[P2P-F] Fwd: Money for the People (GTN Discussion)
michelsub2004 at gmail.com
Mon Jul 24 08:10:18 CEST 2017
---------- Forwarded message ----------
From: Great Transition Network <gtnetwork at greattransition.org>
Date: Mon, Jul 24, 2017 at 6:11 AM
Subject: Money for the People (GTN Discussion)
To: michelsub2004 at gmail.com
>From Mary Sue Schmaltz <marysue at igc.org>
[Moderator’s Note: As you may have noticed, the GTI site was down for a few
days. Thankfully, we’re back up and running. Note that the discussion ends
on MONDAY, JULY 31st (one week from tomorrow), although we may extend it
due to the glitch. – JC]
Mary Mellor's exploration of the nature of money and its role in the
diminishment of socially and environmentally relevant values is well taken.
Active participation from local, regional and national governments will be
imperative to any endeavor to transform monetary structures. However, it
need not be expressly a centralized governmental function.
Currency expert Bernard Lietaer has long argued that we could re-design our
system of money in a manner that would be more socially beneficial if we
were to shift the money "target" away from the competitive model towards
more socially viable aims. Ultimately, Lietaer believes the answer lies in
designing complementary forms of local currencies to work in tandem with
our conventional currency systems. Lietaer also introduced the idea of a
global currency called the Terra, which would be comprised of a combination
of various commodities and international services. Creating a standardized
basket of the prominent commodities and services, he believes, would
incentivize long term thinking and would better stabilize the global
business cycle as it would be more inflation-proof.
In line with Mellor's idea of public money is the idea of utility banking.
Banking expert Martin Mayer notes the significance of banks no longer
acting as social institutions rooted in their communities with direct
relationships to their depositors and borrowers. Now banks are businesses
who sell off their loans severing the relationship between borrower and
lender while shifting risks onto the public. Suzanne McGee in her book
Chasing Goldman Sachs likened the money grid to an electrical grid. Just as
we have electric and water utilities, McGee proposes that we need a banking
utility. When liquidity dries up, it can be just as devastating as a water
or electrical shortage. Playing off the proposed public option for health
care, Ellen Brown in her book Web of Debt suggests that we consider a
public option in banking. Instead of taking profits out of the community
system, the public banking system would be better positioned to reinvest in
the community. An example of such a
successful regional bank already exists – the Bank of North Dakota, which
is owned by the state.
It is vital that we directly address not just the creation and control of
the currency itself, but the whole system of money and finance - including
accounting rules, taxation, regulations and other metrics which incentivize
or discourage certain types of activities. Rana Foroohar in her book Makers
and Takers: The rise of Finance and the Fall of American Business, does a
great job of examining how the incremental rise of hyper- financialization
and commodification have diverted resources away from activities that
promote overall well-being.
Former British banking regulator and chairman of the Institute of New
Economic Thinking, Adair Turner, in his book Between Debt and the Devil,
notes that a mere 15% of the global financial flows are applied to the real
productive economy. The rest relates to fabricated values derived from
financial engineering and manipulations, divorced from the real productive
economy of products and services. These values are truly representative of
the "something from nothing" to which Mellor refers. It's not just that
financial values are widely disconnected from human and ecological values.
These values are not even in line with sound economic values. When
companies such as Apple borrow funds to buy back shares in order to
artificially prop up its share price rather than innovate, the distortion
Exacerbating the distancing of economic values from life-affirming values
is the fact that finance today is driven by complex algorithms.
Quantitative expert Paul Wilmott has been sounding the alarm loudly about
the role of complex algorithms in financial risk and value distortion. Per
Wilmott: "If you used the wrong model to design airplanes, you'd kill
passengers and end up in prison. But do the people using financial risk
models care what happens? Of course they don't." Value at Risk, the
dominant risk measurement used by the financial industry certainly proved
fatal to global financial health leading up to the financial crisis of
2008. Skewed financial modeling is still the driving force of economic
values. (Paul Wilmott just co-authored a new book with Paul Orrell which
was just released entitled The Money Formula: Dodgy Finance, Pseudo
Science, and How Mathematicians Took Over the Markets , which I'm sure will
add new insights to this debate.)
We also need to be careful not to simply monetize certain altruistic or
caring activities. Technology exists today for exchange systems which make
it possible to maintain the integrity of such activities. For example,
BiologicTx, has developed a kidney transplant chain, whereby the system
identifies willing donors to compatible matches without financial gain. Say
a person needs a kidney transplant and a loved one would readily offer one
of their kidneys, but they are found to be biologically incompatible. The
altruistic intent remains intact to mutual benefit as the willing donor is
still giving a kidney to get a kidney for their intended recipient. As we
struggle with financing the needs of our aging populations, we might
consider a Japanese approach known as the fureai kippu, which roughly
translates into “caring relationship voucher.” People volunteer as
caregivers to the elderly and receive credits.
All in all, I very much appreciated Mary Mellor's paper which offers a
great starting point for delving deeper into discussions about the monetary
system. How do we connect people to services and products? How do we
preserve the quality and create universal access to life-giving resources?
