Last year (2021) I gave a three part webinar presentation for The Henry George School of Social Science. In case you missed it, here is the description and the link to the recorded sessions. For each part you will find a list of recommended resources and references.
A critical look at the present global system of money and banking, how it has evolved, why it is problematic, and where it is trending.
The series will also look into past, present, and future exchange and payment alternatives, like Depression-era script, local and private currencies, commercial trade exchanges and LETS systems that apply the “credit clearing” process, and the more recent emergence of crypto-currencies and blockchain ledgers and their potential role. It will include discussion of how these have evolved, their advantages, limitations and future potential and what needs to be done to take them to scale, their political and economic implications, and innovations that are making conventional money obsolete.
WHAT is money?
WHY do we need money?
WHAT is wrong with our money system?
Can we live without money?
HOW can business be conducted without money?
What are the economic, social and political implications of monetary policies and systems?
What is the likely impact of present day monetary innovations?
May 21 – Session 1 provided an overview of the present system of money and banking, how it has evolved, how and why it is problematic, and where it is trending. I spoke about the interest-based debt-money system, how it causes the growth imperative and the politicization of finance and exchange, and the political and economic consequences of its continuation. I outlined the fundamental concepts of exchange and finance and the principles upon which sound and sustainable systems are being developed. Participants were asked to read or listen to some specific materials in preparation of the subsequent sessions.
June 4 – Session 2 was more interactive and provided ample opportunity to discuss questions that were evoked by the previous session and the assignments, including topics like inflation, depressions, asset bubbles and busts, the savings and investment functions, and government responses to shocks like the 2008 financial crisis and the more recent pandemic. This lead into discussion about possible solutions to the problems caused by the present system, and the role of local currencies and other alternatives for the exchange of value.
June 18 – Session 3 concentrated on past, present, and future exchange and payment alternatives, like Depression-era scrip, local and private currencies, commercial trade exchanges and LETS systems that apply the “credit clearing” process, and the more recent emergence of crypto-currencies and blockchain ledgers and their potential role. It included discussion of how these have evolved, their advantages, limitations and future potential and what needs to be done to take them to scale.
During 2019 and 2020 we recorded a series of ten podcast interviews with leading experts and social entrepreneurs who have been working on developing and implementing improved means of exchange aimed at making the economy more equitable and ecologically sustainable. Each podcast is valuable in its own way and the series in total provides an excellent overview of what one needs to know to get a proper start to working in this field.
Among practitioners, Will Ruddick and his associates at Grassroots Economics continue to make exciting progress in developing Community Inclusion Currencies and organizing exchange circles throughout Kenya and other parts of Africa. Our September 2019 discussion with Will is a treasure trove of information about their innovative work that will be of great value to others who aim to organize similar exchange alternatives. Listen to it here.
I appeared on today’s Intercoin show in conversation with crypto entrepreneurs that covered a range of interesting topics including cryptocurrencies, NFTs, exchange alternatives, and digital savings mechanisms. View and listen on YouTube, https://youtu.be/6FXsuBMG2VY.
I was the featured guest on Ellen Brown’s podcast of December 30, 2021. I consider this to be one of my best interviews in which I covered a wide range of the most important questions related to rebuilding our system of money and finance. My interview is comprised of the first 38 minutes of the program.
This audio together with a transcript can also be found here.
In case you missed my webinar and would like to see the presentation, here is the recording that was made. The first part is a specially prepared slide show presentation titled, A World Without Money, Interest, and Debt: A Pathway TowardEconomic Equity, Social Justice, Freedom, andPeace. The webinar concludes with a short video titled, VITA: A worldwide web of exchange, Locally controlled but globally useful, in which I describe my vision of a new decentralized, peer-to-peer, system of exchange. The question and answer portion is not include.
This Wednesday, Nov 24, 2021, I will be presenting one of the most important webinars I’ve ever done. It is being organized by Prof. Lubo Jankovic of the Centre for Future Societies Research at the University of Hertfordshire in the UK.
Here is the description and link. Transcending the present political money system-the urgent need and the way to do it, by Thomas H. Greco, Jr.
