Your Money and Your Life
This article first appeared in Conscious Choice.
Right now, our economic system is teetering as the crash of the subprime mortgage market reveals deeper faults in the banking and insurance industries. Operating with little oversight in the last years, bankers devised complex instruments to make massive loans between financial institutions, generating short-term profits. As liquidity dries up, the banks and insurers are struggling to pay off these debts, forcing the central banks and the Federal Reserve to pump larger and larger sums – hundreds of billions of dollars – into the financial sector.
While this crisis is severe, such paroxysms happen periodically. While some believe this to be a natural process through which the global market corrects itself, others argue that the financial system has underlying design flaws that need to be addressed. Faced with dire consequences of inaction, the financial institutions and government regulators will work together to create a settlement that preserves the illusion of propriety – most likely at great cost to taxpayers and mortgage holders. However they resolve it, this meltdown is an opening for a deeper discussion on how money functions in our society. We have the chance to propose real options that could make the financial system more equitable, as well as sustainable.
We tend to forget that money is, fundamentally, a social agreement, not something natural or elemental. In fact, since the U.S. dollar went off the gold standard in 1971, it is hard to pin down what money actually means, beside virtual bits spinning in the global casinos of the world's financial markets. Bernard Lietaer, a former currency trader and one of the principle architects of the Euro, believes that the economic logic inscribed in our currency is the basic cause of unhealthy and predatory aspects of our social system.
In The Future of Money and other works, Lietaer analyzes the historical evolution of monetary systems, making a distinction between "Yang" currencies that foster competition and individual wealth and "Yin" currencies that are future-oriented and support the health of communities. Many cultures used both at the same time, but our currency is purely Yang, inciting cutthroat behavior. It is interesting to consider that "Wall Street" takes its name from the original barrier built by Dutch settlers to keep out Native Americans, whose primary form of exchange was the gift, rather than the market. We have maintained that wall ever since.
Lietaer has proposed a complementary currency, the Terra, that he believes could be used as a global standard for making trades. The value of the Terra is linked to a "basket" of commodities sold on the stock market, and therefore does not float in an abstract void, like today's currencies. Use of the Terra also involves a "demurrage" charge - in essence, negative interest - which increases over time. In other words, the Terra would depreciate in value the longer it was held, and therefore would naturally lead to less hoarding, encouraging capitalists to spread wealth. (More information about the Terra can be found here: terratrc.org/aboutus). Ideally, the Terra would be combined with local currency initiatives, such as Time Dollars or LETTS, which keep value circulating within communities.
That the monetary system needs a serious redesign becomes evident when you spend some time pondering the matter. "By controlling the creation and allocation of money, the ruling class maintains near total control over the lives of ordinary people and the resources of the planet," writes David Korten in The Great Turning. The basic system by which banks loan money and collect interest on the loans creates artificial scarcity, as the individuals who take the loans have to compete against each other for the extra money, which the banks do not create, to pay back what is owed.
The inherent logic of short-term gain inscribed in our currency system refutes any hope of attaining long-term sustainability. Liberal proponents of globalization, such as the economist Jeffrey Sachs, blinded by a limited model of "progress," fail to see that the form of money we use determines the types of behavior that succeed. What Lietaer offers is an elegant design science approach to this problem. Most likely, such a far-reaching proposal will only be taken seriously as the flaws in our current system become visible to all – which may be only a matter of time.
The visionary design scientist Buckminster Fuller argued, "All who are really dedicated to the earliest possible attainment of economic and physical success for all humanity" should "shift their efforts from the political arena to participation in the design revolution." These days, we seem to be learning that the design revolution and the political struggle are ultimately the same thing. The realization that human behavior is more or less invariant means that economic and social systems can be redesigned in such a way that collaborative and cooperative behavior is rewarded over selfish action.
Image by waI.ti, used via a Creative Commons license.
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Comments
The doughness of the dough
Hey Daniel,
I really liked this post. The ideas are raw like cash money--thanks for giving me lots to think about.
I'm an artist and a capitalist who enjoys riffing off of technology solutions for new wealth dispersal models, as I believe this, and not a socialist revolution, is the way towards a better life for more people. The internet's greatest strength is as a distribution system that gets to places and people no one could ever get to before. A fascinating development is the micoloan and the ability for an individual to raise small amounts of money in large quantities. The same holds true for micro philanthropies such as the Causes application in Facebook. Have you checked out http://kiva.org? It vibes a lot with what you're saying.
