Author Archives: Thomas H. Greco, Jr.

Why Congress Will Not Prevent the Crash

Posted on October 14, 2012 | Leave a comment

As economists go, Robert Reich is one of the more rational and humane, but he suffers under the same delusion as the others.  In a recent blog post, he describes why he thinks that “January’s Fiscal Cliff Turns into a Gentle Hill by February (or March).”

What Robert Reich, and most economists fail to understand is that the federal budget cannot possibly be balanced so long as we have a debt-money system in which banks create money based on interest-bearing debt. This system contains a debt-growth imperative. As time goes on total debt must continually increase to keep the money supply pumped up. When the private sector is all “loaned-up,” government becomes the “borrower of last resort.” Failing in that role, we have a contraction of the money supply, defaults, unemployment and recession. If government assumes that role, we have inflation. So take your choice: recession or inflation, or some of each.

No amount of “Quantitative easing,” or tax cutting, or spending reductions will get us out of this dilemma. Politicians may be able to delay it a bit longer, but no amount of policy tweaking can prevent the inevitable crisis. The problem is systemic and only a complete restructuring of money and banking will solve it. -t.h.g.

 

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Posted in Banking, The Debt Imperative, The Political Money System

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An innovative currency project in Kenya achieves impressive social benefits

Posted on October 5, 2012 | Leave a comment

A currency project that was conceived and operated by Will Ruddick in Kenya last year has reportedly achieved significant social benefits at very little cost. A full report titled, Eco-Pesa: An Evaluation of a Complementary Currency Programme in Kenya’s Informal Settlements can be found at the International Journal of Community Currency Research.

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Posted in Developing Alternatives, Emerging paradigm, Exchange Design

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New Ways to Pay and Be Paid

Posted on October 4, 2012 | 1 comment

I had a Skype chat recently with Ken Banks who pointed me to an excellent article about m-Pesa, a system operating in Kenya that uses mobile phones to provide an easy way of making payments. The article is, The Invisible Bank: How Kenya Has Beaten the World in Mobile Money, by Olivia O’Sullivan.

In his introduction to the article, Ken Banks says this:

 Click a few keys, exchange a few numbers, and it’s done. With just a mobile phone and a registration with Safaricom, Kenya’s mobile service giant, you can pay for anything in seconds – no cash, no long journeys to towns to reach a bank, and no long lines when you get there. This is m-Pesa, the revolutionary approach to banking which is changing economies across Africa. The service allows customers and businesses to pay for anything without needing cash, a bank account, or even a permanent address.

Here is a brief description from the article itself

So how does it work? m-Pesa relies on a network of small shop-front retailers, who register to be m-Pesa agents. Customers come to these retailers and pay them cash in exchange for loading virtual credit onto their phone, known as e-float. E-float can be swapped and transferred between mobile users with a simple text message and a system of codes. The recipient of e-float takes her mobile phone into her nearest retailer when she wants to cash in, and swaps her text message code back for physical money. There are already more m-Pesa agents in Kenya than there are bank branches.

This case demonstrates how any credible entity (like a phone company or power company) can now become a depository “bank” that enables credits denominated in any chosen units (hopefully, objectively defined units like phone minutes or kilowatt hours) to be easily transferred from one account to another via cell phones.

Networks of existing storefronts (like 7-Eleven convenience stores) are being added on top of cell phone technology to enable deposits into and withdrawals from any account. That could potentially be done in any desired currency. As an example, 7-Eleven stores in Thailand have begun to accept payments for purchases made online. The advantage is that no credit card is required. I’ve used this service myself when I booked flights online with NOK Airlines, a Thai low cost carrier. Once booked, one has 24 hours within which to trot on over to any conveniently located 7-Eleven and pony up payment, usually in cash. In my case, I paid in Thai Baht notes that I drew from a nearby ATM using my debit card and drawn on my credit union account in Arizona. 7-Eleven also sells prepaid cell phone minutes. They could easily add acceptance of cash payments to add credits denominated in any desired units to an account (i.e., deposits).

While m-Pesa fees are relatively high for small transactions, that is likely to improve as competing companies enter the field.

Here, is a chart of the m-Pesa fee schedule.

(Chart prepared by Will Ruddick)

The monetary and financial revolution is just a matter of putting existing components together. The hardest part will be in negotiating the minefield of laws, regulations, and taxation policies that protect existing monopolies and fiefdoms. But once begun, it will be increasingly difficult to stop this snowball from rolling downhill. –t.h.g.