Abstract This presentation describes the fundamental role of the global system of money, banking and finance in generating social injustice, economic inequity, environmental despoliation and violent conflict. It outlines the collusive arrangement that exists between finance and politics that has created the global central banking regime to centralize power and concentrate wealth in ever fewer hands and explains how the creation of money by banks as interest-bearing debt causes a growth imperative that is destructive to the environment, democratic government, and the social fabric. But more importantly, it describes the positive developments that are emerging to create a new “butterfly economy” and a civilization in which everyone can live a dignified life.
Thomas H. Greco, Jr. is a preeminent scholar, author, educator, and community economist. He is widely regarded as a leading authority on moneyless exchange systems, community currencies, and financial innovation, and is a sought after speaker internationally. He has conducted workshops and lectured in 15 countries on five continents and has been an advisor to currency and reciprocal exchange projects around the world. He has authored numerous articles and books including, The End of Money and the Future of Civilization (https://beyondmoney.net/the-end-of-money-and-the-future-of-civilization/).
It is clear that governments and banking corporations have long colluded in creating the present system of money, banking and finance that dominates economies around the world, and that they have no interest in making the kinds of changes that would reduce their power or share the wealth more fairly. As I have described it before, the banking cartel has been given the privilege of creating money out of thin air as debt and charging interest for its use, while the central governments get to spend as much as they want for whatever they want without regard to their limited tax revenues or the popular will.
In a recent interview, Prof. Richard Werner confirmed that fact and also explained that banks have been buying the wrong kinds of assets with the money they create, and that is why programs of “quantitative easing” (QE) have failed to achieve the outcomes he intended when he proposed them.
He argues, as I have, that we need more small banks that direct their money creation power toward small enterprises that will use the funds for productive purposes and strengthen their local economies. But the long term trend has been in the opposite direction, toward fewer and bigger banks that direct funds toward big corporations and capital funds that use the money for asset purchases, and toward central governments that use the money to acquire massive amounts of weaponry and conduct military adventures and destructive wars around the world.
But our most pressing need is to eliminate the growth imperative that arises from banks creating and lending money at compound interest. Since interest on money created as debt accrues with the passage of time and causes the debt to grow, the money supply is never sufficient for all loans to be repaid, so additional loans must be made in order to keep the money supply from shrinking and causing recessions or depressions. Since the money supply always lags behind the total amount owed, the economy is stimulated toward artificial and wasteful expansion of economic output. Not all increases in GDP are beneficial, and some are downright destructive. The production and use of weapons of war, for example, add to GDP but provide nothing to satisfy basic human needs or desires, and actually result in the destruction of existing infrastructure and death and misery for the people who happen to be on the receiving end.
If the necessary changes cannot be expected to come from the top of the economic and political pyramid, then they must emerge from the grassroots. Achievement of a steady state, equitable, peaceful and environmentally friendly economy requires deep restructuring of our systems of exchange and finance, and a shift away from debt finance and the increasing size and power of corporations and national governments.
As I’ve argued before in my articles and books, banks are supposed to perform two essential functions, the exchange function and the finance function. In the exchange function they should provide flexible short-term interest-free lines of credit to active buyers and sellers that are ready, willing, and able to provide goods and services to the market immediately or in the near term. This, in effect, monetizes the value of each business’s goods inventories or their capacity to provide valued services in the short run. As an adjunct to providing them with short-term exchange credit, banks should also provide them with credit clearing services in which their purchases are offset by their sales. This is precisely the sort of service that has been provided since 1934 by the Swiss WIR Bank (founded originally as the WIR Economic Circle Cooperative), and by the scores of commercial trade (or “barter”) exchanges that have been operating around the world.
In contrast to the exchange function, the finance function requires long-term credit instead of short-term credit. In performing the finance function banks should not create new money but should reallocate the temporary surplus funds of savers to entrepreneurs who will use it for productive purposes like capital improvements that increase their capacity to produce and distribute needed goods and services, and not for speculative and non-productive asset purchases. Further, they should provide these funds, not as interest-bearing loans, but as temporary equity that, unlike debt, causes the providers of funds to share both the risks as well as the rewards of business enterprise, and does not cause the growth imperative. If the equity stake of the bank is temporary instead of permanent, that will prevent the endless accumulation of vast pools of capital and will make capital a servant to productive enterprise rather than its master. Such equity shares that banks would administer on behalf of their depositors (savers) should expire after the original funds have been repaid to the savers along with a reasonable share of the profits that have been earned during the period of the agreement.
