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After Brexit and Trump

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William S. Cohen, a former Republican senator and secretary of defense and Gary Hart, a former Democratic senator and presently chairman of the International Security Advisory Board, which advises the State Department, advise Mr. Trump not to go nationalistic and remind him of the important work done after WW II. They conclude: “Wise leaders such as Truman, Eisenhower, Marshall and Acheson constructed a temple in which freedom could thrive and economies could prosper. The interior of the temple may be in need of renovation, but Mr. Trump should not pull apart its central pillars and bring it crashing down.”

We are going through a liminal period where old verities and institutions are basically questioned and new ones have not yet emerged. The neo-liberal order of the Bretton Woods system is under attack and rightly so because of its production of a global disorder of inequality that to a great extent is caused by the unjust, unsustainable and, therefore, unstable international monetary system.

A new world order is to emerge based upon an integrated sense of social and ecological justice, similar to the integrated values of the Earth charter. Using this vision, leaders in government and civil society can start discussing and developing a new international financial and monetary system that would work in this climate-constrained century.

The financial systems of the world’s nations are to be liberated from privately owned banking systems and be mostly based upon a money creation system that is not debt-based. The trillions needed for climate and development are to be publicly created and managed. The global monetary system can be based upon a 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 Bill McKibben said of this proposed global 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.”  



The Tierra approach to the looming climate catastrophe

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Much of the causation of the looming climate catastrophe is due the workings of the unjust, unsustainable and, therefore, unstable international monetary system. It is this money system that as glue binds together the financial, economic and commercial systems. Thus, transforming, not only reforming, the global monetary system would lead to the transformation of those other global systems and a transformed global governance system.

Since 2008 I have proposed that we approach the resolution of two of our major international problems by, following Einstein’s advice, bringing both on a higher level of solution. Thus, it is proposed that the climate crisis can be resolved by basing the unjust and unsustainable and, therefore, unstable   international monetary system on the carbon standard of a specific tonnage of CO2e per person. In adopting such carbon standard the global monetary architecture becomes very different from the present one where we only have a fund, i.e. the IMF and where exchange rates often strongly fluctuate and are subject to speculation and manipulation and where international business transactions are mostly transacted using a national currency such as the U.S. dollar which is making a most important global system dependent on one nation’s domestic financial and monetary policies. In the proposed Tierra carbon-based international monetary system exchange rates would only vary within a small band as they are based on a monetary standard determined by the level of decarbonization of a country’s economy, i.e. its approximation to the above mentioned carbon standard. (If nations go for the single currency of the Tierra no historical currencies are needed. Cf. The Tierra currency: what, why and how at It is administered by a democratically governed global central bank and an innovative dual balance of payments system that accounts for both financial and ecological (climate) debts and credits.

One of the main obstacles to the emergence of the Tierra monetary approach to reducing climate degradation and advancing low-carbon, climate-resilient development is the still predominant neoliberal paradigm. Neoliberalism refers to a set of policies that the IMF, the G7 and, to a lesser extent, the G20 have been promoting all over the world for decades. These include tighter fiscal and monetary policies (sometimes even when the economy is weak or in recession); an indiscriminate opening up of countries to international trade and capital flows that direction of which are determined by large, powerful and substantially unaccountable international corporations; the abandonment of state-led industrial and development policies; privatization of public enterprises; and various forms of deregulation, including financial that would open up weak national economies to those large expatriate corporations. However, according to Mark Weisbrot, Co-Director of the Center for Economic and Policy Research in Washington, D.C., the influence of the IMF is waning in developing countries while middle-income countries have also become apprehensive of its neoliberal policies. (Cf. )

One of the ways to foster the emergence of the Tierra Fee and Dividend System—its official name based upon the carbon-reduction methodology of Fee and Dividend rather than carbon trade or a carbon tax methods—is the growing interest in the way money is created and in the use of public banks as opposed to the money creation function of privately owned banking systems. Cf. ;;; . Very encouraging in this area of the international debate on money creation was the striking and promising event on August 3, when 35 leading, mostly British, economists agreed upon changing the direction of the traditional monetary policy in the face of economic malaise. Leaving the track of QE or helicopter money through the financial system they chose the new track of having QE flow directly into the economy without the intermediary of privately owned banking systems. This momentous change has been presented in an open letter to the British Chancellor of the Exchequer which was organized by the British civil society organization, called Positive Money. Cf.