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Posted in Banking, Emerging paradigm, Exchange Design

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Money Malfunction, and What We Can Do About It

Posted on October 1, 2012 | Leave a comment

We have in Professor Jem Bendell a very competent spokesman for monetary transformation. This video hits all the right points, provides all the right answers, and gives viewers some direction for positive action.

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Posted in Prescriptions, The Debt Imperative, The Political Money System

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October Newsletter and Fall tour itinerary: Europe & UK

Posted on September 26, 2012 | 1 comment

In this edition

Fall Tour Itinerary – Europe and the UK

The Wealth of the Commons now in print.

Recent posts

  • QE3
  • Riegel essays:
    • Right-wing Socialists
    • Breaking the English Tradition

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Fall Tour

My fall tour agenda has filled out nicely and includes an exciting assortment of presentations, workshops, and consultations.

On October 1, I will begin a five week tour that will take me to Switzerland, Greece, and the UK.

Here is a chronological list of events. If you wish to participate in any of them, please go to the indicated website or get in touch with appropriate contact person.

3-6 October. Geneva. Presentations and conferences with Community Forge. “CommunityForge is a non-profit association that designs, develops and provides complementary currency systems and tools.” (Use the “Contact” button on the website to connect with Tim Anderson). This stop will probably include a presentation at the UN Palais des Nations, Human Rights Social Forum, on October 3. My topic will be “Strategies for community empowerment and the creation of economic democracy.”

7-14 October. Crete, Greece.

On October 10 and 11, I will be a presenter at the International Sustainability Summit, to be held at the European Sustainability Academy (Sharon Jackson, Director ).

The segment on Strategic shifts in prevailing systems includes a 2 day workshop that will focus specifically upon Community Exchange Systems and Alternative currency systems for Sustainable Communities. On October 10, I will give a presentation on The Emerging Butterfly Society: Making the shift to a steady-state economy and a world that works for all. Details and registration materials can be found at: http://www.eurosustainability.org/en/esa_summit4.htm

15 October to approximately 21 October. Mainland Greece

During this time period, I will be traveling to Thessaloniki, Volos, and Athens. Specifics are still developing.

25 October. York, UK

I will be speaking at the York LETS Conference on the topic, “Why local exchanges and currencies fail to thrive, and what is required to take alternative exchange to scale.” Booking at, http://yorkaltcurrencies-efbevent.eventbrite.co.uk/ . Info at Facebook.

October 27-28. London. Events on Money and Alternative Currencies are being planned by Mary Fee of LETSlinkUK, http://www.letslinkuk.net/. Details will be posted here when available.

30 October. Ambleside (Lake District). Cumbria University, Presentation, Beyond Money, Banks, and the Left-Right Divide.

31 October. I will be delivering a free public lecture, A New Approach to Community Economic Development at Cumbria University in Lancaster, UK.

1 November. I will conduct a workshop titled, Complementary Exchange Systems: Design, Organization, and Implementation, at The University of Cumbria in Lancaster( Room AXB003) from 2pm to 5pm.

Details of both events at: http://www.localwealth.co.uk/tom-greco/

Register for either at http://www.localwealth.co.uk/booking-for-tom-greco-events-in-lancaster/ .

I will return to the U.S. from London on November 5.

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The Wealth of the Commons

Following my participation in the Commons Conference in Berlin two years ago, I was asked to contribute a chapter to an anthology titled, The Wealth of the Commons: A world beyond market & state. This book is a “new collection of 73 essays that describe the enormous potential of the commons in conceptualizing and building a better future.” At long last, the English edition has now been published and can be ordered from Leveller’s Press,

I think the chapter I wrote for this book is one of the most succinct and information-rich essays I’ve ever written, so I’ve posted it here on this site at Reclaiming the Credit Commons.

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QE ad infinitum (QE3)

“Quantitative Easing,” commonly referred to as “QE,” is a euphemistic expression for currency inflation, i.e., the creation of money on the basis of junk securities and empty promises. On September 14, Ben Bernanke announced that the FED would continue to inflate the dollar on an ongoing basis for “as long as it takes.” A week earlier, European Central Bank president Mario Draghi announced a similar plan to save the Euro by buying the bonds of euro-zone governments, notably Spain and Italy. “There will be no “ex ante limits on the size” of the purchases, said Draghi.” He sugar-coated the bitter pill by saying, “governments that want the ECB to buy its bonds must agree to a program of reforms and oversight by the bailout funds and possibly the International Monetary Fund.” We know what that means for the ordinary person. Two of my recent posts address these announcements (https://beyondmoney.net/2012/09/20/qe-ad-infinatum/, and https://beyondmoney.net/2012/09/21/et-tu-ecb-inflating-the-euro/).

