The following scenario is placed at the beginning of the 2010 COSIMO book entitled The Tierra Fee & Dividend System: A Monetary Approach to Low Carbon and Climate-resilient Development by Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist. He is the founding president of International Institute of Monetary Transformation. www.timun.net; email@example.com
C IIMT, June 2010
Tierra Land 2025
Tierra Land 2025
It is the year 2025. So much has changed since 2010, affecting in a very fundamental manner the lives of individuals, families, businesses and the States and the institutions that govern them both on a national and global level. Indeed, it was well-nigh impossible to have predicted these changes around 2010, let alone at the beginning of the new century ten years earlier.
To help you understand what happened, you are invited to take a trip into the future—to
Our energy system is no longer carbon-based. Coal and oil companies now operate a low carbon system and are leading in the promotion of the many renewable energy technologies that we now have. Wind turbines dot our landscape and offshore installations have replaced those hundreds of oil rigs. We read in our textbooks how the 2010 BP oil disaster in the
One of the reasons for this efficient and secure decentralized energy system is the role that national governments have played. In the face of the economic and climate crises of 2007 – 2009 and the ongoing food, fuel and water crises they realized how necessary it was to cooperate in transforming the monetary, financial and economic systems. The pressure of emerging economies, which wanted a more equitable world order, also contributed to this change from a competitive multipolarity to a cooperative multilaterism.
As a result, the world’s financial system is no longer controlled by the Bank of International
Settlements and its Financial Stability Forum, the International Monetary Fund and the World Trade Organization. Nor is it influenced by large financial services corporation. These corporations, many of which had signed on to the World Corporate Charter Organization established a few years after the Rio Summit, are now monitored and regulated by the UN World Central Bank. It is encouraging to observe that under the financial system in
Commercial banks and privately owned banking systems no longer have the privilege of fractional reserve banking. Governments have withdrawn this privilege. Nor is the economy debt-based with governments borrowing money from privately-owned banking systems. Now banks make careful loans to prospective homeowners and enterprising business women.and men. When an individual makes a loan from a bank, he/she pays a very low interest.
The international monetary system in 2025, i.e. the Tierra Fee and Dividend (TFD) system, is no longer without a monetary standard which is carbon based using the Tierra as its unit of account. It aims to address itself to the century’s greatest challenge—reducing GHG emissions to non dangerous levels. With its fixed exchange rates, the TFD system has reduced currency manipulation and speculation drastically. Anchored in the Tierra, the TFD’s unit of account, the nations’ currencies are convertible thus removing the need for a costly global reserve system. We are now looking forward to instituting a single carbon-based world currency using the Tierra as the unit of account, making it, at the same time, a nation’s or individual’s store of value and means of exchange. The method of computing a nation’s balance of payments have also changed. The account lines will include both its financial and ecological credits and debits
But how did these changes come about? Looking back to 2010 we envision the steps the world community needed to have followed to propel these changes forward.
One might have expected that the crisis years 2008-9 to bring forth new thinking and institutions. They did not. Rather, the economic crisis resulted in a near collapse of not only the global financial system, but also the global economic system. Besides, human survival was threatened by the climate crisis. The
During the years 2010 – 2015 new global policies were developed. People started to understand the serious drawbacks of the financialization process that had taken place around the 1990s and wanted to definancialize their societies. They remembered that the hegemonic empires of
People also started to understand the larger scope of the definancialization process by connecting it to deglobalization process and started emphasizing the benefits of living well within the Earth’s limits in their own bioregions.
The link between definancialization and deglobalization became clearer to most people in government, business and civil society. Individuals, local communities and their national governments started emphasizing the benefits of living well within the Earth’s limits in their own bioregions. People were encouraged to become ‘locavores’ eating food grown in their region. The concept of frugal trade which included the environmental costs of the aviation and shipping industries in providing goods and services was introduced and guided business practice. .
Some of this thinking passed into the international community’s effort to implement the Millennium Development Goals (MDG), particularly in 2010, when high level sessions took place in March and September in a last ditch effort to ensure basic human services promised by the MDGs to all by 2015. It took about ten years to have this new thinking and its related policies implemented both globally, regionally, nationally. We have to thank those valiant persons and institutions who did not give up during the last 15 years but rather kept battling a world order that enriched the few, impoverished the many and imperiled species and planet
At the same time, the idea of a carbon-based monetary standard (CBMS) was introduced to deal with the serious shortcomings of the existing international monetary system. Fluctuating exchange rates, currency manipulation and speculation and an expensive global reserve system that costs developing countries some $100 billion annually had to be brought under control. It was finally recognized that the international monetary system, the glue which binds the monetary, financial, economic and commercial systems, had to change if those other systems were to function properly. In other words, the economy, trade and financial institutions had to be based on an equitable, sustainable, and, therefore, stable monetary system if they were to provide resources for low carbon and climate-resilient development in both the global North and South.
A carbon standard was, therefore, proposed to be the new monetary standard. It was developed to put the international monetary system into the service of combating the climate crisis. Its accounting unit was the Tierra, Spanish for Earth. By basing the new international monetary standard on carbon rather than upon a basket of major currencies, commodities or an adapted SDR as the reformist authors in the important Chatham House report were proposing, the international monetary system was transformed leading to changes in the financial, economic and commercial systems, which now had to operate within the limits set by the carbon monetary standard internationally, regionally and nationally. All nations had to express their national currencies in terms of the Tierra, the unit of account of the new monetary system. Pegged or anchored on the Tierra, their currencies became carbon-based and thus convertible with each other.
The way history develops is a wondrous thing. Serendipity and planning often go together, and then the truth of the saying “opportunity favors the prepared mind” becomes clear. One of the outcomes of the minimally effective
It is also worth mentioning that the second Obama Administration finally developed a global monetary vision based upon its New Foundation philosophy that enabled the
This imaginary trip is offered as a prelude and introduction to a proposal for a monetary approach to a low carbon and climate resilient development, i.e. the Tierra Fee and Dividend System (TFD), the various dimensions of which will be elaborated in the chapters that follow.
“Can we move nations and people in the direction of sustainability? Such a move would be a modification of society comparable in scale to only two other changes: the Agricultural Revolution of the late Neolithic, and the Industrial Revolution of the past two centuries. These revolutions were gradual, spontaneous, and largely unconscious. This one will have to be a fully conscious operation, guided by the foresight that science can provide. If we actually do it, the undertaking will be absolutely unique in humanity’s stay on Earth.”
William D. Ruckleshaus,
Head of the