Monthly Archives: April 2011

Coping, caring, and building community

As the financial and economic ground continues to shift beneath our feet, it becomes ever more imperative that we reduce our dependence upon the institutions and structures that we have come to depend upon and take for granted. The financial tsunami of 2008 and the continuing aftershocks should be a wakeup call. The sock markets may be up (for now), but that should not be taken as comforting evidence that everything is “getting back to normal.” As billionaire financier George Soros said in his recent book, “This crisis …has brought the entire [financial] system to the brink of a breakdown, and it is being contained only with the greatest difficulty. This will have far reaching consequences. It is not business as usual but the end of an era.” (The New Paradigm for Financial Markets: The Crash of 2008 and What it Means. p. 81).

The total outstanding credit for all sectors in the U.S. economy was 160% GDP in 1929, 260% in 1932. By comparison, we entered the 2008 crash at 365%, and Soros believes this will rise to about 500% of GDP within the next few years.

What seems to be in prospects for the foreseeable future for the vast majority of people in the developed world, especially the United States, is diminished purchasing power. This the result of simultaneous trends of underemployment or unemployment, rising prices of basic necessities due to currency debasement (inflation), and systematic attacks on the middle-class by the political establishment.

How do we cope with all of that? It is, of course, as the proverb says, both a challenge and an opportunity. I have suggested before that society is on the verge of metamorphic change that offers the promise of a more peaceful and harmonious world in which basic needs are met and everyone has the opportunity to realize their fullest potential. But it will take the right kind of action to make that vision a reality. It will require that we take sharing and cooperation to new levels, and that we create new structures that can serve the common good. An essential part of that is building community.

On that score, I take inspiration from Richard Flyer and the Conscious Community Network. Richard recently posted a list of 37 ways to build community. No Act is Too Small! You can click on that link to learn more, but I have extracted the 37 ways here for your convenience. I’m sure Richard won’t mind.—t.h.g.

1. A smile and a wave will go a long way.

2. Each morning, ask where you can make a difference.

3. Find the good in others instead of their faults – start in your home and on your street.

4. Become aware of hidden needs on your street – isolated seniors;

youth needing mentors, single parents; etc.

5. Start a community garden.

6. Practice forgiveness.

7. Surprise a new neighbor by making a favorite dinner – and include the recipe.

8. Slow down and enjoy the present moment.

9. Don’t gossip.

10. Start a monthly tea group.

11. Play cards with friends and neighbors.

11. Start a babysitting cooperative.

12. Form a group of neighbors to walk their dogs together.

13. Seek to understand.

14. Start a carpool.

15. Have family dinners and read to your children.

16. If you grow tomatoes, plant extra for a lonely elder who lives nearby – better yet, ask him/her to teach you and others to can the extras.

17. Turn off the TV, Play Station, PSP, and talk with family, friends, and neighbors.

18. Bless your food with gratitude.

19. Know that love is not a feeling but a courageous choice.

20. Ask neighbors for help and reciprocate.

21. Talk to your children or parents about how their day went.

22. Say hello to strangers.

23. Create a neighborhood newsletter.

24. Organize a neighborhood clean-up.

25. Be a model and demonstrate the virtues you want to see in the world.

26. Be a peacemaker.

27. Talk to the mail carrier.

28. Shoot some ‘hoops with neighbor children.

29. Support local merchants.

30. Speak kindly and listen carefully

31. Hire young people for odd jobs.

32. Form a tool cooperative with neighbors and share ladders, rakes, snow blowers, etc.

33. Grow your own food.

34. Be real. Be humble. Be respectful.

35. Offer to watch your neighbor’s home or apartment while they are away

36. Be of service to all.

37. Go to http://www.consciouscommunity-reno.org/ to share your stories.

Adapted from http://bettertogether.org.

Should every state own a bank of its own?

A state owned bank can provide state economies with many advantages–if it is properly run. Here’s an article from Mother Jones about the Bank of North Dakota, the only state owned bank in the United States. It makes a pretty good case.–t.h.g.

