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Jan
29

Dare to Dream and Bigger is Easier

Post By gaia1 in Transformation versus reform

Saturday, January 29, 2011

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

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

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

 

Jan
24

Overcoming Obama's Dollar-Centric Monetary Paradigm

Post By gaia1 in American Monetary Matters

OVERCOMING OBAMA’S DOLLAR-CENTRIC MONETARY PARADIGM

Frans C. Verhagen

 

OPED article submitted to the New York Times on January 24, 2011

            The discussions about the 2010 State of the Union and the Speech itself make clear that the Obama Administration is gearing up to a strong jobs and competitiveness program. While the emphasis on job creation is well chosen, the emphasis on competitiveness may give the wrong impression. Paul Krugman rightly pointed out on Monday, January 24, 2011 that using this terminology carries dangers. Also Robert Reich on the NPR’s Newshour on Friday made it clear that applying a business model of competitiveness for public sector policies may not be useful, because national welfare is not to be equated business welfare. What is good for GE need not necessarily be good for the US as a whole, particularly if one considers that it reduces employment in the USA and increase employment abroad in its search for the financial bottom-line. If it were to pursue the triple bottom line that would wed the financial bottom line with ecological and community well-being the equation becomes different.

            In the pursuit of job creation and building a strong domestic economy the Obama Administration seems to be captive of an international monetary system that is ineffective mainly due to the lack of a proper balance of payments adjustment mechanism. This balance of payments mechanism is unable to adjust the financial imbalances among nations due to having a national currency such as the US dollar function as an international reserve and transactional currency. It created the so-called Triffin dilemma where a major change in monetary policies such as the $600 billion quantitative easing by the Federal Reserve has necessarily to impact internationally and make the international monetary system less stable.

A major consequence of such unstable international monetary system is that after August 15, 1971 when the Nixon Administration closed the gold window a global reserve system was born that costs non-hard currency countries some $100 billion annually. That system became necessary as self protection against currency speculators such as George Soros and for the conduct of legitimate and non-legitimate international monetary transactions, given that national currencies were not convertible anymore. The introduction of an authentic monetary standard would make this costly global reserve system superfluous and save those billions of dollars that could be invested in the economies of the non-hard currency nations.

An authentic monetary standard is a standard that need not to be supported by one nation as was the case in the 19th century gold standard (UK) and during a part of the 20th century dollar/gold exchange standard. If the world had accepted during the UN Monetary Conference in the summer of 1944 the British plan of the International Clearing Union (ICU) with its international, non-national reserve and transactional currency of the bancor instead of the American plan not only the international monetary system would have been more effective, but also the financial, economic and commercial systems which are bound together by the international monetary system that acts as glue. If the world had accepted the ICU we might have had a global governance system because Keynes considered the ICU’s potential to evolve in such system.

Though several voices are being heard recently that propose a return to the gold standard (father and son Paul, Sarah Palin, James Grant and other republicans) or using gold as a referent in an international reserve currency (World Bank’s president Zoellick) there are several reasons that gold is not an authentic monetary standard and that a  carbon-based monetary standard is preferable in these carbon-constrained times where a carbon-based international monetary system can be utilized to combat the climate crisis by advancing low carbon and climate-resilient development. Information on the IIIMT’s proposed global monetary governance system can be found at www.timun.net,  in a presentation at Yale university http://conference.unitar.org/yale/environment-sustainable-development and  in 13-minute interview at the recent Cancun Climate Conference http://www.climate-change.tv/frans-verhagen-december-2010

In any event, if one wants to reform the international monetary system by the introduction of a non-national international reserve currency with or without a gold referent or if one wants to transform the international monetary system by basing it upon gold or carbon standard, the Obama Administration has to overcome its dollar-centric monetary paradigm. This has not only been one of the recommendations of the UN Stiglitz Commission of 2009 but also the demand of China and other BRIC countries. Making this transition by the Obama Administration would contribute to an equitable, sustainable, and, therefore, stable international monetary system.

