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Dec
21

The Great Monetary Transition

Post By gaia1 in TFD system

This is a copy of a blog posted on December 21 to www.globaltransition2012.org  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 www.timun.net and my “thinkpiece” on http://www.earthsummit2012.org/index.php/pubs/sf-publications/412-sdg-thinkpieces); 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.”

 

Dec
20

Meeting the gold standard community

Post By gaia1 in American Monetary Matters

Meeting the gold standard community.

Tuesday, December 20, 2011

Comments to the article in http://www.forbes.com/sites/ralphbenko/2011/12/19/the-death-certificate-of-the-paper-dollar-where-to-next where the mentioned authors represent the who is who in the US gold standard community.

I am a practitioner of the sociology of sustainability and unsustainability with a focus on reducing the dysfunctionality of the international monetary system and finding effective ways to combat the climate crisis.

I agree with all the persons mentioned in this article that we need a monetary standard. As a matter of fact I have almost all their books in my personal library and have read them, the last one being by Rickards. However, I am not in agreement with using a pure or flexible gold standard to stabilize the international monetary system.

Having the conservative platform of 2012 include the discussion of a standard-based international monetary system is an important element, because the international monetary system being the glue of the financial, economic and commercial systems is hugely underestimated. It seems that only 1% of all economists are monetary economists. Also the general public is not versed in issues such as the expensive global reserve system that costs developing nations some $100 billion annually.

The main question in the article deals with the issue of how bringing about the introduction of the gold standard. The real question, in my opinion, should be broader and deals with the choice of a monetary standard and how it can be implemented. Thus, I would like to propose a monetary standard based upon carbon.

Basing the international monetary system on a carbon standard, i.e. a specific amount of tonnage of CO2e per person—the present dysfunctional international monetary system would be made more functional and, what is even more important—at least in my view and not in the view of most of the authors in the article I assume— such transformed international monetary system would combat the climate crisis and advance low carbon development. Thus, societies that decarbonize i.e. use renewable energy sources and have climate sensitive land use and forestry policies will have stronger economies and consequently stronger currencies. This integrated approach to resolving three major crises—the dysfunctional international monetary system, the climate crisis and the unsustainable model of development— is presented in a book-length publication entitled THE TIERRA SOLUTION: Using a transformed international monetary system to combat climate change and advance low carbon and climate resilient development, to be published by Cosimo Books in April 2012. For those who are curious and cannot wait that long can visit the website of the International Institute for Monetary Transformation at www.timun.net or google the terms monetary transformation.

 

 

Dec
20

Monetary democracy and monetary justice

Post By gaia1 in TFD system

Monetary democracy and monetary justice

Tuesday, December 20, 2011

This post is part of the GTI forum of the www.tellus.org 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 http://www.businesscycles.biz/docs/lincolnpolicy.htm — 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.

 

Dec
20

The euro crisis solutions and the Tierra Solution

Post By gaia1 in European Union

The euro crisis solutions and the Tierra Solution

Tuesday, December 20, 2011

Following the December 9th EU Summit, European leaders are using a threefold approach to stabilize the euro crisis. The first prong of this strategy is provided by the corrective measures to be enacted by euro-area national governments in the context of sharpened EU surveillance and disciplining sanctions. The second prong or line of defense is offered by a potential financial firewall that a stepped-up IMF can erect around the vulnerable sovereigns of the euro area, such as Italy and Spain, through lending programs with conditionality. The third and last line of defense would be the ECB itself which would take the burden of any residual systemic pressures that the two previous layers would be unable to stabilize.

If these three lines of defense were to synergistically work—still a major question—the euro crisis could be stabilized for the moment, but the crisis itself would not be resolved. There is a bevy of other factors that are needed to be considered to produce an equitable, sustainable and stable currency for the Euro zone and non-Eurozone European countries.

One of them, and probably the most important factor to be considered, is the Euro zone’s connection with the international monetary system of which it is an inextricable part. As long as this international monetary system remains dysfunctional, the euro crisis cannot be resolved on a permanent basis of equity, sustainability and, therefore, stability. The big question becomes how European and other global leaders are able to make this international monetary system more functional, equitable, sustainable and, consequently, more stable.

Time has come to add to the three lines of defense for stabilizing the euro crisis a fourth component, i.e. a proactive policy development program that considers the reintroduction of a monetary standard which would remove the gross volatility, the hallmark of the present system. Rather than basing this standard on a gold—be it pure or flexible—standard, it can be based upon any material or immaterial standard that, John Maynard Keynes’ terms, is considered valuable and accepted as such by a local community or state. The Tierra Solution proposes to take carbon as a standard—a specific amount of tonnage of CO2e per person—, given that decarbonization of societies is humanity’s greatest challenge in the 21st century in coping with the catastrophic effects of an ever increasing amount of CO2e emissions.  

