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Jan
30

UN Draft and Report for Rio 2012 and monetary transformation

Post By gaia1 in United Nations

THE UN’S ZERO DRAFT, THE RPRP REPORT AND THE MONETARY CHALLENGE

Monday, January 30, 2012

 

During this month of January 2012 the UN Headquarters have been abuzz with both the Zero Draft produced by the two co-chairman of the Bureau for the Commission on Sustainable Development and the Resilience of People, Resilience of the Planet (RPRP)  by the High-level Sustainable Development Group (GSP) established on August 9,  2010 by SG Ban Ki-moon. Both of these two products, a draft and a report, are inputs into the Rio 2012 Earth Summit process.

 

How do they stack up in respect to a carbon-based monetary transformation as proposed by the International Institute for Monetary Transformation?

 

The Zero Draft is a minimalist document based upon a compilation document that had a very wide range of views, practices and proposals. It was a great disappointment to many that this draft had not more substance.

 

The RPRP report which was launched today in Addis Ababa,  is a serious attempt to analyze the present world situation,  it points to 8 drivers of change and proposes recommendations, one of which is the important one dealing with a Global Sustainable Development Council. It would replace the nearly two decades old Commission for Sustainable Development which received failing marks.  Recommendations 52 and 53 read: “263. Governments should consider creating a global sustainable development council to improve the integration of the three dimensions of sustainable development, address emerging issues and review sustainability progress, with meetings held on a regular basis throughout the year. This body could be a

subsidiary organ of the General Assembly and would replace the Commission on Sustainable Development. It would need to have a broad geographical and political membership and to fully engage relevant international institutions —including United Nations agencies and the international financial institutions —and non-State actors from civil society, the private sector and science. 264. Such a council would develop a peer review mechanism that would

encourage States, in a constructive spirit, to explain their policies, to share

experiences and lessons learned, and to fulfill their commitments.”

Though the global economy was mentioned many times, both in terms of past and future developments, and its connection with the financial system highlighted several times, the terms monetary and monetary system, let alone monetary transformation, was not mentioned. The monetary connection with the financial system could have been identified, both analytically and programmatically.

An important event in terms of a carbon-based international monetary system was a meeting on January 26 at the New Economics Institute in Manhattan where some forty representatives of NGOs held their first international consultation on the production of NGO sustainability treaties for Rio 2012 Earth Summit. These treaties would be similar to those over three dozen sustainability treaties produced during Rio 1992. About a half a dozen participants expressed interest in being part of the treaty cycle on monetary transformation. I volunteered to send the first draft of this treaty to them for their feedback and expand the treaty cycle after their comments. This draft will be uploaded to the www.timun.net in the next couple of days.

 

Jan
27

Comment to Financial Times Opinion piece

Post By gaia1 in TFD system

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”  http://www.ft.com/intl/cms/s/0/eb455494-483d-11e1-b1b4-00144feabdc0.html#axzz1kgeG2rDO 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.

 

Jan
04

2012 and the Tierra Solution

Post By gaia1 in TFD system


2012 AND THE TIERRA SOLUTION

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.” (http://www.un.org/en/development/desa/news/policy/risks-for-another-global-downturn-have-heightened.html)

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!

 

Jan
03

The Tierra Triple Transformation in global governance

Post By gaia1 in TFD system

THE TIERRA TRIPLE TRANSFORMATION IN GLOBAL GOVERNANCE

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.