In conclusion the Obama Administration, the G20, the IMF and the Bank of International Settlements have to overcome the dollar-centric monetary paradigm and to transition for the time being to a non-national international reserve currency such as the SDRs and from there to an ambitious carbon-based international monetary system.  

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

Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist, is the president of International Institute for Monetary Transformation and the author of the forthcoming COSIMO publication THE TIERRA FEE AND DIVIDEND SYSTEM: Using a transformed international monetary system to combat climate change and advance low carbon and climate resilient development.

 

 

Jan
22

The carbon-based monetary standard and its Tierra Formula

Post By gaia1 in TFD system

THE CARBON MONETARY STANDARD AND ITS TIERRA APPLICATION FORMULA

January 22, 2011

The carbon monetary standard is a standard that is basically set in negotiations that are based upon the IPCC targets for GHG reductions. It is expressed in a specific amount of tonnage of CO2e per person. Given that the average tonnage in 2011 is about 4 tons per person, the standard could be set for 3 tons for the rest of this decade and be reset in 2020 to 2.5 or 2 tons per person. The more stringent the standard becomes the more nations are compelled to engage in low carbon measures to decarbonize their societies.

The real challenge is not the setting of the standard, but the measuring of the decarbonization level of societies. Its measurement has to be translated into a formula which can be called its Tierra application formula or the Formula. This Formula is to be used to determine the value of a nation’s currency and thus its construction becomes very important issue. Therefore, its construction is to be based upon principles and methods that are explicit, so that a fair, efficient and effective Formula can emerge.

Fortunately, there a techniques, indexes and standards that can be usefully investigated for their inclusion in the Formula. Illustrative are the following. Life Cycle  Assessment (LCA) is one such technique that is used by China and India when they committed themselves at the Copenhagen Conference to reducing the carbon density of their societies. The sophisticated Environmental Performance Index for some 163 countries biannually published by the Yale and Columbia Universities’ teams of researchers and consultants is another possible source for the construction of the Formula. Further, there are quite a few indexes in the financial sector that measure the carbon density of companies that could also be used. Finally the the Global Greenhouse Gas Standard for cities that was jointly launched on March 23, 2010 by UNEP, UN-Habitat and the World Bank would also be a major source, particularly after it expands its reach beyond the 40 cities that are now able to compare their emissions over time, across cities and in specific sectors such as energy, transportation or waste. Like this standard which is not built from scratch, but builds on and is consistent with the IPCC protocol and other greenhouse gas initiatives such as those by the World Resources Institute, ICLEI–Local Governments for Sustainability and the Clinton Climate Initiative, the Tierra Formula can use the above resources and many others.

It would seem advisable that measurements of social dimensions be also included in the Formula besides the various techniques, indexes and standards that constitute its technical components. These might include the areas of the level of income of a nation, its past use of atmospheric carbon, its carbon budget as allocated by the equitable carbon budget process that, hopefully, can be completed in the UNFCCC 2011 conference in South Africa. The inclusion of these and other social measures would present a historical and social dimension to the Formula which would increase its fairness and its acceptability. It would also increase the complexity in the construction of the Formula. Like in so many other areas of the Tierra monetary architecture and of the Tierra Fee & Dividend as a whole negotiations have to take place in a spirit of cooperation that matches the severity of a looming climate disaster.

 

Jan
19

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

Post By gaia1 in Transformation versus reform

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

Wednesday, January 19, 2011

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

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

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

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

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

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

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

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

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

 

 

 

Jan
17

Elevating the monetary policy debate in the USA

Post By gaia1 in American Monetary Matters

Elevating the monetary policy debate

Monday, January 17, 2011

The title of this blog post is based upon the subtitle of an opinion article in the Wall Street Journal Online with the main title “Palin’s Dollar, Zoellick’s Gold” that appeared around the time of the G20 Summit in Seoul in November 2010. http://online.wsj.com/article/SB10001424052748703514904575602231815453378.html

