Monthly Archives: June 2012

E. C. Riegel’s Money Quiz and the True Money System

How many people in the world really understand money—its essence, its purpose, its proper management, its potential either to free us or enslave us? Sadly the number is close to nil as Riegel discovered decades ago, an opinion that was shared by renowned monetary economist Irving Fisher of Yale University. According to Riegel, Prof. Fisher, in a public speech “indicated that most persons who undertook to discuss money did not understand the subject and that those ‘who understood the real meaning of money’ were very few.” That was sometime in the mid-1930s, but it seems that the same situation still prevails today.

A little later, Riegel wrote a letter asking Fisher to specify whom those few might be, to which Fisher responded with a list of ten names, along with the caveat that the list was by no means exhaustive, and that there were probably several other of which he (Fisher) was unaware.

Next, Riegel, under the banner of the Consumer Guild of America, prepared a questionnaire which he sent out to the ten “experts” that Fisher had named. Riegel then published, in 1935, the results of his survey in a book titled, The Meaning of Money. I’m not aware of the existence of any digital file of that book, but there are a few bound volumes and photocopies still available.

My intention here is not to review or summarize that book, but simply to provide some background showing Riegel’s diligent research of the subject and to set the stage for presenting some of his eventual conclusions.

Riegel died in 1953, but part of the vast legacy he left behind is a one page document that bears the heading, Are These Propositions Correct? This document bears no date, but was probably written late in his life, and seems to be a concise summary of what he discovered and came to believe as result of his many decades of research and cogitation in the areas of money and the exchange process. I have transcribed that document, and present it below for your consideration.

Are These Propositions Correct?

  1. Money is a means of facilitating trade by splitting transactions in halves, giving the buyer value and the seller a claim for equivalent value upon any one or more traders in the community of traders.
  2. The issuance of money arises out of a purchase and sale transaction requiring tender and acceptance. Therefore, it is a bi-lateral function that can be exerted only by a buyer and a seller and there can be no money issue on behalf of another. Therefore governments cannot issue money on behalf of their constituency.
  3. Implicit in the act of issue is the agreement of the issuer (in common with all others in the trading community) to accept the issue in exchange for value when tendered. Therefore, only one who is prepared to accept money in exchange for value, when tendered, is qualified to be a money issuer and all persons so qualified to accept are ipso facto qualified to issue. Thus the power to issue is inherent in all traders.
  4. Money circulation is a cycle wherein the money passes from issuer to acceptor and from acceptor to acceptor until finally accepted by the issuer and thus retired. The money system is therefore a bookkeeping system whereunder money springs from a debit and is retired by an offsetting credit. The instrument evidencing the bookkeeping process need have no intrinsic value.
  5. Money is actually backed by the value surrendered by the seller and potentially backed by the value in possession of the next seller. Therefore, all “reserves” such as precious metals or other values are purely gratuitous and irrelevant.


If the above propositions are correct, we must conclude that a true money system, not only may, but must be established as an integral part of the private enterprise system and the issuing power must be denied to all except private enterprisers, the exclusion to include all governments and non-profit institutions. The true money system must be based upon voluntary cooperation of the participants. Therefore no legislative or political action is required. Therefore, without political sponsorship or boundaries, the true money system is potentially universal and uniting all traders with one monetary language.

Sometimes Riegel’s statements require clarification and elaboration, which I have done in some of my own writings, and there are a (very) few points on which I disagree. But Riegel has given us here a clear view into the simple essence of money and the true nature of the exchange process, providing the material we need for building a solid foundation upon which economic democracy can be erected. –t.h.g.

What and whom do we really depend upon?

 Tom Atlee’s recent article (excerpted below) is a BRILLIANT statement of both truth and necessity. I believe that sharing, cooperation, and restructuring are now gaining speed. The impending disintegration of the money/banking/finance sector will force us to “take off” soon. Let’s hope that we can generate enough “lift” before we run out of runway.–t.h.g.

