The Future of Money by Bernard A. Lietaer - An amazingly interesting read

[Steve Netwriter]

I am still reading this book. I have found the subject amazingly interesting, and VERY pertinent to the current economic times.

I cannot stress enough how much I think people would gain from taking the time to read this stuff, with an open mind


The Future of Money: Creating New Wealth, Work and a Wiser World by Bernard A. Lietaer



His qualifications/experience, which are extensive as you can see:

http://en.wikipedia.org/wiki/Bernard_Lietaer

http://www.lietaer.com/images/BIO.pdf

His website: http://www.lietaer.com/

Contents of the book: http://www.transaction.net/money/book/index.html

A text interview: http://www.nexuspub.com/articles/200.../interview.htm
Another: http://www.futurenet.org/article.asp?id=886

Bernard Lietaer interview
Added: 25 September 2007



From: http://www.youtube.com/watch?v=vjYDhuLWUnE

Sustainability and the Money System
Added: 21 September 2008



From: http://www.youtube.com/watch?v=62zG9ehnjKg

The First Main Point from the Book - Interest cannot be repaid

The Eleventh Round

Once upon a time, in a small village in the Outback, people simply used
barter in all their transactions. So, on every market day, you would see
people walking around with chickens, eggs, hams and breads and engaging
in prolonged negotiations among themselves to exchange what they needed.
At key periods of the year, harvests for example, or when someone's barn
needed big repairs after a storm, people also had brought over from the
old country the traditions of helping each other out.
A stranger came by, and observed the whole process with a sardonic
smile. "Poor people, she said, so primitive.... There really is a much
better way to do all this. See that tree there, well, I will go wait
there for you to bring me one large cowhide, and gather every family
together. I'll explain the better way."

And so it happened: She took the cowhide, and cut leather rounds in it,
and put an elaborate and elegant little stamp on each round. Then he
gave to each family ten rounds, and explained that each represented the
value of one chicken. This way, people could trade and bargain with the
rounds instead of the unwieldy chickens. "Oh, by the way," she said,
after every family had received their ten rounds, "in a year's time I
will come back and sit under that same tree. I want you each to bring me
back eleven rounds. That eleventh round is a token of appreciation for
the technological improvement I just made possible in your lives."

What do you think had to happen during the next year?

Remember, that eleventh round was never created. Therefore, bottom line,
one of each ten families will have to go bankrupt to pay the financier,
without regard to how well it manages its affairs, and lose all its
rounds, in order to provide the eleventh round to all the others.
So when a storm was threatening the crop of one of the families, people
suddenly had less time to help bring it in before disaster struck....

It was indeed more convenient to exchange the rounds instead of the
chickens on market days, but the new game also had the unintended side
effect of actively discouraging the spontaneous cooperation that was
traditional in the village. Instead, the new money game was generating a
systemic undertow of competition among all the participants.

http://www.mail-archive.com/ctrl@lis.../msg03655.html

And notice, the guy made the rounds from someone else's cowhide !!!
He just needed a fancy stamp.

and:

The interest rate decisions of central banks get our attention, and this is one of the reasons.
The additional cost of increased interest results automatically in a proportional number of increased bankruptcies in the near future.

Just think about that after reading the 11th round tale.


From page 50:

The story from Australia illustrates the way interest is woven into our money fabric, and how it stimulates competition among the users of this currency.

This is how today's money system pits the participants in the economy against each other. This story isolates the role of interest - the 11th round - as part of the money creation process, and its impact on the participants.

When the bank creates money by providing you with your £100,000 mortgage loan, it creates only the principal when it credits your account. However, it expects you to bring back £200,000 over the next twenty years or so. If you don't, you lose your house.

Your bank does not create the interest; it sends you out into the world to battle against everyone else to bring back the second £100,000.
Because all the other banks do exactly the same thing, the system requires that some participants go bankrupt in order to provide you with this £100,000.
To put it simply, when you pay back interest on your loan, you are using someone else's principal.

In other words, the device used to create the scarcity indispensable for a bank=-debt system to function involves having people compete for the money that has not been created, and penalizes them with bankruptcy whenever they do not succeed.

[Steve Netwriter]

After the story I quoted, he then goes on to discuss these:

1. Interest indirectly encourages systematic competition among the participants in the system.
2. Interest continually fuels the need for endless economic growth, even when actual standards of living remain stagnant.
3. Interest concentrates wealth by taxing the vast majority in favour of a small minority.