There are at least six major monetary issues or problems that should be part of this policy debate. Four of them, according to a well-known monetary economist who is academically and politically active , http://gonzaloraffoinfonews.blogspot.com/2010/12/making-of-international-monetary-reform.html  have to do with the global reserve system, the related lack of international liquidity for nations whose currencies are under attack, monetary nationalism and the lack of an international disciplinary body, and the absence on monetary anchoring of currencies. To these four problems the issue of money creation and control and the regulation of capital flows have to be added. Within the context of these six major monetary issues the role of the dollar has to be considered. An elevated monetary policy debate demands this contextual approach.

The dollar is not only the domestic currency and legal tender in the USA, but also the major global reserve and transactional currency. Thus, monetary policies by the U.S. government have a great bearing upon the international monetary system. It is part of the so-called Triffin dilemma when a national currency is being used as an international reserve currency. Therefore, monetary policies dealing with the value and status of the dollar have to be made in the international context as long as dollar functions in that international role.

It has been suggested by Columbia professors Stiglitz and Greenwald, the 2009 UN Stiglitz Commission and quite of few other observers that in order to bring stability to the international monetary system the international community no national or multi-currency like the euro be reserve currencies. Many propose the wider use of the SDRs which were created for that purpose after the closing of the gold window in August 1971. Unfortunately, in the Palin/Zoellick article this issue was not brought up and past US Administrations and the present one have not tackled this international dimension either. As a matter of fact, US Fed Chairman Bernanke considers the major cause of the US external deficits to be due to extreme savings by Asian countries, particularly China without mentioning the role of dollar which, on account of seignorage, is able to loan money to itself without paying interest as other countries do when they borrow dollars.

Any elevated debate on the value of the dollar has to consider its international function unless the international community reforms this costly global reserve system or transforms it by instituting a monetary standard whether it is a gold or other standard. The International Institute for Monetary Transformation www.timun.net believes that a more appropriate standard would be a carbon monetary standard. Such standard would combat this century’s most urgent crisis of a climate change catastrophe by advancing low carbon and climate-resilient development. Thus, this transformed, i.e. carbon-based international monetary system would help transform the financial, economic and commercial systems which are bound together by the international monetary system that acts as glue, using 2008 Eichengreen’s metaphor.

A first step for bringing about such system is for the U.S. government to develop a domestic and international monetary policy that makes relinquishes the dollar as reserve currency for a SDR reserve currency as a transition to a carbon-based international monetary system that would be part of a global debate resulting in a UN Commission on Monetary Transformation, Climate Change and Sustainable Development.

 

Jan
12

Low carbon economies and the TFD

Post By gaia1 in TFD system

Low-carbon economies and the TFD

January 12, 2011

A variety of linguistic expressions dealing with low-carbon economies exists. Dominant about them are “green economies” or green economy, low-carbon societies, economies or societies with low-carbon density, green growth. Ecological linguists will be able to distinguish between them based upon their underlying assumptions which often derive from their geographic origin. Thus, the notion of green growth originated in Asian societies and is defined by UNESCAP as growth that “emphasizes environmentally sustainable economic progress to foster low-carbon, socially inclusive development.”

I have chosen the terminology of low-carbon economies rather than green economies to emphasize first of all that those economies have to become decarbonized in the face of the “uncompromising clock of climate change.” Thus, the terminology of green economy used in the UN Secretary-General Ban Ki-moon’s December 18, 2010 Report on Themes and Objectives of the Rio2012 Earth Summit seems to significantly deemphasize this century’s major challenge of effectively dealing with climate change. Though the Report does not explicitly include the climate change challenge in its definition of its “lens of the green economy” its emphasis on the environmental challenges of a green economy can be considered to implicitly contain the climate change challenge.

