What is the Problem with Our Current Money System??

http://www.lietaer.com/2010/09/what-is-the-problem-with-our-current-money-system/

by blietaer

Our modern monetary systems share in common the fact that they consist of a nationwide, government-enforced monopoly of a single type of currency, created by banksthrough loans attached to positive interest rates, and naturally or artificially kept scarce.   While these particular features of our money system have permitted the accumulation of capital that enabled rapid industrialization during the modern era, they also have a number of hidden but far-reaching counterproductive side effects.

The use of positive interest alone is responsible for driving (1) the short-term thinking that drives our economic decisions, (2) the relentless pressure for economic growth which feeds hyper-consumerism; (3) growing inequities; (4) the greed and rampant speculation which regularly make the front page of our media, (5) and the weakening of social ties and erosion of community.   I have written more at length about these dynamics in mybooks, articles, and interviews, but I invite you to read a brief overview of the main effects of interest to understand how our national currencies generate competition and erodes community.

From Monopoly to Monetary Ecology.  To be clear, the problem is neither our national currencies nor the use of interest per se, but the monopolistic use of these types of currencies which are only well-suited for certain purposes but not for others.   The fundamental problem with our current monetary system is that it is not sufficiently diverse, and as a result it dams and bottlenecks our creative energies, and keeps us trapped in a world of scarcity and suffering, when we actually have the capacity to create a very different reality.   Our conventional money facilitates particular types of (commercial) flows but does not adequately support other types of flows within communities.   When a broader spectrum of currencies is in place, people can complete more transactions, enabling more people to meet their needs and enter into exchange relationships.  Because complementary currencies do not bear interests and are issued in sufficient supply, they encourage cooperation amongst participants, and can counterbalance some of the side-effects of conventional money.

Biologist Elizabeth Sahtouris once asked: “How would a body survive if we decided that all the blood should go to the brain or the liver, or certain organs should only be irrigated with blood on certain conditions?” This is precisely what is happening to our world economy under a monoculture of national currencies that are distributed based on a centralized decision making system controlled by a few financial institutions.  All the blood (dollars, euros etc.) is being sent to specific organs that are supplied while others (communities and regions) are often starved to death.  When they are not properly counterbalanced by complementary currencies, national currencies promote embolism (which is the accumulation of blood in one place).

Adopting a diversity of currencies is just as important to human survival as bio-diversity is to the fate of the earth.  This is not a metaphor. Our peer-reviewed scientific research on the conditions under which  complex flow networks are sustainable demonstrates that money systems share with natural ecosystems the need for a higher diversity and interconnectivity.  The conclusion: to ensure such diversity, we need to actively support the circulation of different types of currencies for different types of purposes.    Promoting a healthier monetary system requires the use of three different kinds of currencies alongside our national currencies: (1) an inflation-proof global complementary currency designed to stabilize the world economy;  (2)  business-to-business currencies designed to counteract the effects of conventional money shortages during periods of economic crises and  contraction; and (3) community currencies that address a variety of social problems and strengthen the fabric of society.

Revising our agreements around money.  Most of the fundamental rules and agreements we have around money were created centuries ago, at a time that was widely different from ours, and by a small group of stakeholders concerned with a narrow set of interests.  As a consequence, they are ill-equipped to serve the challenges and objectives of our current world.   As long as our monetary system remains a blind spot to us, we remain unable to alter its powerful influence on the way we think and act.  As soon as we gain monetary literacy, we can begin examining the nature and implications of the monetary agreements in which we unconsciously participate.  We can start identifying the conditions under which they serve or do not serve the needs of our times, and begin create agreements that better serve our needs.

Solutions | For a sustainable and desirable future

An interesting journal

Solutions | For a sustainable and desirable future

Update: First Round of Interviewees for Future of Money Project � emergent by design

Update: First Round of Interviewees for Future of Money Project � emergent by design (link)

This is a pretty interesting project, worth following up!! Click on the link above, not the title of the post.

Event Updates

At the moment we are working on options for providing meals. We are committed to give as much as we can and of the better quality. That means, we're attempting to offer vegetarian lunches on Saturday and Sunday (most likely a buffet style on Sunday), made with local produced organic vegies. We would also love to have local produce fruit and organic milk for morning and afternoon tea on Saturday and Sunday. Our ability to provide this, depends on how much people we get registered by the 31st of October. Ideally, the 18th of October will give us a clearer picture to manage our budget. If we don't get the numbers we need to afford these expenses, we would still provide meals and morning/afternoon tea. However, we won't be able to ensure local produce organic ingredients.