Re (1), he argues that it is the money system itself that creates competition, which has negative results.
I repeat:

The interest rate decisions of central banks get our attention, and this is one of the reasons.
The additional cost of increased interest results automatically in a proportional number of increased bankruptcies in the near future.

Point (2) is most important in relation to the Chris Martenson videos, and the idea that we live on a finite planet.
If we are to move from endless growth to a sustainable system, we will need a money system suitable for that. I believe that is the main point of the book.

Point (3) is illustrated with an example from Germany in 1985, with a sobering chart.
In summary, categories of people from 1 to 9 lost wealth, and category 10 gained. There was a net flow of wealth from the many to the few.
From those who were "debt slaves" to those who already had wealth. ie were lenders.

---------------------

Summary of Part 1, pages 1 to 120

This is mainly a description of the current money system, and the way it creates certain behaviours in society.
It concludes by describing the different ways the current system can fail, and the 4x possible results.
The conclusion is that the current system will fail, and only one outcome is one that people would like.

Part 2 - Choosing the Future of Money

When I first got a glimpse of what Bernard was suggesting I thought it sounded nuts.
But, having read more, and learnt a lot, I now see what he is talking about.
This is something I had never heard about. He is talking about local money systems that run in parallel with the current national currencies.
Complementary Currencies.
He gives examples, including the "Worgl Stamp Scrip" in Austria.

This paragraph from page 157 is very important:

The main lesson is that what appear to be technical decisions relating to banking and currency regulations are probably some of the biggest political timebombs around.

He claims that the Worgl scrip system was very successful. Until it was banned. The result was high unemployment etc......then Hitler and WW II.

Hence the importance of the paragraph above.
Worryingly he then suggests that failure to allow and implement local solutions will lead to war again.

Amazingly what he is suggesting is an incredibly simple solution for our current economic situation.

[Steve Netwriter]

I want to make a point of who Barnard is, and what he has done. He is not some bod with no qualifications or experience to talk on these issues.
I think this is quite impressive:

Professional Background
• 1987- end April 1991: Co-founder, Director, General Manager and Currency Trader for
GaiaCorp, a currency management firm. In this context he had full responsibility for the
overall management of four funds including Gaia Hedge II, which was during that time
period the world’s top performing managed currency fund as well as the top performing off-
shore fund (Micropal survey of 1800 off-shore funds).

• 1978-1983: Head of Organization and Electronic Data Processing Department of the National
Bank of Belgium (the Belgian Central Bank); responsible for the design and implementation
of the ECU, the convergence mechanism to the Euro, the single European currency; President
of the national Electronic Payment System, the world’s most comprehensive and cost
effective of such systems according to the BIS (Bank of International Settlements ).

• More than 12 years experience in international management consulting and advisor to several
Latin American governments and European Institutions, as well as major multinational
corporations in oil, chemicals, banking, mining, and manufacturing in four continents. For the
first three of these years he was Senior Consultant with Cresap, Mc Cormick and Paget Inc.,
the New York based management consulting firm.

Academic Background
• 2003-2006: Visiting Scholar at Naropa University, Boulder, CO, for designing and
implementing the Marpa Center for Business and Economics of that university.

• 1992-1998: Visiting Professor in Archetypal Psychology, Sonoma State University,
California, writing two books entitled The Future of Money and The Mystery of Money

• 1975-1978 and 1983-1986: Professor of International Finance and International Trade in the
postgraduate programs of the University of Louvain, Belgium’s oldest university.

• Formal academic training includes:

• B.S. and M.S. in Electrical Engineering from the University of Louvain, Belgium
• M.S. in Business Administration from the Massachusetts Institute of Technology
(MIT, Cambridge, Mass.)

[Steve Netwriter]

Usury

The Evil of Usury

http://www.biblebelievers.org.au/usury.htm

I am not a religious person. But, religious writing gives us an insight into how people thought in the past, and what warnings religious leaders wrote about.

A few examples from that webpage:

"The rich ruleth over the poor, and the borrower is servant to the lender" -- Proverbs 22:7

"The whole profit of the issuance of money has provided the capital of the great banking business as it exists today. Starting with nothing whatever of their own, they have got the whole world into their debt irredeemably, by a trick.

"This money comes into existence every time the banks 'lend' and disappears every time the debt is repaid to them. So that if industry tries to repay, the money of the nation disappears. This is what makes prosperity so 'dangerous' as it destroys money just when it is most needed and precipitates a slump.

"There is nothing left now for us but to get ever deeper and deeper into debt to the banking system in order to provide the increasing amounts of money the nation requires for its expansion and growth. An honest money system is the only alternative." -- Frederick Soddy, M.A., F.R.S., Nobel Prize Winner, 1921.