The emphasis of low-carbon economies is not to be understood as a substitute of sustainable development, but as one of its most important component. This was an explicit decision of UN member states during their first Preparatory Meeting for Rio 2012 Earth Summit in May 2010 and is also confirmed by the SG Report in December. Unlike the Report’ use of sustainable development which generally points to development in developing countries sustainable development here is used in terms of both developed and developing countries. It is the interconnectedness of consumption and production in the economies of both the global North and South that have to be considered. All economies are to reduce their carbon intensity—overdeveloped ones in the North and underdeveloped ones in the South. The latter have to engage in “green growth”, the former have to shrink their ecological footprint.

The transition of to low-carbon economies is an area of major efforts in research and policy development. The SG Report brings together much research and assesses the seven policy tracks of green stimulus packages, eco-efficiency, greening markets and public procurement, investments in sustainable infrastructure, restoration and upgrading of natural capital, getting prices right and ecological tax reform. The Worldwatch Report 184 of January 2011 makes a strong argument that renewables together with a decarbonized natural gas component are able to power this transition. The International Research Network for Low Carbon Societies (LCS-RNet) in its Yokohama Dialogue of March 15, 2010 and its Synthesis Report of its second Annual Meeting entitled “Achieving a Low Carbon Society” presents ten key findings all of which contributes to developing a pathway that defines the roles of governments, business, communities and individuals for multi-level governance. What these findings can mean on the national level becomes evident in the World Bank’s program of  low-carbon country reports. The 2010 Country Case Study of Brazil (270 pages plus a CD) shows the need for the construction of baselines in the major sectors and the measures needed to decarbonize those sectors. Such country studies will be augmented by local studies such as the one by the EPC organization in Brazil entitled “Public Policy Proposals by the Business Sector for a LOW CARBON ECONOMY in Brazil.”

The TFD was developed to first of all combat the climate crisis by advancing low-carbon and climate-resilient development in both the global North and South. The Tierra Fee & Dividend global governance system does this by introducing a carbon-based monetary standard that places decarbonization as the core of monetary, financial, economic and commercial policies. The degree to which a country is able to measure up to this standard determines the strength of its economy and the value of its currency.

 

 

 

Jan
10

Low-carbon economies and the TFD

Post By gaia1 in TFD system

Low-carbon economies and the TFD

Monday, January 10, 2011

A variety of linguistic expressions dealing with low-carbon economies exists. Dominant about them are “green economies” or green economy, low-carbon societies, economies or societies with low-carbon density, green growth. Ecological linguists will be able to precisely distinguish between the various conceptions that underlie this variety, particularly in terms of their origination. Thus, the notion of green growth originated in Asian societies and is defined by UNESCAP as growth that “emphasizes environmentally sustainable economic progress to foster low-carbon, socially inclusive development.”

I have chosen the terminology of low-carbon economies rather than green economies to emphasize first of all those economies have to become decarbonized in the face of the “uncompromising clock of climate change.” Using the terminology of green economies as the SG Report on Themes and Objectives of the Rio2012 Earth Summit does deemphasizes this century’s major challenge of effectively dealing with climate change. Though the Report does not explicitly include the climate change challenge in its definition of its “lens of the green economy” its emphasis on the environmental challenges of a green economy can be considered to implicitly contain the climate change challenge.

The emphasis of low-carbon economies on carbon is not to be understood as a substitute of sustainable development, but as a most important component. This was an explicit decision during the May 2010 Preparatory Meeting for Rio 2012 Earth Summit and is also confirmed by the SG Report. Unlike the Report’ use of sustainable development which generally points to development in developing countries sustainable development here is used in terms of both developed and developing countries. It is the interconnectedness of consumption and production in the economies of both the global North and South that have to be considered. All economies are to reduce their carbon intensity—overdeveloped ones in the North and underdeveloped ones in the South. The latter have to engage in “green growth”, the former have to shrink their ecological footprint.

