiers and Occupiers and millions of others who think the Street has sold us out.


Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on publicradio.com and iTunes.

 Comment on March 19:

Like  always, professor Reich is right on target by pointing to history and the deregulation battle of Glass/Steagall. However, I think we have to take Smith’s oped and Reich’s statement a step further by seriously discussing the what, why and how of a credit-based financial system where only the public sector creates money as indicated in the Lincoln 1865 Senate document and advocated by quite a few organizations today. In final instance, the International Institute for Monetary Transformation thinks we have to evolve a carbon-based international monetary system as proposed in The Tierra Solution: Resolving the Climate Crisis Through Monetary Transformation to be published in April 2012.

 

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