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Mar
19

Greg Smith's Op-ed piece on GoldmanSachs, Robert Reich's and my comments

Post By gaia1 in American Monetary Matters

Blog: Smith’s Op-ed piece on Goldman Sachs, Robert Reich’s and my comments

http://readersupportednews.org/news-section2/320-80/10467-focus-goldman-loses-22b-after-scathing-op-ed shows how Goldman Sachs lost 3.4% of its stock, i.e. $2.2 billion after Smith’s Op-ed in the New York Times. Robert Reich rightly shows how Smith’s critique is way too narrow. I think the national and global financial community have to be subjected to a discussion of an alternative financial and monetary system.

 

Why Greg Smith's Critique Is Way Too Narrow

By Robert Reich, Robert Reich's Blog

17 March 2012

 

http://readersupportednews.org/images/stories/alphabet/rsn-G.jpgreg Smith, a Goldman Sachs vice president, resigned his post Wednesday with a stinging public rebuke of the firm on the oped page of the New York Times - accusing it of no longer putting its clients before its own pecuniary goals.

But if Mr. Smith believes his experience at Goldman is something new, he doesn't know history. In 1928, Goldman Sachs and Company created the Goldman Sachs Trading Corporation, which promptly went on a speculative binge, luring innocent investors along the way. In the Great Crash of 1929, Goldman's investors lost their shirts but Goldman kept its hefty fees.

If Mr. Smith believes such disregard of investors is unique to Goldman, he doesn't know the rest of Wall Street. In the late 1920s, National City Bank, which eventually would become Citigroup, repackaged bad Latin American debt as new securities which it then sold to investors no less gullible than Goldman Sachs's. After the Great Crash of 1929, National City's top executives helped themselves to the bank's remaining assets as interest-free loans while their investors and depositors were left with pieces of paper worth a tiny fraction of what they paid for them.

The problem isn't excessive greed. If you took the greed out of Wall Street all you'd have left is pavement. The problem is endemic abuse of power and trust. When bubbles are forming, all but the most sophisticated investors can be easily duped into thinking they'll get rich by putting their money into the hands of brand-named investment bankers.

Moreover, finance has become so complex that investors don't even know when they're being taken for a ride, and so can't possibly hold a brand-name bank responsible for their losses - or for gains that are a fraction of what they might otherwise have been.

That's why we have regulations. After millions of investors lost everything in 1929, the federal government stepped into the breach with the Securities Acts of 1933 and 1934 and the Banking Act of 1933, sponsored by Senator Carter Glass and Congressman Henry Steagall.

But starting in the 1970s and 1980s, Wall Street made sure these and the regulations issued under them were steadily watered down - which contributed to the junk-bond and insider trading scandals of the 1980s, the dot-com scams of the late 1990s and early 2000s, the Wall-Street enablers of Enron and other corporate looters, and the wild excesses that led to the crash of 2008.

Wall Street's shenanigans have convinced a large portion of America that the economic game is rigged. Yet capitalism depends on trust. Without trust, people avoid even sensible economic risks. And when they think the game is rigged, they're easy prey for political demagogues with fast tongues and dumb ideas.

The Street has only itself to blame. It should have welcomed new financial regulation as a means of restoring public trust. Instead, it lobbied intensely against the new Dodd-Frank Act and refused to resurrect Glass-Steagall.

The cost of such cynicism has leached deep into America, finding expression in Tea Partiers and Occupiers and millions of others who think the Street has sold us out.


Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on publicradio.com and iTunes.

 Comment on March 19:

Like  always, professor Reich is right on target by pointing to history and the deregulation battle of Glass/Steagall. However, I think we have to take Smith’s oped and Reich’s statement a step further by seriously discussing the what, why and how of a credit-based financial system where only the public sector creates money as indicated in the Lincoln 1865 Senate document and advocated by quite a few organizations today. In final instance, the International Institute for Monetary Transformation thinks we have to evolve a carbon-based international monetary system as proposed in The Tierra Solution: Resolving the Climate Crisis Through Monetary Transformation to be published in April 2012.

 

Mar
17

Global governance and the 10th Principle

Post By gaia1 in American Monetary Matters

 

 

Global governance and the 10th principle

March 17, 2012

 

The dialogues of March 17-18 at Pace University organized by  the www.GlobalTransition2012.org-- the first one of which in October 2011 I participated in--are important venues with its “shared aim of developing alternative solutions to redress inequalities and global environmental change.” However, too little attention is paying paid to the “big picture” of the institutional framework within which green economy and other sustainable development programs have to be located. Though many CSOs and UN bodies  talk about the need of integrating the three pillars of sustainable development, far too little work is done. It is up to civil society to push nations of “developing alternative solutions”. It is not only due to inertia and to political inability and unwillingness of especially powerful nation-states that alternative solutions are not found. It is also the small bore vision of many civil society organizations that have not produced the vision and grand pursuit needed for these carbon-constrained times.