The transition of to low-carbon economies is an area of major efforts in research and policy development. The SG Report brings together much research and assesses the seven policy tracks of green stimulus packages, eco-efficiency, greening markets and public procurement, investments in sustainable infrastructure, restoration and upgrading of natural capital, getting prices right and ecological tax reform. The Worldwatch Report 184 of January 2011 makes a strong argument that renewables together with a decarbonized natural gas component are able to power this transition. The International Research Network for Low Carbon Societies (LCS-RNet) in its Yokohama Dialogue of March 15, 2010 and its Synthesis Report of its second Annual Meeting entitled “Achieving a Low Carbon Society” presents ten key findings all of which contributes to developing a pathway that defines the roles of governments, business, communities and individuals for multi-level governance. What these findings can mean on the national level becomes evident in the World Bank’s program of  low-carbon country reports. The 2010 Country Case Study of Brazil (270 pages plus a CD) shows the need for the construction of baselines in the major sectors and the measures needed to decarbonize those sectors. Such country studies will be augmented by local studies such as the one by the EPC organization in Brazil entitled “Public Policy Proposals by the Business Sector for a LOW CARBON ECONOMY in Brazil.”

The TFD was developed to first of all combat the climate crisis by advancing low-carbon and climate-resilient development in both the global North and South. The Tierra Fee & Dividend global governance system does this by introducing a carbon-based monetary standard that places decarbonization as the core of monetary, financial, economic and commercial policies. The degree to which a country is able to measure up to this standard determines the strength of its economy and the value of its currency.

 

 

 

Jan
08

Preparations for Rio+20 and the TFD Global Governance System

Post By gaia1 in TFD system

PREPARATIONS FOR RIO+20 AND THE TFD GLOBAL GOVERNANCE SYSTEM

Saturday, 08 January 2011

 

Preparations for Rio+20 are in full swing as is evidenced from the UN website www.uncsd2012.org and from the civil society (Stakeholderforum) website http://www.earthsummit2012.org/. The two main sources on the UN Department of Economic and Social Affairs’ (DESA) website are the Secretary-General (SG)’s Report of December 18, 2010 and the longer Synthesis Report which is based on responses from governments, UN organizations and civil society to the DESA questionnaire. It is to the conceptually stronger SG’s report that this blog post responds to.

 

The report uses two lenses—the concept of green economies and institutional frameworks—to assess the progress of both Rio 92 and Johannesburg 2002 Earth Summits, identify gaps in order to revive the Spirit of Rio, so that nations are willing to make stronger political commitments to sustainable development. It poses the question as follows: “how can a focus on the two themes help us to accelerate progress on each of the three pillars, and towards convergence among the three pillars, of sustainable development?” (#3)  Sustainable development is conceived to include low-carbon and socially inclusive development which is to be pursued within the three pillars of environmental, social and economic governance. Many times the Report points to the lack of coordination and coherence in those three fields of governance on both global, national and local levels and makes suggestions to improve those frameworks, particularly the global environmental one, without dealing with the details of convergence of the three pillars.

 

Strikingly absent in the definition of a green economy is the issue of climate change. The green economy is considered “in the context of sustainable development and poverty eradication” leading to the acronym GESDPE. It would have given the concept of green economy and the larger issue of development a more realistic contents to work with if the climate issue had been included.

 

It is the supreme challenge of humanity to urgently and effectively deal with climate change. It is to become the organizing concept of sustainable development, green economy and Rio+20. At least that is what the IIMT’s proposes in its global governance system of the Tierra Fee & Dividend (TFD).

 

Though the Report at the very end spends a few words on the international financial institutions (IFIs) it does not make any substantial suggestions to have them do more than providing more and better funding for development. It is exactly by transforming the most basic international system, i.e. the international monetary system that binds together the financial, economic and commercial systems that a genuinely structural and bold change is made possible. By basing the presently inefficient and ineffective international monetary system on a carbon standard the whole international governance structure is changed-- a governance structure that enriches the few, impoverishes the many and imperils species and planet.