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Recent posts

In recent weeks, I’ve been re-reading some of E. C. Riegel’s essays. I’ll be posting the more important ones from time to time. Here is one that, although written more than 60 years ago, seems especially timely: The Right-wing Socialists.

Another important Riegel essay is, Breaking the English Tradition, which years ago I embedded, with my comments in a post to my other website Reinventingmoney.com. That post titled, The Politics of Money, can be download at here.

Hoping to see some of you along the way,

Thomas

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Posted in Developing Alternatives, Geo-politics, My activities, The Political Money System

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Reclaiming the Credit Commons

Posted on September 23, 2012 | 1 comment

Following my participation in the Commons Conference in Berlin two years ago, I was asked to contribute a chapter to an anthology titled, The Wealth of the Commons: A world beyond market & state.

This book is a “new collection of 73 essays that describe the enormous potential of the commons in conceptualizing and building a better future.” At long last, the English edition has now been published and can be ordered from Leveller’s Press.

I think this chapter is one of the most succinct and information-rich essays I’ve ever written, so I’ve posted it here on this site. You can download the pdf file here: Reclaiming the Credit Commons.

It is also available in Greek here. and in French here or at Ecoattitude –t.h.g.

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Posted in Developing Alternatives, Emerging paradigm, Prescriptions

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Et tu ECB? Inflating the Euro

Posted on September 21, 2012 | 1 comment

Te European Central Bank is following the lead of the Federal Reserve in planning to buy up the debts of euro-zone governments. By making that move, the ECB is overstepping its legal bounds, but, hey, whatever it takes to maintain the global plutocracy.

Here’s an excerpt from The Washington Post

The European Central Bank moved decisively Thursday in announcing that it would buy the bonds of struggling governments without limit, an initiative that could save the euro zone and blunt one of the main threats menacing the global economy.

The unprecedented step, meant to reassure fearful investors that euro-zone governments would not default, sparked a rally on world stock markets. U.S. stock indices posted their largest gains in weeks, with the S&P 500 soaring 2 percent and closing at a four-year high.

….

By agreeing to buy government bonds when investors balk, the ECB is moving much closer to becoming a “lender of last resort,” a role traditionally played by the U.S. Federal Reserve and other central banks. The ECB was created with a narrower mandate than the Fed or Bank of England, say, and is barred by European treaties from financing individual governments.

Draghi said the new program won near-unanimous support on the ECB board, with only a single dissenting vote. Jens Weidmann, head of Germany’s central bank, has been adamantly opposed to the idea, saying in a recent interview with the news magazine Der Spiegel that the bond-buying initiative would violate the ECB’s legal mandate and was “too close to state financing via the money press for me.”

More..

 

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Posted in Banking, Geo-politics, Inflation, The Political Money System

QE ad infinitum

Posted on September 20, 2012 | 3 comments

Last week, Ben Bernanke announced that the FED would continue to inflate the dollar on an ongoing basis for “as long as it takes.”

As I’ve said before, purchases of securities by the FED amounts to the injection of counterfeit money into the economy under color of law. It’s bad enough when FED purchases are limited to federal government securities. In that case, it is federal budget deficits that are enabled. Now, the FED is buying, at inflated prices, “junk” (securities of little worth) from banks, financial institutions, and speculators, enriching those who caused the bubble in the first place, and enabling more of the same.

This is just another move by the banking and financial elite to take ownership of the entire world.

A recent article in ZNet by Jack Rasmus concludes,

The significance of the Fed’s QE3 move therefore is there will continue to be free money in unlimited amounts to banks and investors to hoard or to speculate and play with, while it’s cuts in spending and disposable income for the rest of us. But ‘QEs for them’ and ‘Austerity for the rest of us’ will mean continued economic slowdown and recession, accelerating in Europe, more slowly coming in the US, and increasingly on the horizon for even Asia.

That continued economic slowdown—in the US and globally—will make the private banking system in turn even more unstable, regardless of how many FED QEs are introduced.  So why do governments continue with ‘austerity’ policies on the fiscal side that ultimately negate QE policies on the monetary side?  Because QEs are more profitable to bankers and investors. And those bankers and investors believe if they can just hold out in the short run—with the government and central bank making up for their short term losses with trillions of ‘free money’ injections, in the longer run the capitalist system will self-correct itself on its own. But that proposition—i.e. bail out investors and bankers and let the markets do the rest—is economic ‘ideology’ and not economic fact or science.