What will be the new nature of livelihoods and market participation in this
era of automation and worker obsolescence? We can begin by linking
financial values to real life on the ground. Local circles of economic
activity should be nested within the global system, but not smashed down by
the top-heavy nature of our dominant money systems.
Mary Sue Schmaltz
marysue at igc.org
> Transition Network
>Sent: Jul 19, 2017 4:25 PM
> for the People (GTN Discussion)
>From Peter Barnes
>I love Mary Mellor’s path-breaking thinking and writing on money. And I
completely agree with her main point: that we, the people, ought to reclaim
sovereignty over our currency and issue new money directly to ourselves as
part of a basic income, rather than let banks create it by making loans.
>But her proposal, as well as others that are necessary for a Great
Transition, leave me wondering about how we craft a viable political
strategy. Speaking as an American, I wonder how many of my
fellow-countrymen have any inkling about how banks have privatized the
social construct we call money. Very few, I’d venture to say. So it is hard
to imagine a popular movement arising for monetary reform along Mellor’s
line. The same is true for other proposals discussed on this site: they are
necessary for our planet and society, but way too complex for the average
distracted citizen to comprehend.
>That’s half of our political challenge. The other half is that all of our
proposals face intense political opposition from powerful legacy
industries, whether these be fossil fuel companies, health insurers or
banks. These companies have immense power to confuse the public, buy
politicians, and block progressive legislation. So how do we create a
framework that is simple and persuasive enough to inspire a popular
movement, and sturdy enough to do so over the decades it will take to
effect a Great Transition?
>The best historical model we have, it seems to me, is social insurance.
Leaving aside its older European roots, this model took root in America
with the Social Security Act of 1935 — propelled by such grassroots
movements as the Townsend Clubs — and has expanded steadily ever since,
resisting all efforts from powerful industries to decimate or privatize it,
including the latest onslaught against the Affordable Care Act. What has
made social insurance so impregnable are its universality (the middle class
is solidly behind it) and the fact that it addresses the near-universal
fear of economic insecurity — a fear that, despite our seeming prosperity,
is only intensifying.
>That said, the present financial base of social insurance — payroll
contributions by workers and employers — has essentially maxed out. Nor is
it possible to supplement existing labor income by taxing it. So a 21st
century system of economic security will have to be built on a new
financing model, which I have proposed to be income from common wealth, in
the manner of Thomas Paine and the Alaska Permanent Fund (see With Liberty
and Dividends For All).
>Picture, then, a giant “common pot” into which flows money from multiple
forms of common wealth and out of which flow monthly dividends to every
American with a Social Security account. Such a pot could begin, as Social
Security did, with a relatively small inflow and outflow, and grow over
time as Americans become comfortable with it. Its funding sources could
include fees on pollution of shared ecosystems and use of socially
constructed financial infrastructure, as well as new money created in the
manner Mellor proposes.
>This system, anchored by the common pot, would serve three functions
simultaneously. First, it would address the pressing need for lifetime
economic security, a need that will only increase as automation and
artificial intelligence replace more jobs. Second, it would create demand
for more revenue sources which, if properly designed, would advance one of
the key goals of the Great Transformation: internalizing the costs of
destabilizing nature. Third and perhaps most importantly, it would supply
the political juice for the first two functions. To paraphrase Mary
Poppins, rising dividends from the common pot would become the sugar that
helps the less palatable transformational pills go down.
>In short, three cheers for Mellor’s monetary proposal. And let’s make good
use of it by embedding it in a larger strategy that makes a greater
transformation politically possible.
>Author, With Liberty and Dividends For All
>On Sat, Jul 1, 2017 at 9:31 AM, Great Transition Network wrote:
>From Paul Raskin
>The old proverb—money is the root of all evil—may overstate the case, but
money is, indeed, implicated in the iniquitous debt/growth spiral now
>Mary Mellor explains in her new GTI essay, “Money for the People,” that it
needn’t be so. The modern money system is a social construct that evolved
to spur capital accumulation, but lingers on in an era needing, instead, to
throttle consumerism, debt, and the economic growth machine. Rather than
creating money privately through bank lending, as the current system does,
an alternative approach—public money—can undergird an economy oriented
toward people and use value, not profit and exchange value.
>I think you’ll find Mary’s vision of a critical institutional pillar of a
Great Transition economy illuminating, intriguing, and inspiring. Please
read it at www.greattransition.org/publication/money-for-the-people, and
let the comments and questions begin! How would public money work in
practice? How would it interface with the market? How might its pursuit
contribute to strategies for system change?
>Comments are welcome through JULY 31.
>HOW WE WORK
>Odd-numbered months are for internal GT Network discussions; even-numbered
months are for public dissemination. You will receive all comments via
email, and can review the entire thread online at
www.greattransition.org/forum/gti-forum. The essay will be published
alongside a “Roundtable,” comprised of selected comments from the GTN
discussion and a response from the author.
Hit reply to post a message
Or see thread and reply online at
Need help? Email jcohn at tellus.org
P2P Foundation: http://p2pfoundation.net - http://blog.p2pfoundation.net
Connect: http://p2pfoundation.ning.com; Discuss:
Updates: http://del.icio.us/mbauwens; http://friendfeed.com/mbauwens;
-------------- next part --------------
An HTML attachment was scrubbed...
More information about the P2P-Foundation