Is there a terrain of compromise that might also be acceptable to the protagonists of the financial system? Anyone enjoying the privilege of a monopoly will tend to fight to retain it. Legitimising non-financial incentive systems will therefore not be an easy path for the financial system, and even harder to accept for some central banks. However, in contrast to the Chicago Plan, what is proposed here keeps the core of the banking system’s business model intact. Interest in a Chicago Plan reincarnated under the name of ‘Modern Money Theory’ (MMT) is now spreading, even at the grassroots level. Just one example: a public conference entitled ‘the MMT Summit’ was held in Rimini, Italy, on 24-26 February 2012. It attracted several thousand participants!

When assessed in terms of its societal consequences, maintaining the monetary status quo and the Official Paradigm seems increasingly irresponsible, perhaps untenably so. European countries have been financially cornered into dismantling social safety nets that took generations to build, and into retracting the promises made to people who contributed throughout their entire working lives to a pension and health care system. Governments will also be obliged to privatise cultural heirlooms that have, in many cases, been public property for centuries or even millennia. Most regrettably, universal austerity will render them totally unable to exert the leadership required for the kinds of investment needed to avoid runaway climate change.

The Fiat Currency Paradigm makes it clear that our money system is an 18th century legacy information system, rendered quite convoluted and sclerotic by 300 hundred years of use and abuse. How will we explain to our children and grandchildren that thanks to the technological means available in a new Information Age, we were able to update all our information systems except our monetary system? Who will take responsibility for telling them that we sacrificed the planetary biosphere in order to keep our monetary system operational for one more decade?

Thomas Friedman’s op-ed piece from the New York Times, previously mentioned in Chapter VI, concludes: “Capitalism and free markets are the best engines for generating growth and relieving poverty – provided they are balanced with meaningful transparency, regulation and oversight. We lost that balance in the last decade. If we don’t get it back – and there is now a tidal wave of money resisting that – we will have another crisis. And, if that happens, the cry for justice could turn ugly. Free advice to the financial services industry: Stick to being bulls. Stop being pigs.”

Click here to view the embedded video.

“Eine Hauptursache für Infl ation, regelmäßige Krisen und Zusammenbrüche liegt in der fehlerhaften Konstruktion unseres Geldsystems. Davon profitiert eine kleine Minderheit von etwa 10 Prozent der Menschen. Die große Mehrheit zahlt drauf. Über die in allen Preisen und Steuern versteckten Zinsen beträgt diese Umverteilung von Arm zu Reich in Deutschland etwa 600 Millionen Euro pro Tag.”

Available for download on iTunes.

Click here to view the embedded video.

Since 2010 a number of proposals have been published by authors of different backgrounds, all proposing a parallel currency regime as a third way between fiscal union and euro exit. Unfortunately, they previously remained largely ignored by the media.

We acknowledge the idea of parallel currencies as a blueprint for a fundamental restructuring of the European financial architecture. We consider it to be the approriate means to systemtically deal with the structural differences within the euro area.

Now, the extent to which such proposals contribute to the stability of Europe, both politically and economically, depends on their concrete implementation. Their primary focus should be the sustainable benefit of the general population of Greece, and potentially of Portugal, Spain and others.

Hence we suggest the design of such a new financial architecture is not to be determined by banks and financial institutions alone, but should draw on the expertise, ideas and experience of heterodox thinkers and practitioners.

Here is a list of the various proposals known to us and some previous press coverage on the subject.

For the Money Network Alliance “MonNetA” (<http://www.monneta.org/index.php?lang=EN>)

• Prof. Margrit Kennedy
• Ludwig Schuster
• Jens Martignoni
• Leander Bindewald

“The entire debate, the public debate, on the Greek situation and the Euro as been positioned as if there are two solutions only, completely in or completely out, either 100% or zero. I think this is a very simplistic view. There is an all range of other options in between.”

Click here to view the embedded video.

So we take this opportunity to outline how just one of the proposals from this book can be applied, on the ground, in Greece (and in Spain, Italy, Ireland and anywhere else facing this kind of crisis), right now. It’s a solution that mainstream financiers and media avoid discussing, but it’s elegant and simple. It would work, and the necessary (Open Source) software is available now.

Our proposed solution to the drama unfolding in the eurozone is a systemic one. Current monetary orthodoxy says that 100% of the Greek (or any other national) economy must be either ‘in’ or ‘out’ of the eurozone. Everybody knows that either option will be excruciatingly painful and condemn whole countries to even higher unemployment and yet more misery. But it doesn’t have to be that way!

The core principle of complementary currencies, as set out here, is that they run alongside the main currency, increasing resilience and flexibility for the entire socio-economic system. Here’s one solution in a nutshell:

• Greece continues to use the Euro for all international business: tourism, shipping, exports and imports, etc. Taxes are levied in Euros on profits made in these activities, and used to service the country’s national debt.
• In addition, any Greek city/region wanting to participate issues its own local currency (generically called the Civic in the case study in chapter VIII). Civics are used to pay for urgently needed local social and environmental programmes. In our example, 1 Civic is issued to anyone who completes 1 hour of approved service to the community. Projects for which Civics are paid should be decided democratically and locally.
• The issuing city/region requires payment from each household of, for example, 10 Civics per quarter.
• To support this, an online market (like e-Bay) is set up. Here, households that have not done enough hours work to earn 10 Civics per quarter can buy them with Euros or any other good or service acceptable to both parties, from those that have earned more than they need.
• Civics exist only in electronic form, issued by each participating city/region, using mobile phones as a payment mechanism, as is commonly the case in Indonesia, South Africa and Kenya now. In this way, Civics remain 100% traceable and their use is transparent.
• A new type of non-profit organisation will audit the validity of the Civics in circulation.
• There is no fixed Civic:Euro exchange rate. This is determined in the online market. To increase the value of its Civic, a city simply requires more of them from each household. As the local economy recovers, this number can be reduced, and could even drop back to zero when full employment is reached.

This approach allows the Greek mainstream economy to retain the benefits of the Euro, while the Civic enables each community to solve its own problems in its own way, while mobilising every household (with appropriate exceptions for sickness or handicapped people) to contribute to solving local social and environmental problems.

(In addition to the Civic, a business-to-business currency called C3 – explained in chapter VII– could inject working capital into small businesses, which account for over 85% of all private jobs, and thereby accelerate the recovery of mainstream jobs paid in Euros. Similar approaches could be used in other European countries struggling with the social and economic consequences of the austerity programmes currently being imposed.)

]]> http://www.money-sustainability.net/the-eurozone-crisis-a-workable-solution-available-today/feed/ 0 http://www.money-sustainability.net/appendix-a-a-primer-on-how-money-works-your-money-in-its-world/ http://www.money-sustainability.net/appendix-a-a-primer-on-how-money-works-your-money-in-its-world/#comments Mon, 28 May 2012 08:35:18 +0000 gael http://www.money-sustainability.net/?p=41 “The only people who claim that money is not an issue are those who have sufficient money that they are relieved of the ugly burden of thinking about it.” So thought the American writer Joyce Carol Oates.

This Primer (Appendix A from Money and Sustainability: The Missing Link) explains why now even those fortunate few should think about it.

It also answers the following questions:

• Where does your money comes from?
• How is the value of money determined?
• Who is really in charge of your savings?