As governments, bankers, and financial elites continue to abuse the currency, the economy, and our political institutions, it becomes ever more urgent that people cooperate in organizing new structures of exchange and finance that empower them sufficiently to meet their basic needs and build “the Butterfly Society” to save the planet and provide a dignified life for everyone. — t.h.g.

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Posted in Banking, Inflation, Politics, The Political Money System

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Beware of the Right-Wing Socialists

Posted on September 12, 2012 | 15 comments

Here below is another insightful gem from E. C. Riegel. In this essay, Riegel (1) highlights the predominant fallacy which holds that money is based on political authority and should be controlled by the State, and (2) explains why true free enterprise can only exist when private enterprisers control not only the means of production, and the means of distribution, but also the means of exchange.

The present global system of money is far from that. It is the product of collusion between politicians and bankers that has established a dysfunctional, exploitative, and violent despotism. –t.h.g.

The Right-Wing Socialists

THERE ARE three classes of socialists: the left-wing, or Marxist, group, who believe that the government should own and control everything; the middle-of-the ­road socialists, who believe the government should own and operate public utilities; and the right-wing social­ists, who believe that the government should control only the monetary system.

The right-wing socialists are by far the most danger­ous, because they are not known as socialists and call themselves capitalists, individualists, private enterprisers, etc. They even believe themselves to be anti-socialist and profess full faith in private enterprise. They are not only numerically the largest group of socialists but are also individually the most influential. Among them are the leading industrialists and mercantilists and bankers and statesmen.

The right wing socialists believe that with produc­tion and distribution facilities in the ownership and operation of private interests, and with monetary facilities in the hands of government, we can have free enterprise. They might as well believe that if a man owns an auto­mobile, he need not worry about who or what controls the gas.

Private enterprise means the right among men to come to voluntary agreement on the exchange of their goods and services. These agreements, some written, some oral, some implicit, some explicit, run into the millions, and upon their fidelity rests the entire social structure. In a money economy, all these contracts are expressed in terms of the monetary unit, which is itself based upon a contract-the basic contract which is the foundation of the entire pyramid of contracts.

What is the money contract that makes possible or impossible the faithful performance of every other con­tract? Ask any businessman, banker, lawyer, economist or statesman, and you will find that his idea is not only vague, but that it involves legislation. In other words, he believes that money is a political product.

In contrast with this universal belief, the truth is that the state is incompetent to legislate money and power­less to issue it. The substance of money is supplied en­tirely by private enterprise. The state’s intervention in money is at best an impediment to private enterprise, and with the assertion of the issue power, it becomes the active agent of socialization. Thus those who believe in or accept political money power – and their number is legion – are the most dangerous, though innocent, socialists.

While the great mass of people have no ideology, those who think on the issue between private enterprise and socialism are virtually all socialists of the three classes named. This is a startling fact that we must recognize before the final battle lines are formed. The would-be friends of private enterprise must be made real friends, instead of innocent fellow travelers with those who would destroy our liberties.

Private enterprise, to survive, must control its three facilities, namely, the means of exchange, the means of production, and the means of distribution. To control the means of exchange, we must have separation of money and state.

#     #     #

This essay is contained in the republished version of Riegel’s, New Approach to Freedom. That book, and Riegel’s other major works can be found at http://www.newapproachtofreedom.info/.–t.h.g.

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Posted in Freedom, Politics, The Political Money System

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Bank of England inflating the pound; admits manipulating share prices and interest returns

Posted on August 24, 2012 | 1 comment

Yesterday,  August 23, the BBC published a report titled, Bank of England defends QE but admits rich benefit most. In the British version of “Quantitative Easing,” the report says that since March 2009, the Bank of England has purchased “£375bn of government bonds, known as gilts.” Of course, like every other central bank, the BoE has no money with which to buy the bonds, it simply creates it, thus injecting counterfeit money into the economy under color of law.

According to the BBC story, “The policy of QE means that the Bank [of England] now holds more than a third of all government bonds in issue.” That means the BoE has created massive amounts of counterfeit British pounds. But that is just the beginning. Commercial banks create more counterfeit money as they buy more government bonds under the fractional reserve banking system. Ordinary people end up paying the cost.

See my previous posts on QE.–t.h.g.

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Posted in Banking, Inflation, The Political Money System

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