Also, the event will start on Friday from between 3pm and 5pm, to give workers a chance to leave their offices earlier but not miss the whole day. And Depending on when we start, we might finish between 7pm and 9pm. At the moment we don't plan to cater for this afternoon/evening because the event was initially planned to be a 2 days workshop, not 3 days Symposium and Open Space Forum. Thus, we suggest potential attendants to bring you own food on Friday.

Apparently some people feel this effort is hypocrite due to the participation fee. I strongly suggest to read our "about us" page on the blog to find out our motivations behind these charges. And also invite you to consider the length of the event, with its implications, and level of commitment we have to  make of this event something worth attending to. The "changing the economic dream - event" page on our blog has more info about what you can expect and bring to the weekend.

To reduce waste and avoid incurring in further expenses, we ask participants to bring your own 'mess kit' for the entire weekend.

Do not hesitate to contact us should you have any further questions.

Kindest Regards

Tatiana Maya

The New Economics for Humanity

"Poor People??? SCREW THEM!!! "

No body actually said it, but that's what I heard this afternoon at the BrisLets Annual General Meeting. Read it if you have the time...pretty long.

We were listening to the Treasurer about the 2009-2010 financial year and statements of accounts in official money. We were down from about $800 compared to the previous financial year. The money we had, about $300, was collected from new membership fees who are a 'for life' $20 per member, which means that in theory we had 15 new users in the system. Someone did the homework to look at the actual new members of the system and noticed that in fact, we had 50 new members, not 15. So the big question was: 'where is the money from this people?". The answer was that at some meeting, it was decided that Brislets would allow potential users to join in, try it out and pay afterwards. So 35 people haven't paid yet....people went mad!!

How come people are there without paying?!?!?! Some sort of united voice amongst the attendants was saying "I've paid my fee, it's not fair that I pay and others are there for free". Recruiting people is something that BrisLets wants to see happening. They really want to see the system growing. However, for many people Brislets is not the best thing they want to do for $20. On the other hand, many people who would find the system useful and would provide services (skills) to it, do not have $20. One of the social issues that LETS tackles is, precisely, poverty and unemployment. Nevertheless, in the midst of the convulsion, a very common unexamined assumption came through: "people who don't have $20 to pay for membership, do not have any goods nor services to offer to the system". My mouth just fell wide open. Are we saying that if you don't have whatever the membership fee is, you don't have anything to offer to this community?? 

I repeatedly said, imply, try to say, that 'exclusion never works' and, that with this approach we were closing the group to those who can pay. Some where quite happy with the latter, and some even suggested in regards to the 35 people who haven't paid something like: do so ASAP before you start trading, or please go away. 

I find the whole idea quite shocking and completely opposite to what LETS AND the CES are all about. I dare to say that Tim Jenkin would feel quite sad to read this.  Let's not forget that LETS is, in many cases, an initiative to overcome the trading constraints imposed by official money. Yet, Brislets punches people on their faces right at the beginning; Don't come if you can't pay...

People were kind of implying that everyone and anyone has $20 in their life. It would be good to explore this http://www.aph.gov.au/library/intguide/sp/poverty.htm

At some point I said again "what is going to happen if I have someone who wants to join but doesn't have the money". The answer was "Well, you pay for them!"...later on, I refined my question: "what if there is a group of refugees who definitely can pay $20" ...[because that means their food for the day?]... I can pay for one to join, but I can't pay for 50 people, as much as I would love to, I can't" Answer was "It's that simple, if people can't pay, then can't be part of this group"....The answer brought me tears, I had to leave the room...thanks God my son was there with me and I could find peace in him and his big smiles and funny noices. 

Initially I had tears from seeing the indifference, after the tears left, a very strong and deep sadness remained, not for those of whom we are excluding, but for those who can't stand the fact that someone else will get the chance to join for free when they themselves had to pay. If $20 sounds to small an amount that everyone can pay, why are they so attached to the fact that they have already paid it?? Seeing them with such a dependence is very sad. During the morning, I attended the Peace and Sustainability Festival. They let anyone and everyone have stalls for free, I was there promoting The New Economics for Humanity. A very big crowd of people was representing "Make Poverty History". I wonder if Brislets could've been brave enough to be there telling these people "tell the poor you work with, that LETS can be a very good thing for them to join...just make sure they have $20 if they want to join us". I wonder how many of you are actually saying that you don't want poor people in the system anyway.

