The Money Crunch Why Complementary Currencies Now

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The Money CrunchWhy Complementary Currencies Now?

• Bernard Lietaer
• blietaer_at_earthlink.net

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Plan
Todays Context Understanding Complementary
Currencies Complementary Currencies in
Practice Conclusions
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Todays ContextThe Money Crunch

• We are at the beginning of a substantial Money
  Crunch, where money scarcity will result in a
  general squeeze in funding support for education,
  social services, elderly care, etc.
• gt The TINA syndrome (There Is No
  Alternative)

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Todays Context Global Structural Shift

• This situation is going to accentuate over time
  because we are in the middle of a major
  structural shift of the world economy
• Emergence of Information Age End of Industrial
  Age
• Same scale and impact as shift from Agrarian Age
  to Industrial Revolution, except faster
• Structural gt no business cycle improvements will
  solve them gt no return to 1990s likely
• Japan was first economy to hit that wall with its
  Crash of 1990
• Japan tried all the classical solutions (e.g. tax
  cuts, public works) to re-launch their economy,
  to no avail
• Germany and Europe is now going the same way
• Stubborn unemployment, no recovery in sight
• US is currently in denial but will be third in
  the same sequence

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Todays Context US

• 1980-1990s Devolution of many social issues from
  Federal to State and local level,
• without providing funding
• without allowing deficit spending
• 2000-2003 Crash Economic downturn
• Total Denial of Structural Issue
• Unemployment problem is temporary
• Monetary crashes happen only to 87 other
  countries
• gt Massive State and local deficits gt 2
  solutions
• Cutting social and educational programs precisely
  when they are most needed
• Inventing new approach to resolve those problems
• Japan after initial denial failure of
  classical solutions, now regional development
  through complementary currencies
• Germany Europe idem
• Can we afford not to learn?

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Some Definitions What is Money?

• Economic Textbooks define money by what it does,
  not by what it is
• e.g. Functions of Standard of Value, Medium of
  Exchange, Store of Value, etc....
• Money is an Agreement, within a Community, to use
  something as a Medium of Exchange
• Complementary Currency a currency - different
  from
• national currency - that operates in
  parallel with national currency
• Links unmet needs with unused resources.
• I foresee new private currency markets in
  the 21st century. Alan Greenspan

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Todays SituationThe Japanese Precedent?

• Japan has already gone through 13 years of what
  we just begin now.
• The use of complementary currencies can bring an
  end to the long-lasting deflation of the Japanese
  economy by supplying additional monies of various
  types at the local level. Japanese Minister of
  Economy, 2002
• Who better to resolve local issues than the local
  people?
• Example 1 Toshiharo Kato, top executive of METI,
  has initiated 40 different types of complementary
  currency eco-money projects
• Variety of technologies (from high-tech smart
  card, to low tech paper)
• Variety of scales (from mountain village of 800
  people, to prefecture of 10 Million)
• Variety of complexity of functions (from single
  function to 27 different functions on a single
  smart card elderly or children care, local
  unemployment, small business loyalty schemes,
  disaster preparedness training, etc.
• Strategy testing to determine which models works
  best for what purpose, and go large scale with
  the best
• Example2 Tsutomo Hotta, Mr. Moral Authority in
  Japan implements Fureai Kippu complementary
  currency for elderly care
• Example 3 Next step up is integrated regional
  systems (pilots in Yamato City, Germany)
• Why cant we start the same in US, in Colorado,
  now?
• Pilot project in advanced design phase in Sonoma
  County, CA.

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In addition to Fureai Kippu 300 other systems
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Yamato Love (Local Value Exchange) currency
1) Interchanges between local currencies 2)
Interchanges between citizens and regional
currency 3) Interchanges between citizens 4)
Interchanges insidea regional currency
(1)
(3)
(2)
Eco Money
Ithaca Hours
Mall Point
in Yamato City
(4)
Regional Currency / Regional Point
Fureai Ticket
LETS
Due Bill
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Plan
Two Case Studies Framework for Complementary
Currencies Core Ideas Mechanism Complementary
Currencies in the US Conclusions
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Core Ideas

• Contrary to prevailing economic theory, money is
  not value neutral. Instead, different money
  systems encourage different collective behaviors
  and emotions.
• Conventional money dissolves community
• Complementary money creates it
• Thousands of complementary currencies experiments
  are on-going now around the world that provide
  new tools for a region to address various
  socio-economic problems.
• For different types of problems, particular
  designs are useful !