Peace.
jp
nuts and bolts
More please...
Thanks so much for writting this and other articles about our monetary system. I am coming to the conclusion that this is one or perhaps the most important issue facing humanity and the Earth's future.
How we treat the Earth and the inhabitants is directly related to how money is created and used. We forget to remember that the only real "asset" is Life and the Lifeforce of this planet.
So many question come to mind of the need to create a system to enslave others with the need to dominate, instead of cooperate. I would love to see progressive minded economists contribute to this site.
Here is a link to a video that explains our current financial system.
http://www.souldish.com/2007/10/25/the-tao-of-money/
Peace
"When the power of love overcomes the love of power,the world will know peace." Jimi Hendrix
Well...
The realization that human behavior is more or less invariant means that economic and social systems can be redesigned in such a way that collaborative and cooperative behavior is rewarded over selfish action./
After the Fall, maybe. www.farrfeed.com
Inflation
I have long felt that something in major need of 'redesign' (preferably into the trash bin) is Inflation.
Inflation essentially posits that goods increase in value each year, however the actual effect of those goods (say the nutritional content of a loaf of bread) does not change. This is the flaw in our system. It means that we are constantly working uphill. We have to ensure we get pay raises in line with inflation just to maintain our current living standard. Those pay raises, more often than not are only granted by companies to the hard working - so we only maintain our current living standards by working harder.
Similarly, a nation's economy has to grow in order to be healthy - inflation means that standing still is the same as contracting. It's commonly agreed that a 2% growth is a healthy sign. But how does an economy grow exactly? it grows by work and consumption, and only a finite amount of people can create work and consume goods. Inflation thus places a very real pressure on mankind to continue to breed at an increasing rate, in order to feed the economies which must grow in order to be prosperous.
All of this assumes infinite resources, which of course there arent. And so inflation ironically is causing, not prosperity, but recession as the world wakes up to the notion that working uphill requires infinite resources over the long term... Worrying.
The only way out of this trap that I can see is to either redesign inflation or to increase funding into fields such as robotics and mechanisation. Those damn robots can work harder!!
Bruce
Those damn robots
Robots & Elves
&
One (1) Child
Forcast our Production...and not hold back what is essential
Transition from a system to the other
The first thing that comes to mind is that it will require a revolution of some sort, not without any anger or bloodspill. But will our governments, public administrators and leaders consciously choose such a path? Though it could technically happen, why would an elected leader make such a disturbing choice for his electorate? He would risk far too much. What I think we need is a long-term platform for a soft morphing of our economic and social models. And I think it is already happening, we are just not patient enough. I would agree though, being impatient myself just like everyone else, that at some point, the consciousness shift, along with the economic, social, and environmental shifts will have to be shown as a necessity. This, only time, nature, and consciousness will achieve. And then, those platforms will be developped and put in place, not in anger and blood, but in cooperation and acceptance.
Economic Rubicon
Hey Daniel,
First of all I'm loving your book. On the subject of economy and the pending global crisis, I think that the economy needs to be flipped, as many of the things we accept as set in stone. This week we had a significant drop in consumer spending, and strangely that's regarded as a bad thing! The system should be based on savings instead of spending, the nations who can save more would be rewarded simply in their new found abundance of resource and capitol. Does that make sense? Constant growth means constant harvest and consumption. On an island, expanding doesn't make sense and earth is an island. I know I'm stating the obvious but it seems to me that the obvious needs to keep being reasserted and placed into the ether for those who think these concepts are far fetched. On another note, everyone should read Michael Ruppert's book Crossing the Rubicon in which he describes in detail how black market money is integral to the global economy, how drugs are equally as important as oil resources, and how the resources in the hands of our Intelligence agencies are used to manipulate-stabilize and undermine-global economic patterns. Poppy crop in Afghanistan is at an all time high as is heroin usage globally. This industry is essential to the economic survival of all countries, especially the survival of American economic hegemony. I personally don't think economic survival as we know it is very important. I just pray it can end smoothly which seems impossible.
Take care
Luke
well put ->
www.organelle.org
www.truetao.org
Shifting from a system to the other
I really admire the models of such "champions" as Gandhi, King or all those decorating our history. However, I strongly believe that those models are obsolete in a world like ours. The problem with those is that we have to play "the waiting game". Somehow, we tend to wait the "signal", we tend to wait the person that will lead us to such changes.