"Let me issue and control a nation's money and I care not who writes its laws" -- Attributed to Mayer Amschel (who later changed his surname to Rothschild and founded the largest financial dynasty ever to exist in its influence and power).

The Greatest Swindle Ever!

"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it all back again. However, take it away from them, and all the great fortunes like mine disappear, and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits" -- Sir Josiah Stamp (President of the Bank of England in the 1920s, the second richest man in Britain).

Hidden under a veneer of respectability, integrity and competitiveness, the Banker awaits his next unsuspecting victim. The Banker is partaking in the biggest swindle of all time, and he knows it. The Banker's wealth, power and influence extends the world.

"Those who swallow down usury cannot arise except as one whom Satan has prostrated by his touch does rise. That is because they say, trading is only like usury; and Allah has allowed trading and forbidden usury. To whomsoever then the admonition has come from his Lord, then he desists, he shall have what is already passed, and his affairs is in the hands of Allah; and whoever returns to it -- these are the inmates of the fire; they shall abide in it. . ." -- From the Qur'an, Surah Al-Baqarah.

===============

History of Usury Prohibition
A Short Review of the Historical Critique of Usury
Wayne A.M. Visser and Alastair McIntosh
Centre for Human Ecology
First published in Accounting, Business & Financial History, 8:2, Routledge, London, July 1998, pp. 175-189.

http://www.alastairmcintosh.com/articles/1998_usury.htm

INTRODUCTION

The concept of “usury” has a long historical life, throughout most of which it has been understood to refer to the practice of charging financial interest in excess of the principle amount of a loan, although in some instances and more especially in more recent times, it has been interpreted as interest above the legal or socially acceptable rate. Accepting this broad definition for the moment, the practice of usury can be traced back approximately four thousand years (Jain, 1929), and during its subsequent history it has been repeatedly condemned, prohibited, scorned and restricted, mainly on moral, ethical, religious and legal grounds. Among its most visible and vocal critics have been the religious institutions of Hinduism, Buddhism, Judaism, Islam and Christianity. To this list may be added ancient Western philosophers and politicians, as well as various modern socio-economic reformers. It is the objective of this paper to outline briefly the history of this critique of usury, to examine reasons for its repeated denouncement and, finally, to intuitively assess the relevance of these arguments to today’s predominantly interest-based global economy. The scope will not extend to a full exploration of some of the proposed modern alternatives to usury, except to describe the growing practice of Islamic banking as an example.

===============

Community

From the latin:

cum - "together" or "among each other"

munus - "the gift" or "munere" - "to give"

Hence "community" = "to give among each other"

From "Community Currencies" chapter 6, page 179.

[Steve Netwriter]

I am now up to page 187, and it has just occurred to me the difference between the common complex view of the financial system (which some think is purposely complicated/obfuscated) and what I'm reading.
It made me think of this:



Bernard says roughly:

"The idea that money is simply a passive medium of exchange which does not affect the transaction or the users of a currency is wrong.
My arguments in favour of this view do not come from economic theory (which is way behind practice in this field), but from two sources of evidence: empirical observation and the most solid psychological theory."

This is an important point. Bernard in his book, cites numerous real life cases. He does not look at complex banking models. He is looking at the interaction between people and the banking system and between people, and the way the money system affects the way people behave.
IMO it is a compelling argument.

======================

A reminder that life is not all about money.



100 Minds That Made the Market
By Kenneth L. Fisher

http://books.google.co.uk/books?id=gxkfNOsY-gcC&pg=PA51&lpg=PA51&dq=%22wealth+of+friends%22&source=web&ots=YlWZ17SZnU&sig=13Bgc0DxONIhi5a6T2T8SYBXm00&hl=en&sa=X&oi=book_result&resnum=3&ct=result

All of us here today have had our lives enriched by Richard. He has inspired us, and continues to do so. He has challenged us, and we continue to rise up to those challenges. He has taught us, and we have learned.

He has left us -- far too soon -- and even as we mourn him, we are also celebrating his life, his legacy, and his incredible wealth. But his wealth wasn't a material wealth, though, but rather a wealth of friends and family, colleagues and co-workers, support and love.

I am grateful for this chance to know Richard and for the chance to carry him in my heart for the rest of my days.

IN MEMORIAM
Richard E. Pearl, Sr., Ed.D.

http://www.lptn.org/richard/

usury -> competition, and gradual social breakdown. The breakdown of "community".

community currencies -> community. Real wealth. The wealth of living in a community, with friends.