 

Dec
12

Monetary justice as guiding principle

Post By gaia1 in IIMT

 

 

 

 

MONETARY JUSTICE:

The guiding principle for the structure of the zero draft of the outcome document?

 

Presented at the Second Intersessional of Rio 2012 Earth Summit

 

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

 

International Institute of Monetary Transformation (IIMT) , www.timun.net; gaia1@rcn.com

UN Headquarters, 14-16 December 2011

 

As to methods there may be a million and then some, but principles are few. The man

who grasps principles can successfully select his own methods. The man, who tries

methods, ignoring principles, is sure to have trouble.”

Ralph Waldo Emerson, 1890s

INTRODUCTION

 

Monetary justice is the ethical principle that underlies the Tierra Fee & Dividend (TFD) system, the IIMT’s carbon-based international monetary proposal. The TFD is presented as a transformational pathway of an integrated solution to a non-working international monetary system, an increasing global threat of catastrophic climate change and an unsustainable model of development.

 

A main theme of Tierra Fee & Dividend (TFD) system, following Emerson’s observation, is the need to first search for principles before searching for methods. One of the main shortcomings in UN conferences and negotiations seems to be a basic lack of interest, unwillingness, or inability in dealing in a substantial and coherent way with the ethical dimension of the various global challenges the UN and the world community face.

 

Thus, the main premise of the TFD system is that no stability in the monetary, financial, economic and commercial systems is possible without the principles of equity and sustainability. Underlying the principle of monetary sustainability is the principle of monetary justice not only in its social, ecological, procedural and intergenerational meanings, but especially in its transformational meaning as the ethical foundation of a carbon-based international monetary system. Monetary justice is proposed here to be the main guiding principle that unifies many other important principles as spelled out in the recent Bonn DPI/NGO Declaration. Monetary justice is proposed here to function as the organizing principle for the much discussed integration of the three pillars of sustainable development as called for by the UN SG Report of December 2010 and in various DESA Reports. Consequently, monetary justice is suggested to be the guiding principle for the structure of the Zero Draft, the three main parts of which would consist of the explanation and application of the monetary justice principle, the various suggestions in the Compilation document that deal with the development of a global institutional framework and the more numerous suggestions that deal with green economies and low-carbon and climate resilient development.

 

            The world over,  millions of people are demonstrating and protesting  the gross inequality between people and demand basic overhaul of the monetary, financial, economic and commercial systems, because these systems do not work for the 99% of them as these systems continue to enrich the few, impoverish the many and imperil the planet. It is most important that government, business and civil society leaders in the Rio process respond to this demand for fundamental and transformational change in the world’s global systems which unlike physical systems are human made and, consequently, can be changed and even transformed. It is possible to achieve this global

 

 

transformation if the world’s most basic global system, i.e. international monetary system is transformed. By introducing a carbon standard, not a pure or flexible gold standard, this transformed international monetary system would not only transform the dysfunctional international monetary system, but, at same time, provides a realistic pathway to stabilize the climate and to bring about a low-carbon  and sustainable model of development. Such monetary transformation is a practical, though very challenging way, to integrate the three pillars of sustainable development, a main objective of the Rio 2012 Earth Summit.

 

 MONETARY JUSTICE in its regular and transformational sense

 

International monetary justice is not only the application of social, environmental, procedural and intergenerational justice principles to the present international monetary system, but also the application of these various forms of justice to a transformed international monetary system. International monetary justice in the latter, transformational or integrated sense, argues that, as a matter of justice, government, business and civil society are to pursue a carbon-based international monetary system that would remove monetary injustices such as the global reserve system, would honor the right of a stable climate in the interest of both Earth and human wellbeing and would promote human rights.

There is little social, environmental (climate), procedural and intergenerational justice in the present international monetary system, the climate system and the human relations system. These injustices can reduced simultaneously by the pursuit of the proposed carbon-based international monetary system which is described in some detail in the Stakeholder Forum’s http://www.earthsummit2012.org/index.php/pubs/sf-publications/412-sdg-thinkpieces and in great detail in the forthcoming Cosimo book-length publication THE TIERRA FEE AND DIVIDEND SYSTEM: Using a transformed international monetary system to combat climate change and advance low carbon and climate resilient.

Such carbon-based international monetary system is possible if government, business and civil society and particularly their leaders are able to think outside the box. Such thinking  is demonstrated by Maurice Strong who believes that basing the international monetary system on a carbon standard is “innovative” and that such system “seems to be very promising particularly in light of the stalemate in post-Kyoto prospects” (October 8, 2010 email); by author Bill McKibben, leader of the global www.350.org  who believes that a carbon-based international monetary system is on “one of the remaining possibilities” given that  physics and politics increasingly narrow our possible paths of action ; by those who signed an international petition entitled “Make monetary justice the basis of your Rio negotiations”  at http://www.change.org/petitions/g20-and-rio-summitteers-make-monetary-justice-the-basis-of-your-negotiations Needed for this transformed international monetary system is a plan that would lead to a financial system that is credit- rather than debt-based and that would be democratically governed by a Global Central Bank. The Chicago Plan of the 1930s was proposed by many outstanding economists to deal with the Great Depression. It withdrew the privilege of fractional reserve banking by privately-owned banks, making them utilities without the privilege of creating money and of owning over 90% of the money supply.

