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Sep
27

The TFD Working Groups

Post By gaia1 in TFD system

 

THE TIERRA FEE AND DIVIDEND (TFD) WORKING GROUPS:

Values, Mission, Objectives, Program, Membership, Organization.

 

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

Founding president, International Institute of Monetary Transformation

www.timun.net; gaia1@rcn.com

27 September 2010

 

“As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods.  The man, who tries methods, ignoring principles, is sure to have trouble”.

Ralph Waldo Emerson, 1890s.

 

Introduction

            There are many reformist proposals for a post-Kyoto regime. The TFD is a transformational one. It transforms the international monetary system by basing it upon a carbon standard as a way to combat climate change and advance green economies. One of its major strength following Emerson’s observation is its use of a value-based framework.

 

Values

  • Values are anterior to the development of an organization’s mission and objectives because they set boundaries that determine them.
  • The TFD Working Groups adhere to a value-based planning framework that integrates social and ecological values, much in the same way as the Earth Charter does.
  • The basic value in Tierra Fee and Dividend (TFD) system is climate justice which is based upon the historical fact of the cumulative ecological indebtedness of industrialized nations.

 

Mission

The aim of the international network of TFD Working Groups is to establish a carbon-based international monetary system that will to combating climate change and advancing low carbon and climate-resilient development.

 

Objectives

  1. To develop a Monetary Plan of Climate Action (MPCA)
  2. To establish programs of  research, education and action to have MPCA considered by the UNFCCC and, particularly, by Rio 2012 Earth Summit
  3. To urge UN organizations  to incorporate a carbon-based international monetary system (CBIMS) into their planning for low carbon and climate-resilient development
  4. To urge international financial institutions (IFIs), governments, business and civil society organizations to incorporate the CBIMS into their planning for low carbon and climate-resilient development
  5. Urge governments to sponsor the UN General Assembly Resolution for a UN Commission of Experts on Monetary Transformation and Low Carbon, Climate-resilient Development that would submit its Monetary Plan of Climate Action to the UNFCCC which, in turn, would present its MPCA to the Rio 2012 Earth Summit

 

Program Activities

  • Research
    • Research those dimensions of the TFD that would contribute to the establishment of CBIMS
    • Develop a research agenda to address the shortcomings of present global climate governance approaches to post-Kyoto climate regimens, using the criteria of the TFD’s value-based framework
    • Compare the strengths and weaknesses of the U.S. government’s position of GARE (Global Agreement on Reduction of Emissions) as elaborated by The Brookings Institutions’ authors Antholis and Talbott in Fast Forward
    • Develop transitional strategies for the Tierra Land 2025 scenario to become a reality
  • Education
    • Educate fellow professionals in ways that are convenient to the specific TFD Working Group’s focus
    • Engage in educational activities for the general public
  • Action
    • Convince national governments to sponsor the UN General Assembly Resolution for the establishment of the above UN Commission
    • Organize any project, playful or otherwise, to promote TFD acceptance

 

Membership

TFD Working Groups consist of leaders in various professions or social groupings who consider combating climate change and advancing low carbon and climate-resilient development the two main, interrelated challenges of the 21st Century. The initial membership is chosen by invitation by TFD designer sustainability sociologist Dr. Frans C. Verhagen. Once a TFD Working Group has been established its leadership selects additional members and develops its research, education and action agenda. Once the leadership changes, the Institute appoints the next leadership based upon the preferences of the Working Group.

 

Organization

The International Network of TFD Working Groups will be coordinated by the International Institute of Monetary Transformation, the originating institution of the TFD. The Institute will network with the various international centers that are engaged in post-Kyoto alternatives.

 

Conclusion

 

“Whatever you can do or dream you can, do it.

Boldness has power, genius and magic in it.”

Johann Goethe

 

Sep
24

The US-China Currency Dispute

Post By gaia1 in American Monetary Matters

 

 

 

THE US-CHINA CURRENCY DISPUTE:

The case for a carbon-based monetary standard

 

An OPED piece

Submitted to the NY Times

By Frans C. Verhagen

September 24, 2010

 

The longest period of global economic progress in the 20th century was the period of 1945 to 1971. The main reason of these two decades of prosperity was that the basic global system, i.e. the international monetary system had a monetary standard. That gold/dollar exchange standard made currencies fixed (within narrow bands) which made trade predictable and flourishing.