Another way to foster the Tierra approach to transformational monetary change would be the promotion of issuing an expanded Special Drawing Rights (SDRs) facility as a precursor of a single currency such as the proposed Tierra currency. This type of SDR was strongly advocated by the 2009 UN Stiglitz Conference which dealt with the UN response to the 2008 financial debacle in terms of the interests of developing nations.

We live in a transitional period when traditional values and institutions are unraveling and new ones have not yet fully emerged. In such times and in the face of a global looming catastrophes such as the global climate degradation fundamental change might happen faster than normally expected, particularly when large numbers of national populations such as the 14 million Sanders voters in the USA are not only frustrated with the status quo, but demand “a future that you can believe in”.

The Tierra monetary approach to the looming climate catastrophe may be far out for most readers. However, Bill McKibben, author and team leader of, responded to my invitation to write the foreword to the 2012 Tierra Solution book by stating the following: “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.”  




Frans C. Verhagen, M.Div., M.I.A., Ph.D., is a sustainability sociologist who after working in Ghana in the sixties studied international affairs and the sociology of international development in the seventies at Columbia University. For some thirty years he worked in New York City in environmental education and activism, including producing a monthly TV show on Queens Public TV for 12 years. After four years of research about the causes of the financial catastrophe of fall 2008 he published in 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation", the conceptual, institutional, ethical and strategic dimensions of which are updated at



Brexit, the way forward

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Brexit is a turning point on a global level in the same way that the fall 2008 financial crisis was. Central Banks and their private club of the Bank of International Settlements which would be the first institutions that would find a way out seem to be at a loss for reasons well indicated in Much reflection by them and others has been spent on Brexit’s consequences in Britain, the EU and globally and far less on vision and strategy.

Whatever vision individuals or institutions may have on believable futures, one important element of any strategy for transformational change has to include that the present neoliberal, Western nations’ political center is to be replaced by a globalization process that is not dominated by corporate elites in business and government as is presently the case with WTO, NAFTA and TPP. It is the neoliberal disorder that his to be redesigned, and not by the present designers who are its major beneficiaries. A cogent argument for this approach is made,  among others, by TFF Director Prof. Jan Oberg  TRANSCEND Network for Peace, Development and Environment and be found at Go t Original – and by Noam Chomsky

Part of the new design is to tackle money creation by privately owned banking systems and its affiliates in most central banks and in the Bank of International Settlements (BIS). Money creation which is the sole right and obligation of the public sector has to be reclaimed from the banks  which then would become utilities. It is this issue of money creation or public financing that should be on the BIS’s agenda pushed by citizens organizations such as  in the US, by in the UK, in the Netherlands and others.

In this redesign phase I personally would like to go far beyond the money creation issue which would be a firs important step in global governance redesign. I would like tosee that the unjust, unsustainable and, therefore, unstable international monetary system be transformed by basing it on the carbon standard of specific tonnage of CO2e per person, leading to the emergence of a global central bank and a balance of payments system that counts for both financial and ecological (climate) credits and debts. 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



The carbon monetary standard in an anchorless world

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 The carbon monetary standard for an anchorless world.