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Understanding the Mechanism Solving social
problems with a Single Conventional Currency
National Currency (competitive, scarce)
Cooperative/Regional Economy (Social Capital)
Competitive/Global Economy (Financial Capital)
Community Transactions
Tax- Deductions
Commercial Transactions
Non-Profits
Subsidies
Taxation
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Understanding the Mechanism Solving social
problems with Complementary Currencies
National currencies (competitive, scarce)
Complementary Currencies (cooperative, sufficient)
Competitive/Global Economy
Cooperative/Regional Economy
Commercial Exchanges
Community Exchanges

• Complementary Currencies are complementary to
  (not replacing) national currencies
• Complementary Currencies create ADDITIONAL
  Wealth, Work, and a safety net below official
  system

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Changing the Money Paradigm by Leaving Monetary
Flatland
Global Economy
Regional Economy
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Plan
Two Case Studies Framework for Complementary
Currencies Complementary Currencies in
Practice Conclusions
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Three Practical Findings

• In the field of complementary currencies,
  practice is ahead of theory
• Contrary to key economic theory hypothesis
  assumed by Adam Smith, money is not value
  neutral
• Different types of money encourage different
  types of transactions, and different
  relationships between people
• Complementary Currencies solve socio-economic
  problems
• Dampens impact from economic shocks
• gt Can be useful tool to resolve social problems
  without creating budgetary deficits, raising
  taxes or bond issues.
• Creates a more stable and gentler world
• If there is no crisis, it is very useful as a
  community building tool
• If there is a crisis, it becomes vitally useful

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Plan
Two Case Studies Framework for Complementary
Currencies Complementary Currencies in the
US Conclusions
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Conclusion

• We are now living in an age of fear
• gt Disempowerment and isolation of the people
• We have already started a Money Crunch
• gt Money scarcity feeds the TINA syndrome
• Complementary currencies are a pragmatic way
  to
• take back our power
• Rebuild and strengthen community
• to counteract money scarcity
• and thereby find other ways to resolve the
  challenges we are facing.

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The Money Crunch WeekendUnique Opportunity to

• Personal contact with world-class experts
• 7/1 participants/presenter ratio
• Create a Community of Practice in Colorado
• Learn Money 101 how conventional money really
  is created and managed
• Learn about various complementary currency system
  from the creators themselves
• There will not be another opportunity of this
  level in the foreseeable future

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The Money Crunch WeekendKey Speakers

• Edgar Cahn Founder of Time Dollar Foundation,
  initiator of 300 Time Dollar systems. Author No
  More Throw-away People
• Tom Greco Founder of the Community Foundation.
  Author of Money Understanding and Creating
  Alternatives to Legal Tender speaks about What
  is money?
• Luca Fantacci, Italy speaks about New Findings
  on Historical Precedents for Complementary
  Currencies
• Alec Tsoucatos, speaks about Money the Untold
  Story
• Christina Gray, initiator of institutional
  complementary currencies, speaks about Lets get
  real about system change
• Gilson Schwartz, Brazil Innovations from the
  field
• Stefan Brunnhuber, Germany Money and
  Sustainability (the new Report to the Club of
  Rome)
• Octavia Allis, Kathy OConner, Christian
  Izquierdo Community Applications
• Greg Barry, Sergio Lub, Randy Petersen Business
  Applications
• Arthur Brock, Joel Hodroff, Les Squire New
  technologies for complementary currencies.

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Follow-up

• Of Human Wealth Beyond Greed and Scarcity (new
  galley edition available here)
• Also The Future of Money (London Random House,
  2000) and 17 other languages
• Internet
• www.accessfoundation.org
• www.transaction.net/money
• Email bernard_at_accessfoundation.org