 

“The goal of the Global Transition 2012 Initiative is to achieve an outcome from the UNCSD Earth Summit 2012 that catalyses a global transition to an economy that maximizes wellbeing, operates within environmental limits, and is capable of coping and adapting to global environmental change in an equitable manner.” Clearly stated is this goal, but the Challenge Papers may not reach that goal because there is not an overarching view of global governance. A valuable contribution in that regard is being made by the www.GreenEconomyCoalition.org with its elaboration of 9 principles and its “improving governance” diagram, appended below.

 

I would submit that a tenth principle has to be added to its 9 principles of a green economy. Using the format of the 9 principles this tenth monetary principle would read:   “10. A green economy without an equitable, sustainable, and, therefore, stable global monetary system will not be effective—The monetary principle.

—a monetary standard other than the pure or flexible gold standard is to be developed so that volatile exchange rates, currency manipulation and speculation and financial imbalances can be reduced; adopting the SDR as the major reserve currency is an intermediate step on the road to the removal of the expensive global reserve system when currencies have become convertible or a world currency has been adopted.” (The full argument for the tenth principle can be found in www.timun.net/blog )

The only substantive contribution in the monetary/financial area for Dialogue #3 is Simon Zadek’s proposal for a “public fiduciary” which resembles the “global public authority” proposal of October 2011 by the Pontifical Commission of Justice and Peace. Though he, as member of the Canadian Center for International Governance Innovation, sees the need for a governance structure, no specific proposals were made. My forthcoming book The Tierra Solution: Resolving the Climate Crisis Through Monetary Transformation to be published next month by Cosimo Books in New York presents a pathway, not a blueprint, to such global governance structure by using a carbon-based international monetary system to combat the climate crisis and advance low carbon and climate-resilient development.

 

 

 

 

 

Mar
17

The global green economy: The 10th principle

Post By gaia1 in American Monetary Matters

THE GLOBAL GREEN ECONOMY: The 10th principle

A Contribution to the online discussion  of 9 draft principles

By

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

International Institute for Monetary Transformation

Www.timun.net ; gaia1@rcn.com

New York, March 9, 2012

Introduction

The Coalition for a Green Economy, formed by a wide range of stakeholders during the recent the UNEP Governing Council meeting, has proposed  “nine draft principles of a green economy” that are being discussed on line. The tenth principle is the principle that places these 9 principles in the larger context of a transformed, i.e. carbon-based international monetary system which as glue binds together monetary, financial, economic and commercial systems.

Description of the 9 draft principles

In the Coalition’s online survey the 9 principles were  listed and comments were invited to be placed in each of the 9 comment boxes. Here the 9 principles and their descriptions are reproduced and my comments, mostly questions, were made in bold type.
1. A green economy delivers sustainable development – “It is a vehicle to deliver sustainable development – not a replacement - It addresses all three pillars (environmental, social and economic) and develops policy mixes that seek the best results across all of them - It integrates the cultural and ethical dimension across the three pillars.” How do those three pillars relate to present global monetary, financial, commercial systems?

2. A green economy delivers equity - The Justice Principle – “It delivers equity between and within countries and between generations - It respects human rights and cultural diversity - It promotes gender equality - It respects indigenous people’s rights to lands, territories and resources.” What about financial and monetary justice?

3. A green economy creates genuine prosperity and wellbeing for all - The Dignity Principle. “It eradicates poverty - It transforms traditional jobs and actively develops new, decent green jobs - It helps build capacity and skills - It delivers the Human Development Indicators - It provides universal access to basic health, education, sanitation, and other essential services - It respects the rights of workers and trade unions and delivers a just transition - It support the right to development - It supports sustainable, diverse economies and local livelihoods.” What about local financial and banking systems? What about public banks as suggested by the US Public Banking Institute?

4. A green economy improves the natural world - The Planetary Boundaries, Earth Integrity and Precautionary Principle. “It recognizes ecological boundaries and seeks to operate within them - It delivers environmental justice - It respects the precautionary principle - It assesses of the potential impact of new and untested technologies before they are released - It demonstrates the benefit for the environment through indicators - It ensures an optimum and wise use of natural resources - It safeguards biodiversity loss and prevents pollution - It promotes the restoration of balance in ecological and social relations.”What about incorporating ecological balances of climate debts and credits into a new balance of payments system?”