By making these simple changes in the kinds of banks we have, and way money and banks work, we can eliminate the endless expansion of debt, the inequitable distribution of power and wealth, the erosion of democratic government and the despoliation of the environment, and usher in a new more peaceful civilization.
If existing banks are unwilling to make these changes, or if existing banking regulations do not permit them, they can be implemented by other organizations that are entirely outside the banking system. The commercial trade exchanges mentioned earlier have, for more than 40 years, been facilitating the exchange function by providing credit clearing services to small and medium sized businesses, and are classified by the US government as “third party record keepers” that are not subject to banking regulations. By making some minor improvements in their operations and by networking them together, trade exchanges can evolve the exchange function in ways that can provide a worldwide web of exchange in which interest-free credit is locally controlled but globally useful.
Likewise, the finance function can be, and is, increasingly provided by small investors directly to entrepreneurs without involving banks by using innovative mechanisms like crowdfunding, community investment funds, and direct public offerings. By providing investment funds to SMEs and cooperatives in the form of equity shares, interest-free loans, or revenue shares, they can help rebuild local economies in ways that make communities more resilient and self-reliant, and most of this can be achieved by private enterprise without the need to enact any new laws or regulations.
I recently conducted a series of three webinars for the Henry George School of Social Science. All three sessions were recorded and can be viewed at the links provided below.
Our Money System – What’s Wrong with it and How to Fix it A webinar series that takes a critical look at money & credit, their political and economic implications, and innovations that are making conventional money obsolete.
Here is a brief description of each session as it developed and a list of References and Resources recommended for further study. _____________________________
Webinar #1 begins by laying out the “big picture,” the multi-dimensional mega-crisis that is challenging us make major changes in our various systems and meta-structures. It suggests that civilization is going through a metamorphic change that can lead us into a new “convivial” society, but that requires moving away from the old “caterpillar economics” of perpetual growth driven by our dysfunctional interest-based debt-money system, and towards a new sustainable and more equitable “butterfly economics.” It describes in detail how the present global system of money and banking is dysfunctional and destructive, how it has concentrated wealth in few hands, centralized political power, corrupted governments and given rise to a domineering “super class.” It describes how money is created based on lending at compound interest and how that causes an economic growth imperative. It shows the enormous explosion of debt that has been accelerating over time and cries out for a new more stable and equitable system of money and exchange.
Webinar #2 covered money mysteries, myths, and misconceptions relating to the essence and functions of money, the way it has evolved over time, and what gives it value. It described the inflationary bias of political money which causes it to continually lose purchasing power, which stimulated a discussion about how to measure value and how to define an objective unit of account that can be applied to determine the value of any credit instrument, including political currencies. The second part of the webinar was about how we can re-empower our communities by taking control of our credit, shifting our purchasing, saving and investment decisions toward the local economy, and becoming more enterprising and less dependent upon employment in huge corporate businesses.
Webinar 3 was the capstone of the series. It focused entirely on solutions to the problems that were discussed in the previous sessions. It described the shortcomings of the current alternative exchange prototypes, enumerated the essential principles that need to be observed in order to make exchange alternatives more scalable, and suggested the types of organizational structures and protocols that are needed to create an effective and secure network of exchange that will be locally controlled but globally useful. It also contained a short video presentation that describes Mr. Greco’s vision of a global system of exchanges that apply mutual credit clearing in which “credit is locally controlled but globally useful.” This session also included a brief summary of his thoughts about the nature of and potential applications of digital currencies, cryptocurrencies, blockchain ledgers and smart contracts in building a new credit based system of exchange.
This discussion between Thomas H. Greco, Jr. and Intercoin founder Greg Magarshak covers a wide range of topics including the principles of sound currency issuance; mutual credit clearing; proper allocation of credit; the problems of centralized power, depression, and inflation; empowerment of small businesses and local communities; crypto-currencies; universal basic income (UBI), and more.
When the division of labor has been once thoroughly established, it is but a very small part of a man’s wants which the produce of his own labor can supply. – Adam Smith, Wealth of Nations.