On September 12, 2013 NYTimes Op-ED columnist Roger Cohen presented his views of “An Anchorless World” focusing on the unsteady hand of the Obama Administration during the Syria Crisis. He goes back to 1945 when the US was the steady hand after WW II and set up a world order around the U.S. dollar and the US economy. Having noted the steady decline of the world order, he, a German friend and John Kornblum, the former U.S. ambassador to Germany commiserate together about the anchorless world without a vision of an alternative world order. I submitted the following comments (probably #199):


From an anchorless world to a world with a monetary carbon anchor is a huge challenge that humanity has to discuss if we want to avoid a climate catastrophe. We need an integrated vision that would deal with the climate, economic, political and monetary challenges simultaneously. We need such vision, because dealing with one or two major issues separately and disjointedly often creates other, unforeseen, problems.

By discussing and developing the challenge of carbon-based international monetary system we are dealing simultaneously with the climate crisis and the unsustainable patterns of economic, financial and commercial global systems. Changing, i.e. transforming the international monetary system which acts glue of those systems, changes and transforms the monetary, financial, economic and commercial systems. Details of this carbon-based international monetary system, which is the necessary but not sufficient condition in removing the present anchorless world, can be found in the recently published Tierra Solution proposal which presents the conceptual, institutional and strategic dimensions of such new world order.



The manana bankers and the TSN

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Friday, August 03, 2012

Today’s top editorial in the New York Times calls Mr. Draghi and Mr. Bernanke manana bankers because they fail to action in Europe and the USA letting the entire global economy “slow” in its already precarious condition.

Why are they not taking action?  Are they waiting for slower growth, higher unemployment and lower output before they are using their statutory powers to intervene? Those are possible minor reasons for their taking no action. One of the main reasons is the lack of political resolve on the part of the political establishment in both jurisdictions that would result in proper fiscal policies and necessary structural reform.

There is also another reason why both European and American manana bankers and their politicians are not taking the necessary monetary, fiscal and economic actions. They do not have an integrated view of the future expressed in a conceptual, institutional and strategic plan of an integrated global governance system. Such plan or approach would inspire them to look beyond their own regions’ problems and challenges and focus on global solutions because their problems and challenges are an integral part of the globalized world of today. Even if the manana bankers were to come up with some additional stimulus measures and improve their regions’ economies somewhat, such regional progress would often not redound into global wellbeing of all nations. It is only through the creation of global governance institutions that integrate the social, economic and ecological (particularly the climatological) dimensions of development and climate challenges that real progress and wellbeing can be accomplished for all. It is to accomplishment of that challenge that The Tierra Solution is offered as one of the presently very few integrated global governance proposals.



Connecting the dots

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July 25, 2012

One of the recurring expressions at the DPI/NGO Conference in Bonn on September 2011 was the expression “Connecting the dots”. One of my half dozen public statements made the point that not dots are created equal. Some dots or realities are more important than others. Thus, I showed how the issue under discussion could be connected to a larger dot, emphasizing the need for an integrated perspective on the three dimensions of sustainable development.

It is this strategy of connecting the dots that I use in learning about new economic, social or environmental realities. Thus, the question in respect to the issue of Greece’s debt and the future of the Eurozone would become one of connecting it to the conceptual, institutional and strategic dimensions of  the TSN. In answering that question I would refer to the basic notions of the TSN, its institutional framework and its strategy as preliminarily presented in The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation.



Announcement of the Tierra Solution and a solid statement of support

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Announcement of a new book that is most relevant to the upcoming Rio Earth Summit next month. It presents one of the very few proposals for an integrated global governance system where the three pillars of sustainable development are woven together by basing the international monetary system on a carbon standard, thus combating the climate crisis and advancing low carbon and climate-resilient development. The book proposes to have monetary justice in its regular and transformational sense become the guiding principle of such integrated institutional framework for sustainable communities development. For more information, see and for action before the Earth Summit see    


The Tierra Solution: Resolving Climate Change Through Monetary Transformation

Cosimo Books, May 2012

Economics & Environment, ISBN: 978-1-61640-688-2

Paperback, pp.374, $19.99 / £14.99 / €16.49 / A$27.49, coordinator of The economics of sustainable development dialogue space in the  responded to my post in then Forum topic Monetary justice as guiding principle for integrated global governance   “I wholly agree: the transformational potential of money is huge. It is specifically these initiatives which ally the financial with the environmental that I believe have the greatest possibility of changing the global paradigm.

