My tour of Northland has brought new learnings on mutual credit systems
Thanks to Geoff and Naomi Waterhouse, Ken Ross and the Far North District Council I was able to respond to their requests to speak to several Transition Towns groups on the issue of money. There were 70 at Kerikeri, 25 at Kaitaia, 75 at Whangarei and 20 at Kaiwaka. The format was to show the film Money as Debt followed by a short discussion, a break, a short powerpoint where I outlined the designs of various community currency systems, and then discussion. A big challenge!
I remain more convinced than ever that the 47 minute Canadian documentary on money showing what a pernicious and unsustainable system we have inherited over the centuries, that this film teaches it brilliantly, with animation and clarity.
Now the case of Kaiwaka has set me thinking. Gail Aitken who had been a member of a LETS system in UK, had set up a small LETS after coming to Kaiwaka to an intentional community at Koanga Gardens. If measured by the trading volume per member, it is a very successful scheme. It has only 40 members but they all know each other extremely well. There is another intentional community involved and a few from the small township of Kaiwaka, an hour south of Whangarei.
The purpose of the discussion was to work out ways to improve their scheme. Gail runs it using just a spreadsheet. She is paid by the system in the local currency, the kauri. They don’t use the internet and the members showed no desire to be dependent on the internet as they believed the LETs was more resilient that way.
In the discussion it became clear that three members were greatly in credit ($4000 and more) and one of these said very eloquently that she didn’t particularly want to spend it as they had all they needed and were against consuming for its own sake. The same woman, when someone pointed out that a solo mother of three children had not traded and was in debit to the system, declared with feeling that the woman was already working raising the children and there should be no pressure on her to trade. (Others may have implied she should sell something or work for others in the mutual circle.)
Afterwards I was pondering. I was thinking about the Time Banking model in Lyttelton which has a Community Chest as a member. An interior design company had done some work free for the system and been credited with Hours. The company donated their hours to the Community Chest so that those who had no time or health to work for others could be supported.
I spoke to one of the administrators of the Kaiwaka system afterwards suggested that if their system tended to be blocked by people with large credits they didn’t particularly want to spend, then they could look to the time bank model and set up a community chest. In that way the solo mother could be cared for while she was doing her child care. “In a way you are setting up a mini social welfare system within your circle”. He was fascinated by the idea.
My other observation was that Kaiwaka may be a model for others wanting to set up mutual credit trading circles without the Internet. Each of the types of currencies could forge links with the others, with exchange rates being determined regularly, thus extending the variety of goods and services available, and giving members a better experience still.
Perhaps there could be a network of LETS systems on the web and a network not on the web. After all when you think of what is happening in the soil in the root system of any plant, there are millions of small fungi, bacteria and working. There is an ecosystem of millions of tiny micro-oganisms where nutrients and energy are exchanged to everyone’s benefits. Feedback loops tell where the needs are and the surplus resources.
We have often talked about how important it is to develop trust and bonding in a community before a community currency can be successful. Well, why not skip this step and go to communities which already have done their bonding and teach them to set up a mutual credit circle for trading? As the global economy collapses around us, local bowling clubs, schools, maraes, Rotary clubs, sports clubs and RSA’s will be amenable. Why not have a series of small interlinking LETs systems in a small town or suburb, rather than one big one? That will give us more administrators, more resilience, more innovation and bigger numbers, vastly improving the experience of community currencies. If they include in each scheme a Community Chest it would be a lifeboat in the case of a ravaged centralised benefit system. This would prepare for the huge scale movement of the newly unemployed city members returning home, complete with their alcohol, debt, drug and gang problems.
Mutual banking
As the international banking system goes through its reform spasms it is critical to develop mini local models under the radar as well. To start a new bank now costs a prohibitive $30m, up from $15million recently.
I am in mind of a Samoan woman who told me during Mike Rowbotham’s visit early this decade that they had systems where members paid a certain amount per month into a pool and at the end of the month there was a draw for an interest free loan. If someone didn’t want it they drew again. As the reformers of the national currencies of the world and the banking system of the world get into action over the next few years, so will those who are building a new money system at the flaxroots level. I have often thought we need a conference to work on a new financial system –Permaculture Economics? Soilweb Financial Systems? A conference gives face to face contact and may attract those working at higher levels as well.
Monday, October 20, 2008
News media quotes my book in Coromandel
Thomas Everth writes a regular green blog for a Coromandel paper.