How the Nation’s Only State-Owned Bank Became the Envy of Wall Street

The Great Unraveling—Entering Stage Two

There has been very little recognition of the Debt/Growth Imperative that is built into our global system of money, banking, and finance. As I have been preaching for many years, the creation of money as interest-bearing debt requires that indebtedness, in either the private sector or the public sector, must be continually increased at an accelerating rate in order for the system to continue to function. When the private sector is fully “loaned up,” government must step in as “the borrower of last resort.” That was clearly manifested in the latest bubble-bust cycle with the massive bank bailouts and the assumption by governments of enormous amounts of their “toxic debt.”

The aggregate debt burden is destined to ultimately become unbearable, and no amount of government or central bank intervention can save this flawed system (such is the nature of exponential growth). The fiscal crisis that is now confronting national governments around the world signals the imminent collapse. How that will play out is difficult to assess, but it behoove us to use our available resources to enhance the resilience of our communities and build new systems that can be relied on to provide the things we need in order to thrive and build a world that works for all.

One prominent commentator who “gets it” is Chris Martenson. His recent observations (below) are worth considering.—t.h.g.

The Breakdown Draws Near

Tuesday, April 19, 2011, 12:22 pm, by Chris Martenson

Things are certainly speeding up, and it is my conclusion that we are not more than a year away from the next major financial and economic disruption.

Alas, predictions are tricky, especially about the future (credit: Yogi Berra), but here’s why I am convinced that the next big break is drawing near.

In order for the financial system to operate, it needs continual debt expansion and servicing. Both are important. If either is missing, then catastrophe can strike at any time. And by ‘catastrophe’ I mean big institutions and countries transiting from a state of insolvency into outright bankruptcy. [emphasis added]

In a recent article, I noted that the IMF had added up the financing needs of the advanced economies and come to the startling conclusion that the combination of maturing and new debt issuances came to more than a quarter of their combined economies over the next year. A quarter!

I also noted that this was just the sovereign debt, and that state, personal, and corporate debt were additive to the overall amount of financing needed this next year. Adding another dab of color to the picture, the IMF has now added bank refinancing to the tableau, and it’s an unhealthy shade of red: Banks face $3.6 trillion “wall” of maturing debt: IMF

Read the rest of Martenson’s post here.

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Whose interests does a central bank serve?

There’s an old adage that says “the best way to rob a bank is to own one.” Well, take a look at what the owners of the Federal Reserve are doing with your money. And, this is, I’m sure, the mere tip of a very ugly iceberg.–t.h.g.

From Rolling Stone

The Real Housewives of Wall Street

Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?

By Matt Taibbi
April 12, 2011 9:55 AM ET

America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we’re broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year’s retirees from the IRS, the SEC and the Department of Energy.

Why Isn’t Wall Street in Jail?

Most Americans know about that budget. What they don’t know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the “official” budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.

This article appears in the April 28, 2011 issue of Rolling Stone. The issue will be available on newsstands and in the online archive April 15.

Read the rest of it here.



60 Minutes exposes banks’ massive mortgage fraud

This is a truly astounding story about how major banks have routinely used falsified documents to foreclose on people who were lured into the housing bubble.

Liberty Dollar conviction no threat to “barter” exchanges

In the wake of the recent Liberty Dollar case, there has been much concern and confusion about what it means to the alternative exchange and local currencies movement. Here is a clarifying statement that has just been issued by the International Reciprocal Trade Association (IRTA), the trade association for the commercial “barter” industry.

Liberty Dollars Case Does Not Involve the Modern Trade & Barter Industry

No Government Precedent Set Against Private Barter Currencies

Recent news stories suggesting that the Liberty Dollars verdict is a signal that the Government is against private barter currencies are categorically incorrect and ignore the facts of the case.

On March 18, 2011, after a six day trial, a North Carolina jury found the defendant Bernard von NotHaus guilty of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.

