• Mar 25, 2021 from 9:00am to 10:00am
  • Location: Online
  • Latest Activity: Mar 26

As private and public debt spirals, so some people think we can't afford to cut and drawdown carbon or adapt now to increasing impacts, while others think we need to pump up economic activity via more government debt to try and stabilise societies. However, these perspectives arise from a misunderstanding of the nature of money and credit. That is a misunderstanding so fundamental that unless it is revealed and changed, we will achieve neither sustained efforts at bold carbon reductions or transformative and deep adaptation. Indeed, we will not be able to 'degrow' an economy without massive societal disruptions unless there are changes to national monetary systems and the scaling of local complementary currencies. 

Why is the current monetary system so bad? What are the arguments against that critique and why are they lacking? Why has some of the degrowth movement sidelined calls for monetary reform? What kind of changes to national monetary systems are needed? What could a Monetary Rebellion be seeking on monetary policy? 

This webinar is for anyone who reads the paper and wishes to engage in conversation with other interested persons. 

As soon as it is released, the link to the paper will be mailed to all those who indicated they are going or interested in this event. 

A video of previous commentary on the topic from Prof Bendell is here

Previously Bendell and Slater issued a discussion paper with DA colleague Dorian Cave, on the potential for local governments to issue currencies to help with immediate problems as well as increase resilience to forthcoming financial and monetary breakdowns. 

The video of the webinar to launch the research paper on the need to transform out monetary system:

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  • I got to listen to the presentation this morning, but was unable to speak. Unfortunate glitch.

    I've been corresponding with Mathew recently about my concern that the arguments used in your paper to blame bank money generally, rather than the use of interest, have weaknesses/holes in them. Whether or not this is the case has major implications for policy. The wording I found in your analysis was the following.:

    If principal debt and money are issued together, then enough money exists, by definition, to pay off all the principal debt. But the money does not necessarily flow where it is most needed to repay debts. Instead, much of it gets siphoned off and stagnates in great reservoirs, in a phenomenon economists call a lowered 'marginal propensity to consume'.

    The first sentence here is obvious and valid. However the second sentence does not follow except if the reality of added interest flow from the borrower back to the lender is taken into account. That is the flow that is needed in order to completely repay the debt. Where it goes is central to the problem of capitalism.  If it is not all returned to the user community, there are insufficient funds there to repay all loans outstanding. 

    Jackson and Victor recognize this fact, and acknowledge that they “had to ensure not only that all interest payments were recirculated, but that all the pools in which money accumulates and stagnates were regularly drained”

    The implications of this statement are obvious. All of interest must be returned to the user market, and no savings can be retained by the money authority. They had to know that this is the case and that this situation is inimical to capitalism which depends on its income over expense due to interest for its profit; its accumulation of capital.

    Part of interest is traded back to the user community. This part does not add to the growth imperative although it has to be earned back again by members of the working economy, which is one thing that leads to inequality.

    It is the part of the banking authority interest income in excess of their spending back into the working economy which builds their capital assets. These assets would have to be completely taxed away in order for Jackson and Victor's criteria to be met. This isn't capitalism, which is the accumulation of assets.

    Later you acknowledge this fact but do not follow through and determine that

    their conclusion that ““… the results in this paper suggest that it is not necessary to eliminate interest-bearing debt per se, if the goal is to achieve a resilient, stationary or quasi-stationary state of the economy.” (ibid.: 44, emphasis added) and

    the model may not translate to the real world”  do not pertain to the reality of capitalism.  In other words their model is inimical to the reality of capitalism, contrary to what they imply in their conclusion.

    So finally, your conclusion that your previous analysis was wrong is not correct. Your analysis was instead incomplete as was that of Douthwaite.  This is because you did not take into account and document where the flow of interest went.

