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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.



The Tierra Solution and the OWS Protests

Post By gaia1 in TFD system


Tuesday, October 18, 2011

One month after a 1000 protesters occupied Zukotti Park in the Wall Street area the protest has swept over the USA where some 1000 cities had their protests and even over the globe in many places. Finally, people start to wake up that the system does not work, is highly unfair and that those two realities are related. It is has become a movement for social justice and fundamental change.

Though the protesters has not make specific demands yet—their emphasis is still on process and the value of participatory decision-making—time would seem to have come that they and humanity as a whole is to map out a vision of the future where the global monetary, financial, economic and commercial systems work for the good of all people and the whole planet.

It is in this context of increased awareness of fundamental change, of transformational change that the Tierra Solution is presented. It was during the march of October 5, 2011 I articulated its contents in three statements with one sentence of explanation. Find below the cardboard sign that I carried.



Monetary Justice at the G20 and the Rio +20 conference

Post By gaia1 in United Nations

The following presents the rationale of why the G20 and the Rio negotiators should consider taking monetary justice as the basis for their negotiations. Hopefully, the reader agrees with this rationale and signs the Petition which can be found at  and search for monetary justice.


MONETARY JUSTICE to be the basis for the G20 and Rio 2012 Earth Summit deliberations.

Addressed to: Mr. Sha Zukang, Secretary-General of Rio+20  Earth Summit

                        President Sarkozy, President of G20 for 2010-11

Monday, October 17, 2011

Why it is important?

The international monetary system, functioning as glue, binds together the global monetary, financial, economic and commercial systems. The present international monetary system, characterized by a fundamentalist free market system, by financial imbalances and their volatility of exchange rates with their associated disputes about managed and market-based exchange rates, by currency speculation and manipulation, its lack of effective regulation of capital flows and derivatives and, last but least, by a costly global reserve system with its unfair seignorage system, is unjust, unstable, and unsustainable. It is unjust because mostly operates for the benefit of hard currency countries while the rest of the world and the global economy itself suffer. Because the international monetary system is unjust, it is unstable and unsustainable.

Making monetary justice the basis for G20 and Earth Summit negotiations would consist of three major challenges dealing with needed transformational changes in the privately-owned banking systems, in the debt-based financial system and in the dysfunctional international monetary system which is called criminal by Nobel Prize economist Robert Mundell. First, banks are to become utilities without the privilege of creation money. Second, the financial system is to be based on money or credit which only the government can create and circulate into the economy. The Chicago Plan of the 1930s, proposed by many outstanding economists to deal with the Great Depression, is an example of such system Cf. Thirdly—the most challenging transformational change of all—the international monetary system is to be based upon a standard, not a gold, but carbon standard and governed by the Global Central Bank with its administering, monitoring, regulating and money creating functions. This novel concept is presented by  with its forthcoming book entitled THE TIERRA SOLUTION: Monetary Transformation, Climate Change and Sustainable Development. (Cosimo Books January 2012) Adopting such carbon-based international monetary system would constitute a global monetary governance system that could be the basis of a comprehensive global governance framework beyond Rio 2012.

In conclusion, signing this petition means that you believe that monetary justice is needed in global deliberations and negotiations to transform the global monetary, financial, economic and commercial systems so that humanity can live in social and ecological peace in the 21st century.  (For context, see and the September 2011 DPI/NGO Declaration where governments, among many other things, are called upon in Line 265 “to rethink the monetary system to be based on a carbon standard.”)




Monetary Justice and Monetary Transformation

Post By gaia1 in IIMT


Tuesday, October 18, 2011

For about two months I have been using the term monetary justice instead of monetary transformation. This linguistic change is more educational than anything else. People understand what justice is and does. What is monetary justice and what does it are then the two questions to be answered. Monetary justice is the presence of justice to the monetary field.  It is to remove or at least reduce the many monetary injustices that are present in the international monetary system and less so in national monetary systems. So the end result is monetary transformation as proposed in the Tierra system of a carbon-based international monetary system.

The use of the monetary justice term and approach was first publicly used at the DPI/NGO Conference in Bonn in the beginning of September. During most of the general assembly and working group meetings I was able to connect the issue at hand with the international monetary system while at the same time circulating a statement during the conference. The outcome of this and other activities lead to the inclusion in the final Declaration that governments, among many other things, are “to rethink the monetary system based upon a carbon standard”. This Declaration is presented by the German government to the Rio +20 Bureau that is overseeing the preparatory process. (See  for the Declaration and for the circular in its Documents Section called Monetary Peace.)

The use of the term of monetary justice has also contributed to far greater interest in monetary transformation by the CoNGO Sustainable Development Committee of which the Working Group on Monetary transformation, the climate crisis and sustainable development is part. We are now working on having monetary justice become part of a Compilation Document that would form the basis of the Rio Outcome document.

Finally, I have launched an international petition on addressed to the G20 and the Secretary General of the Rio Conference to consider taking monetary justice as the basis of their negotiations. At the reasons for doing so are given. If a thousand people were to sign this petition which in essence presents an answer to the Wall Street Protests and a post Rio governance framework governmental negotiators would take heed. Are you part of those who are going to sign the Petition?