In the trial, the defense improperly tried to argue that Mr. NotHaus’s Liberty Dollar coins represented legitimate voluntary private barter currency transactions. But the government and jury rejected that misplaced argument; “there can be no private currency system that functions through the private creation and distribution of counterfeit coins designed in resemblance and similitude of United States coins.” (Government Brief filed on April 7, 2011 in by U.S District Court by U.S. Attorney Anne M. Thompkins).

Several news stories have highlighted an irresponsible quote made by Liberty Dollar’s counsel, Aaron Michel, which said:

“The prosecutors successfully painted Mr. von NotHaus in a false light and now the U.S. Attorney responsible for the prosecution is painting the case in a false light, saying that it establishes that private voluntary barter currency is illegal.”

However, the fact is that the Government rejected any comparison of VonHaus’s counterfeiting activities with legitimate barter currencies. As the Government stated in their U.S. District Court Brief of April 7, 2011; “the defendant was not operating a private currency barter system, rather he was counterfeiting United State coins and using deceptive means to inject them into the flow of current money to defraud the public.” (Page 5.) Further on page 13, the Government states ” the evidence at trial clearly demonstrated that the activities surrounding the creation and distribution of the Liberty Dollars were in no way a competing private voluntary currency system, but rather constituted a deceptive and fraudulent scheme designed and implemented by the defendant.” Lastly, on page 14, the Government goes on to say, “any comparison of Defendant’s creation and distribution of Liberty Dollar coins to localized private exchange systems such as the Ithaca Hour or Disney Dollar are absurd on their face.”

IRTA moved quickly to set the record straight and was successful in getting the following clarifying statement inserted in a revised version of the http://www.examiner.com article by Mr. Schortgen:

Executive Director of IRTA, Ron Whitney says, “Mr. Michel’s quote suggesting that the Liberty Dollar case is related to the legally recognized organized barter industry is misplaced. The IRS website at http://www.irs.gov/businesses/small/article/0,,id=187904,00.html defines barter as “the trading of one product or service for another.” The Liberty Dollar’s case is not about trading one product or service for another, rather it is about violation of Section 18, 486 of the U.S. Code which prohibits the manufacture of coinage or metals intended as current money resembling coinage of the U.S. Mr. vonNotHaus was convicted of the charges of counterfeiting and making and selling currency, barter had nothing to do with the case. The modern trade and barter industry was recognized by the U.S. government as a legal alternative form of commerce by the Tax Equity and Fiscal Responsibility Act (TEFRA), passed in 1982 whereby barter exchanges were deemed third party record keepers and required to comply with IRS 1099B reporting laws. Barter sales conducted through barter exchanges are taxable sales reported annually to the IRS. The Liberty Dollar’s verdict is completely separate from the legally recognized modern trade and barter industry and in our view it does not represent an effort on the government’s part to declare valid TEFRA compliant barter transactions as illegal activity.”

We trust the information above will operate to clear the confusion on this matter. Please call Ron Whitney at 757-393-2292 if you have any questions.

Money and Oil: The agenda in Libya becomes more evident

I hadn’t noticed it before, but on March 22, Bloomberg reported that, Libyan Rebel Council Forms Oil Company to Replace Qaddafi’s

Well, we’ve grown to expect things like that. The more interesting development reported in the article was this:

The Council also said it “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

Amazing! Grab the oil and grab control of the money machine.

For some interesting commentary on these developments read this article: America’s true reason for attacking Libya becomes clear with new central bank, , and this article: Wow That Was Fast! Libyan Rebels Have Already Established A New Central Bank Of Libya.

What IS the truth about Libya?

There are a lot of things about the turmoil in the Middle-east and the current assault on Libya that don’t quite add up. Here is one version of the truth that seems plausible. We’re all aware by now of the competition amongst the major power to secure oil supplies, and that oil is the primary reason behind the American war against Iraq.

Could it be that the burgeoning growth of Islamic finance has something to do with the policies of the Western powers in the Arab and Islamic world? Based as it is on funding without interest/usury (riba), true Islamic finance  is bound to eventually threaten the power of the banking establishment. –t.h.g.

