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The euro crisis solutions and the Tierra Solution

Post By gaia1 in European Union

The euro crisis solutions and the Tierra Solution

Tuesday, December 20, 2011

Following the December 9th EU Summit, European leaders are using a threefold approach to stabilize the euro crisis. The first prong of this strategy is provided by the corrective measures to be enacted by euro-area national governments in the context of sharpened EU surveillance and disciplining sanctions. The second prong or line of defense is offered by a potential financial firewall that a stepped-up IMF can erect around the vulnerable sovereigns of the euro area, such as Italy and Spain, through lending programs with conditionality. The third and last line of defense would be the ECB itself which would take the burden of any residual systemic pressures that the two previous layers would be unable to stabilize.

If these three lines of defense were to synergistically work—still a major question—the euro crisis could be stabilized for the moment, but the crisis itself would not be resolved. There is a bevy of other factors that are needed to be considered to produce an equitable, sustainable and stable currency for the Euro zone and non-Eurozone European countries.

One of them, and probably the most important factor to be considered, is the Euro zone’s connection with the international monetary system of which it is an inextricable part. As long as this international monetary system remains dysfunctional, the euro crisis cannot be resolved on a permanent basis of equity, sustainability and, therefore, stability. The big question becomes how European and other global leaders are able to make this international monetary system more functional, equitable, sustainable and, consequently, more stable.

Time has come to add to the three lines of defense for stabilizing the euro crisis a fourth component, i.e. a proactive policy development program that considers the reintroduction of a monetary standard which would remove the gross volatility, the hallmark of the present system. Rather than basing this standard on a gold—be it pure or flexible—standard, it can be based upon any material or immaterial standard that, John Maynard Keynes’ terms, is considered valuable and accepted as such by a local community or state. The Tierra Solution proposes to take carbon as a standard—a specific amount of tonnage of CO2e per person—, given that decarbonization of societies is humanity’s greatest challenge in the 21st century in coping with the catastrophic effects of an ever increasing amount of CO2e emissions.