We have become so accustomed to using money to get the things we want and need that most people find it nearly impossible to conceive of any other possible way. Whenever I tell people that my work is about exchanging goods and services without using money they invariably ask, “Oh, you mean barter?” Then I go on to explain that barter requires a coincidence of wants between two people — I must have something you want, and you must have something I want. No, we must think beyond barter.
Through intensive study of monetary history and exchange principles extending over a long period of time I’ve come to a deeper understanding of theexchange process and the possibilities for advancing beyond our present dysfunctional and destructive monetary system.
“Mutual credit clearing” is a process that enables producers to trade goods and services directly among themselves without the need to use money. The credit clearing process is not a new invention; banks have been using it for a long time to settle accounts among themselves. But businesses can also use it to trade with one another and settle accounts among themselves, and they have been doing so for the past several decades. There are now scores of commercial “trade exchanges” operating around the world to provide credit clearing services for their tens of thousands of member businesses. While these exchanges are often referred to as “barter exchanges,” they do not do barter in the conventional meaning of the word. Rather, they utilize the collective credit of the members themselves as the internal payment medium. Members earn “trade credit” when they sell goods or services to another member, and they spend trade credit when they buy goods or services from another member. It is a simple process of accounting for value given and value received. When a member sells something their account is credited (increased) and when the buy something their account is debited (decreased).
What enables the system to work is the fact that some trusted members who offer for sale goods and services that are in high demand are allowed to spend trade credits before they earn them. In other words, these trusted members are given a line of credit against their future sales; their account balances are allowed to be negative, up to some predetermined limit that is based mainly on the amount of value they are ready willing and able to sell to the other members.
Here, in a minute and a half, one of the major trade exchange operators explains the processes in its utter simplicity:
Note, this is not meant to be an endorsement of Bartercard or any other company. I refer to this video only as a good description of how credit clearing works to enable producers to trade among themselves without needing to make payment with conventional money, nor the need to borrow from banks.
And in this video a member of another trade exchange describes how credit clearing works for his business:
Properly organized and managed mutual credit clearing exchanges provide an effective, stable, and sustainable means of creating interest-free local liquidity and enabling companies and individuals to enhance their opportunities for success despite the adverse policies of banks and governments.
In this isssue I describe what private currency vouchers are and how they can help solve the money problem that I’ve been writing about for the past 35 years. Here’s the full table of contents: You can read the entire … Continue reading →
Unlike, government and central bank fiat currencies which promise nothing but their acceptance as tax payments, private currency vouchers promise to be redeemed for real valuable goods and services. If the issuer is trustworthy and can be counted on to … Continue reading →
Last year (2021) I gave a three part webinar presentation for The Henry George School of Social Science. In case you missed it, here is the description and the link to the recorded sessions. For each part you will find … Continue reading →
Whether one likes it or not, the end of money as we’ve known it is at hand. From a more or less conventional perspective it may look something like what David G.W. Birch describes in his Forbes article, Payments In … Continue reading →
In this issue: The Legacy and Vision of Dee Hock (b. March 21, 1929 – d. July 16, 2022) I had occasion to meet Dee Hock in September of 1995 when we were both invited to participate in the first … Continue reading →
I’m a little late in posting this here, but if you didn’t see it when I first sent it out, I think you will find it interesting and useful. 2022 June Newsletter ― Reconnecting the Monetary Economy to the Real … Continue reading →
During 2019 and 2020 we recorded a series of ten podcast interviews with leading experts and social entrepreneurs who have been working on developing and implementing improved means of exchange aimed at making the economy more equitable and ecologically sustainable. … Continue reading →
One of my most popular posts has been, There once was a river …an allegorical tale of money and credit, in which I’ve tried to show how we have all become slaves to money and those who control money. Using … Continue reading →
This little vignette written by Don Werkheiser remains one of the best concise explanations of inflation I’ve ever seen. It was published in the spring 1982 edition of Green Revolution, the journal of the School of Living a non-profit organization … Continue reading →
In light of the current surge in the rates of inflation in countries around the world, the dominant political monetary regime is once again being called into question. Perhaps this time there will be sufficient interest and concern about its … Continue reading →