5. A green economy is inclusive and participatory in decision making - The Inclusion Principle. “It is based on transparency and the visibility of all stakeholders - It supports governance at all levels from global to local - It empowers citizens and promotes full and effective participation at all levels - It fosters cultural values and is sensitive to ethical considerations - It builds societal awareness, developing education and skills - It is inclusive and participatory, giving opportunities to youth, women, poor and low skilled workers, indigenous peoples and local communities.” What will be the global governance system be like to make this Inclusion Principle be possible?

6. A green economy is accountable. - The Governance Principle. “It governs markets in consultation with all stakeholders - It promotes the development of standards to measure progress - It promotes international cooperation and defines International liability - It promotes democracy - It commits to international human rights standards and environmental agreements.” What are the financial, banking and monetary institutions like that are built on this Governance Principle?  

7. A green economy builds economic, social and environmental resilience - The Resilience Principle.” It supports the development of social and environmental protection systems - It promotes systems approaches, recognizing the interdependence and integrated nature of these three systems, underpinned by culture and ethical values - It creates resilience by supporting many green economy models relevant to different cultural, social and environmental contexts - It considers indigenous local knowledge and promotes diverse knowledge systems - It builds local skills and capacities. Should such resilient and diverse economic models that are relevant to local communities not be part of a global resilient structure in finance, banking and monetary systems?

8. A green economy delivers sustainable consumption and production - The Efficiency Principle. “It ensures prices reflect true costs incorporating social and environmental externalities - It implements the polluter pays principle - It supports life-cycle management - It strives for zero emission and zero waste - It prioritizes renewable energy and renewable resources - It seeks absolute decoupling production and consumption from negative social and environmental impact - It delivers sustainable lifestyles - It promotes social, economic and environmental innovation - It promotes resource efficiency - It gives access to intellectual property rights.”  Is such socially and ecologically responsible global economic system compatible with the present neoliberal economic, financial and monetary philosophy? Should we not instead pursue a credit-rather than a debt-based financial system, a banking system that is not engaged in money creation but operates on 100% reserves and global international monetary system that is based upon a standard that pushes nations to deal with the climate crisis by decarbonizing their societies?

9. A green economy invests for the future - The Intergenerational Principle. “It ensures the finance sector supports the delivery of diverse sustainable green economies - It promotes long-term decision making above the short term - It regulates the finance sector, constrains speculation and supports the real economy.” Is it not necessary in order to evolve such financial sector the global financial system is to be restructured as credit-based system where governments spend money into circulation as proposed in the 1865 Lincoln Monetary Declaration, by the New Economic Foundation and most recently by adherents of the Modern Monetary Theory in Michael Hudson’s report of the Rimini meeting at www.globalresearch.ca/index.php?context=va&aid=29605 ?

Description of the tenth principle

The following statement of the 10th principle in the format of the other 9 principles was submitted via https://www.surveymonkey.com/s/LB9Q3GW  on March 6 to Emily Benson of http://www.greeneconomycoalition.org.   It followed the survey’s suggestion that  “10. Now that you have read through the nine draft principles of a green economy, is there anything else you would like to add or share to inform this discussion?”

 “10. A green economy without an equitable, sustainable, and, therefore, stable global monetary system will not be effective—The monetary principle.

—a monetary standard other than the pure or flexible gold standard is to be developed so that volatile exchange rates, currency manipulation and speculation and financial imbalances can be reduced; adopting the SDR as the major reserve currency is an intermediate step on the road to the removal of the expensive global reserve system when currencies have become convertible or a world currency has been adopted.

—the Declaration of the Bonn DPI/NGO Conference of September 2011 has asked governments to “rethink the international monetary system to be based upon a carbon standard” (line 265).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

—a green economy framework that does not give essential attention to the challenge of disruptive climate change will be ineffective; a carbon-based international monetary system would push nations to decarbonize their societies in order to combat climate change because the strength of their economies and their currencies would depend on it.”

Rationale for the 10th principle

 The above questions in bold have connected the 10th principle with the thinking that went into this important effort of finding an integrated value-based planning framework. The main reason for including the monetary principle together with its credit-based financial system and 100% reserve banking as a 10th principle is that such inclusion provides an integration of the three pillars of sustainable development and of the other 9 principles above.

The complete rationale for inclusion of the 10th Principle is presented in my forthcoming book The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation, to be published by Cosimo Books in the middle of April.