The Truth About Libya

By Stephen Goodson 4-1-11

Colonel Muammar Gadaffi is frequently referred to in the media as a “mad dictator” and “bloody tyrant”, but do these allegations accord with the facts?

Libya consists of over 15O tribes, with the two main groups, the Meghabra living in Tripolitania in the west and the Wafallah living in Cyrenaica in the east. Previous attempts to unite these tribes by the Turkish (1855-1911) and ltalian {1911-43) colonial rulers failed and the country was split in two for administrative purposes.

Oil was discovered in Libya in 1959, but King ldris of the Senussi tribe allowed most of the oil profits to be siphoned into the coffers of the oil companies. The coup d’etat on 1 September 1969 led by Colonel Gadaffi had countrywide support. He subsequently married a woman from the royal Barqa tribe and adroitly unified the nation.

By retaining Libya’s oil wealth for the benefit of all its people, Gadaffi had created a socialist paradise. There is no unemployment, Libya has the highest GDP in .Africa, less than 5% of the population is classified as poor and it has fewer people living below the poverty datum line than for example in Holland. Life expectancy is 75 years and is the highest in Africa and I0% above the world average.

With the exception of the nomadic Bedouin and Tuareg tribes, most Libyan families possess a house and a car. There is free health care and education and not surprisingly Libya has a literacy rate of 82%. Last year Gadaffi distributed $500 to each man, woman and child (population 6.5 million).

Libya has a tolerable human rights record and stands at 61 on the International Incarceration Index, comparable with countries in central Europe (the lower the rating, the lower the standing – the USA occupies the no.1 spot!). There is hardly any crime and only rebels and traitors are dealt with harshly.

Anyone who has read Gadaffi’s little Green Book will realize that he is a thoughtful and enlightened leader. Libya has been accused of having committed numerous acts of terrorism in the past, but many of these have been perpetrated by foreign intelligence agencies as false flag operations – the Lockerbie bombing being a prime example.

The CIA and MI6 and their frontmen have been stoking up dissent in the east of the country for almost 30 years. Libya produces exceptionally high quality light crude oil and its production cost of $1 a barrel, compared to the current price of $115, is the lowest in the world.

Riba (usury) is not permitted. The Central bank of Libya is a wholly-owned by the Libyan Government and is run as a state bank, issuing all government loans free of interest. This is in contrast to the exploitative fractional reserve banking system of the West. The no-fly zone and the bombing of Libya have nothing to do with the protection of civilians. It is an act of war ­ a blatant and crude attempt by the oil corporations and international bankers to steal the wealth of Libya.

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Stop Chasing the Buck and Change Your Luck

Cashless trading based on credit clearing is moving into its next stage of development, the optimization and scale-up stage.

Established groups and associations are beginning to recognize the importance and urgency of disengaging from conventional structures of money and banking, reclaiming “the credit commons,” and reorganizing the exchange of value under local community control. One such association is Green America, formerly known as Coop America, which has recently established  The Green America Exchange  as a way of offering cashless trading opportunities to members of their Green Business Network.

GAEx uses the GETS trading platform which has been developed by Richard Logie, a long-time commercial trade exchange operator and leader in the industry. While the GETS software is proprietary, it seems to have the functionality needed for cashless trading within the exchange. According to Logie, the platform also has the capability needed for networking similar exchanges together into a larger more widespread trading community.

In response to a request from the Green America administration I’ve written the following article for posting (in four parts) on the Green America Exchange blog. For your convenience, I’ve also posted it below.–t.h.g.

Stop Chasing the Buck and Change Your Luck

Thomas H. Greco, Jr.

Most small and medium sized businesses (SMEs) these days are having a hard time financially–sales are down, costs are up, and bank credit is unavailable, all of which is symptomatic of the stagflation that besets the American economy.

