"New frontier of money"
April 3, 2006
It is nearly two years since the E. F. Schumacher Society
convened the conference "Local Currencies in the 21st
Century." The event drew nearly 300 participants
from thirteen countries to Bard College on the Hudson River. It
is widely agreed that the conference was a landmark event. Some
of the things people said:
"This was the best conference I've ever attended." --Pete Seeger
"It was one of the most superbly organized and inspiring events I have attended." --Tony
"You've provided me and our Community Support Dollar project a huge shot
in the arm: connections, information, inspirations, strategies galore. I
get choked up thinking about it all." --Phillip
"Just to say that was one of the best ever conferences." --Judith
"This was indeed the best conference I've attended. Very well
organized, great spirit.
I enjoyed meeting so many interesting folks from around the world. It
felt like visiting a village where people vastly agreed about things that are
important to me." --Paul Glover
The sense of community that was engendered was clearly a major cause of its
success. But for many its success was that the program illuminated
in a new way one of the most mystified subjects of all time: money. Margrit
Kennedy demonstrated in her opening presentation that the monetary system
in its current form, by its very nature, creates a wealth disparity of class. By
the end of the conference those attending understood that money can actually
take many forms and the social and economic effect of a system is dependent
on its form. Currencies can be invented for the purpose of building a community
or for mobilizing unused resources. If shaped correctly a currency
can be a tool to empower the small economy: the economy of community and
family.
Those who missed the 2003 E. F. Schumacher conference will have another chance
to learn about the new frontier of money. We will be co-sponsoring the
BALLE pre-conference on June 8th at Champlain College in Burlington VT, entitled, "Complementary
Currencies: Money for Local Living Economies." The national BALLE conference
follows on the 9th and 10th. The pre-conference will feature many of
the same speakers that made our local currency conference at Bard so inspiring
including Bernard Lietaer, author of "The Future of Money;" Edgar
Cahn, founder of Time Banks and author of "No More Throw Away People;" Paul
Glover, creator of Ithaca HOURS and Tom Greco, author of "Money: Creating
Alternatives to Legal Tender" among many other inspiring and dedicated
individuals. Susan Witt will speak on "BerkShares," our
own local currency that is scheduled for launch in the fall of 2006. We
very much hope that you will be able to make this event. To register
please go to:
http://www.livingeconomies.org/events/conference06/related
For more information on local and complementary currencies
read the following article by Hazel Henderson which recently
appeared in Vermont Commons.
Regards,
Chris Lindstrom
Special Events Coordinator
E. F. Schumacher Society
140 Jug End Road
Great Barrington, MA 01230
http://www.smallisbeautiful.org
* * * * * *
THE POLITICS OF MONEY
By Hazel Henderson
© Hazel Henderson, Jan. 2006, All Rights Reserved
www.hazelhenderson.com
The word is out that economics, never a science, has
always been politics in disguise. I have explored how
the economics profession grew to dominate public policy
and trump so many other academic disciplines and values
in our daily lives. Economics and economists view
reality through the lens of money. Everything has
its price, they believe, from rain forests to human labor
to the air we breathe. Economic textbooks, Gross
National Product (GNP) and the statistics on employment,
productivity, investment, and globalization – all
follow the money. Happily, all this focus on money
is leading to the widespread awareness of ways money
is designed, created and manipulated. This politics
of money is at last unraveling centuries of mystification.
Civic action with local currencies, barter, community
credit and the more dubious rash of digital cybermoney
all reveal the politics of money. Economics is
now widely seen as the faulty sourcecode deep in societies’ hard
drives….replicating unsustainability: booms, busts,
bubbles, recessions, poverty, trade wars, pollution,
disruption of communities, loss of cultural diversity
and bio-diversity. Citizens all over the world
are rejecting this malfunctioning economic sourcecode
and its operating systems: the World Bank, the IMF, the
WTO and imperious central banks. Its hard-wired
program: the now derided “Washington Consensus” recipe
for hyping GNP-growth is challenged by the Human Development
Index (HDI), Ecological Footprint Analysis, the Living
Planet Index, the Calvert-Henderson Quality of Life Indicators,
the Genuine Progress Index and Bhutan’s Gross National
Happiness… not to mention scores of local city
indices such as Jacksonville, Florida’s Quality
Indicators for Progress, pioneered by the late Marian
Chambers in 1983.
As with politics, all real money is local, created by
people to facilitate exchange and transactions, and it
is based on trust. The story of how this useful
invention, money, grew into abstract national fiat currencies
backed only by the promises of rulers and central bankers
is being told anew. We witness how information
technology and deregulation of banking and finance in
the 1980s helped create today’s monstrous global
casino where $1.5 trillion worth of fiat currencies slosh
around the planet daily via mouse clicks on electronic
exchanges, 90% in purely speculative trading.