    It is indeed interest that leads to the growth imperative.  The policy implication is that interest, and more generally unearned profit which leads to the accumulation of capital must be removed from the economy, as well as the accumulation of money, if the growth imperative is to be removed from the economy.  This just leaves mutual money; credit clearing, as the necessary alternative for an economy that structurally doesn't require growth by its structure.  Mutual money function is simply to record transactions of equal value, not to gain advantage as a result of the structure of money.  In this paradigm, capital, a large claim on commitment must be raised by getting the commitment of the community of users effected by the use of the capital.  The community, rather than an authority makes the decisions of if and where to raise capital in its jurisdiction. 

    All of the above is explained in greater detail in the  paper that I have shared with Matt.  It is still a manuscript, and needs to be critiqued in its details, but I think the basic arguments it makes are valid. 

    Please advise if this analysis is not found to be valid.  I would like to know if it is not, and why. 

    A caveat.  This analysis depends on recognizing that there are two economies; a user economy, and a money authority economy.  Without this distinction, the analysis is not easily understood. 

    In peace, Paul Krumm

  • Great paper, intriguing seminar. A comment and a couple of resources.

    Understandably you are very polite about capitalism, after a decade of trying to understand it, I came to appreciate that it was carcinogenic, ie naming that reflects not just accumulation and debt but also expropriation. It's been great to have  support for this intuition.

    In the The End of Progress, I outline how the trajectory of our culture of corporate consumer capital may be influenced by a deep structure of 'crystallization' and 'thawing'.

    And in Growth section 5 of my video Messages From the Blue Planet I channel what the planet has to say about growth.

    Thanks to the three of you for a very helpful clarification.


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  • Hi, I'm looking for a zoom link to join but can't see anything. Can someone please share the link?

  • Here is the text of the blog that launches the paper today:

    Initiative for Leadership and Sustainability: Monetary adaptation t...

    “There is no way out of our Covid debts with the current monetary system, unless we speed up our consumption and destruction of ecosystems which then increases the risk of future pandemics. It's a debt catch-22 that we will only escape with monetary reform. The deaf ears of politicians on this matter is why some people think a Money Rebellion has become necessary,” explains co-author Professor Jem Bendell, University of Cumbria. 

    This new research paper “Monetary Adaptation to Planetary Emergency” joins the debate about what can be done about the massive Covid-related public debts. It argues that there is no way out of this debt situation that won't make future pandemics more likely, unless there is monetary reform. The authors argue that neither more GDP growth nor more borrowing is the solution to unprecedented levels of debt. Instead, the role of government treasuries, central banks and banks must now change.

    Currently, money is created by private banks when they issue loans. This paper argues that such a system means that our economies are forced to expand, whether or not a population wants that. Such a Monetary Growth Imperative arising from the unique privilege of private banks issuing money is now untenable due to both climate change and evidence that environmental damage generates pandemic risk.

    The paper notes the increasing likelihood of disruptions to economic systems from the direct and indirect impacts of environmental change means that the current monetary system is neither resilient nor helping humanity become more resilient.

    For twenty years, and with little influence, some environmental economists argued that the way money is issued into circulation forces the economy to grow, and that only fundamental monetary reform could change that. But over the last decade some economists influential in environmental policy communities, including the field of degrowth (and postgrowth), have argued that capitalism without growth is theoretically possible. This paper shows, in simple terms, they were mistaken to conclude that, and it makes the case again for systemic changes to our monetary systems.

    Therefore, the authors show how even green-tinged economists have been misinforming both activists and policy makers. The paper suggests that as members of the establishment, academics often have a bias towards questions, conclusions and narratives which will be acceptable to power. As an economist, sociologist and community activist, the three authors call on the economics profession to look again at the way the banking systems force our economies to expand in order to avoid disruption to businesses, jobs and financial assets. They argue that no criticism of capitalism is coherent nor a credible basis for alternatives unless it addresses the Monetary Growth Imperative.  

    “The world is in an unprecedented mess. This means, among other things, that economists should question their assumptions, or risk becoming outdated and toxic. The money system is a major, often overlooked driver of economic behaviour, and it needs urgent reform. It's time for a radical overhaul," explains co-author Professor Christian Arnsperger, University of Lausanne. . 