Our present predicament is no accident of nature, nor is it a temporary condition; it is the expected result of a flawed system of money, banking and finance. We have allowed the banks to control our credit and charge us interest for the “privilege” of accessing some of it as bank “loans.” The fact is that the dollar regime, like every other political currency, collectivizes credit. It is the people’s collective credit that supports each national currency, but the allocation of that credit is determined by forces beyond popular control, and an inordinate proportion of it is used to fund the war machine and to enrich corporate fat cats, all to the detriment of peace, equity, and the common good.

But we need not be victims of a system that is so obviously failing us. We can learn to play a different game. It is possible to organize an entirely new structure of money, banking, and finance, one that is interest-free, decentralized, and controlled, not by banks or central governments, but by businesses and individuals that associate and organize themselves into cashless trading networks. This is a way to reclaim “the credit commons” from monopoly control and create healthy community economies that can enhance the quality of life for all.

In brief, any group of traders can organize to allocate their own collective credit amongst themselves, interest-free. This is merely an extension of the common business practice of selling on open account—“I’ll ship you the goods now and you can pay me later,” except it is organized, not on a bilateral basis, but within a community of many buyers and sellers. Done on a large enough scale that includes a sufficiently broad range of goods and services, such systems can avoid the dysfunctions inherent in conventional money and banking and open the way to more harmonious and mutually beneficial trading relationships that enable the emergence of sustainable economies and promote the common good—a true economic democracy.

This approach is no pie-in-the-sky pipedream, it is proven and well established. Known as mutual credit clearing, it is a process that is used by scores of commercial “barter” companies around the world to provide cashless trading for their business members. In this process, the things you sell pay for the things you buy without using money as an intermediate exchange medium. Instead of chasing dollars, you use what you have to pay for what you need. It’s as simple as that. Unlike traditional barter, which depends upon a coincidence of wants and needs between two traders who each have something the other wants, mutual credit clearing provides an accounting for trade credits, a sort of internal currency, that allows traders to sell to some members and buy from others. According to the International Reciprocal Trade Association (IRTA), a major trade association for the industry, “IRTA Member companies using the ‘Modern Trade and Barter’ process, made it possible for over 400,000 companies World Wide to utilize their excess business capacities and underperforming assets, to earn an estimated $12 billion dollars in previously lost and wasted revenues.”

Perhaps the best example of a credit clearing exchange that has been successful over a long period of time is the WIR Economic Circle Cooperative. Founded in Switzerland as a self-help organization in the midst of the Great Depression (1934), WIR provided a means for its members to continue to buy and sell to one another despite a shortage of Swiss francs in circulation. Over the past three quarters of a century, in good times and bad, WIR (now known as the WIR Bank) has continued to thrive. Its more than 60,000 members throughout Switzerland trade about $2 billion worth of goods and services annually.

Now the Green Business Network of Green America, is offering that kind of opportunity to its membership through Green America Exchange, GAEx. While still in the formative stages, Green America Exchange has the potential to become, not merely a lifeboat for SMEs in difficult times, but a model for a new paradigm in business.

The challenge for any network, of course, is to achieve sufficient scale to make it useful. The bigger the network, the more opportunities it provides for cashless trades to be made. In the early stages, it may require some help to find those opportunities, but as the members discover each other and become aware of what each has to offer, the value proposition becomes ever more evident and more businesses are attracted to it. Like Facebook, Twitter, My Space and other networks that are purely social, cashless trading networks will eventually grow exponentially –and that will mark a revolutionary shift in political as well as economic empowerment. It will be a quiet and peaceful revolution brought on, not by street demonstrations or by petitioning politicians who serve different masters, but by working together to use the power that is already ours—to apply the resources we have to support each other’s productivity and to give credit where credit is due.

Through participation in an exchange network that is open, transparent and democratic members enjoy the benefits of:

  • A reliable and friendly source of credit that is interest-free and community controlled.
  • Less need for scarce dollars.
  • Increased sales.
  • A loyal customer base.
  • Reliable suppliers.