New Fed Chairman, Ben Bernanke opined that the mystery
of low bond yields and interest rates was due to a “global
savings glut.” Former Fed Chairman Greenspan,
whose zero real interest rates flooded the US economy
with excess liquidity and helped create the dot-com,
housing, and global asset bubbles, declared himself “perplexed.” The
anomaly involves the global economic imbalances between
the USA, the world’s largest debtor – borrowing
the lion’s share of global capital – and
the developing countries of Asia and those exporting
oil as the world’s new lenders. I doubt there
is a “global savings glut” or a “Shift
of Thrift” from indebted U.S. household’s
zero saving rates to thrifty Asian savers as claimed
in The Economist editorial of Sept. 24, 2005. My
view is that there’s a global flood of fiat paper
money – mostly trillions of US dollars – amplified
by the pyramiding of financial “innovations” (derivatives,
hedge funds, offshore “special purpose entities,” currency
speculation, and tax havens) vis-à-vis real production
of goods and services in the real world.
Today, we see worldwide experimentation with local exchange,
barter and swap clubs, such as Deli-Dollars, LETS, Ithaca
Hours and other scrip currencies in the USA and Canada. Billions
of people still live in traditional non-money societies
and the world’s mostly female voluntary sectors. I
have described these huge uncharted sectors as the “Love
Economy” estimated by the Human Development Report
(United Nations Development Program 1995) as $16 trillion
simply missing from economists’ global GDP that
year of $24 trillion. Others have described these
non-money sectors, notably Karl Polanyi in Primitive,
Archaic and Modern Economies (1968); Lewis Hyde
in The Gift (1979); Genevieve Vaughan in For-Giving (1997); Dallas
Morning News financial editor, Scott Burns in Home,
Inc (1975); Edgar Cahn’s No More Throw
Away People (2004) and his time-banking programs
now emulated worldwide (The Time Dollar How To Manual, www.timedollar.org).
All this hands-on experimenting resulted in an explosion
of grassroots awareness about the nature of money itself. As
local groups and communities created their own local
scrip currencies and exchange systems, they learned about
economists’ deepest secret: money and information
are equivalent – and neither is scarce! As
money morphed from stone tablets, metal coins, gold and
paper to electronic blips of pure information – the
economic theories of scarcity and competition began to
be bypassed by electronic sharing and community cooperation. Barter,
dismissed in economic textbooks as a primitive relic – went
hi-tech. eBay, the world’s largest garage sale,
is an example of how to bypass existing markets.
People began to see how central banks and national money-systems
control populations by macro-economic managing of scarcity,
employment levels, availability of mortgages and car
loans, via the money-supply, credit, interest rates and
all the secretive levers and spigots used by central
bankers. Even Nobel prizes were politicized as
mathematicians in 2004 challenged the so-called “Nobel
Memorial Prize in Economics” demanding its de-linking
from the Nobel prizes and to confess its real name, “The
Bank of Sweden Prize in Economics.” The mathematicians,
Peter Nobel, grandson of Nobel and many other scientists
object that economists misuse mathematics to hide their
faulty assumptions – and that economics is not
a science but a profession. The row over the 2004
Bank of Sweden Prize was because its recipients had authored
a 1977 paper with a mathematical model purporting to “prove” why
central banks should be independent of political control – even
in democracies. Central banking too, is politics
in even deeper disguise, as I describe in “21st
Century Strategies for Sustainability” (downloadable
at http://www.hazelhenderson.com/recentPapers/21st_century_strategies_.htm).
Today, rapid social learning about the politics of money
and how it functions is revealing this key mythology
underlying our current societies and its transmission
belt: that faulty economic sourcecode still replicating
today’s unsustainable poverty gaps, energy crises,
and resource depletion. Climate change creeping
upon us for 25 years is the latest media wake up call,
and predictably economists quickly “captured this
issue for our profession,” as a UK economics group
put it (Henderson, 1996), to promote their pollution
and C02 trading “markets.” In
spite of such efforts, the defrocking of economics, the
deconstructing of money systems and the growth of all
the healthy local, real world alternatives is propagating
widely. The World Social Forum launched in sunny
Porto Alegre in 2000 by Brasilian reformers is one of
many such worldwide movements. Argentina’s
default in 2001 taught its citizens that they could trust
their own local scrip, flea markets and electronic swap
systems more than the country’s official currency:
the peso. Argentina, Brasil and Venezuela have
announced they will repay their IMF loans in full – to
free their economies from “Washington Consensus” prescriptions.