==========

This is what I find so inspiring about this book.

[Steve Netwriter]

Curitiba - The Brazilian city which left the Third World

Starting on page 196, this describes an experiment started in 1971.

I will quote just the conclusion:

Curitiba is a practical case study where 25 years of experience show that a whole-system approach using both the traditional national currency and well-designed complementary currencies is beneficial to everybody, including people who are focused exclusively on the traditional economy denominated in national currencies. It enabled one Third World city to join First World living standards within one generation.

From the internet.

This is a map of the place:
http://maps.google.co.uk/maps?hl=en&...num=1&ct=title

Curitiba: A Global Model For Development by Bill McKibben
http://www.commondreams.org/views05/1108-33.htm

Curitiba's Bus System is Model for Rapid Transit By Joseph Goodman, Melissa Laube, and Judith Schwenk
http://www.urbanhabitat.org/node/344




Orienting Urban Planning to Sustainability in Curitiba, Brazil
http://www3.iclei.org/localstrategie...curitiba2.html

Curitiba's Urban Experiment
http://www.pbs.org/frontlineworld/fellows/brazil1203/


Ah ha, you can read it for yourself here:

Designing Bioregional Economies in Response to Globalization
Bernard Lietaer and Art Warmoth © 1999
http://ceres.ca.gov/tcsf/pathways/ch....html#curitiba

Curitiba: the Brazilian City which left the Third World

In 71, Jaime Lerner became mayor of Curitiba, the capital of the southeastern state of Paraná, Brazil. He was by profession an architect. Quite typical for the region, the urban population had mushroomed from 120,000 people in 1942 to over a million when Jaime became mayor. By 1997, the population had reached 2.3 million. Again, quite typically, the majority of these people lived in "favelas," the shanty towns made out of cardboard and corrugated metal.

One of Jaime Lerner's first big headaches was garbage. The town garbage collection trucks could not even get into the favelas because there were no streets suitable for them. As a consequence, the garbage just piled up, rodents got into it and all kinds of diseases broke out. A mountain sized mess!

Because they did not have the money to apply "normal" solutions, such as bulldozing the area to build streets, Lerner's team invented another way. Large metallic bins were placed on the streets at the edge of the favelas. The bins had big labels on them which said: glass, paper, plastics, biodegradable material and so on. They were also color coded for those who couldn't read. Anyone who brought down a garbage bag full of presorted garbage was given a bus token. For the biodegradable materials they were given a plastic chit exchangeable for a food parcel of seasonal fresh fruit and vegetables. A school-based garbage collection program also supplied the poorer students with notebooks. Soon the neighborhoods were picked clean by tens of thousands of kids, who learned quickly to distinguish even different types of plastic. The parents use the tokens to take the bus downtown, where the jobs are.

What Jaime Lerner did, from our perspective, is invent Curitiba money. His bus tokens and food chits are a form of complementary currency. His program "Garbage which is Not Garbage" could just as well have been baptized "Garbage which is Your Money."

Today, seventy percent of all Curitiba households participate in this process. The sixty-two poorer neighborhoods alone exchanged 11,000 tons of garbage for nearly a million bus tokens and 1,200 tons of food. In the past three years, more than 100 schools have traded 200 tons of garbage for 1.9 million notebooks. The paper recycling component alone saves the equivalent of 1,200 trees each day.

Let it be clear that Lerner's team did not start off with the idea to "create a complementary currency." What happened instead is that they used an integrated systemsanalysis for all the major issues at hand, and spontaneously ended up creating a complementary currency to solve them.

Cities as Sustainable Ecosystems
By Peter Newman, Isabella Jennings
http://books.google.co.uk/books?id=D...um=1&ct=result

[Steve Netwriter]

Ithaca Hours:




The growth in community currencies worldwide:

[Steve Netwriter]

That's as far as I've got so far.

Amazingly it appears to be very difficult to get copies of the book, except from the library !