What are your thoughts on changing GDP to another KPI? Would this be linked to carbon p/person; other indicators inclusive of natural capital?"



No Turning the Corner, unless....

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Monday, April 16, 2012

“Out of the sighs of one generation are kneaded the hopes of the next.”Joaquim Maria Machado de Assis, Brazilian novelist, poet, and playwright (1839 – 1908)

There is a dense fog of economic and ecological gloom hanging over the globe. This is not a fog shown on a satellite picture, but a human-made fog. It is a fog of dysfunctional monetary, financial, economic and commercial systems that keep the world constrained from reaching decent quality of life for its 7 billion human beings and its trillions of other living beings. This economic fog will even get denser because of the ever increasing ecological fog of global warming, measuring in parts of million of CO2e in the atmosphere, and its ever increasing social consequences of social disruption. Can this fog be lifted or at least its density reduced?

IMF’s Christine Lagarde noted in her address to the Associated Press on April 12 that given the economic situation in Europe and in the USA “markets remain volatile and that turning the corner is never easy.”  One thing is clear to her: “... integration poses great risks, but it also promises great rewards. Heightened global cooperation is the key. History has shown us that when nations face common challenges in a spirit of solidarity, everybody wins. When nations pull apart in acrimony, going their own way and seeking their own advantage, everybody loses.” How can nations cooperate in lifting the fog of economic and ecological gloom (and doom in no proper action is taken) and turn the corner for functional monetary, financial, economic and commercial systems to emerge?


First of all, such emergence is made possible by achieving an ever better understanding of the dynamic interplay between these global systems and the systems of inequality. Thus, Galbraith in his new book “Inequality and Instability” argues that finance is the driveshaft that links inequality to economic instability. Like its closely related reality of the equity they both very much determine how well these global systems will work.


Second of all, these functional systems will emerge when the crucial role of the international monetary system as glue of these systems is recognized. While monetary historian Barry Eichengreen emphasizes the glue metaphor, other metaphors such as lubricant and linchpin are equally useful in emphasizing the basic role of the international monetary system. Reforming and especially transforming the global monetary system means reforming or transforming the other systems. A proposal for a transformed international monetary system will be presented below.


Thirdly, a guiding principle for a global governance framework is needed that would be able to make the social, economic and ecological dimensions of sustaining futures a reality. This pursuit is one of the main challenges of the upcoming Rio June 2012 Earth Summit.


Fourthly, in order to facilitate the above three requirements nations and their private sectors and civil societies are to work far harder in discussing and developing a new set of integrated social and ecological values, the kind of common value base that is part of the Earth Charter which was launched in 2000 after five years of intensive, worldwide consultation of thousands of groups.


Based upon a similar framework as the Earth Charter’s the Verhagen publication of The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation proposes a pathway that would satisfy those other three requirements and could turn the corner once and for all if being pursued and implemented. It is based upon the carbon monetary standard of a specific tonnage of CO2e per person. Its unit of account of the Tierra would be indicate the quantity of the fixed exchange rates which would make them convertible until the time nations decide to adopt the Tierra as a global currency. Nations that decarbonize the most will have the strongest economies and, consequently, the strongest currencies. Nations would settle their financial and ecological (climate) debts and credits via a modified balance of payments mechanism where a sizable amount of financial credits of nations in the global North can be bilaterally settled with the ecological credits of nations in the global South. Most importantly, this carbon-based monetary architecture is governed by the Tierra Global Central Bank which, unlike the IMF, would be an integral part of the United Nations and which, unlike the Fund, would be a real bank. It would the sole creator of money because the present privately-owned banking systems would be based upon 100% reserve requirements, i.e. they would not create money, but function as utilities.