I have documented over the years many of the pioneers
of money reform, from the Time Store in Cincinnati in
the 1890s; Ralph Borsodi’s “Constants” in
Exeter, NH in 1972; and during the 1930s “bank
holiday,” Vermont’s own Malted Cereals Company
scrip, issued in Burlington and the Wolfboro Chamber
of Commerce’s scrip in New Hampshire. The Chicago
Plan, promoted in the 1930s by University of Chicago
economists sought to reform money-creation by private
banks as debt. Through this fractional reserve
system, banks are only required to keep less than 10%
of their capital in reserve. Banks can lend out
the rest at interest, simply creating money out of thin
air as those loans in their accounting entries! The
American Monetary Institute (www.monetary.org)
founded by Stephen Zarlenga, has revived the Chicago
Plan, which would raise the fraction of reserves banks
must hold – and return the national money-creation
function to the federal government. Money would
be created and spent into circulation through building
and maintaining public infrastructure, roads, education
and vital services. Such interest-free money would
save municipalities and states billions in interest payments
on their bonds and prevent accumulation of debts that
lead to bubbles, booms and busts. Ken Bohnsack’s
Sovereignty Bill promotes these reforms, all summarized
in Zarlanga’s The Lost Science of Money (2004)
and The Truth in Money Book by Theodore R. Thoren
and Richard F. Warner.
Other perennials—E. F. Schumacher’s Small
is Beautiful (1973), James Robertson’s Future
Wealth (1989), Margrit Kennedy’s tireless
teachings, and a record of Robert Swann’s work
and papers on community economics—are all available
at the E. F. Schumacher Society’s Library (www.smallisbeautiful.org). The
Society, engaged in both theory and practice, founded
the SHARE micro-credit system in 1981, created Deli
Dollars and other customer financing methods in 1989,
and is about to help launch the BerkShare local currency
program. Since its founding in 1980, the Society
has documented other community credit pioneering, such
as Michael Linton’s LETS experiments, Paul Glover’s
Ithaca Hours, and other projects all highlighted at
its 2004 conference Local Currencies in the Twenty-First
Century. Bernard Lietaer’s The
Future of Money (2001); Lynn Twist’s The
Soul of Money (2004); William Krehm’s COMER
Newsletter (www.comer.org)
and James Robertson and Josef Huber’s Creating
New Money (2004) continue to inform us.
My bookshelf on alternative economics, barter, credit
and currency system continues to grow, and includes Ralph
A. Mitchell and Neil Shafer’s indispensable, eye-opening
self-published Standard Catalog of Depression Scrip
of the United States in the 1930s (Krause Publications,
Iola, WI) (1984). It contains thousands of pictures
of alternative scrip currencies issued in almost every
US state and city and many in Canada and Mexico after
the Great Crash of 1929 and the bank failures that followed. During
the 1980’s in all my talks across North America
advocating local self-reliance and alternatives to fiat
money, I carried this heavy volume along to show how
local inventiveness helped overcome the failures of national
banking and finance. People would raise their hands
in recognition as I would show on overheads the scrip
used in their state. “I remember these in my Dad’s
bureau!” “My Mom used that to buy our groceries!”
So, today, as the global casino again reaches crises
of abstraction, derivatives, currency futures, and financial
bubbles – we have been here before. Today’s
global imbalances, deficits, bouncing currencies, poverty
and debt crises require a systemic redesign of that faulty
economic sourcecode. Worried finance ministers
and central bankers call vainly for a “new international
financial architecture.” They do little but
fret about this behind closed doors, at meetings of the
G-8, WTO, and in Jackson Hole and Davos. Some clever
libertarians try to beat the bankers at their own game
with global digital currencies backed by gold, including
e-gold Ltd, Gold Money and Web Money. Based in
offshore havens, Nevis, Jersey, Moscow, and Panama, they
have become platforms for cyber-crooks (Business
Week, January 9, 2006). The rest of us are redesigning
healthy homegrown sustainable local economies – all
over the world.
Before we fall into “either/or” errors,
we should avoid doctrinaire “smallness,” ideological
localism, and knee-jerk libertarianism. None can
protect local communities from the ravages of market
fundamentalist-driven globalization. Like it or
not, we are all “glocal” now. Communities,
like cells in the body-politic and the body, need boundaries
or membranes to keep out elements destructive to the
cell’s integrity. But all cell membranes
are semi-permeable to allow needed elements, information
and energy exchanges from the environment to pass through. In
today’s information saturated world, communities
need to understand anew which elements to reject and
which to embrace. Wholesale rejection can lead
to rigidity, xenophobia, and misreading of history. Wholesale
acceptance of current unsustainable economic global trends
will surely lead to loss of local culture and biodiversity
and to resource-depletion. We humans have been
adept at creating new scenarios and technologies that
mirror our lack of systemic knowledge and foresight.
From such social changes and unanticipated consequences,
we must then learn and evolve – or suffer ecological
collapse.
* * * * * *
Hazel Henderson has authored many books since Creating
Alternative Futures with Foreword by E. F. Schumacher
(1978, 1996). She co-created with the Calvert
Group, the Calvert-Henderson Quality of Life Indicators,
regularly updated at www.calvert-henderson.com.
She serves on the Advisory Board of the E. F. Schumacher
Society and often teaches at Schumacher College in
Britain. She is currently writing (with co-author
Simran Sethi) the companion book to her TV series,
ETHICAL MARKETS aired on PBS stations nationally and
on TV channels in Brasil and other countries www.hazelhenderson.com .
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