 

This happy state of affairs changed when the gold/exchange window was closed by the Nixon Administration on August 15, 1971. This led to the present system of fluctuating exchange rates which has led to rampant currency speculation where 95% of the currency trades belong to casino gambling and 5% respond to the needs of real economies. It also underlies the present currency disputes between the US-China and other such as the EU-China one and Japan’s effort to devalue its yen to stimulate its economy and boost its exports. It is also worth mentioning that trillions of dollars are lost in unnecessary transaction costs for businesses that have to hedge their projects against these currency fluctuations. Furthermore, developing countries have to spend $100 billion annually to buy hard currencies to protect their currencies and be able to purchase needed (and sometimes unnecessary) imports. In the meantime the global economy is still reeling from a foreseeable financial debacle that has led to austerity budgets, severe unemployment and increased hunger and disease.  In all, the lack of a functioning international monetary system—it is called a criminal non-system by Nobel economics prize winner Robert Mundell—is  a major cause of an international economic and financial system that enriches the few, impoverishes the many and imperils people, species and planet.

 

Economist Judy Shelton has argued during her Congressional testimony on May 15, 1999 that a monetary standard is needed because of  the continued expansion of free trade, the

increased integration of financial markets and the advent of electronic commerce.  She also raised the important question “whether this process of monetary evolution will be intelligently directed or whether it will simply be driven by events.” The present US-China and other currency disputes seem to indicate that the latter route is being followed. She concluded her testimony by stating that “it is imperative that the United States begin to develop and put forward its own global monetary vision for the future.” She is personally in favor of a return to the gold standard. Given the fact that only 1% of economists engage in monetary economics and even less percentage that engages in research in crucial monetary standards, it is not surprising that new thinking on monetary standards is well-nigh absent. Most monetary economists focus on an alternative ways in every more complicated models to move away from the US dollar as the major reserve currency and propose a basket of currencies or a basket of commodities or other ways to bring greater predictability. If there were a real monetary standard, the global reserve system could be removed.

 

The International Institute of Monetary Transformation is proposing a carbon-based monetary standard that would make the value of currencies based upon the level of decarbonization of their societies. The lower the carbon intensity of a society, the stronger its economy and the stronger its currency. Though countries can maintain their present, culturally important, currencies, their values would change based upon the value of the Tierra, the unit of account of the monetary standard. If countries decide that with the introduction of this carbon-based, i.e. transformed international monetary system they want to introduce a world currency the Tierra would become a world currency which, besides being a unit of account, would become a means of exchange and a store of value.

 

The Tierra monetary architecture does not only have fixed exchange rates, it also has carbon accounts that are part of a nation’s balance of payments. Like financial imbalances—the bane of present day economic problems—ecological imbalances have to be settled by transferring funds from carbon-debtor nations in the global North to carbon-creditor nations in the global South.  To make the carbon-based international monetary system work a global central bank is needed that not only administers the system, monitors and regulates financial flows, but also engages in creating liquidity, particularly in those times like ours where austerity budgets in the global North and South are making life difficult or impossible. Abundance of financial resources rather than scarcity would be reigning principle. This world central bank is to be located within the UN system.

 

During the exchange rates hearings at the US Congress last week and President Obama’s meeting with Chinese premier Wen at the UN Headquarters yesterday it has become clear that this US-China dispute is being fought at the highest political level. Perhaps, this currency dispute can be seen as a transition point in a power struggle between the US and China. Congress may pass tariff barriers to Chinese goods and the Obama Administration may start legal action against China at the World Trade Organization to win a Pyrrhic victory. The Republicans may use the dispute as a political football in order to gain majorities in one or both houses of Congress, capitalizing on people’s anger and wanting to change the political landscape without developing new policies. Such strategy can be classified under the rubric “"Responsibility Deficit" a term introduced by David Brooks in his today’s column in the New York Times.

 

The US-China currency dispute is a symptom of the non-system of international monetary relations. Fighting the cause of the dispute rather than dealing with the symptom is the way forward. If the Obama Administration were to apply its New Philosophy to the international monetary system and start considering its transformation by basing it on a   carbon-based monetary standard, the dispute would be resolved and the world would become a very different place. The Institute’s Tierra Land of 2025 scenario spells out this new world together with the social processes that make this Great Monetary Transition possible. It proposes that nations pass a UN General Assembly resolution to establish the UN Commission of Experts on Monetary Transformation and Low Carbon, Climate-resilient Development that submit its Monetary Plan of Climate Action via the UN FCCC to the Rio 2012 Earth Summit where monetary global governance would become part of its global economic and environmental governance. In preparation of that Commission the IIMT has started to organize international professional working groups that are doing the research, education and action needed to have the world transition from the non-system in international monetary relations to a carbon-based international monetary system which being glue (Eichengreen 2008) would bind together  and transform the global financial, economic and commercial systems.

 

____________________________________

 

Frans C. Verhagen, M.Div., M.I.A., Ph.D. is a sustainability sociologist and founding president of International Institute of Monetary Transformation www.timun.net. His forthcoming book with Cosimo Books is entitled The Tierra Fee & Dividend System: A Monetary Approach to Combat the Climate Crisis and Advance Low Carbon and Climate-resilient Development.