BechtelMoney

**__ The Unsustainable Nature of our Economy __** It is not difficult to convince someone that there is a problem with much of the world’s economy. Everyone involved can see that something is wrong, but what are we doing about it? The United States government has several organizations in place to manage and avoid economic crises, yet somehow we still find ourselves struggling through another recession. According to the World Bank, over the past 25 year we have experienced 96 banking crises and 176 monetary crises. The best known example comes from the 1930’s during the time of the Great Depression. Most people will say that we learned a great deal from this and that there are measures in place to keep it from happening again, but we are still having trouble today. There is debate going on right now about whether we are currently in or out of the last recession. The security of our monetary system is something that every person and organization has some stake in.

How are these problems related to sustainability? By definition, a system that crashes as often as our current economy is not sustainable, but it has far more repercussions than one might think. For one, in order to get out of the Great Depression, the government had to spend an enormous amount of money on weapons and dig itself further into debt. This was the easiest way to put more money back into circulation. It follows that throughout history our times of greatest economic prosperity were when the government was spending money, most of the time on weapons. It doesn’t take an expert to know that war causes a huge amount of environmental destruction and is not a sustainable practice. Also, our current monetary system encourages competition. This is not always a bad thing, as it can lead to greater productivity, but if we want to live more sustainable lives we are going to have to learn to cooperate and work together. Furthermore, our current system redistributes money from the poor to the rich; mostly through interest (Greco 1994). This creates a matrix of sustainability problems on its own. Without money it is more difficult for the poor to get their voice heard and as a result they are often overlooked in policy making. This is exactly why we see so much environmental degradation within improvised regions. There are clear and evident problems with our financial structure and as economist and money systems scientist Bernard Lietaer says, “The design of our Currency determines the design of our society.” Without better control over money it will certainly be a formidable task to create any form of change in the future.

**__ Structural Problems with our Currency __** Our history is perfect evidence that there a major structural flaws to our current economy. Consider a brief example. Suppose you are given a car and told to drive across the country as fast as you can, but this car has no breaks and trouble steering. Now everyone will agree that you are going to get into an accident. Suppose, however, that you still need to get across the country. Should you look for better maps or perhaps hire someone else to drive? Will these things help you avoid another accident? It is evident that there is a there is a structural problem here because no matter what you change, if you are still driving the same car, there will likely be many more accidents. The exact same thing is true about the economy. No matter how many “safety nets” are put in place, if we don’t make structural changes to the system we will continue to see problems.

How do we measure the sustainability of our financial system? The sustainability of any system can be measured using a simple metric: How well does the system balance efficiency and resilience? This metric is an integral part of network complexity theory and can be used to determine the sustainability of any system, from a natural ecosystem (very sustainable) to our current electric grid (not sustainable). Furthermore, efficiency and resilience depend on two structural variables: diversity and interconnectivity (Lietaer 2010). Greater diversity and interconnectivity will lead to more resilience and less efficiency and vice versa. When we look at our economy, it is obvious that there is low diversity and interconnectivity, which translates to low resilience and high efficiency. The low interconnectivity comes from lack of government regulation and other third party involvement. The lack of diversity comes from both lack of money sources (banks) and lack of different currencies. This discussion parallels the problems faced with modern farming practices. Our only concern is with the efficiency of the system and as a result it is very unstable (North 2010). Still, politicians such as Milton Freeman continue to lobby for less economic regulation, large banks keep absorbing smaller ones, and most people won’t even think or using anything accept for dollars to get paid, even as its value constantly depreciates.

Another serious problem with our economic system in America is how it is run. The Founding Fathers believed (as do most people today) that the right to coin money should be something that only government has. This ensures that the system works for the benefit of the people and not private interests. The reality today, however, is far from this. The Federal Reserve Act of 1913 gave private bankers, who made up the Federal Reserve Corporation, the power to create money. At the time, President Woodrow Wilson said:

"A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the world - no longer a Government of free opinion no longer a Government by conviction and vote of the majority, but a Government by the opinion and duress of small groups of dominant men."