Gone are the days when the financial systems were based upon debt rather than money or credit. Gone are the days when austerity was needed to balance budgets and reduce debts. Days have come when financing will be ample for the billions of valuable programs that are needed for equitable and sustainable futures for all.


No turning the corner in this present fog of economic, ecological and social gloom and doom is possible, unless….nations start to cooperate in devising new monetary, financial, economic and commercial systems based upon a transformed international monetary system to combat the climate crisis and advance low carbon and climate-resilient development in the global North and South.


“If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.”  Henry David Thoreau, 19th century American transcendentalist.




REDD+ and the Tierra System

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Friday, March 09, 2012

How is the Tierra system related to the Reduction of Emissions of Deforestation and Forest Degradation (REDD) and REDD+ which includes the need of consideration of the social and environmental aspects of REDD policies and programs? REDD’s Social and Environmental Standards (SES) are being developed as discussed in

REDD is an important area in combating disruptive climate change, because it accounts for some 30% of the GHGs in the atmosphere by emitting methane, nitrous oxide and CO2e, particularly on account of deforestation for agriculture and livestock. Five major strategies for reducing and sequestering terrestrial greenhouse gas emissions are presented in the WorldWatch Institute Report #179 of 2009. They are: enriching soil carbon; farming with perennials; climate friendly livestock production; protecting natural habitat and restoring degraded watersheds and rangelands. Though the international policy and science communities have been slow to embrace terrestrial climate action, the Report estimates that “Even at a relatively low price for mitigating carbon emissions, improved land management could offset a quarter of global emissions from fossil fuel use in a year.” Quoting Smith of IPCC the figure of p.25t shows the Greenhouse Gas Sequestration Potential of 1.6 Giga tons of CO2e for cropland management, 1.5Gt for grazing land management, 1.3 Gt for restoring, .7 Gt for restoring degraded lands, .2 Gt each for rice management and livestock and some .05 Gt for manure management. Then the figure indicates how much of those potentials can be reached if $0-20, $20-50 or $50-100 per tone CO2e were to be spent.

There are at least three ways that the Tierra Fee & Dividend system relates  to this REDD reality.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

First of all, because of its credit-based financial system the Global Central Bank would have ample resources to invest in greenhouse gas sequestration from farming and land use, so that those potentials could be reached. Unlike the carbon storage and sequestration of carbon in the burning of fossil fuels which is already produced, terrestrial sequestration would keep the GHGs inside the crop and grazing land, so that the pursuit of these potentials would seem to have priority in sequestration.

Secondly, the Tierra Fee & Dividend system excludes cap-and-trade with its offsetting practices both with the UN CDM (Clean Development Mechanism) and bilateral agreements, thus reducing much of the gaming on carbon and other untoward practices.

Thirdly, though the emphasis in my forthcoming book The Tierra Solution: Resolving the Climate Crisis Through Monetary Transformation has been on carbon emissions of fossil fuels in the determination of the CO2e standard—perhaps a Northern bias—inclusion of terrestrial GHGs is an obvious extension, given that the standard deals with the CO2 equivalency of methane and nitrous oxides. Thus, the approximation formula for the standard has to include more measures of terrestrial GHGs.



Comment to Financial Times Opinion piece

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Lorenzo Bini Smaghi, a former member of the Executive Board of the European Central Bank and currently Visiting Scholar at Harvard’s Weatherhead Centre for International Affairs, wrote an Opinion piece in the Financial Times, entitled “How to equip the IMF for the crises of our time” I posted the following comment. Lorenzo Bini Smaghi has made several good points to make the IMF more effective in the short run. His conclusion that “deep thinking and strong leadership are urgently required” is a correct one.

