I am often told that money is like energy; that it flows around the community creating economic activity remaining essentially the same, never being destroyed. But this metaphor doesn't satisfy me. it works quite well for cash whether fiat or backed, but most of our money is not cash and in fact behaves very differently.
It is tempting when exploring the True nature of money, as theologians study the bread in the Eucharist, to study the tokens and the exchanges. One popular approach is to posit a substance called 'value' which resides in the tokens, either intrinsically because the tokens are made of some valuable stuff (use value), or by government decree (exchange value). This is a bit like the theory of transubstantiation in which the bread 'changes' into into the body of Christ.
But this whole approach assumes that money is some kind of stuff which moves from hand to hand. Even fiat money is a commodity insofar as I value it more than what it can buy.
When we look at the different ways of issuing money, we see clearly that 97% of modern money is NOT a commodity. It comes from nothing and exists only on bank balance sheets. This is accounting money, the kind used in mutual credit systems. And it has some other interesting properties:
- For every unit of money created as a liability, there is a corresponding asset created with equal and opposite value
- The money flows into circulation and at the appointed time some money - not necessarily the same money is pulled out of circulation and cancelled out against the asset, leaving nothing.
- When we look at cash we might imagine each piece moves around the economy independently of other money, like a ball bouncing randomly around a pinball machine. But with accounting money you can't mark the bills and track one piece of money just like you can't pinpoint an electron. A better analogy is a field
At least, that's when it works.
When we treat money as a commodity, the flows get out of sync. When we hoard money and relend the same money twice we prevent it from returning to source. When we just read the peaks and not the troughs, we miss the coming tsunami.
When, for cultural reasons, borrowers take all the responsibility and risk, while lenders charge rent on their absent 'property' the two parties will never dance well together, leading to gluts and dearths and arhythmia.
So I think that credit money, accounting money is very much like electricity, and the conceptual leap we need to make if we want master it is as big as from Newtonian mechanics to Quantum mechanics.
Here’s a short and sweet video that reports on court case (Daly v First National Bank of Montgomery) in which it was clearly shown how banks create money by making loans, and the illegitimacy of that process.
And if you are facing foreclosure on your mortgage, the three magic words that might forestall the action are “produce the note.” This Fox news report explains it.
In this edition
- Back in the USA
- My latest article: 50 Ways to Leave the Euro: Greece and the Global Crisis
- Raising the debt ceiling—again…, and again…, and..!
- Seizing an Alternative—conference recordings
- Homage to Peter Etherden
- The case of Iceland – Is democracy more important than financial markets
- Gates Foundation chooses Cyclos for E-pay Innovation Award
Back in the USA
I’ve been back in Tucson since early October, resting and recuperating from five months of travel and an exhausting summer tour of Europe. I’m corresponding, writing, advising and waiting to see what new opportunities might present themselves.
My tour of Europe included presentations, interviews, and/or workshops in Greece, Italy, and Ireland. As recordings of my presentations become available, I will be posting them on my website http://beyondmoney.net/. So far I’ve posted interviews from Athens and Sardinia, and the slide show from the workshop I conducted in Athens. The audio of my August 28 Dublin presentation, The Liberation of Money and Credit, can be heard at https://soundcloud.com/flanagankev/thomas-greco-dublin-august-28-2015.
My latest article
Common Dreams has just published my latest article, 50 Ways to Leave the Euro: Greece and the Global Crisis. In this article I provide my prescriptions for how Greece (and other countries) might relieve their impossible debt burden, and I describe ways in which domestic liquidity can be created apart from the euro regime and without inflation. You can read it here. I’ve also posted it on my website as a PDF file.
As an aside, in addition to Greece’s economic and financial problems, the country has been overwhelmed by a flood of refugees and migrants. It is reported that more than a half million have arrived on Greek islands just in the past 10 months. This refugee crisis that is now threatening all of Europe is a direct result of the destabilizing actions by the Western powers attempting over the past several years to reshape the politics of the Middle-east and North Africa. Their agenda goes way beyond oil, but few people are paying any attention. Former Reagan administration official Paul Craig Roberts is one of many sources that provide deeper insights, for example in his article, The Re-enserfment of Western Peoples.
Raising the debt ceiling—again…, and again…, and..!
Every few years the U.S. Congress goes through the charade of debating whether or not to raise the limit on the government debt. In the end they always do. According to Wikipedia, “the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush, and five times under Barack Obama.”
Why continue the pretense that there is any choice about it? Why can’t the government balance its budget and why does the national debt keep increasing? The real answer, which I wrote a quarter century ago, will probably surprise you. To learn what it is, see my recent post at http://beyondmoney.net/2015/10/15/why-cant-governments-balance-their-budgets/.
Seizing an Alternative—conference recordings
Recordings made at last June’s Seizing an Alternative conference at Pomona College are being compiled and made available at the Pando Populus website. These include several sessions from Track 6: Political Collapse in which I participated.
Session 1 featured presentations by John B. Cobb, Jr., Ellen Brown, and Thomas Greco. In this recording, John Cobb’s introduction is followed by Ellen Brown’s presentation (starting at minute 6:45) and Thomas Greco’s (starting at minute 22:24 and ending at minute 44:15). A Q&A session runs from minute 44:15 to the end. In my portion I provide a brief overview of private currencies and exchange systems and present some of my early prescriptions for addressing the Greek debt crisis.