Corporations are a sustainability problem on their own, but the fact that we gave them the liberty to create money is truly horrifying. This is why we live in a debt economy where money is scarce. Like any corporation, the national banks act for their own profit and this is exactly why they charge interest (Greco 1994). Money is not just a neutral form of transaction; it is created with the purpose of making banks rich, at all costs.

**__ Solutions __** While the most apparent solution is to revoke the Federal Reserve Act, this is also the most formidable. There are enormous corporate interests involved and it isn’t much more likely to happen than corporate charters being revoked completely. Nevertheless, the Constitution does say specifically state that Congress, and only Congress shall have the power to coin and regulate the money of the country. John F. Kennedy to move back toward this before he was assassinated, but there has little effort since. Only with education and public cooperation will this ever actually end (Sickler 2007).

A better solution is multiple currencies. This is something that has already begun around the world and provides some hope for our current economic situation. Other forms of currency have been around as long as man. A couple examples that are common today are airline frequent flier miles and cigarettes in prisons. These forms are clearly not widely applicable enough to help the situation much but there are other historic examples and currencies used in other countries. Two historic examples, which Lietaer argues could be successful if applied in today’s economy, are stamp script and commodity based currency (a.k.a. gold and silver). Stamp script was used during the Great Depression and actually has a negative interest rate. Commodity based currency is the oldest form of currency and has been tested to be affective. A current example of multiple currencies is the Banco Palmas in Brazil. With the help of NGOs, people in an impoverished district in Brazil organized and set up a community credit bank. The currency of this bank is called Palma and it is in this currency that inhabitants there sell, buy and stimulate the local economy. 1,200 new jobs have been created with a lot of dignity and prosperity (for more information see the link below). Another current example is what is known as time banking. Time banking is a form of currency where value is measured in time. How this works is that people earn hours for providing services to others which are then redeemable for other people’s services. A popular example is what is known in Japan as Fureai Kippu. There are an unlimited number of ways this currency can be used, but it is most traditionally allocated for helping elderly with simple tasks such as grocery shopping. Hours that are earned can be used or saved for when an individual becomes elderly or sick or can be transferred to one’s family. A more local time banking institution is known as TINY (Time Interchange New York). This system claims numerous benefits from better social networking to more happy and wealthy life styles. More information about TINY can be found at the link below. Complimentary currencies structurally diversify our media of exchange and link unmet needs wit unused resources (Lietaer 2010).

**__ Outcomes __** If we work to make our current economic system more sustainable there will be numerous benefits. First off, there will be more economic wealth available to people. This, in turn, will lead to greater free time for people and more happiness. This free time can and extra money can be used to improve our interactions with the environment; instead of fattening the corporations’ wallets. Furthermore, a lleviating poverty in other regions can help save the ecosystems there by creating more value for the area. There are clear connections between the economic status of areas and their level of environmental degradation. Other forms of currency also foster cooperation and community pride, which can directly lead to healthier interactions with the environment. Lastly, less reliance on corporate banks takes away much of the power which corporations have and can decrease their negative influences.

** Links: ** Banco Palma story: [] TINY: []

** Peer Reviewed: ** Lietaer, Bernard. "Is Our Monetary Structure a Systemic Cause for Financial Instability." Journal of Future Studies Financial (2010). Scribd. Web. 23 Oct. 2010. . Martin, Brian. "New Money for Healthy Communities, Reviewed by Brian Martin." //Green Left// (1994): 25. //Brian Martin//. Web. 24 Oct. 2010. . North, Peter. "A Review of ‘Local Money’ by Peter North." Transition Culture. 20 July 2010. Web. 23 Oct. 2010. .

** Other Resources: ** Greco, Thomas H. New Money for Healthy Communities. Tuscan, Arizona: Thomas H. Greco, Jr., 1994. Rat Haus Reality Press. Web. 24 Oct. 2010. . Lietaer, Bernard. "A 'Green' Convertible Currency." Transaction Net. Web. 23 Oct. 2010. . Lietaer, Bernard. "Our Monetary Blind Spot." Currency Solutions for a Wiser World. 19 July 2010. Web. 23 Oct. 2010. . Sickler, Melvin. "America's Greatest Problem - It's Debt Money System." Jeff Rense Program. 29 Feb. 2007. Web. 26 Oct. 2010. [].

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