    It is the first academic paper that directly challenges economists in the environmental field to stop being anti-radical in their assessment of the need for monetary reform.

    “Despite recent academic doubts, the current monetary system requires that economies must expand in order for the money supply to be sufficient to service debts. That means there must be wholesale monetary reform to reduce the destructive pressure on the environment and give space for communities and societies to try to adapt,” explains co-author Matthew Slater, Community Forge. 

    The authors conclude that if they are issued in responsible ways that protect privacy and rights, then Central Bank Digital Currencies are one policy option to help countries to escape the Covid debt catch-22. “At least the rise of crypto currencies has been an innovative disruption which is propelling some central banks to shift into the 21st century” said Professor Bendell, who ten years ago predicted that Facebook would launch a currency one day, and described Bitcoin as making people rich, in his TEDx speech on the need for monetary innovation and reform. 

    The paper also provides backing for a novel approach to monetary policy where governments would enable the widespread use of different currencies for accumulation and for circulation.

    How will these ideas get any traction within the field of economics? Perhaps the climate crisis will be the trigger. Looking at the climate movement, Professor Bendell explains that: 

    “Many campaigners and policy makers claim that we now need system change because of the climate crisis. They can be forgiven for not knowing how that must involve changing the monetary system, as the topics of money and banking have been made opaque by many economists. So let’s simplify the matter this way. The current money system means that humanity is being forced to expand our consumption and destruction of the natural world, threatening life on Earth. Therefore you would not be credible to call for bold action on climate if you are not calling for deep changes in banking. So while it might be fashionable in some circles to say neoliberalism is over or that capitalism is broken, unless you get specific on the brokenness of the monetary system and what must change, then you aren’t coherent. The burning forests, flooding cities and failing harvests tell us that we are out of time for pussy footing on deep changes to banking and monetary systems ” 

    The paper can be downloaded here

    A recording of a webinar with the authors will become available here

    Share news on this paper and topic with the hashtags #monetaryadaptation and #adaptingmoney

    If you are working on this, then consider the Business and Finance discussion group of the Deep Adaptation Forum. In addition the global Scholars Warning initiative have a discussion thread on economics within its community. if you have a doctorate, you cab consider signing the letter and joining the initiative here.

    A previous Occasional Paper from IFLAS explored more local level currency innovation to generate more community resilience to external shocks.

    Monetary adaptation to planetary emergency: new paper addresses the monetary growth imperative
    “There is no way out of our Covid debts with the current monetary system, unless we speed up our consumption and destruction of ecosystems w...
  • Have the zoom details gone out? I haven't received them or the paper yet. Please give me a link to sign up if I haven't properly. Thanks.

  • Dear Jem,
    Thanks for spreading awareness about the root of the problem!

    I'm working since 2017 on the project Money of Good, a paradigm-changing socioeconomic platform to driving the transition to new (crypto) money and change the game for the benefit of the common good and the planet.
    I know, you've probably heard statements like this dozen times.
    Let me say that Prof. Yuval Harari gave us great feedback about the bold strategy we've been improving and testing with success. Check the proof-of-concept events here: https://youtu.be/6lFRJhUblvw
    I also had the chance to do some great improvements after attending Money and Society MOOC two years ago and by discussing the ideas with Matthew Slater.
    So consider, what if this is the regenerative system that has found how to disrupt the old system and boost the true power of cryptocurrency?
    You are very welcome to share your thoughts, criticize or join us to make it take off.

    Take a look at www.moneyofgood.org

    And I bet you'd also like to check out this powerful insight into the potential of the solution: https://bit.ly/theconsuptionofthesolution
    Thanks for your inspiring work and attention.

    Warm regards,
    Marcelo Bohrer - Money of Good founder and head of strategy
    +49 15 733922744
  • I tried diligently to access this event with the code I received but without success. The Zoom info button seem to say that I was in the right place but not connection transpired. Disappointing. Great paper.

    • The event is the 25th which is tomorrow. 9am UK. 

    • Ok! thanks! I evidently diaried the wrong day.



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