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Beyoond the November liquidity injection

Post By gaia1 in European Union


Thursday, December 01, 2011

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

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

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

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

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