In the big picture, this reveals to me, how insecure we feel around what can happen with our money. According to Brislets, $20 is a very small amount to pay, but too much money to lose once you're in. And we're worried about poverty in the world?? There was a very interesting idea: What if those who can't give official money, give 20 units to the admin account. Unheard...it was like "[pat pat] yeah yeah, sounds good....and now the important thing: What about the AUD$20???" There was no room whatsoever for new ideas. Instead of taking advantage of the situation to innovate and create a DIFFERENT solution, people felt it was too risky and they rather went back to old paradigms...as if they were working before. 

One of the main reasons for charging official money has something to do with Brislets being able to manage the group as an incorporated association. CAREFUL!!! THERE ARE SOME GRASSROOTS GROUPS AROUND BRISBANE who are looking at ways for association, please I don't want to see this happening again. If we want true transformation of the structures in society, we have to be inclusive. We can't just step on people who don't have the money, get them off the train and tell them "sorry, you missed this one". For many, there are no more trains!! People have more to show than just money. This is also a 'heads up' call for all other LETS and complementary currencies initiatives out there. 

I also added that more important than $20 per member, was the fact that the health of the system, according to the CES statistics, was pretty bad. I brought up the fact that just a couple of months ago, there were about 1000 accounts that were put "on hold". For many users of Brislets, it is not a secret that most of those members will not be back to resume activities with us. They have pretty much left, and all of them have either positive or negative balances. Many argued that this was not really an issue. I would like to advice them to read the CES Manual again, about why it is important to bring balances to zero before leaving the system. Someone even dared to ask, in a very disrespectful tone: "which group are you talking about?? That is happening in your group! not here!". Am I crazy and showed up at the wrong meeting?? 

It felt as if most people in that room were happy for Brislets to lose members if they don't agree with their financial policies. According to that, I don't see any danger in putting this information available for Brislets members. There is a difference between ownership and stewardship. I feel like I'm in a privately owned group were I only have to follow old rules, and where there is no place for me to take responsibility of the success nor failure of the system. I also heard: "In the real world you have to pay money". I have to say: Don't overlook the real world of those of don't have the money, their real world is a lot tougher than yours, and it is your real world who has built theirs so...stewardship is my call. (Book: Stewardship: choosing service over self-interest by Peter Block)

Yes, this is my very ego speaking here. However, I am very thankful to the situation. I am not being sarcastic. If not because all of what happened there, I would not have been able to reinforce to myself that there are many and much better ways to 'do business'. So thank you all for the pain I saw and still feel. It'll push me through and take me to the grandest version of the greatest vision I've ever held of myself. Someone told me "don't take it personally". I appreciate the words, I felt they were sincere. I don't take it personally. I am a global citizen. I take it globally and humanly. 

I'd like to paste something from a discussion that's going on in the yahoo group, something that maybe, many of you are not aware of:

there are 2 major problems with how money is structured:

1) that it is created as debt where only the principle gets created, which means that the monetary supply is at all times insufficient to pay the outstanding debt - causing the need for exponential growth which is environmentally unsustainable (& the inflationary pressures harm the poorest sectors the most)

2) money has a privileged position relative to labor & real world assets - for two reasons, first that money does not depreciate in the same way that other consumables do, and second that money is leveraged to create new 'wealth' via usury fees.  this is an argument put forward by Silvio Gesell (in his "Natural Economic Order" book (http://www.appropriate-economics.org/ebooks/neo/neo2.htm) which is hard to read - tho there's a nice article here: http://findarticles.com/p/articles/mi_m0254/is_4_59/ai_68704400/?tag=content;col1

i feel we also have terrible issues with community trust - so, i'm concerned when i hear comments about how these systems work best in cohesive cooperative communities.  i'm drawn to the Mondragon cooperative model (http://en.wikipedia.org/wiki/Mondrag%C3%B3n_Cooperative_Corporation) for a community owned credit union

so, what i favor for Baltimore is a demurrage model (like http://www.uea.ac.uk/env/ijccr/pdfs/IJCCRvol13%282009%29pp61-75Gelleri.pdf) that would operate with some percentage of the holding fees assisting non-profits that are helping the community.  i've worked with a restorative justice program here in Baltimore (Community Conferencing Center) which is very effective at healing conflict, but does not make money to operate - i think many of the non-profits are important for healing our communities & should be funded as part of our social infrastructure

Tatiana Maya.