Emerging EcoNomics #3: The New Sharing Economy

One of the key features of “the new economy” is sharing.  More and more people are sharing housing, cars, bikes, tools, meals, skills, money, books, ideas, music, energy, recreation, projects, transportation, knowledge, problem-solving, visions, jobs, ownership, clothes, stories, time…

Sharing is a resource in hard times as well as a source of intrinsic meaning and satisfaction any time.  To an increasing number of people, sharing offers compelling alternatives to the corporate-dominated money-saturated whole-society bustle we normally think of as “the economy”.


The existing economy is designed to get us to look out for ourselves so that we’ll consume, compete and work at paying jobs.  It nurtures the illusion that we are independent, building lives for ourselves in a world where everyone else is out for themselves, too.  Closer examination, however, suggests that such independence is largely a myth, a well-promoted appearance obscuring our profound dependence on the competitive buy-and-sell economy which, in turn, conceals our dependence on nature, culture, and each other.


In the existing economy we experience obligations not primarily to our neighbors, our communities or the natural world that supports everything we do.  We experience obligation to our employers, to governments, and to banks, credit card companies, and other institutions of higher lending.

This entrenched economic dependence hides the fact that we are fundamentally INTERDEPENDENT:  We need each other.  We are intimately connected to intricately interdependent natural world.  And we are co-creating the conditions of our lives and the prospects for our future, whether we know it or not.


…. Once we become grounded in quality of life rather than quantities of stuff or money, the possibilities for sharing expand exponentially, creating a sense of abundance even in the presence of some physical scarcity.

Whether or not we are inclined to share more with each other, one thing we all share nowadays is destiny.

Read the rest of the article…

Cyclos, worth another look??

I Just received a message from one of my advisee groups on the west coast. They are seriously considering Cyclos as the platform for their local exchange system.

Here is what they say:

Cyclos offers a complete Open-Source on-line banking system with additional modules such as e-commerce and communication tools. Check this out at

The objective of the project is to develop open source complementary currency software that is easy to use and maintain, flexible, secure, and highly customizable. The Cyclos structure is entirely dynamic.

This means that it is possible to ‘build’ a monetary system from scratch. Organizations that want a standard system can use the default database that comes with basic configurations and can be easily enhanced. Cyclos is used for mutual credit systems like LETS, Barter systems, administration of Micro credits or remittances, Time banks and backed currency systems such as a C3 (consumer and commerce circuit). Cyclos just started to be used as a back-end for mobile banking services in Africa, and various Universities are studying the possibility to use Cyclos as a campus payment system.

It seems that the newest version of Cyclos may have the functionality, ease of use, and customizability that we have been looking for.

I’d be interested to see or hear expert reviews and people’s actual experience with using the Cyclos platform. Please send them as a comment to this post.

Fossil Fuels, Debt-money, and the Growth Economy

The video below (300 Years of FOSSIL FUELS in 300 Seconds), from the Post Carbon Institute, is very well done. It tells the story about the development of industrial civilization based on fossil fuel energy, and the mega-crisis that now confronts us. While it is inaccurate in pointing to fossil fuels as the main driver of economic growth, it is well worth the five minutes it takes to watch it.

As I’ve been saying for a long time, the availability of cheap fossil fuel energy has been the enabler of continuous economic growth, but it is not the driver. The driver of the growth imperative which has been operating for about the past 300 years is the political interest-based debt-money system. It is a system that creates money based on interest bearing “loans.” It is the compound interest that is built into the global money system that requires the continual expansion of debt, which in turn forces the physical expansion of economic output. Now nature is putting on the brakes, telling us it’s time to STOP.

We can make the transition to a regenerative economy consciously and deliberately, or we can try to deal with the developing problems on an ad hoc basis in the midst of inevitable chaos. The end of the industrial era should not be mourned, nor does it need to be painful. We have before us the opportunity to create a happier, more peaceful world, one in which we all have enough to live a dignified and fulfilling life with enough time and energy to restore our communities and our environment. For more about that, see my presentation on The Butterfly Society.—t.h.g.