He writes a monthly a column under the title "Green Blog" for his local paper the Coromandel Town Chronicle.
A copy of Novembers edition (minus the last bit on another topic) is below.
Green Blog
One of the main topics of this years Eco Show in Taupo – and timely so – was the state of our financial systems and how their current construction might be the underlying root cause of much of the world’s problems.
Few people realise – according to Deirdre Kent, one of the speakers on these issues and member of ‘Living Economies’ and author of ‘Healthy Money, Healthy Planet’ – how money is created in this country and around the western world. Most of it is not created as physical currency, the paper notes and coins you can carry in your wallet by central banks and governments, but as interest bearing dept when individuals, governments and businesses take out loans from lending institutions at the stroke of a pen as a balance on a bank account held against some collateral (a property, your future income etc.).
The problem with this is that the banks create the principal of the loans at the stroke of a pen for you to spend, but not the interest they expect you and everybody else to bring back to them. This causes the entire system to be in constant need to expand and to create more money - as further interest bearing dept - so that the interest of previous loans can be paid. This system only works if even more money is created and as long as the value and the amount of the underlying assets upon which loans are given also rises. In fact the entire financial system only works if and as long as it keeps growing. You will have heard it from most politicians: “We need the economy to grow by x% per year”.
But if you grow something every year by a percentage of what you already have then you get “Exponential Growth”. In nature there are no stable systems that allow exponential growth to go on. Simple math will tell you that a single penny invested at 5% compounding interest 2000 years ago would today be worth 134 billion balls of Gold each the weight of the Earth at the 1990 gold prices! You will probably need to read this a few times to comprehend these numbers but its true. Exponential growth always leads to a catastrophic end and the only cases of exponential growth in natural systems are quickly self-limiting. Take the exponential growth of yeast bacteria in a brewing vet as an example. The bacteria grow exponentially until the concentration of the yeast’s excrement (Alcohol) is killing them off. Another example of exponential growth of cause is Cancer.
Exponential growth is unsustainable when you live on a finite planet. And even if we had a whole bunch of planets it will not work for very long as the example above shows, where the exponential growth of a single penny devours just about every bit of matter in our Galaxy in the short order of just 2000 years. Our exponential growth dependent financial systems must therefore fall over every few generations in a wave of deep destruction before they can carry on growing again until we one day perhaps might come to our senses and develop a steady state economic system and live like all enduring natural systems in a state of balance and harmony with our environment.
Let’s for argument sake include all the people that will live in the next 7 generations when we take a democratic vote on our actions today. Why not? The fact that they are not able to speak yet should not be held against them. Why should we deprive them constantly of all their rights? Imagine what the actions of our democratic system would be then? A steady system that would give enduring sustenance to humanity and all natural systems upon which we depend? I bet!
Since we have an election upon us when you read this take a look which of the candidates and parties might have grasp of all this besides prescribing more of the same as cure…
Thomas Everth
He writes a monthly a column under the title "Green Blog" for his local paper the Coromandel Town Chronicle.
A copy of Novembers edition (minus the last bit on another topic) is below.
Green Blog
One of the main topics of this years Eco Show in Taupo – and timely so – was the state of our financial systems and how their current construction might be the underlying root cause of much of the world’s problems.
Few people realise – according to Deirdre Kent, one of the speakers on these issues and member of ‘Living Economies’ and author of ‘Healthy Money, Healthy Planet’ – how money is created in this country and around the western world. Most of it is not created as physical currency, the paper notes and coins you can carry in your wallet by central banks and governments, but as interest bearing dept when individuals, governments and businesses take out loans from lending institutions at the stroke of a pen as a balance on a bank account held against some collateral (a property, your future income etc.).
The problem with this is that the banks create the principal of the loans at the stroke of a pen for you to spend, but not the interest they expect you and everybody else to bring back to them. This causes the entire system to be in constant need to expand and to create more money - as further interest bearing dept - so that the interest of previous loans can be paid. This system only works if even more money is created and as long as the value and the amount of the underlying assets upon which loans are given also rises. In fact the entire financial system only works if and as long as it keeps growing. You will have heard it from most politicians: “We need the economy to grow by x% per year”.
But if you grow something every year by a percentage of what you already have then you get “Exponential Growth”. In nature there are no stable systems that allow exponential growth to go on. Simple math will tell you that a single penny invested at 5% compounding interest 2000 years ago would today be worth 134 billion balls of Gold each the weight of the Earth at the 1990 gold prices! You will probably need to read this a few times to comprehend these numbers but its true. Exponential growth always leads to a catastrophic end and the only cases of exponential growth in natural systems are quickly self-limiting. Take the exponential growth of yeast bacteria in a brewing vet as an example. The bacteria grow exponentially until the concentration of the yeast’s excrement (Alcohol) is killing them off. Another example of exponential growth of cause is Cancer.
Exponential growth is unsustainable when you live on a finite planet. And even if we had a whole bunch of planets it will not work for very long as the example above shows, where the exponential growth of a single penny devours just about every bit of matter in our Galaxy in the short order of just 2000 years. Our exponential growth dependent financial systems must therefore fall over every few generations in a wave of deep destruction before they can carry on growing again until we one day perhaps might come to our senses and develop a steady state economic system and live like all enduring natural systems in a state of balance and harmony with our environment.
Let’s for argument sake include all the people that will live in the next 7 generations when we take a democratic vote on our actions today. Why not? The fact that they are not able to speak yet should not be held against them. Why should we deprive them constantly of all their rights? Imagine what the actions of our democratic system would be then? A steady system that would give enduring sustenance to humanity and all natural systems upon which we depend? I bet!
Since we have an election upon us when you read this take a look which of the candidates and parties might have grasp of all this besides prescribing more of the same as cure…
Thomas Everth
Tuesday, April 29, 2008
Review from Italy
I found this on the web
Just when you thought you knew about how to save civilisation through turning off lights using public transport of driving less, Deirdre Kent confronts us with an unpalatable truth. The world's money system is designed so that the money supply and hence the size of the global economy must keep on increasing exponentially or it will collapse.
"Sometimes I wish I didn't know about the money system and I could put my knowledge back in the bottle and screw the lid on" said Deirdre Kent. "It is so frustrating to watch top environmentalists describe the mess we have all got into with runaway climate change and a world blind to the bombshell of peak oil when I know that it is the money system which demands economic growth. Why else would politiicians, journalists and economist all advocate economic growth for the last four decades of environmental decay and noone connect the dots?'
Kent's book is one of many on the money system, books that are rarely read because people think they can't understand economics. However this book is clear and easy to read as many reviewers have discovered.
Kent spends a third of the book explaining how the current money system is sick and the rest describing the huge array of local currencies available currencies which are created without interest.
The reviews of her book include Management Magazine, who say "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."
Just when you thought you knew about how to save civilisation through turning off lights using public transport of driving less, Deirdre Kent confronts us with an unpalatable truth. The world's money system is designed so that the money supply and hence the size of the global economy must keep on increasing exponentially or it will collapse.
"Sometimes I wish I didn't know about the money system and I could put my knowledge back in the bottle and screw the lid on" said Deirdre Kent. "It is so frustrating to watch top environmentalists describe the mess we have all got into with runaway climate change and a world blind to the bombshell of peak oil when I know that it is the money system which demands economic growth. Why else would politiicians, journalists and economist all advocate economic growth for the last four decades of environmental decay and noone connect the dots?'
Kent's book is one of many on the money system, books that are rarely read because people think they can't understand economics. However this book is clear and easy to read as many reviewers have discovered.
Kent spends a third of the book explaining how the current money system is sick and the rest describing the huge array of local currencies available currencies which are created without interest.
The reviews of her book include Management Magazine, who say "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."
Thursday, April 03, 2008
Recommendation from David De Cleene of Auckland
Hi Deirdre
I’d like to congratulate you on writing one of the most amazing books I’ve ever read in terms of:
1. Pointing out something so critical to the very fabric of our society,
2. Making something so complex so simple,
3. Being so completely thorough, and,
4. Offering possible solutions
I’ve been writing a book for the last 6 years and so understand just how much effort goes into a book. A friend of mine passed your book on to me a week ago and it’s perfectly what I was looking for. Even more amazing that you’re a Kiwi...
David De Cleene
Parnell
Auckland
April 08
I’d like to congratulate you on writing one of the most amazing books I’ve ever read in terms of:
1. Pointing out something so critical to the very fabric of our society,
2. Making something so complex so simple,
3. Being so completely thorough, and,
4. Offering possible solutions
I’ve been writing a book for the last 6 years and so understand just how much effort goes into a book. A friend of mine passed your book on to me a week ago and it’s perfectly what I was looking for. Even more amazing that you’re a Kiwi...
David De Cleene
Parnell
Auckland
April 08
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