Session 7 featured presentations by Ellen Brown, Thomas Greco, and Kevin Clark. My presentation begins at minute 27:18 and ends at minute 54:30. In it I answer the fundamental questions about money and the exchange process, and how to reclaim the credit commons. _______________________________________________
Homage to Peter Etherden
I was very sad to learn recently that Peter Etherden has passed away. Peter was one of my very good friends with whom I always enjoyed visiting and discussing our mutual interests. I’m glad that I got to see him a few weeks ago in London just prior to my return to the U.S.
I first met Peter in 1986 in Zurich where we both attended the Fourth World Assembly that was organized by John Papworth. Over the subsequent years we corresponded regularly and we were able to meet several times during my visits to England. One of my fondest memories is of my visit in 2002 when he and his partner Connie lived aboard their boat in Rye harbor. During that visit the three of us sailed across the English Channel to Bologne where we spent a few days at mooring in the harbor. I also recall 2001 when my then partner Donna and I visited Rye and the four of us went off to explore Devon and Cornwall, a very beautiful part of Britain.
Peter was a diligent researcher and prolific writer whose interests were wide ranging. He will be greatly missed. Many of his research compilations and his writings under various pen names can be found at http://www.cesc.net/.
The case of Iceland – Is democracy more important than financial markets?
In his 2012 CBC interview, the President of Iceland very articulately describes the situation as it played out in his country during the global financial crisis that began in 2008. He describes the ways in which the failure of Icelandic banks was handled, the strong reaction from the British and Dutch governments, the reasons behind his government’s actions, and what really is at stake, not only for Iceland but for every country in the world. See it at https://youtu.be/7zlzC_X MQzI.
Gates Foundation chooses Cyclos for E-pay Innovation Award
In case you missed the news, as I did, the Social TRade Organisation (STRO) last year was chosen by the Bill and Melinda Gates Foundation to receive the prestigious E-pay Innovation Award for its Cyclos secure payments platform. Cyclos was chosen to receive the award over 9 other contenders from around the world. The $50,000 award was given at a ceremony at the annual conference of the Electronic Transactions Association in Las Vegas.
Finally, as Thanksgiving day in the U.S. approaches, I’m reminded of how blessed my life has been. It is in the spirit of gratitude that I thank you for your support and wish you all a happy holiday season.
Neal Gorenfo in Shareable did a great job of introducing the upcoming platform cooperativism conference by explaining the rise of Death Star platforms and a counter-proposition that these platforms could or should be run as cooperatives.
I'm dubious about the way in which these horizontal platforms conceive of community. As Gorenfo said,
Platform coops may be able to create a deeper community experience than Death Stars, which routinely feign community ethos for profit.
This is because the 'community' in one of these horizontal platforms is a group oriented around one particular need. Surely the communities we want to be modelling and supporting with our solidarity architecture, is local, meatworld, communities?
We should not take it for granted that Death Star platforms should be overcome with another kind of platform. This 'platforms' model of the internet was defined and developed by the monopolistic, centralised, money-hungry forces, so maybe we should be a bit more open to other ideas about the social web architecture we want?
I've been working on a platform for 7 years, but the idea that it had to take over the world never occurred to me. Local community groups want simple platforms that manage their identity and relationships and data in one place that they trust i.e. under local control, and to plug in globalised 'features' that enhance their community life but while giving them a degree of privacy.
Local hubs need to connect to global services through open APIs. Many global services like payments, transport and communication do tend towards monopolies and these need to be especially carefully governed.
Local platforms can then be built using any of several technologies to suit a range of cultural needs. My work is Drupal, but many comparable community platforms exist, like Odoo, WordPress, Joomla, which can be extended in many directions with open source modules. Most communities can find somebody to manage such platforms for them, and they can work together to pool resources. My organisation, Community Forge offers free hosting & support for 140 active communities, some of which donate back to pay expenses. That project became what it is without writing any invoices, incurring any risk or any debt.
These 'local' platforms also need to interoperate - ideally they would all be groups in one massive social network with locally controlled 'pods', as the diaspora project (an alternative to Facebook) has shown us, though it didn't reach critical mass.
I was particularly intrigued, in the article above, to read therefore about GNU social adding a 'module' called GNU BnB. I've been looking out for years for the right decentralised social networking platform which can be modularly extended to connect to web services. Could GNU social be the way forward?
We surely can't raise the kind of money needed to compete with Death Star capitalists. In a saner world, government would be showing interest in making such services public services - financed by the government, and run by the public for the public. Even without finance, we have huge resources in our passion and our desperation to forge a new politics using the devolved power that technology can give us. We are held back because too many of us are too engrossed in our own projects to go lend a hand where it is most needed.
Gorenfo also talked about incubating the templates and deep cooperation. Lets not forget, as we launch a new movement, that cooperatives have been around for 150 years; that existing local communities and grass roots movements like the Mutual Aid Network are struggling with a plethora of disjointed tools; other projects like the Global Ecovillage Network and Transition Towns are investing in highly customised platforms because they don't know what else to do.
Maybe as well as looking at the Death Star we want to destroy, we should be looking at the seeds of the economy we want to nurture. Isn't that the cooperative approach?