 

It is changed to the benefit of all: people, species and planet. The TFD global governance system solves three major problems by integrating them. The international monetary system receives a standard, so that less currency manipulation and speculation takes place, a costly global reserve system is removed, and ample liquidity is brought into the system by a democratic, federal Global Central Bank. The climate crisis is made manageable because the TFD global governance system makes nations balance their carbon balances via their balance of payments. Finally, the TFD system with its emphasis on the decarbonization of societies as part of its carbon standard pushes nations to pursue low-carbon, climate resilient and socially inclusive development. It is their measuring up to the carbon standard and its unit of account of the Tierra that would determine the strength of their economies and the value of their currencies.

 

Both the SG Report and the Donostia Declaration of the Stakeholderforum point to the need of boldness in dealing with the huge challenges globally and nationally. The latter’s Declaration states: “It is not a time for complacency to be content with today, or be timid or apathetic in the face of the challenges the world faces: business as usual is no longer an option. It is surely a time for boldness, for passion, for vision and for commitment to create a better and more sustainable future. As Einstein said: "We can't solve problems by using the same kind of thinking we used when we created them." In a similar vein General Eisenhower when faced with a big problem that he could not solve by itself, employed the strategy of making the problem, not smaller, but bigger by connecting it to other problems. The thinking of both Einstein and Eisenhower underlies the methodology that was employed to develop the TFD global governance system.

 

Maurice Strong believes that basing the international monetary system on carbon is “innovative” and that the TFD “seems to be very promising in light of the stalemate of post-Kyoto prospects.” Thus, the IIMT proposes that the UN General Assembly passes a resolution to establish a UN Commission on Monetary Transformation, the Climate Crisis and Sustainable Development. Its members would consist of experts in those three areas and charged with the task of making recommendations for a Monetary Agenda For Climate and Development Action. Such Commission would pursue the “convergence among the three pillars” of the SG Report by investigating integrated global governance systems such as the one proposed in the TFD global governance system.

 

Jan
05

The Global Tierra Court

Post By gaia1 in TFD system

THE GLOBAL TIERRA COURT (GTC)

Wednesday, January 05, 2011

In the foregoing blog post entitled “the Tierra Fee & Dividend global governance system” which explored the issue of whether the TFD is a global governance system mention was made of a global Tierra court. The specific paragraph reads: “Though initially the TFD did not contain a Global Court to adjudicate monetary, climate and development conflicts it would make sense to design a global court that would deal with the conflicts that arise from the TFD global governance system. The Court could be called the Tierra Court and would take its place besides the World Court (International Court of Justice) and the International Criminal Court and the International Court of Climate Justice, proposed by Bolivia’s Cochabamba conference in April 2010. The Tierra Court would conceptually be closest to Climate Justice Court because of its focus on the climate crisis.”

This court was not called the Global Monetary Court, because this would indicate that the Court would deal with monetary matters as presently understood. By calling it the Global Tierra Court this Court would be inextricably connected with the Tierra monetary standard of the Tierra Fee & Dividend global governance system and the conflicts that would arise out of its operation.

The relationship of the GTC with present and future global courts is to be spelled out by the signatory nations to the Tierra Treaty. Thus, the Tierra Court could include the proposed International Court of Climate Justice given that the TFD global governance system is very much engaged in combating the climate crisis and its related conflicts. Perhaps a division of labor among the various global courts could be whether they adjudicate matters of human-human conflicts or human-Earth conflicts. Whatever the final division of legal labors, both categories of courts would have the five characteristics that a global institution would have using the Brown-Garver formulation, i.e. capacity and authority,  credibility, accountability and effectiveness, transparency and subsidiarity (governance institutions should be as local possible). Thus, in terms of subsidiarity all the regional, national, sub-national courts would continue to carry out their constitutional or statutory duties.

 

Jan
05

The TFD as a global governance system

Post By gaia1 in American Monetary Matters

THE TFD AS A GLOBAL GOVERNANCE SYSTEM.

Wednesday, January 05, 2011

The question is whether and to what extent the TFD is a global governance system. To answer this question one has to determine the functions of a global governance system and the characteristics that would make such system carry out those functions in an effective and fair way.