However, before one can effectively equip the IMF for our times it is necessary to understand the present global monetary dimension of the financial crisis. The international monetary system which as glue binds together the monetary, financial, economic and commercial systems is dysfunctional in several ways, because it is not based on equity, sustainability and therefore cannot be a stable system. First, as recommended by the 2009 UN Stiglitz Commission, the U.S. dollar as a reserve currency has to be replaced by a multi-currency reserve or SDR facility to start with. Secondly, the international monetary system needs a standard. Though there are several observers, particularly in the Republican fold in the USA, who advocate a return to a pure or flexible standard, this writer has been proposing a carbon standard, not only to give an equitable and sustainable basis for its stability, but also to combat this century’s greatest challenges of climate change and sustainable development. A carbon-based international monetary system would emphasize the level of decarbonization of a society greatly determines the strength of its economy and its currency. Such system would have a balance of payments mechanism that would balance both financial and ecological credits and make imaginative exchanges possible between these two types of debts because of the financial creditors in the North are ecological debtors to the South. This carbon-based international monetary system would be administered by a Global Central Bank the idea of which has been proposed for over one hundred fifty years. Note that this Bank of Central Banks would govern over a financial system that would be based upon credit, not on debt and over a banking system that would be based upon 100% reserves and thus does not engage in money creation anymore.

I think the proposed carbon-based international monetary system presents the “deep thinking” that is needed to simultaneously deal with both the unstable and dysfunction monetary system, with the ever increasing amount of GHGs and with the poor accomplishments in global developments that enrich the few, impoverish the many and imperil the planet.



2012 and the Tierra Solution

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Wednesday, January 04, 2012

The year 2012 will be an important year for the Tierra Solution. In April The Tierra Solution: Monetary Transformation, Climate Change and Sustainable Development will be on the market. At that time a well developed publicity strategy and a well-developed organizing strategy with national Tierra Solution Working Groups will be launched after earlier scattered attempts in both areas. In June the Rio 2012 Earth Summit is to take place where the issues of green economies, global governance are two main themes to which The Tierra Solution can make a genuine contribution. This contribution has been made by having the proposed carbon-based international monetary system become one of the ten “thinkpieces” of the Stakeholder Forum, several inputs in the UN Headquarters process and its inclusion in UNCSD Compilation document. A book launch at the UN in April or May may further infuse the feasibility of the Tierra Monetary Compact into the Rio process.

Notwithstanding these efforts The Tierra Solution (TSN) will not find great acceptance in 2012, mainly on account of its transformational nature. The TSN requires people to think outside the famous box because it does not reform but goes beyond the present form of financial and climate institutions by its trans-formational approach. Furthermore, its acceptance depends on many external circumstances, particularly in the economic, financial and monetary fields. The worse the global economic, financial and monetary systems perform and the more salient become the impacts of an increased global warming, the faster people, pundits and policy makers will consider the TSN becoming a realistic alternative as already Maurice Strong and Bill McKibben think it is.

According to UN economists 2012 will be a make-or-break year in terms of proceeding with slow economic recovery or falling back into recession. Their WESP 2012 observes: “The developed economies are on the brink of a downward spiral enacted by four weaknesses that mutually reinforce each other: sovereign debt distress, fragile banking sectors, weak aggregate demand (associated with high unemployment and fiscal austerity measures) and policy paralysis caused by political gridlock and institutional deficiencies. All of these weaknesses are already present, but a further worsening of one of them could set off a vicious circle leading to severe financial turmoil and an economic downturn.” (

To these four weaknesses has to be added the weakness of a dysfunctional international monetary system that being the linchpin of those global systems makes them all more volatile and unstable. Removing its expensive and unnecessary global reserve system by the introduction of a monetary standard such as the carbon standard would go a long way to increase equity, sustainability and, therefore, stability in all these global systems. Notwithstanding the recommendation of the 2009 UN Stiglitz Commission to move away from a one country or even on region based international reserve currency, very little progress has been made. Notable, however, is the beginning of an uprooting process by the replacement of the U.S. dollar as the international transaction currency. China and Japan, China and Brazil and other pairs of countries have started trading with each other without using the U.S. dollar. The U.S. dollar as a reserve currency is, unfortunately, still strongly ensconced, particularly also due to the fact of the weak euro, the second largest international reserve currency. Image what the world would look like if the U.S. government were to decide to move away from having the U.S. dollar used as a reserve and transaction currency in favor of a carbon standard and of a Global Central Bank that would unify the divergent approaches of the US Fed and the ECB in dealing with the economic malaise and crisis in most countries!