For some years I have been drawn towards the Global Ecovillage Network (GEN) and around 3 years ago started talking to them about exchange and the benefits of not using money. This was never going to be a quick win for me or the movement and I have been employing all my relationship-building skills, my deep listening, my nomadic powers, my Drupal expertise, and my patience in order to serve them.
Last year I attempted to get a sense of ecovillage economies by touring several to share explicitly on that subject. It turns out that many in the movement are aware of economics and the benefits of exchange. Many ecovillages have informal exchange agreements with their neighbours and other ecovillages. There are currencies within Auroville and Findhorn, and Damanhur has a very long history with, I think every possible monetary model having been tried.
Then I was invited to the Green Pheonix festival last year, where many of the movements leaders have time to nurture relations and discuss matters in a more conducive and serendipitous environment than the sterile and tiring Skype which mediates most of their meetings. The exchange project idea received 1000CHF unsolicited donation which was a clear sign that it should go ahead. The money is being used so far to support my expenses to attend events.
So I was given a slot at this year's GEN international conference in Findhorn to explore the idea with a larger group and gage interest. The interest gaged was sufficient and the critical question of the (first) unit of account was decided to be based on existing bilateral agreements between ecovillages, which is to say, on hospitality.
In Green Phoenix last week the topic was one of the main themes. Green Pheonix has been a small but intense festival in which experts were given time to go deeply into their subjects, but this year the format changed and it became even small and more intense! We were 35 people mostly in one room. The only two people not living in an ecovillage were Jamie Brown and I. With my laptop out of order and my fees paid it seemed like a sign from the universe to attend (most of) the sessions. The discussion on global exchange has resulted in the formation of a new working group which will elicit a directory of ecovillage needs - it being felt that an offer-driven marketplace would reveal less useful information, and needs would reveal more actionable gaps in the economy.
Green Pheonix wishes to recast itself as a thinktank for GEN, and in order to continue going deeper, has asked for a three year commitment. I'm deeply honoured to be in such a forum, and with such people!
My two month visit to Greece last summer prompted me to develop some proposals that might be applied in Greece and other countries where the government has become insolvent. I’ve written these up in an article that was recently published in the online journal, Common Dreams. You can read it there or here below. It was also republished on Resilience and can be found there.
50 ways to leave the Euro: Greece and the global crisis
By Thomas H. Greco, Jr.
The problem is all inside your head, I told the Greeks
The answer is easy, you need only stop the leaks
The power is yours to claim the freedom that you seek
There must be fifty ways to leave the Euro
(Apologies to Simon and Garfunkel)
Following the resounding “NO” vote by the Greek people on the bailout conditions in the July referendum, the negotiations between the Greek government and “the institutions” resumed with the expectation that a better deal for Greece would ensue. The outcome was quite the contrary. Greek negotiators ended up agreeing to a bailout deal that was far more onerous than the one the voters had rejected. Why?
The harsh reality is that the Greek government is insolvent. Having been lured into the debt-trap and the shared euro currency by western oligarchs using a combination of measures, including outright fraud, Greece was forced to accept the onerous conditions attached to the first two bailouts. Now it has been bludgeoned into accepting a third. The weapon of choice is the euro currency itself which is being wielded by the European Central Bank (ECB). By throttling the flow of euro currency into the country, the ECB last summer created near chaos in the Greek economy. This, and the threat of even more severe punishment in the future, was enough to bring the Greek government to heel.
With sovereign debt up around 180% of GDP, there is no way that the Greek government will ever be able to grow its way out of the current mess. The draconian measures demanded by the creditor institutions will just make it worse. Even the IMF has acknowledged (with apparent reluctance) that some debt relief is necessary for the Greek economy to recover. The new agreement forces the Greek government to yield even more sovereignty and to open its economy and its people more fully to exploitation by corporate interests and transnational banking institutions. Read the entire article…
In a landslide vote Texas lawmakers approved (by a margin of 140 to 4 in the Texas House and 27 to 4 in the state Senate) a bill to establish a gold depository bank. The bill was signed into law in mid-June by Republican Governor Greg Abbott.
In this interview Texas State Representative Giovanni Capriglione, author of the bill explains how this new law came into being and what it does.
The full interview can be heard here.
This is a surprising turn of events that is reminiscent of the private NCBA (National Commodity and Barter Association), a gold depository that was harassed and finally put out of business by government thirty years ago.
This bank, if it ever comes into being under the aegis of the Texas state government, will not so easily be quashed by the feds, After all, you “don’t mess with Texas.” It could lead to a payment system that is independent of the Federal Reserve and provide depositors with some protection against the continuing inflation of the US dollar.
But the gold market is very much manipulated and controlled by the big holders, the various central banks and national governments around the world. It would be better to hold an assortment of basic commodities on deposit to better assure that depositors’ purchasing power will be maintained. Better yet, state governments should support the creation of credit clearing exchanges that enable buyers and sellers to trade with one another without using money at all but simply offset each trader’s payments for purchases against their receipts from sales. In that case, the commodity assortment need only be used to define a unit for denominating members’ account balances. This and other innovative approaches to exchange are all explained .in my books, especially The End of Money and the Future of Civilization, and in my various interviews and presentations on this website.
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- Our offers and wants (30 mins)
- One sheet of paper each. Make a big list. Think for each other. We can do more than we think!
- Relations with the village (15 mins) Take previous list and ask: What can we offer the local people and the world? What do we need?
- trading floor game (90 mins) WHILE Stewart put all the offers and wants into his SAM software and produce a printed directory
- Look at new offers and wants directory. Write some cheques for imaginary transactions, enter them in SAM and browse.
- How does money flow through Skala & members
Map collective and individual economic inputs and outputs
- Core business ideas.
ASK everyone what kind of work creates flow, is effortless for them
Discuss - where are the harmonics in the group
Enquire: what is the economic situation now - how could it be developed?
- Land Ownership & commitment
- ASK everyone to plot on 4 axes: how much of them is in skala: heart, relationships, capital, income.
- Enquire: What do other ecovillages do about ownership, commitment, participation in governance, and helping to shape the vision.
- ASK everyone what would encourage them them to move towards the 'full' commitment which Anna and Nikiforos think is necessary
- Discuss: Is it possible and helpful to make full commitment (on those 4 axes) but for review after a time period, such as 5 years?
- ASK everyone what they would like to discuss next.
A long time ago, when Stewart was an estate agent, interest rates jumped from 5% to 15% in a day (Thanks to George Soros) and three of his clients committed suicide. Stewart decided to design a new, less money-centric life, and started New Morray LETS in Forres, near Findhorn, Scotland twenty years ago. His energy and commitment helped the LETS to grow steadily and now he reckons 60% of his economic life is through LETS. Working with a friend, he developed and fine-tuned a MS Access application to administer the whole system, including printing the directories. Soon he was travelling all over Scotland setting up LETS, sharing software and even had email-relay intertrading network which works to this day!
When he flew to Japan to extoll the virtues of local exchange that he smelled a paradox and returned home to focus on local issues where he is now a local counsellor and organiser. That is why I had never heard of him until this summer, when I visited Findhorn for the GEN conference. Fate construed that Stewart was at a turning point in his life and accommodated me with probably the only ecovillager who could and would connect us. So Stewart's intuition to come to Greece was confirmed by my going there, and so we hooked up for this two weeks.
First for the Festival for Solidarity and Commons economy where we each had 90 mins in a crowded cafe. I had planned to run the trading floor game, but on seeing the venue I hashed together a script in which we presented the history of money in a lively way, which seemed appreciated. He gave a talk about his experience but also drawing social and monetary parallels between his LETS and natural systems which won a much greater response.
And so to Volos where the beleaguered TEM team has been appreciative of outside experts this last couple of years, but (in my opinion) has received much more theoretical advice than practical. Whereas I work like a dog on my software and give it to everyone and no-one in particular, Stewart's approach is to travel offering direct exchange. He probed and learned that our host had a tonne of logs which needed moving up 3 flights of stairs. TEM doesn't publish a directory, so she had only asked two people who had declined. But the very next day, those logs were moved and I had reciprocated directly for once! Stewart all but decided there and then to move to Volos for six months a year, and hopefully from there to do the same for Greece as he once did for Scotland.
Then to Thessaloniki where we had to decide how best to serve a local activist group in a 2 hour evening session. We settled on a conversational format - I explained what's wrong with money and why mutual credit systems are an appropriate citizen's response, Stewart talked about how LETS works to build community; then there was a barrage of questions I thought would never end.
Our final destination was Skala a small ecovillage which is looking to formalise its structure and build the local economy, but more endogenously than many ecovillages which get money from hospitality, courses and benefactors.
Stewart lives by intuition and exudes spine-tingly stories about how guidance and knowledge come, sometimes reliably, from nowhere, so its been an honour to spend this time, and I look forward to seeing the fruits of his next year's labours.
This is a question I answered more than a quarter century ago in Part I of my book, Money and Debt: A Solution to the Global Crisis. It is a question that gets scant attention from politicians and economists who are willing to speak only about the need for perpetual economic growth and keeping the government debt at “manageable” levels, never asking why government debt is necessary or how it might be eliminated.
When I first undertook to answer this question, the debt crisis was already well underway and global in scope. Since then the situation has become more critical with debt levels reaching astronomical levels.
What I said in 1990 began with this:
The whole world today seems to be awash in a sea of debt which threatens to drown us all. Many Third World countries, despite their huge increases in production for export, are unable to pay even the interest due on their accumulated indebtedness to Western banks and governments. In the U. S., the levels of both public (government) and private debt are increasing at alarming rates. The Federal budget deficits of recent years far exceed anything thought possible just a decade ago. Why is this happening and why is it a problem? In order to understand that, one must first understand some financial facts of life.
Here are the essential points of my argument:
- Almost all of the money in every country is created by commercial banks when they make loans either to the private sector or to governments (by purchasing government bonds, notes, etc.),
- Money is extinguished when loan principal is repaid,
- The interest that banks charge on these loans causes the amount owed to grow as time passes,
- Causing the aggregate amount owed to banks to always exceed the supply of money in circulation,
- Requiring that banks make additional loans to keep the supply of money in circulation from falling behind the amounts needed for existing loans to be “serviced” (repayment of part of the principal plus the interest due) in order to avoid a cascade of defaults and economic depression,
- And that this “debt imperative” that is built into the global money system is the driver of the economic “growth imperative” that results in superfluous economic output and its attendant depletion of physical resources, despoliation of the environment, increasing disparities in income and wealth distribution, and many other problems that plague modern civilization.
- That physical limits to economic output on a finite planet make this money system unsustainable over the long term.
- That there are practical limits to the amount of debt that the private sector is able or willing to incur.
- That chronic government budget deficits are therefore a political expedient that is necessary to keep this flawed system from collapsing as governments assume the role of “borrower of last resort.”
- That politicians are quite willing that governments play this role since it gives them the power to take much more value out of the economy than the revenues available by means of overt taxation.
- That bankers, for their part, by monopolizing the allocation of credit in the economy and charging interest on it, are able to enrich themselves and exercise tremendous power over the political process making a sham of democratic government.
The empirical evidence strongly supports my analysis. You only need to look at charts showing the growth of debt over time to see it growing at an accelerating rate (geometrically), a pattern that reflects the compound interest function that is an inherent feature of our global political money system.
You can read my original 1989 exposition of these points at Money and Debt: a Solution to the Global Crisis, Part I, and their subsequent elaboration in my latest book, The End of Money and the Future of Civilization, http://beyondmoney.net/the-end-of-money-and-the-future-of-civilization/.
# # #
Journalist Edward Posnett, in an article that appears this weekend in the Financial Times magazine, describes the origins and operations of Sardex, a mutual credit clearing exchange that I visited last month and reported on here.
Posnett’s article, The Sardex factor, is fairly well written and begins with the subtitle: When the financial crisis hit Sardinia, a group of local friends decided that the best way to help the island was to set up a currency from scratch. You can read the full article here.
While I consider Sardex to be among “the best of the breed” and a trade exchange model worth replicating, it is by no means unique. Posnett’s article is well worth reading but I fault it on two counts, first for ignoring the scores of similar commercial trade exchanges that have been operating successfully around the world for the past several decades, and secondly for failing to emphasize the crucial importance of the value proposition that mutual credit clearing provides—the provision of liquidity to a local or domestic economy, independent of the banking system and without the disruptive and destabilizing imposition of interest.
There are several well run commercial trade exchanges but as I said in my interview at Sardex, most trade exchange operators are too complacent and satisfied with their modest levels of business success.
The ‘special sauce” that seems to make Sardex stand out is the underlying values and social mission of the founders. Their primary purpose in launching their credit clearing exchange was to help improve the local economy of their home island. I hope that will continue to inspire their operations and development in the years to come.
They have tried to assist entrepreneurs in six or seven other regions of Italy to replicate their design and operations, but told me that the results have been disappointing. I’m speculating that it may be for lack of that “special sauce.” If that’s the case, then successful replication will require that they work selectively with social entrepreneurs who share the same values and mission of serving the common good.
That seems to be quite a rare breed right now, so these people will need to be nurtured through a process of selection and education–perhaps somewhat akin to what the Jesuits have historically done. The need is for people who have the right values, strong motivation, and technical competencies to create the new socio-economic paradigm.
The interview that I gave at the Sardex offices during my visit focuses on The Changing Picture in Complementary Currencies and can be viewed in the post below or on YouTube at https://youtu.be/epOebHTQpDI. The pictures that I took are in my online photo gallery at, https://picasaweb.google.com/112258124863172998784/201508SardiniaItaly?authuser=0&authkey=Gv1sRgCILAwtjOyOetvAE&feat=directlink.
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During my August visit to the Sardex trade exchange on the island of Sardinia, they recorded (on August 13, 2015) this short interview. In it I cover a few important points on the liquidity problem and how commercial trade exchanges help to solve it.
Upcoming Ireland Events and My Remaining Tour Itinerary
My Activities in Greece, an abbreviated sketch
The Greek Crisis
The summer has gone pretty much according to the plan I laid out in my Spring Newsletter, with of course the inevitable addition of things that have popped up spontaneously. I’m sorry I’ve been too busy to report about all of it, even though I’m sure many of my readers would want to know. My main reason for writing now is to highlight the agenda for the remainder of my summer tour in case some of you happen to be in the neighborhood of Ireland, Scotland or England. I hadn’t really planned to visit Italy but here I am—in Rome after visits to Tuscany and Sardinia (more on that below). I’m now in Ireland for the final events of my summer tour.
Here’s what I’ll be doing.
Ireland Events and My Remaining Tour Itinerary
25 to 27 August 2015. I’ll be at Cloughjordan Ecovillage to participate in the P2P Summer School program on The Art of Commoning. Then on Friday, 28 August, I will give a lecture at Trinity College, Dublin, followed by a panel discussion. And on Saturday, 29 August, I will conduct a workshop at the same venue. Here are the details.
Friday August 28th 19:00 – 21:00
Talk: The Liberation of Money and Credit
Where: CONNECT (Formerly CTVR) Dunlop Oriel House, 34 Westland Row, Trinity College Dublin, Dublin.
On the evening of Friday August 28th, Thomas Greco will give a presentation on The Liberation of Money and Credit, outlining the fundamental importance of reclaiming the credit commons and showing how communities and businesses can reduce their dependence on bank borrowing and conventional, political forms of money. After the talk Thomas will join a panel with Michel Bauwens and Kevin Flanagan of the P2P Foundation, Dr Rachel O’Dwyer of Trinity College Dublin and Graham Barnes of Feasta for a Q&A session.
Saturday August 29th 10:00 – 16:00
Workshop: The Exchange Revolution: Taking Complementary Currencies and Moneyless Trading to a New Level
Where: CONNECT (Formerly CTVR) Dunlop Oriel House, 34 Westland Row, Trinity College Dublin, Dublin.
On Saturday, Thomas will run a workshop for currency activists, practitioners, researchers, and social entrepreneurs on The Exchange Revolution: Taking complementary currencies and moneyless trading to a new level, also at the CONNECT venue in Dublin. Anyone with a specific interest in developing and extending the impact of community currencies, mutual credit, and other complementary exchange mechanisms is invited to attend.
Both events are sponsored and hosted by CONNECT (formerly CTVR – http://www.ctvr.ie/), at their Dublin city centre venue and supported by Feasta, the Foundation for the Economics of Sustainability (http://www.feasta.org) and P2P Foundation Ireland.
Both Dublin events are free but people are asked to register at:
Tuesday, 1 September, at Queens College, Belfast
Evening Lecture, Communities, Currencies and the Commons: Democratising money creation & enterprise after the Euro-Greek crisis, with Thomas Greco at Queens College, (Senate Room) at 7.30pm (registration at 7.15pm) hosted by the School of Law partnered by Positive MoneyNI. The talk will be followed by panel discussion.
Coordinator – William Methven, email@example.com
From Belfast, I will travel to Edinburgh, Scotland for a few days of exploring, then to London. I’m scheduled to fly back to San Francisco on September 9.
My Activities in Greece, an abbreviated sketch
Altogether, I spent a little more than three weeks at the Kalikalos Holistic Summer School during the months of June and July. Kalikalos is located on the Mt. Pelion peninsula where the views are spectacular, the mountain villages delightful, and the nearby beaches inviting, all of which provides a good balance of work, play and living in community with people from diverse places. In this ever-changing community of students, workshop leaders, volunteers, facilitators-in-residence, and staff, everyone pitches in to prepare meals, clean up, and share their special gifts. The daily program routine leaves plenty of time for recreation and many people choose to go down the mountain to the beach in the afternoons (about a 20 minute ride) or to hike the ancient donkey trails that connect the villages. Healthy living is a fundamental aspect of the Kalikalos experience with plenty of opportunity for yoga, meditation, tai chi and whatever other modes of centering people care to share. Meals are vegetarian and based mainly on fresh whole foods and traditional Greek ingredients—local olives. olive oil, feta cheese, locally baked bread, tomatoes, cucumbers, and vegetables from Kalikalos’ own gardens.
During my first week there I gave two presentations and conducted sessions in which we played two of my simulation games, Money Monopoly and Free Exchange. Then in July during the workshop on Solidarity Economy, I participated in most of the sessions and gave two presentations on the money problem and exchange altenatives.
While my work on exchange alternatives in Greece has been mostly with private groups and activists, I have developed proposals for creating domestic and community liquidity at all levels ranging from the bottom upward to include grassroots initiatives, business associations, municipal governments, and even the national government. I will be publishing specific details about these proposals in the near future. I am also continuing to work with colleagues in Volos on laying out the framework for a nationwide network of localized credit clearing exchanges.
During the last weekend in July I conducted a two day workshop in Athens for a sizable group of participants interested, or active in programs to create complementary liquidity. In the first session our discussions were based on my slide show on the Greek situation, and in the second, my presentation on the issues that need to be addressed in Taking Moneyless Exchange to Scale. That slide show is posted on my website at https://beyondmoney.files.wordpress.com/2015/07/workshop-athens.ppsx.
On Wednesday, July 29, I was interviewed on Porto Kali internet radio in Athens (in English with Greek translation). You can listen to it at http://wp.me/a43RA-Ge. _________________________________________________
The Greek Crisis
The Greek debt crisis has been all over the news lately so most everyone is aware of it, but most people are not aware of the underlying causes or what is being done to the Greek nation by the financial and political powers-that-be. Several of my recent posts at http://beyondmoney.net have dealt with that topic. In addition, there have been some very good recent articles that clearly explain it. These three are especially enlightening:
• GREECE’D: We Voted ‘No’ to slavery, but ‘Yes’ to our chains, by investigative reporter Greg Palast.
• The Rest of the Story About Greece: EU’s economic demands seek to derail small business and local communities, paving the way for multinational corporate giants.
• Ellen Brown’s fine article “Guerrilla Warfare Against a Hegemonic Power”: The Challenge and Promise of Greece
And if you want to understand the larger agenda of which the Greek situation is indicative, be sure to listen to Ellen Brown’s interview with Dr. Paul Craig Roberts, Greece-y Mess – 07.08.15, at http://itsourmoney.podbean.com/e/greece-y-mess-070815/
Last week I had occasion to visit the Italian island of Sardinia and spend a few hours meeting with the founders and managers of a commercial trade exchange called Sardex.
I’ve known about Sardex since almost its beginning five years ago and have corresponded over the past few years with Giuseppe Littera, one of its founders, but this was the first opportunity I’ve had to get an inside look at their operation. I came away with a better understanding of how they operate and the impression that the Sardex structures, procedures, and protocols come closer to optimal than any other trade exchange I’ve seen. It appears to be a developing model that can be both scalable and replicable.
You can read my brief but more complete report here, and. you can get a pretty good picture of the distinctive features of Sardex by viewing Giuseppe Littera’s presentation (in English) that was made at a conference in Volos, Greece, in 2014. You can find it on YouTube at, https://youtu.be/rvaL2A8juz0.
All best wishes for a playful and enjoyable summer,
Last week I had occasion to visit the Italian island of Sardinia and spend a few hours meeting with the founders and managers of a commercial trade exchange called Sardex. Here below is an abbreviated report of what I learned. The pdf version of the report can be found here.
Sardex, a brief report
by Thomas H. Greco, Jr. August 15, 2015
I recently spent a few days on the Italian island of Sardinia conferring with the founders and administrators of Sardex (http://www.sardex.net/), a commercial credit clearing exchange that has been notable for its success in organizing small businesses and service providers on this island of about 1.6 million people.
I’ve known about Sardex since almost its beginning five years ago and have corresponded over the past few years with Giuseppe Littera, one of its founders, but this was the first opportunity I’ve had to get an inside look at their operation. I came away with a pretty good understanding of how they operate and the impression that the Sardex structures, procedures, and protocols come closer to optimal than any other trade exchange I’ve seen. It appears to be a developing model that is both scalable and replicable.
I will not attempt to provide here a comprehensive report or detailed analysis, rather I will highlight a few major points and provide some sources of additional information for those who are interested in doing their own research.
Current membership: ~3,000
Current transaction turnover: ~1.5 million euro equivalent per month
Expected turnover for 2015: 50 million
Velocity of credit circulation: 12 times per year
Employees included as sub-accounts: 1,000
When I asked about the key factors that account for their success, here is some of what I was told:
1. Founders are dedicated to the mission to relocalize and rehumanize the economy and to reconnect people by enabling the creation of interest-free local liquidity based on the production capacity of local businesses.
2. Social solidarity and cultural cohesion, while very important and part of the mission, were NOT a pre-existing factor that would account for their early success. In fact, they have had to work hard to develop social solidarity and cooperation amongst their members, but this is now changing. One account broker told me, “I can see how behavior of many of our members has changed. When the financial crisis first began, they were starting to lay off employees or cut their wages, and they were reluctant to spend their euros. This made matters worse as the circulation of money slowed down. But as they began to participate in the process of earning and spending trade credits, they began to increase pay to their workers and to invest in their education. In one case, when a member’s shop was burglarized, other members stepped up to help by donating some of their trade credits to help their fellow member recover from the loss.”
That anecdote demonstrates the differences in behavior that results when people experience scarcity compared to when they experience abundance. In this case, the scarcity of euros caused behavior to change in the direction of reduced willingness to spend and the contraction of overall economic activity. But their experience with trade credit was much different. Realizing the greater availability of trade credits, and finding it easier to earn them, leads people to experience abundance and to be more generous and spend more liberally.
3. I was surprised to learn that the Sardex revenue model relies mainly upon initiation fees and annual membership fees (collected in euros); and that they had decided early-on to stop charging fees on transactions. For me, that approach is counter intuitive in that I have long held the view that recruitment would be most successful if membership were made easy, low cost, and risk free, and that it seems reasonable to apply the principle that users pay in proportion to the amount of services they receive. In this case, that principal would mean that those that receive more credit clearing services should pay more. Well, this may be a case where successful practice trumps rational theory. Marketing specialists should look closely at the dimensions of this phenomenon.
There is however some logic in this approach in that, since the cost of participation is relatively fixed, members should seek to maximize the benefits of their membership by trading more within the network. Initiation fees are set according to the size of the business and range from 150 to 1,000 euros. Annual membership fees are likewise based mainly on turnover and range from 350 to 2,500 euros.
4. Strong member support by an effective staff of brokers who help to arrange trades, especially for those that have high earning capacity to avoid excessive accumulation and high positive trade credit balances.
5. Recruitment strategy tries to replicate the supply chain, i.e., bring in businesses that are the suppliers of existing members or prospective members.
6. “Solidarity threshold.” Requirement that members offer their goods and services for trade credit at the same prices as their euro prices, and that payment be accepted 100% in trade credit on all transactions of less than 1,000 euros. “Blended trades,” i.e., payment in a combination of trade credits and euros are allowed on larger purchases, according to a sliding scale).
7. (a) Restrict membership to companies that have a registered office in Sardinia. This promotes social solidarity and excludes large multi-national corporations. (b) Avoid “saturation” (accepting too many members that offer the same line of products or services).
[While I am fully supportive of the former of these, and would indeed, permanently exclude multi-national companies, this latter practice of avoiding saturation I consider to be of use only in the initial stage of establishing credit clearing as a credible means of exchange and an effective source of local liquidity. Ultimately, I believe that membership must be open to any community-based small or medium enterprise (SME) that meets the basic qualifications for membership. Of course, not all of them will qualify for lines of credit.]
8. Fully compliant with reporting and tax regulations. Transparency is a matter of fundamental importance.
9. Emphasis on monetizing the unused capacity of members. Connecting unused supplies with unmet needs is a primary benefit of credit clearing services.
The Sardex company has been consulting with other groups to replicate their system in seven other regions around Italy. In the future, Sardex is planning to initiate a rebate program to bring consumers into the trading community, which will enhance the circulation of local trade credits, make Sardex better known, and stimulate more sales for their business members.
Here below is a list of a few of the many reports and sources of information about Sardex. Readers are invited to add others as comments.