Do we need a leader?
It is my belief that no. I do not believe that our time is suited for leaders. It is a time of councils and organizations, a time of team work, and group decisions. Shareholders assemblies, unions, executives meetings, UN, that's how things are being decided. Sure, a bit of leadership won't hurt, but ultimately it is a group that makes the final decision.
My point is that we shouldn't wait for any signal, we shouldn't wait for a leader. Why not go out and vote for the party with the most drastic and unprobable propositions?
On another hand, it is also my belief that a house built on clay crumbles by itself. If our monetary system is so corrupted, based on wicked values, shouldn't it auto-destruct. But are we going to wait until it does? For sure, I think we can at least act as catalysts.
The root of the problem is on what "ground" our monetary system is built. Economic growth leads to natural resources depletion. How can it be otherwise? What we need is to find a suitable "ground" before building a new monetary system - and I'm afraid I cannot think of one existing at the moment. We need to focus on our values. Strong values, not dictated by religion or any other "system of thought". By aligning our values with the Earth which nourishes us and our children, gives us air to breathe and water to drink, we align ourselves with a great ally. Unfortunately, some people are so alienated from nature that for them a computer screen is the brightest light they will see during their day.
So how are we going to make this economic shift, really? Just like all the other shifts that needs to happen. Bit by bit, idea by idea, we slowly -but at an ascending speed- are changing the world by raising our collective consciousness to a new stage, from national to planetary, and soon, maybe, from planetary to universal. Artists, writers and poets are the ones who are really shaping tomorrow's world.
Let us keep on dreaming the future. Somehow, I feel we are getting there...
Well said
MundoPax
Once again, Daniel has shined light on a significant situation that needs to be completely refigured. Since time is money and money makes the world 'go round' it is imperative that we rethink this model in order to move towards a more logical and sustainable world. I think these flaws in perception that the human race suffers from as a whole can all be related to our relationship with money. This is what throws off our concept of time and certainly our concept of life in general. In order to trancend this, we must reconfigure our monitary system and overall mentality towards "cash rules everything around me."yeah...
www.organelle.org
www.truetao.org
absolutely
insightful yet again. i am in agreement with you there robin about models of the past being obsolete for the modern moment. but i do think they can be innovated on by taking their useful parts and discarding what wouldn't serve us now. being nonviolence (thumbs up) and waiting around (thumbs down), respectively.
and a new way of handling tokenized value would definitely need a good ground. paramount is the need to understand the roots of why capitalism is enslaving/enacting omnicide on the planet and its inhabitants. something new built on the old foundations can obviously not work. the importance of this can not be stressed enough, for i doubt the creators and original implementors of capitalism were thinking, "gee, how can we enslave the world right before we kill it..." granted, their motives were probably less than virtuous, but i'm pretty sure it was all carried out under the banner of progress with the "best intentions" in mind.
i also can think of no better foundation than organismal reality and full acknowledgement of the innumerable value of sentient biodiversity. so what would it take for more and more people to stop using their currency and feeding the bloated belly of the power elite. again robin, i believe you hit the nail on the head. it comes to a question of values. what do we consider important? what do we need from the government that we cannot attain ourselves, as individuals and collectives? is our word "value" merely a reductive token of an experience our ancestors had direct experience with before and during the genesis of the complex representational sentience we enjoy and abuse today, that's been frozen and cached under the guise of liberty but really exists as a mental terrain predator???
haha...i'm allowed one maniacal cackling rant-sentence per week, just to keep things light. but on a diffy note, the i think the following inquiries are very important. "do we directly experience the things our lexical metaphors point to, or do we interact with endless cached tokens? and furthermore, what happens when we play with flat metaphors that point towards things that are living growing explosively, recombinantly?"
cognitive robin-hoods rule!
www.organelle.org
www.truetao.org
Time is money
first make banks irrelevant
What I would like to do is figure out a way to declare my independence from banks and their usurious $35 overdraft fees.
I only use a bank to have a checking account to stash my meager paycheck in so I can write checks, pay bills and use the atm card. They have the atm system and the online bill-pay system rigged with inexplicable delays and mystifying lag times that seem designed to disable one's capacity to keep track of how much cash is "available" at any given moment; and almost guarantee the banks a steady trickle of $35 overdraft fees, especially for financially challenged, uncredit-worthy jamokes like me. I'm sure there's a lot of us, and I'm sure those fees are a huge source of revenue for the banks. To me that's stolen revenue, and I'm getting sick of it. Trouble is the convenience of paying by plastic is hard to give up.