 

 

Mar
15

Response to the ECOSOC 2012 annual meeting with IFIs etc

Post By gaia1 in United Nations

COHERENCE, COORDINATION AND COOPERATION FOR FfD:

A transformative monetary proposal

Presented at

Special High-level meeting of ECOSOC with BWIs, WTO and UNCTAD

12-13 March 2012, UN Headquarters

By

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

International Institute for Monetary Transformation

Www.timun.net ; gaia1@rcn.com

INTRODUCTION

 

No lasting and profound progress can be made in this triple C approach to FfD unless all stakeholders are aware of and are able to agree on the underlying assumptions in the global monetary, financial, economic and commercial systems that are part of FfD.

 

ANSWERS TO THE TWO TOPICS UNDER DISCUSSION

 

  1. “Promoting  sustained, inclusive and equitable economic growth, job creation, productive investment and trade”

 

The NGO Coalition for Green Economy is holding on line discussions about 9 Global Green Economy principles in preparation for the Rio 2012 Earth Summit. These principles are eminently applicable to the first of the two topics of this high-level ECOSOC consultation. Those principles are:

1. A green economy delivers sustainable development; 2. A green economy delivers equity - The Justice Principle; 3. A green economy creates genuine prosperity and wellbeing for all - The Dignity Principle; 4. A green economy improves the natural world - The Planetary Boundaries, Earth Integrity and Precautionary Principle. 5. A green economy is inclusive and participatory in decision making - The Inclusion Principle. 6. A green economy is accountable. - The Governance Principle. 7. A green economy builds economic, social and environmental resilience - The Resilience Principle. 8. A green economy delivers sustainable consumption and production - The Efficiency Principle.9. A green economy invests for the future - The Intergenerational Principle.

 

A 10th principle has been presented by the International Institute for Monetary Transformation that would integrate these principles under the concept of monetary justice in its regular and transformed sense of the terms. It can be formulated, following the format of the above 9 principles as:

“10. A global green economy without an equitable, sustainable, and, therefore, stable global monetary system will not be effective—The monetary justice principle.

A monetary standard other than the pure or flexible gold standard is to be developed so that volatile exchange rates, currency manipulation and speculation and financial imbalances can be reduced. Adopting the SDR as the major reserve currency is an intermediate step on the road to the removal of the expensive global reserve system when currencies have become convertible or a world currency has been adopted as part of a standard-based international monetary system such as proposed in Verhagen 2012  The Tierra Solution: Resolving the Climate Crisis Through Monetary Transformation. (The book, published by Cosimo Books, will be on the market in the middle of next month.)

 

 It proposes a carbon-based system, called the Tierra Fee & Dividend (TFD) system with the Tierra as its unit of account, and Fee & Dividend, not cap-and-trade, as its carbon reduction method. Beside the carbon standard of a specific tonnage of CO2e per person, this carbon-based international monetary system would also have a balance of payments mechanism that balances both the financial and ecological (climate) credits and debts in one integrated payment system. The system would be governed by a Global Central Bank with administrative, regulatory and exclusively held money creation functions, so that its member states are bound together in a properly structured monetary union that would maintain balanced fiscal policies.

The Declaration of the Bonn DPI/NGO Conference of September 2011 attended by over 2000 NGO representatives has asked governments to “rethink the international monetary system to be based upon a carbon standard” (line 265) and Maurice Strong believes such system is “innovative” and could possibly function as an alternative to the Kyoto Protocol.

The main reason for including the monetary principle together with its credit-based financial system and 100% reserve banking as a 10th principle is that such inclusion provides an integration of the three pillars of sustainable development, the three C’s of FfD and  the 9 principles above.

  1.  “Financing of sustainable development”

 

No lasting and profound sustainable development is possible unless it explicitly connects with the challenge of climate change because climate changes disrupt now and will disrupt  even more in the future any attempt for sustainable development. Thus, a financing system for sustainable development without a green economy framework that does not give essential attention to the challenge of disruptive climate changes will be ineffective. Consequently, adopting a carbon-based international monetary system would provide not only ample financing for development, but also for climate adaptation and mitigation measures. Such system would push nations to decarbonize their societies in order to combat climate change because the strength of their economies and their currencies would depend on it.

 

The first step in the support of the development and implementation of this Tierra global governance system is for nations to decide at the June Rio Earth Summit to have the UN General Assembly pass a Resolution to establish the UN Commission of Experts on Monetary Transformation, Climate Change and Sustainable Development which would explore the pros and cons of carbon-based systems, such as the TFD.  Their recommendations would be part of a Monetary Agenda for Climate and Development Action which would include a blueprint for financing of development and climate.

 

Mar
09

REDD+ and the Tierra System

Post By gaia1 in TFD system

REDD+ AND THE TIERRA SYSTEM

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 www.redd-standards.org.

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.