What will it take to make mutual credit clearing networks go viral the way social networks have? That is the key question, the answer to which has heretofore remained elusive. While the WIR has been an obvious success, it seems to have been intentionally constrained and prevented from spreading beyond Swiss borders, and while commercial “barter” has been significant and growing steadily, it is still tiny in relation to the totality of economic activity.

As they are operated today, commercial trade exchanges are self-limiting and typically impose significant burdens upon their members. These include onerous fees for participation, exclusive memberships, limited scale and range of available goods and services within each exchange, the use of proprietary software, and insufficient standardization of operations which limits the ability of members of one trade exchange to trade with members of other exchanges.

Virtually all commercial trade exchanges are small, local, and operated as for-profit businesses. Small scale, local control, and independent enterprise are all desirable characteristics, but when it comes to exchanging valuable goods and services, something more is needed. What the world needs now is a means of payment that is locally controlled but globally useful.

Here are the things that I think are needed for cashless trading based on mutual credit clearing to go viral:

  1. Members need to offer to the network, not only their slow moving merchandise and luxury services, but their full range of goods and services at their usual prices. This will assure the value of the internal trade credits and make them truly useful.
  2. Like any “common carrier,” trade exchanges should make membership open to all with little qualification.
  3. Lines of credit (the overdraft privilege) must be determined according to each member’s ability and willingness to reciprocate, measured for example, by her record of sales into the network.
  4. Trade exchanges must be operated for and by the members in a way that is transparent and responsive.
  5. Members must exercise their duties to provide proper oversight and supervision of those assigned to manage the exchange.

As soon as there is a model exchange that has mastered these dimensions of design and operation, its success will inspire others to follow suit and the rapid growth phase will begin, leading eventually to an internet-like global trading network that will make money obsolete. Perhaps Green America Exchange will become that model.

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Thomas H. Greco, Jr. is a writer, networker, and consultant, specializing in cashless exchange systems and community economic development. A former engineer, entrepreneur, and tenured college professor, he is widely regarded as a leading authority on free-market approaches to monetary and financial innovation, and is a sought-after advisor and speaker at conferences internationally. He is the author of many articles and books, including The End of Money and the Future of Civilization (Chelsea Green, 2009) and Money: Understanding and Creating Alternatives to Legal Tender (Chelsea Green, 2001). His blog, http://beyondmoney.net/, and website, http://reinventingmoney.com/, are valuable resources that provide detailed explanations and prescriptions for communities, businesses, and governments.

“Tax the Super Rich now or face a revolution”

Hey, it aint me saying that, it’s mainstream Wall Street columnist Paul B. Farrell of MarketWatch (published by Dow Jones & Co).

You sure wouldn’t know it from the attacks that politicians are making on social spending and longstanding restraints on corporate predation, but maybe a few insiders are finally waking up to reality. If the super-rich (and the rest of us) are lucky, there will be enough of a political upsurge to change the rules of the game before all hell breaks loose.

The New Deal policies of FDR and the depression-era Democrats saved capitalism from extinction back in the 1930′s by establishing rules to constrain the damage done by the greed of insiders and power seeking demagogues, and by creating social programs to protect the weak and disadvantaged and to share the wealth. Without that, there would probably have been a violent revolution in America.

Taxation by itself will not be enough to create a compassionate and harmonious society, but retrieving the loot that has been stolen from the American people over the past couple decades would be a good start.

Here are a few tidbits from Farrell’s article:

Remember, 93% of what you hear about markets, finance and the economy are guesses, wishful thinking and lies intended to manipulate you into making decisions that suck money from your pockets into Wall Street.

…on an inflation-adjusted basis, Wall Street lost 20% of your retirement money in the decade from 2000 to 2010, over $10 trillion.

Wake up folks. The Super-Rich Delusion is destroying the American Dream for the rest of us. The Super Rich don’t care about you. They’re already stockpiling for the economic time bomb dead ahead. Don’t say you weren’t warned. Time for you to plan ahead for the coming revolution, for another depression.

Read the rest of it here: