Wednesday, August 02, 2006

Ian Grant reviews book for Management Magazine

Healthy Money, Healthy
By: Deirdre Kent
Publisher: Craig Potton Publishing
Price: $34.99

Sustainability is a current buzz word among politicians and business leaders. It is on many lips; but lip service is about as far as it usually goes.

There’s barely even lip service paid to the idea that our present economic system is not sustainable. It’s a bit like democracy. Most of us accept it without question; some worry about it but decide the alternatives are worse. Yet there are growing doubts about the sustainability, the very survival of the economic system that makes most of the world go round, and that we all depend on so completely.

Deirdre Kent’s Healthy Money, Healthy Planet both confronts the realities and considers some of the alternatives. She argues, as do economists like Richard Douthwaite, that the present debt-based global economic system must continue to grow or it will collapse. “The ritual worship of the desirability of economic growth” can, she writes, be traced to capitalism’s total dependence on continuous economic growth because of the need to pay interest on borrowed money. Almost all our money supply is created by interest-bearing debt by private banks; the Reserve Bank has confirmed that only 2 percent of the money in use in New Zealand is created interest-free.

Collapse is not just a theoretical possibility: witness the Argentinian and Thai economies and Japan’s struggle with its banks’ bad debts for over a decade. “At the time of writing,” noted Kent, “Japan spends more than 40 percent of its taxation revenue servicing debt…” As Clyde Prestowitz pointed out in Three Billion New Capitalists (reviewed in Management Ausust 2005) there is increasing concern about America’s ability to fulfil its international financial obligations: the US trade (current account) deficit was about $650 billion in 2004, financed by huge overseas borrowing, and mortgaging large US assets to foreign lenders.

Deirdre Kent, previously the tenacious leader of the country’s anti-smoking lobby, has written an impeccably researched book that deserves to be read. It discusses, in an agreeably jargon-free and readable fashion, how the current system works, or doesn’t. It looks at complementary economies and monetary systems – at possible changes to taxation, community banking, commercial barter – that have been tried successfully in various parts of the world.

The increasingly stark reality is that unfettered, unthinking growth is now both unsustainable and increasingly unacceptable. Healthy Money, Healthy Planet should be a valuable resource in the essential, and overdue, debate on our economic options.

Rating 4

Wednesday, July 05, 2006

Paul Glover's review in Yes! Magazine

Review published in Yes! Magazine May 2006

Healthy Money Healthy Planet
by Deirdre Kent

reviewed by Paul Glover

There are already thousands of run-for-your-life crisis books. Celebrations of success are rarer. Deirdre Kent’s book Healthy Money, Healthy Planet is a fine contribution to the latter, a great find for those who want to convert bad news into good news that exemplifies the world we want.

Community currencies, for example, have begun to prove that economics and ecology can become friends. Local cash can fix problems that dollars ignore.

Healthy Money helps currency organizers more effectively explain the differences between money which connects people and money that controls people. Kent starts with an authoritative history of national money systems.

Commercial bankers create money just by signing loan contracts. Only ten percent of the dollars lent are backed by bank reserves; 90% are fantasy credits. Here’s the trick: the interest charged can never be repaid because, like musical chairs, the money lending game doesn’t provide enough credits for repaying both principle and interest. The resulting deliberate dollar scarcity forces a desperate scramble for sales regardless of damage to communities and nature.

Bankers foreclose the inevitable losers then control more wealth than ever. And control of money decides where jobs are available and for how long; decides who owns land and what gets built; decides what is legal and what’s a crime; decides who lives well and who struggles. (For a fuller discussion of money systems, see Thomas Greco, “The Trouble with Money,” and Bernard Lietaer, “Beyond Greed and Scarcity,” YES! Summer 1997.)

Why should bankers have all the fun? Healthy Money provides two essential tools to citizens creating community currency that’s dedicated to social justice, environmental repair, and neighborhoods. First, it introduces the varieties of grassroots credit systems and summarizes their strengths and weaknesses.

Kent compares the multitude of paper scrips, digital credits, smart cards, and barter banks. She prefers that monetary theorists take action, and risk blundering in the real world.

At the same time, Kent exhorts community organizers to act on the larger stage. She endorses “healthy globalization” for labor rights and environmental justice. She is enthusiastic about commodity-backed international currency (like the Borsodi Constant), and carbon emission rights currency. The Constant’s value was measured by aggregate current sales from harvests and mines, while trading the rights to spew carbon oxides seeks to cap global pollution. She recommends that currency activists learn business sense from those who comprehend profit and loss.

And since money when banked multiplies its force, community banking is considered just as necessary as community currency.

Some community currency advocates are skeptical of local currencies that are not backed by national currency. But all national currencies are in debt to nature, since modern economies extract resources faster than they replenish.

Even the United States’ dollar is backed no longer by vast domestic petroleum reserves, boundless woodlands and deep soils, nor by gold or silver, but by $6 trillion debt, rusting industry, and declining military control of foreign oil.

That’s why HOUR systems ( are deliberately backed by local labor and sustainable partnership with nature. As the notes say, “HOURS are backed by real capital: our skills, our time, our tools, forests, fields and rivers.” When dollars, euros, yen and yuan fade, HOURS can take over.

Kent does not pretend to have written a how-to manual. She seems like a genial schoolteacher walking the rows, inviting our attention to choices. But Healthy Money prepares us well to understand finance, while making it serve our neighborhoods and revive the planet ourgrandchildren will inherit.

Paul Glover is founder of Ithaca HOURS, the Ithaca Health Alliance, and Citizen Planners of LosAngeles. He is a consultant for grassroots economic development:


Tuesday, June 27, 2006

I have been invited to Australia

On 13 July I am off to Australia with my partner Malcolm Murchie. I was invited by ERA (Economic Reform Australia) and will speak in five places – Brisbane, Maleny, Crystal Waters, Sydney and Adelaide.

The Brisbane event is at the conference of Students of Sustainability. I will be appearing with two others Professor Bob Blain of USA and Dr Geoff Davies of Canberra, author of Economiia. In Canberra we are at the Forum on Nature and Society, which sounds an interesting group.

Right now I am flat out preparing powerpoints which are up to date on local currencies. I have discovered that last week in New Zealand Greendollars Nelson New Zealand was launched by the owners of a commercial barter company OZONE. OZONE has 3000 trade members in New Zealand so the members of this new green dollars will be able to trade with 3000 businesses. I am keen to learn more.

We have to take three boxes of books with us for sale.

Tuesday, May 30, 2006

A review in New Zealand Books from an economist

The following review appeared in the June 2006 edition of a publication called New Zealand Books. I am a little reluctant to put it on the website as it has a few inaccuracies. An author feels a little weird when someone gets a fact or two wrong..Anyway it seems he has cottoned on to what the book is about, particularly the chapter on diversity and on organic organisation and thinks it worthwhile reading. Some of his sentences are hard to understand and I am not sure that he reiterates or rephrases what I actually said. Deirdre

Current Account
Robin Johnson

Healthy Money Healthy Planet: Developing Sustainabiilty through new Money Systems
Deirdre Kent
Craig Potton Publishing $34.99
ISBN 1877333298

This book is a serious critique of orthodox economic writing and attempts to set out an alternative interpretation of the role of money in society. In particular, it attacks the creation of credit by the banking system and lack of controls over the money supply. The viewpoint is international as well as domestic and hence includes world monetary influences as well as those of particular countries. In summary the author deplores the concentration of wealth and power in a small percentage of the population, the undue influence of multinational corporations, the lack of regard for natural resources, and the baleful influence of international specialisation (world trade reform) on local economies.

The author presents a case for the reform of the money system consistent with a view of society that is self-reliant, environmentally friendly and helpful to all levels. She reviews what she calls complementary economic and monetary systems that might mitigates some of the worst features of the international monetary system she identifies. Complementary currencies are those set up to give the power to issue money to people at all levels of organisation. These have been developed in a number of countries, including New Zealand, and their implementation could overcome foreign or bank control of the money supply. If implemented they would require the introduction of community banking and local participation, the encouragement of commercial barter and exchange, enhanced local currency circulation and alternative means of exchange, like voucher schemes, in parallel with national and international systems.

For an economist this is a serious challenge, and, I believe Kent’s proposals are unlikely to be workable. However, for the non-economist, the book is an informative read on everyday aspects of the economy, particularly the workings of the monetary system and the author’s interpretation of it.

The title of the book derives from the author’s metaphor of an organic model for a healthy economy – thinking of it as a living system. It’s her view that in a healthy global economy there would be no essential conflict between what is good for the local region and what is good for the planet; and in a national economy, its parts, while competing for attention by demonstrating their uniqueness, should all cooperate and help each other at optimal capacity.

The author speaks of managed borders. In a human cell, if the cell membrane is removed, the contents will leak out and pathogens will enter the cell. While goods, services,, energy and money are all allowed to circulate freely within the economy, the borders should be managed to allow vital materials, energy and information to pass through. In an organic, hierarchic model each economy – supranational, national, regional, local and neighbourhood – would be a complete unit. To retain integrity each would have its own currency, while also using the national and international currencies for trade within the larger unit.

Kent follows other writers in this area by setting out operational characteristics of a healthy holarchic (a term said to come from Arthur Koestler, meaning that each living part of an organism is whole but also depends on cells around it; a group of such cells is a holarchy system). These characteristics are based on the following ecological principles: life is frugal and sharing; life depends on inclusive, place-based communities; life depends on boundaries; and life thrives on diversity, creative individuality and shared learning.

Theese propositions can be used to recreate economic institutions in the service of “life”. Thus:

"Human economies can and should function as self-organising systems in which each individual, family, community or nation is able to exercise its freedom of choice, mindful of the needs of the whole, and no entity has the power to dominate any other. Human economies can and should be organised to contribute to life’s abundance through frugal use, equitable sharing, and continuous recycling of the available energy and resources to meet the material, social and spiritual needs of all their members. Human economies can and should be built around inclusive, place based communities, adapted to the conditions of their physical space, adept at the collection and conversation of energy and recycling of materials to function as largely self-reliant entities, and organised to provide each of their members with a sustainable means of livelihood."

Human economies can and should acknowledge and reward cooperative behaviour towards the efficient use of energy and resources in providing adequate livelihoods for all and enhancing the productive capacities of a shared pool of living capital. Human economies can and should have managed borders at each level of organisation, from households and community to region and nation, which allow them to maintain the integrity, coherence and resource efficiency of their internal productive processes and to protect themselves from predators and pathogens while cooperating to enhance the potentials of the larger whole. Human economies can and should nurture cultural, social and economic creativity and diversity and share information within and between and between place-based economies. These conditions are the keys to system resilience and creative intelligence.

Now it seems to me that these social institutions are largely built around the Christian ethic and the efficient use of resources, and would be acceptable to economists and non-economists alike. Modern legislation also provides for the control of excessive monopolies and unfair competition, and international agreements are in place for sharing energy resources, preventing unfair trade and the control of bugs and disease (“predators and pathogens”). Where the two approaches seems to part is in the degree of control of local, national and international autonomy sanctioned by society. The author would prefer more local control over events, more self-sufficiency at the household and regional level, and less trade with other entities at all levels.

The political analyst is bound to point out that such an organisational change is well within the powers of democratic voting systems if sufficient people opt for it. The economic analyst would also have to point out that many social reforms of the kind prescribed can only be achieved by some loss of efficiency in the productive system. If there is a loss of efficiency in moving to such a system, there is less wealth to share among the unfortunate and the less advantaged. The very efficiencies gained from specialisation in trade at regional, national and international levels would be largely lost.

In the end it comes down to what kind of society we really want. We need to weigh the advantages and disadvantages of the various options. Most of us would vote for a caring, decently incomed, self-governing form of organisation if the benefits were clear. It could be that the information we have available is insufficient to make a constructive choice – a point suggested in the last of the aboe forms of organisation. Perhaps the most positive aspect of this book is that it exposes much new information and a new view on a subject that concerns everybody; a reading of its contents might influence ways our society might move in the future.

Robin Johnson is an economist and retired civil servant.

Thursday, March 23, 2006

Rachel McAlpine reviews book for Kapiti Observer

Review by Rachel McAlpine in Kapiti Observer, 23 March, 2006

Healthy Money Healthy Planet: Developing Sustainability through new money systems, by Deirdre Kent, Craig Potton Publishing.

A new book from Deirdre Kent of Waikanae is in tune with the ideals of Craig Potton Publishing, who produce ‘occasional, but important books on a variety of social and environmental issues.’

What have money systems to do with a healthy planet? The answer is shocking and incredible.

‘The national currency of industrialised nations is created when commercial banks issue loans’, explains Deirdre Kent. ‘Banks created the loan but not the interest to pay it back.”

Thus our economy depends on a shortage of currency, and industrialised nations are all, by definition, eternally, inevitably, permanently, hopelessly in debt. This forces economic growth, which damages our planet. All any government can do is twiddle with the details, if I have got the message right.

To abolish the world monetary system is not realistic, and Deirdre Kent does not suggest such a thing.

But local, complementary currencies can and do coexist, with many benefits.

The book includes a fascinating overview of ‘healthy’ money systems.

Examples in New Zealand include Green dollars, Chatham Island Notes, Flybuys, Air New Zealand Airpoints Dollars, Bartercard and Tradecard. The policies of our big banks are compared with those of Kiwibank, the credit unions and community banks.

This is a lively book about a timely topic that most people barely think about. It is by a non-economist for non-economists – a refreshing approach.

The author repeatedly strikes a note of moderation, for example by quoting JK Galbraith: ‘A constant in the history of money is that every remedy is reliably a source of new abuse.’

(Let me declare my interest: Deirdre Kent is my sister)

Wednesday, February 22, 2006

Organic pathways website reviews book

This is a New Zealand website for those interested in organics. It has published the following review.

Money, Healthy Planet
Developing Sustainability Through New Money Systems
Deirdre Kent

In her preface to Healthy Money Healthy Planet, author New Zealander Deirdre Kent says the book is her contribution to the conversation on how to preserve the planet and resolve economic injustices.

She calls the way money currently operates “sick money” and here’s why:

Income Disparity In New Zealand, since the 1980s, the highest income families have increased their share of income - the top 10 per cent has gained, the next 20 per cent is holding their own.

Meanwhile, the bottom 70 per cent are worse off than 10 years ago.

In 1960, the wealthiest 20 per cent of the world’s population, living in the richest countries, had 30 times the income of the poorest 20 per cent. By 1977, the figure had increased to 74 times.

The assets of the world’s 358 billionaires exceed the combined annual incomes of countries accounting for 2.3 billion people or nearly half the world’s people.

Debt US$40 billion a year flows from developing countries to the developed countries and the developing world now spends US$13 on debt repayment for every US$1 it receives in grants.

As a result of the debt crisis, 7 million children die each year.

Money Creation Healthy Money, Healthy Planet describes how money currently works and shows how increasing financial inequality is built into the system.

She maintains that many of the environmental and social problems result from the creation of money out of thin air by private banks as interest bearing debt. She describes how it works and explains why some central bankers, economists and politicians deny that this is how money works.

Kent is in favour of loans being made, but says the payment of interest on top of the loan creates a situation where there is never enough money in circulation to cover the interest, in practice meaning there must be winners and losers in the current economic system.

In a section on the invisible governments, she lists “secretive” organizations that are dominated by big business interests and that seek to influence governments - powerful and unaccountable groups which make democracy impotent.

Organic Model She explains how healthy money would be the result if the economy was built on an organic model where power is not centralized, and money can also be created at the regional level and used to revitalize regional economies.

She envisages economies nested in economies using a pattern which mimics nature, and which will help keep money circulating at the local and national level, instead of being a one way flow toward oversized points of power as currently happens.

Monetary literacy for the masses Kent is a New Zealand grandmother with a lifelong involvement in political issues, and an interest in challenging underlying assumptions and beliefs, she has always been interested in mathematics (and was a maths teacher).

She advocates monetary literacy for the ordinary person and says economics permeates our lives and is far too important to be left solely to economists. Her book is a good starting point for newcomers as it is written in layperson’s language.

It is also a useful resource for people already interested in monetary reform as it assesses a number of complementary economic and monetary systems which have been tried in various countries, including New Zealand.

Monetary reform resource She assesses the strengths and weaknesses of various currencies, looking at why some have worked and others failed - thus providing a useful reference for people wanting to set up complementary currencies, for instance, which would work alongside the national currency, but would return power to the grassroots level and encourage regional rejuvenation.

Her book includes a table of currencies with their strengths and weaknesses, and a list of useful websites in categories including Green economics, history and theory of money, monetary reform, GDP, organic model of organization, various currencies and ethical investments.

It also lists useful organizations in New Zealand and Australia and has an extensive bibliography. A glossary is a good aid to people taking their first steps in economic literacy.

Craig Potton Publishing
RRP: $34.95

Available from
H. Dew
Living Economies
12 Costley St