The Tierra Triple Transformation in global governance

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Tuesday, January 03, 2012

During this new year the issue of global governance will be a major theme at the Rio 2012 Earth Summit in June, a crucial event for this decade and probably for the 21st century. It will also continue to feature as a major challenge after the Summit given that the present world situation’s fragmentation in the economic and political fields demands greater cooperation in developing workable global institutions.

Effective global institutions that can deal with the economic and climate crises are ideally rooted in three interrelated and integrated transformations: a monetary, banking and a financial transformation. While the latter two transformations are increasingly being discussed and considered necessary, the first transformation still escapes solid scrutiny. The Tierra Solution (TSN) proposed by the International Institute for Monetary Transformation foremost focuses on monetary transformation. It is able to integrate all three transformations.

The monetary transformation of the TSN is considered the basis for the banking and financial transformation, for like any monetary system it acts as glue, lubricant and linchpin of the financial, economic and commercial systems Once the international monetary system is transformed, it will transform or at least greatly change the other global systems that are part of any global governance system. The Tierra international monetary system is transformed by the introduction of a standard, not a pure or flexible gold standard, but a carbon standard. This carbon-based international monetary system would push nations to decarbonize their societies because the greater their level of decarbonization, i.e. the wider use of renewable energy the stronger their economies and their currencies. Thus, this transformed basic system would combat climate change and advance sustainable development, two areas the accomplishment of which would determine the quality of any future global governance system.

In order for this basic monetary transformation to take place a Global Central Bank is needed that is able to monitor and control the banking and financial sectors. The former would not be engaged anymore in the creation of money or, in other words, would operate on a 100% reserve requirements, while the latter would not be based on debt anymore, but on credit that would be circulated into the economy by the public sector.



The Great Monetary Transition

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This is a copy of a blog posted on December 21 to  under the heading “The Great Monetary Transition”.

Part of the Global Transition2012 is the transition from a dysfunctional international monetary system to one that is based upon equity and sustainability, thus leading to monetary stability with its reduction in volatility in exchange rates, currency manipulation and speculation.

Such equitable, sustainable, and, therefore, stable international monetary system can be achieved by the introduction of a carbon monetary standard. Such standard would not only make national currencies convertible and the global reserve system which costs developing countries some $100 billion annually, unnecessary, but would also combat the climate crisis and advance low-carbon development in both the South and North. Thus, three major global problems can be simultaneously resolved by integrating their solutions rather than approaching them sequentially. For more information, see and my “thinkpiece” on; for full details see my forthcoming book entitled The Tierra Solution: Monetary transformation, climate change and sustainable development.

With enough civil society support, nations at the Rio 2012 Earth Summit could add to their present SDGs the Sustainable Development Goal of “Rethinking the international monetary system to be based on a carbon standard”. As a matter of fact, line 265 the DPI/NGO Declaration of the Bonn September conference invites governments to do exactly that.

Accepting that sustainable development goal for the transformation of the international monetary system the Rio 2012 Earth Summiteers could decide to establish a UN Commission to that effect. It would update and go beyond the recommendations of the 2009 Stiglitz Commission.

I fully agree with Geoff Lye, chairman of SustainAbility, in OUTREACH of December 16 believing that government, business and civil society are “to recognize that future solutions need to be fundamental rather than incremental; collaborative rather than competitive; and working to shift systems rather than part of it.”



