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Aug
23

Krugman's Age of Bubbles

Post By gaia1 in American Monetary Matters

 The following is an expanded version of my shortened response to Krugman’s column in the New York Times of August 23, 2013. It may also function as the basic information for an OPED piece in the New York Times.

Why did so many bubbles happen during the last couple of decades while they were absent during the 50s and 60s and early 70s? There are many reasons, but the most important one is often not mentioned, let alone studied.

It was during this period that the international monetary system was a stable system, based as it was on the dollar/gold standard. When the Nixon Administration in August 1971 removed that standard, instability started to creep into the monetary, financial, economic and commercial systems. The latter systems were affected because the international monetary system acts a glue of those systems: change that basic monetary system and all other global systems change.

So the question becomes of how we can return to a stable international monetary system in the 21st century. The Stiglitz UN Commission of June 2009 investigating the effects of the financial meltdown of 2008 on developing countries argued that no one country’s currency should be the international transaction currency nor should the currency of a regional monetary union act in that way. The Commission and quite a few other monetary economists starting in the late 1970s came up with the solution of Special Drawing Rights or SDRs.  This would a first major step in the right direction.

Given that all global systems, i.e. monetary, financial, economic and commercial systems have to deal with this century’s greatest challenge of a changing climate that affects all dimensions of social and ecological life on this planet, it is my argument that we can use the world’s most basic system of monetary relations to also deal with this climate crisis. Thus, I have proposed the Tierra Solution that would resolve the climate crisis through monetary transformation, i.e. basing the international monetary system on the carbon standard of a specific tonnage of CO2e per person. The conceptual, institutional and strategic dimensions of such transformational change far exceeding the paltry reform efforts of the IMF are presented in a 350 page book published in 2012.  Applications of this carbon-based international monetary system can be found at various places on the internet by googling my initials of fcvnyc and on the website of International Institute for Monetary Transformation, i.e. www.timun.net.

In this Age of Bubbles where the future of social and ecological wellbeing is at stake it behooves serious people to consider and debate transformational changes such as the feasibility of carbon monetary standard that would force nations to decarbonize in their pursuit of low carbon and climate-resilient development in the global North and South.

 

Aug
03

spurring economic transition

Post By gaia1 in United Nations

 The following post was submitted on August 3 to debate@thebrokeronline.eu which is part of the UN Post2015 effort to device a new integrated framework after the MDGs framework and action expires. It describes the contents and goals of its debate in the following terms.

‘Inclusiveness’ has become a buzzword, particularly in development economics. But how can we create a more inclusive economy and what obstacles lie in the way? These are the questions that The Broker's 'Spurring economic transition' debate addresses.  

Spurring economic transition is about building a global economic model that is durable, is aimed at more than just economic growth, and seeks to involve those who are currently excluded in a participatory way. Such economic transformation might be needed in all countries - developed, emerging, and developing.

The Broker aims to provide an overview of the lessons learned from efforts to transform the economy in such a way, all over the world. We bring together diverging approaches on how to effectively and structurally evoke this change by connecting the knowledge of academics, policy-makers, practitioners and entrepreneurs. The debate focuses on the following questions:

Assuming that the goal is to transform the global, regional and local economy in such a way that well-being for all is more important than growth rates:1. How could this be done?2. What hinders this economic transformation?3. How can such an economic transformation be structurally incorporated into policy at national, regional and global level?

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'Spurring economic transition' to a more inclusive economy also includes the need to look at the most basic global system, i.e. the international monetary system. It acts like glue binding together the financial, economic and commercial systems. Transforming that basic system means transforming the other global systems that are built upon i.

Taking that international monetary system and basing it not on a gold but a carbon standard is one way of transforming it. How that can be done is presented in the 2012 book The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation which discusses the conceptual, institutional and strategic dimensions of this “extraordinarily innovative” proposal. (see review in Amazon.) Bill McKibben, author, environmentalist and founding leader of the global www.350.org wrote the following statement on basing the international monetary system on a carbon standard as proposed by Verhagen’s 2012 Tierra Solution book: “The further into global warming area we go, the more physics and politics narrows our possible paths of action. Here’s is a very cogent and well-argued account of one of the remaining possibilities.”

The conceptual, institutional and strategic dimensions of The Tierra Solution is an answer to your first question. Assuming that the goal is to transform the global, regional and local economy in such a way that well-being for all is more important than growth rates: 1. How could this be done?

The answer to your second question “What hinders this economic transformation?” is presented in the last two chapters of the book.

Part of the answer to the third question of the Brokeronline debateHow can such an economic transformation be structurally incorporated into policy at national, regional and global level?is presented in chapter 7 in the section on global governance and derives much of its views based upon the invitational UNITAR Conference on global governance and its subsidiary levels held at Yale University in September 2011.