If we must have the corporation, let it be “B”

Few people are yet aware of it, but there is a new form of organization that seeks to transform the behavior of the corporation to make business a force for change that servers the common good. The B Corporation is “a new type of corporation that meets rigorous and independent standards of social and environmental performance, accountability, and transparency.” 

Here’s a letter from the B Lab team that recounts the recent history and announces the upcoming retreat.—t.h.g.

It was twenty years ago today . . .

Actually, it was five years ago this week that the curtain rose on the B Corp movement.
At the invitation of then BALLE executive director and current RSF Social Finance CEO Don Shaffer, we were given an opportunity to share the vision of B Corp in a plenary setting before we had any business being given the stage.  As if sensing the moment, 13 leaders of the sustainable business community with whom we had been gestating the concept for more than a year, said that if the curtain was rising on B Corp, then they wanted to be on stage for the first performance.

Our memory is (other than Jay being uncharacteristically brief in his introductory remarks) mostly of being humbled that these leaders, already recognized as such by their peers, were willing to stand up and lend their credibility to something so unlikely and audacious.  But, then, that is what leaders do.

We remember (perhaps correctly) Jeff Mendelsohn characteristically bounding to take the mic first to explain why New Leaf Paper was becoming a Founding B Corporation.  Or maybe it was Mike Hannigan (Give Something Back) who led off as our unofficial local host?  Or maybe everyone appropriately deferred to Judy Wicks (White Dog Café) as BALLE’s co-founder?  They were joined by Matthew Bauer (Better World Telecom), Ben Bingham (now 3 Sisters Sustainable Investments), Jason Salfi (Comet Skateboards), Scott Leonard and Matt Reynolds (Indigenous Designs), Elizabeth Guman (now Strategy Arts), Mal Warwick (Mal Warwick Associates), and competitors cum collaborators Adam Lowry (Method), Gregor Barnum and Jeffrey Hollender (Seventh Generation).  We are sure (and sorry) that we are forgetting some who were leading that day.

It is wonderful to be here.  It’s certainly a thrill.

It’s hard to believe this all began from a standing start five years ago.  Although, it wasn’t a standing start was it.  The sustainable business movement, the local living economies movement, socially responsible business and investing movements, microfinance, clean tech, organics, green building et al were all long-standing and vibrant.  Myriad thought and action leaders too numerous to mention have inspired and influenced each of those on stage and the now more than 500 Certified B Corps in countless ways.  The community of B Corps will hopefully inspire and influence the next generation of leaders whose names we don’t yet know and whose ideas we can’t yet imagine.

With the 5th anniversary of the B Corp on our minds and our October Champions Retreat approaching, we are feeling the need to reflect and to hear your reflections on where we’ve been and where we may be headed.  Whether you’d like to share a memory, a vision, or a concern, a hope, an idea, or a suggestion, please share it with us or post it on our internal B Corp community listserve – which you can access here.

In five short years, together we have built a vibrant and diverse community of more than 500 leading businesses across 60 industries, 40 states, and now 8 countries.  More than 2,000 other sustainable businesses are using the standards we’ve developed together to measure what matters most and to help them benchmark their performance and increase their impact.  Together, we have passed legislation — that a former president of the American Bar Association calls ‘the first, real, original, constructive thought in the corporate governance world in 25 years’ – in 7, no, now 8 states, as today benefit corporation legislation was enacted in Louisiana by Republican Governor Bobby Jindahl.  Much more has been accomplished (the launch of GIIRS and a national ad campaign to name a few) and, of course, since much more remains yet to be done.

I don’t really want to stop the show.

So stay tuned, enjoy the summer, share your reflections and visions and make sure you put October 3rd-5th on your calendar to join your fellow leaders in Half Moon Bay for our Champions Retreat as we focus our collective energy on the power of collective action and create plans for what we can do together that we can’t do alone.

Thanks to all who have led the way and given this community an opportunity to serve.  Thank you to the 13 who taught the band to play.  And thank you all for making playing so well together.

Be the change,

Jay, Bart, Andrew and the B Lab team