But, you can read a fair amount in these places:

Snippets you can read online:

Contents of the book:
http://www.transaction.net/money/book/

Preface

http://www.transaction.net/money/book/rethink2b.html

Part 0:

http://www.mail-archive.com/[email protected]/msg03752.html

Part 1:

http://www.mail-archive.com/[email protected]/msg03753.html

Part 2:

http://www.mail-archive.com/[email protected]/msg03655.html

Designing Bioregional Economies in Response to Globalization
Bernard Lietaer and Art Warmoth © 1999
http://ceres.ca.gov/tcsf/pathways/chapter2.html


Resources that explain things from the book

Complementary Community Currency Systems and Local Exchange Networks

http://www.transaction.net/money/community/

Ithaca HOURs Online

http://www.lightlink.com/hours/ithacahours/

LETSystems
http://www.gmlets.u-net.com/

What is the Time Dollar Network? - this has free software for controlling the system
http://www.timekeeper.org/whatis.html

e-gold
http://www.e-gold.com/

Number of Community Currency Systems Operational in Twelve Countries 1984-1996
http://www.transaction.net/money/internet/#graph

"Internet Currencies for Virtual Communities"
http://www.transaction.net/money/internet/

Diagrams from the book
http://www.techrules.com/clients/aea...of%20money.pdf

An audio ($4.95) ?
http://www.iamplify.com/store/produc...roduct_id/2328


Other books

Pathways to Sustainability: The Age of Transformation - This lists a number of books
http://ceres.ca.gov/tcsf/pathways/index.html

Entering The Age Of Transformation:
Choosing The Destiny Of Humanity In The 21st Century
Joseph Kruth © 1999
http://ceres.ca.gov/tcsf/pathways/chapter1.html

Functions of Sustainable Community Systems for Transformation
Kenneth W. Hunter © 1999
http://ceres.ca.gov/tcsf/pathways/chapter3.html

etc

[Austrokiwi]

Steve glad you finally picked up that book, you may recalkl I recommended it some time last year. To purchase the book now can cost a few hundred US$ ( I was shocked to see on Amazon)

[Badger]

Have come across bits and pieces of this info on my travels around the net

Nice one Steve Ill check the links out when time allows, havnt really got my head around the complementary currencies idea - form and function...

[Steve Netwriter]

Badger,
I thought this account of Curitiba was particularly good:

Designing Bioregional Economies in Response to Globalization
Bernard Lietaer and Art Warmoth © 1999
http://ceres.ca.gov/tcsf/pathways/chapter2.html

I suggest you start with:

1. Watch the two YouTube vids
2. Read the 11th round story
3. Read the Curitiba story.

Steve

[Steve Netwriter]

One wish that a large majority of people can agree upon is to rebuild community.
All the above examples confirm that implementing complementary currencies can significantly help in reaching that goal.
I do not claim them to be a panacea, but they have definitely proved once again that they enrich our social toolkit to face issues raised by our Time-Compacting Machine.

Page 212.

See this:

Diagrams from the book
http://www.techrules.com/clients/aea...of%20money.pdf

For an explanation of the Time-Compacting Machine, and quite a lot more.

[Strummer]

interesting thread, will look into this. cheers

[drelly]

Speaking of money alternatives, has anyone been involved with Bartercard? I did a number of years ago but after sitting down and calculating the true impact of using it on business cashflow, I canned it. It's an insidious, destructive system that promotes itself using flawed numbers that are more like blatant lies. The fees were crushing and the system itself has so many downsides.

[Steve Netwriter]

Page 215:

Central bank reactions to complementary currencies

3. For the first time, one central bank - the one in New Zealand - has gone exactly the other way by not only tolerating them, but seeing them as a device to reduce unemployment while keeping a tight rein on inflation in the national currency.

As usual NZ is ahead in the thinking

================

Welcome to Wairarapa Green Dollars
COMMUNITY EXCHANGE SYSTEM
http://www.wais.org.nz/home/FAQs.html

What is the purpose?

The WAIS Voucher Project has been established to build economic resilience by supporting local businesses and producers, reducing our carbon footprint and helping unemployed and underemployed people. It will raise awareness about the way we spend money and the fact that a voucher spent locally keeps building wealth as it circulates, instead of leaking out to the global economy.

Not directly relevant, but interesting because it is about the Chris Martenson Crash Couse:

Transition Towns New Zealand Aotearoa
http://www.transitiontowns.org.nz/node/1061


Canterbury Community Dollars
http://communitydollars.org.nz/


Film Screening: Money as Debt & La Double Face de la Monnaie (The Two Faces of Money), Auckland

Transition Ranui-Swanson is showing a series of films to raise awareness of the challenges of peak oil and climate change.

Paul Grignon's 47‐minute animated presentation of "Money as Debt" tells in very simple graphic terms what money is and how it is created. Money has become the drug of our societies. Confronted with this phenomenon, citizens all over the world are inventing complementary currencies for social ends and are opening the debate: What is money for?

The second film is made of reports of different complementary currencies functioning in locales of Europe and features interviews with complementary currency experts.

http://www.sustainability.govt.nz/event/868