One of the best analyses about global governance is presented in a chapter of the highly acclaimed 2008 book by Peter Brown and Geoffrey Garver entitled Right Relationship. Building a Whole Earth Economy. In its chapter five it proposes four global institutions: a global reserve, a commons trusteeship, a global federation and a global court. Respectively their functions are: analyzing Earth’s systems and planning their fair and ecological use; holding the Earth’s commons in trust for present and future generations of both human and non-human species; cooperating globally within institutions that have enforcement authority; refereeing about global conflicts. In order to carry out these functions, the four institutions should possess capacity and authority, credibility, accountability and effectiveness, transparency and subsidiarity (governance institutions should be as local possible).

To what extent is the TFD fulfilling those four functions and to what extent would it be carrying them out with those five characteristics of good governance? The answer to those two questions determines whether it is correct to consider the TFD a global governance system.

The main institution that is to be brought into existence under the TFD system is its Global Central Bank (GCB). Its functions are beyond the monetary and financial functions of other central banks such as the European Central Bank, because the Global Central Bank is in charge of a carbon-based international monetary system that integrates monetary issues with combating climate crisis and advancing low carbon and climate-resilient development. In order to carry out this integrated function the GCB is to have a very strong division to analyze and plan while maintaining its major focus climate and development focus. Thus, its commons trusteeship and its global reserve functions are clearly included in its GCB. Signatory nations to the Tierra Treaty can decide to make these two GCB functions into separate institutions rather than GCB divisions.

In terms of the functions of a global federation the TFD system can be considered an institution with great capacity and authority. Unlike the ECB which does not have authority over the fiscal policies of its members, the GCB does have some powers. Unlike the present global monetary and financial institutions the TFD is designed to have full compliance powers. Given that the international monetary system as glue binds together the monetary, financial, economic and commercial systems and thus becomes the linchpin of the international system, the TFD’s Global Central Bank almost constitutes a global federation. Once nations are willing to cooperate together in binding treaty by coordinating their global monetary, fiscal and financial policies, the governance function of a global federation is in place.

Though initially the TFD did not contain a Global Court to adjudicate monetary, climate and development conflicts it would make sense to design a global court that would deal with the conflicts that arise from the TFD global governance system. The Court could be called the Tierra Court and would take its place besides the World Court (International Court of Justice) and the International Criminal Court and the International Court of Climate Justice, proposed by Bolivia’s Cochabamba conference in April 2010. The Tierra Court would conceptually be closest to Climate Justice Court because of its focus on the climate crisis.

The characteristics of the TFD global governance system include capacity and authority as mentioned above. Credibility, accountability and effectiveness and transparency would also be characteristics that would be pursued as a matter of course. As regards subsidiarity the TFD system’s GCB governs by a board of representatives of regional monetary authorities which be enabled to become strong by various capacity building methods, so that what can be done regionally and locally is done there.

Given the above assessment of the functions and characteristics of the TFD it can be concluded that the TFD can be candidate for a post-Kyoto global governance system that integrates the pursuit of a healthy climate and the model of low carbon and climate-resilient development by utilizing an international monetary system that is transformed by its adoption of a carbon standard. It warrants to be fully studied by a UN Commission which would come up with a Monetary Agenda for Climate Action. It also warrants becoming part of a grassroots movement that would push for a UN General Assembly Resolution to establish the Commission and would engage in research and education by stimulating national debates of this TFD candidate as a post-Kyoto alternative. It is Maurice Strong who believes that basing the international monetary system on carbon is “innovative” and that the TFD “seems to be very promising in light of the stalemate in post-Kyoto prospects.”

The TFD global governance system is a work in progress and many of ideas and best practices presented during the second Yale/UNITAR conference on Global Environmental Governance (September 17-9, 2010) where the TFD was first officially launched and ideas of other similar global governance learning events can be used to improve it, particularly in preparation for its hopefully full-fledged discussion (and negotiation) at the Rio 2012 Earth Summit.