I want to retain that convenience without having to rely on a bank to provide it. Eliminate the overdraft fee-pimp middlemen, so to speak. So. I'm thinking of ways to ditch the banks entirely. Maybe cash my paycheck twice a month and buy myself a friggin American Express or Visa gift card with it, and use that for all my bills and transactions? At least there's no ambiguity that way. When that runs dry I'm done, and no third party can pay a bill I don't have the money for and didn't authorize and then put me another $35 further in the red for the privilege. But I'm sure someone will tell me how those gift and cash cards are preloaded with hidden fees to siphon off more money. If anyone has other ideas on how to make banks irrelevant I'd love to hear them.
your dukes
Banks are an intrical part of the consumer infrastucture. Really, the most immediate and effective way around the banks is to remove thier power. Consumers are, of course, essential to a banks power. Just like an old time snake oil salesman, the only way to get the pests off your back and out of town is boycott. But why throw out the baby with the bath water? After all a bank is a really great idea. And snake oil has to have some practical uses too... doesnt it? Personally, I know nothing about those new Amex, Visa gift cards and I wouldnt be surprised if there was some outrageous fees involved in using them. Then again, I wouldnt be surprised if a black hole erupted in Oklahoma, Nothing was sucked into it and the Greys began explaining to a cow farmer how annoying it is missing your galactic exit. Personally, I just use other folks banks and only when I absolutley must.
UK Overdraft Charges Challenged
Hey bopes,
there has been some controversy in the UK recently relating to unfair overdraft charges. Banks have had to pay back millions, and are currently being investigated by the Office of Fair Trading: http://news.bbc.co.uk/1/hi/business/7214814.stm Not sure if there is any great similarity with the situation in the US, but might be useful.
http://www.bankcharges.info/
The sub-human
Hey Daniel,
I think it's good that you highlight some of the important problems with our very corrupt banking system, but I had a little trouble with this closing comment:
"The realization that human behavior is more or less invariant means that economic and social systems can be redesigned in such a way that collaborative and cooperative behavior is rewarded over selfish action."
I think that any proposal based on the assumption that human behavior is 'more or less invariant' might actually contribute to our cultural problems. Even if incentives could be created for cooperation rather than competition, the assumption of predictable behavior could have a totalizing effect and amplify what is general about the human.
I would argue that it is the 'sub-human' that is 'more or less invariant' and that the infinite creativity of human incarnation is the very process that we should care to facilitate- however impractical that may be.
I actually do not think it is out of the question that the central banking system is designed with full intention of producing sub-humans.
Here's Rudolf Steiner from 1907:
"Perhaps it is only for future historians to show clearly that a fundamental change then came about which we may describe by saying that in banking affairs the personality was gradually shattered."
And his solution:
"Now, the personality may save itself and ascend again. It can save itself, for example, by really learning to strengthen its inner soul-forces and depend upon itself and make itself independent of the objective forces of capitol. But the personality may also throw itself into these forces, it may, in a certain way, sail into and plunge into the abyss by allowing itself to be ensnared by the forces active in capital."
Both quotes are from Lecture 7 of the series on the Apocalypse of St. John-
Thanks,
Mitch
Addicted to Wealth?
I always find it interesting when the mainstream media talks about economic crisis, such as recession. No one ever mentions the addictive nature of wealth and the ill effect it has had on our society, in those terms. I love the Yang/Yin explaination given in this article. I don't think people ever think about money in those terms, which is where we need to start, imo. Thanks DP!
"Yeah, I think I know what you mean."
awesome dialogue...
hey there, ecolocal. a question for you: how could a group of people separate from the ideologies ("you need money to survive," etc) they've inherited? isn't the slavery essentially voluntary? and wouldn't a group of folks who were living outside of consumerism/capitalism be a great example for others who are dissatisfied with the current abortion of a system? a group like this would need a multimedia "press kit" featuring as much art as could be mustered, to reach out to a nation of people in deep sleep.
anyone have practical advice/suggestions for such an undertaking? i don't know how the system works, per se, but i can see the fundamentals pretty clearly, i think. and i believe deeply in the power of art/media/creativity to serve as an agent to take for transition-phobia.
www.organelle.org
www.truetao.org
Money and your life