 

CONCLUSION

 

The September 2011 DPI/NGO Bonn Conference’s Declaration states in line 265 that governments, among many other things, are “to rethink the monetary system based upon a carbon standard.” Given that the Earth Summit wants to develop “New Foundations for the Future”, it is  essential that among those foundations the monetary foundation is going to be considered because it is the international monetary system functioning as glue, as a lubricant for the other international system that can be considered to be the linchpin of those systems. As a consequence it is crucial that the Rio 2012 Earth Summit process basing itself on the requirements of monetary justice give priority to monetary governance as the basis of governance systems for the 21st century.

 

 

Dec
12

The Tierra Monetary Compact

Post By gaia1 in IIMT

The Tierra Monetary Compact

Monday, December 12, 2011

This new nomenclature of the Tierra Fee & Dividend system, the Tierra system or The Tierra Solution is only new in terms of name, not in terms of content. It was first used on December 7, 2011 as part of the 5th High Level Dialogue of Financing for Development at UN Headquarters. The Dialogue’s focus was on the two main UN conferences on financing for development: the Monterrey Consensus of 2002 and the Doha Declaration. It was suggested in the IIMT’s 2 sided, one page golden rod circular that a monetary compact of a carbon-based international monetary system might be the ultimate goal in financing of not only development, but also of climate measures. The circular can be found in the IIMT Documents section, http://www.timun.net/documents.php?dcat=3

Twice I was given the opportunity to speak to the feasibility of considering the Tierra Monetary Compact (TMC), once in a side event and, more importantly, in an official General Assembly Dialogue meeting. In both cases, participants paid attention without being able to respond to the interventions.  They, the 100 circulars and personal interactions are part of making people think outside the box for a pathway that integrates three major global problems of a dysfunctional international monetary system, ineffective climate negotiations and an unsustainable development model.

 

Dec
01

Beyoond the November liquidity injection

Post By gaia1 in European Union

BEYOND THE NOVEMBER 30 LIQUIDITY INJECTION

Thursday, December 01, 2011

There seems to be general agreement that the six central banks’ injection of dollar liquidity into the Eurozone banks is only a temporary measure and does not deal with the real sovereign debt problems of several of its member states. Even the strengthened euro is back again after one day to its pre-injection level.

There are at least two pathways that will be more effective in making the Eurozone sustainable. The first one is well explained by Ellen Brown’s article in http://www.huffingtonpost.com/ellen-brown/the-ecb-fiddles-while-rom_b_1117193.html?view=print&comm_ref=false entitled “The E.C.B. fiddles when Rome burns”. In it she shows that article 123, paragraph 2 of the Lisbon Treaty permits the ECB to lend to publicly owned banks. By treaty cannot lend directly to its member governments. She thinks that if France had borrowed from its own publicly-owned or central bank rather than from privately-owned banks starting in the seventies, it would have saved enough money by not having paid interest and by receiving dividends of its central bank that it could be debt-free now.

So, why is this public bank option not being used? Why should Eurozone governments be forced to borrow from privately-owned banking systems? Important questions that can not be answered here, because the second pathway has to be presented now.

The public bank pathway would be part of a larger conception of the global monetary, financial, economic and commercial systems. It is based upon an international monetary system that is transformed by the adoption of a carbon monetary standard. There are quite a few observers, many of them in the Republican and Hayekian fold who advocate sound money by way of a pure or flexible gold standard. They also understand that the international monetary system does not work without a proper standard. What the carbon standard does is not only making the international monetary system function properly as glue and lubricant of the other global system, but, as importantly, pushes nations to decarbonize their societies and thus combat the climate crisis, humanity’s major challenge for this century. Adopting this carbon-based international monetary system called the Tierra Fee & Dividend system or the Tierra Solution nations could spend money, not debt, into circulation for their economies and would not have any financial difficulty in financing the necessary mitigation and adaptation measures to combat the climate crisis. However bad the sovereign debt situation is in the Eurozone, the US and elsewhere, the drama that is being played out in the UNFCCC Conference in Durban might be more damaging in the long run for people, species and planet. What does it take for government, business and civil society to take the steps towards the Great Monetary Transformation and making monetary justice the guiding principle of global governance?

I believe with editor and author Bryant Harrison McGill who said, “Yearning for the seemingly impossible is the path to human progress”.