Monetary democracy and monetary justice

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Monetary democracy and monetary justice

Tuesday, December 20, 2011

This post is part of the GTI forum of the called “On the money”. It was in response to Gwendolyn Hallsmith’s reference on monetary democracy.

Hi, Gwen and others:

Monetary democracy does not only happen “Where we reclaim our constitutional right to issue the coin of the realm, and take it back from the banks”—so well expressed in the 1865 Senate document of Lincoln’s monetary policy as found in — but also when people globally are able to determine the shape of the international monetary system. This would include the choice of basing that system on a standard or continue with the present system of high volatility in various asset markets, currency manipulation and speculation and an expensive global reserve system that costs developing countries some $100 billion annually.

This choice of an alternative to the global reserve system is not raised by the economic profession of which only 1% of its practitioners are engaged in monetary economics.  Removing the global reserve system rather than reforming it a little bit and basing the international monetary system on a standard means that national currencies become convertible or that a global currency becomes possible which by its very nature is convertible.

As mentioned in an earlier comment this month and in several others over the last couple of years I think that the introduction of a carbon standard is the most appropriate pathway to make the international monetary system best serve the financial, economic and commercial systems. Some economists are willing to accept the possibility of a carbon-based international reserve currency to replace the U.S. dollar and other reserve currencies, but not a carbon-based monetary standard. One of the reasons that they and many other social scientists are not looking into this transformational monetary approach is the lack of integrative thinking where the climate crisis is considered to be resolved sequentially, i.e. separately, in its own silo rather than simultaneously.

Personally I prefer to use the term monetary justice rather than monetary democracy. It would indicate not only the social, environmental, procedural and intergenerational injustices that take place in the present dysfunctional international monetary system, but also the injustice that is taking place by not having an equitable, sustainable, and, therefore, stable international monetary system. It can be argued that monetary justice in this comprehensive sense can be the guiding principle of global governance model for the Rio 2012 Earth Summit, integrating as it does the three pillars of sustainable development.



Margin call and monetary transformation

Post By gaia1 in TFD system

Many of the technical details that led to the near collapse of the investment/hedge firm in the movie are reminiscent of the 2007 collapse of Bear Sterns and the 2008 collapse of Lehman Brothers and the financial meltdown of the fall of 2008. While the hedge fund’s finances started to unravel based upon a faulty computer model of volatility in the market, the real causes of the financial collapse were more complex, particularly due to the deregulation of the financial industry.

What also shines through in the movie is the fragility of the system on account of system’s defects and of human limitations, including greed of some. That fragility existed before the fall 2008 and has not been dealt with, though the US Dodd-Frank might have been a force in the right direction if it had not been watered down so much.

The fragility of the international financing system, also shown in the weakness of Europe to bring its euro and financial system into order, would be greatly reduced if banks and other financial institutions such as hedge funds were to operate on 100% reserves rather than the present fractional reserve system. A most ringing argument for that position was made in 1936 when Irving Fisher, economics professor at Yale, presented in 24 pages “100% Money and the Public Debt.” It is the foundation for much present day thinking about a money- rather than debt-based  financial system where banks become utilities whose money creation privilege has been reclaimed by the public sector.

Amid the present worldwide economic slump several neo-classical economists are advocating a return to the gold standard, among whom the editorials of the New York Sun stand out in their stridency. Indeed, the monetary, financial, economic and commercial systems need a monetary standard besides a financial system that is money- or credit-based. However, the return to the gold standard will not do because of liquidity and rigidity concerns.

Why not develop a monetary standard that incorporates humanity’s most pressing problem of a changing climate that can wreak catastrophic impacts on people and planet? This type of monetary transformation would affect the international financial, economic and commercial systems  because the international monetary system as glue and as lubricant of those systems is their linchpin. How this can happen is foremost a question of transformational thinking in monetary economics an example of which is presented by Australian economist Steve Keen of Debunking Economics fame who together with several other radical economists predicted the financial fiasco in the fall of 2008.


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