From an idea to a scalable working model: merging economic benefits with social values in Sardex, by Giuseppe Littera, et al, at the London School of Economic, Inaugural WINIR Conference, 11-14 September 2014, Greenwich, London, UK. http://eprints.lse.ac.uk/59406/1/__lse.ac.uk_storage_LIBRARY_Secondary_libfile_shared_repository_Content_Dini%2C%20P_From%20idea%20to%20scalable%20model_Dini_From%20idea%20to%20scalable%20model_2014.pdf
You can get a pretty good picture of the distinctive features of Sardex by viewing Giuseppe Littera’s presentation that was made (in English) at a conference in Volos, Greece, in 2014. It is to be found on YouTube at, https://youtu.be/rvaL2A8juz0
Report (in Italian) in the Italian daily newspaper, La Repubblica: Dalla Sardegna al resto d’Italia. Sardex inventa la moneta complementare. “Abbiamo ripensato l’economia.” http://www.repubblica.it/next/2014/06/23/news/dalla_sardegna_al_resto_d_italia_sardex_inventa_la_moneta_complementare_abbiamo_ripensato_l_economia-89771112/?refresh_ce. [English translation needed.]
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The wonderful Robin Hood Collective is gathering for 4 days in London and I so regret being unable to attend that I'm writing this post for all the assembled!
I'd like to introduce myself and share what I'm doing and what I would like to see Robin Hood doing.
I've been working on community money systems since 2008, firstly writing free software for timebanks and LETS, and then nomading and networking and teaching amongst them. In fact my software is by far the most used open source software in the field, since it is mature and highly configurable. The organisation I co-founded in Geneva, Community Forge, hosts around 150 local community exchange web sites, for free.
When Denis (Jaromil) introduced me last March to Daniel Hassan with the warmest commendation, I was so pleased to hear that an activist hedge Fund existed that I invested without a second thought! Since then I'm pleased to see the collective's reputation and support-base growing. One thing I'm not clear about - is Robin Hood an 'official' financial institution and is therefore my investment protected by any kind of law?
In my explorations of local communities and ecovillages, I came to understand what exactly we need complementary currencies for, and why we need other kinds of tools to work with 'real' money. The main services I think communities need are not so much hedge funds but
- Exchange accounting
- Savings and Loans
Existing financial services, mostly provided by existing mega-corporations are not suitable, because large, highly regulated organisations take such a large proportion of the money they handle, and they seem to be governed more in the interest of shareholders than the people whose money they are managing. Insurance companies cheat us through small print, pensions companies use actuaries against us, I need hardly detail the crimes of banks, and all of them work hand in glove with the surveillance state. And the law means it can hardly be otherwise. So I've come to believe we need to be creating these services informally; trusting each other rather than appealing to the courts for dispute resolutions. Is it possible to use trust instead of law? To simply bypass the expense and intrusion of regulated but powerful and greedy middle-men?
Without taking too much of your time, I'd like to tell you about some initiatives which I believe are going in the right direction.
This is my field, by in particular I'd like to tell you about the largest network of LETS and timebanks, Community Exchange Systems. Several hundred communities have the tools to register transactions between their members and between communties. This network is the cornerstone of the global economy I want, with credit/money being issued by and for local economies. The software is free, I'm working to make it open source.
Savings and Loans
In New Zealand there is a cluster of around 40 Savings Pools. These are local groups of citizens who trust each other, paying a monthly amount into a shared 'pot' which they they then lend to each other in turn, interest free. They use an accounting methodology which means everyone has equal access to the money over time; it is based on the Swedish JAK Members Bank system which finances homes interest free. These groups meet for a meal every month and report on their economic wellbeing, building relationships and unsurprisingly economic co-dependence in the process. Currently they are doing their accounting on an offline Excel spreadsheet.
At the heart of the Transition Network, in Totnes, Devon, there is Local Entrepreneur's Forum (video) Local business people gather once a year and present entrepreneurial ideas and then give and receive financial support and in-kind donations. This helps to spread the risk but also creates financial and social ties which further ensure the success of those ventures. They are using very informal tools right now but I would argue every city needs a stock exchange!
In Holland recently I met Jip, who has created an online p2p insurance service CommonEasy. He had the wonderful idea of starting small, insuring people's smartphones for about a third of the price of the commercial rate. He had around 30 subscribers, and his brother had written a Wordpress plugin for members to vote on whether they think claims are worthy. Why aren't there initiatives like this in every street in Europe? And what could be insured next, after an initiative has won our trust with mobile phones? It would be a great starter application for smart contracts!
Sorry to say I don't know any pension initiatives. This is a question that goes to the heart of who we trust because we believe that our pension makes the difference between dying early, alone, slowly, painfully under a bridge, or having a long retirement with holidays and healthcare. Of course money is only a proxy for the care and attention that old people need. It buys professional services. But actually any functioning community should have capacity to carry and genuinely care for its elderly - that human touch is better than anything money can buy. Instead of lodging our money with banks and their bedfellows, in hope that by doing evil it might 'grow', we should, insofar as the opportunities exist, be lodging our savings in building the communities that will support us.
So I'm hoping to see some action on those fronts!
Finally I want to invite you all to participate in the Money and Society MOOC which I co-authored last winter with Professor Jem Bendell. In around 15 hours over the coming 4 weeks, we will explore the philosophy, history, impacts and alternatives to money. The second run starts this Sunday!
Thanks for reading and have a great conference!