Reexamine the Structure of Money to Promote Recovery
Reexamine the Structure of Money
Re-typed with Permission from: "Green American, Spring, 2009" Quarterly Review
www.coopamerica.org/pdf /gamspring 2009.pdf P. 14
Back in 2001, international economist Dr. Bernard Lietaer predicted our current economic crisis in
his book The Future of Money: Beyond Greed and Scarcity (London: Random House, 2001),
saying that before 2020, the world economy was going to hit a wall and go into a deep recession.
"I'm not the only one now," he says, ticking off names like Nobel laureate Joseph E. Stiglitz and
New York University economist Nouriel Roubini. "Stiglitz recently said that in the beginning of a
recession, the debate between economists is usually whether it's going to be a 'V' - deep and
short - or a 'U' - not as deep but longer, as in three or four years. He says this one could possibly
be in the form of an 'L' - hitting the ground and staying there."
Lietaer's specialty is studying monetary systems - he's one of the chief architects of the
mechanism that allowed 16 European Union (EU)countries to covert their individual currencies to
the Euro. He, too, sees the current recession as an L-shaped one, unless we address the
problem at its root. Which means nothing less than reexamining and retooling the very structure of
our monetary systems.
"For any complex system to be sustainable, it needs to have a balance between two factors:
resilience and efficiency," he says, noting that a resilient, efficient system needs to be diverse and
interconnected. On the other hand diversity and interconnectivity decrease efficiency. Therefore the
key is an appropriate balance between efficiency and resilience. "This is more understandable in
ecosystems. One animal cannot eat one plant. If that plant gets in trouble, goes extinct. If he eats
50 types of plants, then if one plant gets in trouble, he just eats the others. The same thing is true
of whatever eats that animal. It's a chain of the appropriate level of diversity and interconnections -
which are the key to sustainability."
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Lietaer says that in applying what we learn from ecosystems to the "monoculture" of money, "it
was very predictable
that one day we would be in trouble. The banks are all photocopies of each other. There's no
diversity of institutions and no diversity of currency. Therefore, just as it's very logical that an
ecosystems like this will collapse, it's very predictable a monetary system like this will collapse,
So Lietaer - in an architectural or advisory capacity - has been working to implement a variety of
"complementary currencies"around the world - a move he says would help build resilience and
efficiency into our monetary systems and pull us out of our L-shaped situation.
COMPLEMENTARY CURRENCIES DEFINED
Complementary currencies are not intended to replace existing monetary systems, but to work in
concert with exist-ing money. These include "local and regional currencies" - which aim to
stimulate businesses in a particular local, or regional area. There are "social purpose
currencies," like TimeDollars (see that section), where people exchange services within a small
community to encourage social cohesion. And there are "functional currencies", which serve a
targeted purpose and can stretch beyond a particular community and go country-wide,
continent-wide, or even worldwide.
An example of a functional currency is the NU currency, which aims to encourage activities on the
consumer level that reduce carbon emissions. After a successful NU pilot project took place last
year in Rotterdam, six cities in the EU - Rotterdam, Bristol, Dublin, Amsterdam, Brussels, and
Munich - have signed up to begin implementing a NU system in 2009.
'Let's assume that you take the bus or the subway instead of your car," says Lietaer. "The NU
system gives you credit for the carbon units you're saving with your public transportation ticket.
Later, if you want to go buy a bicycle, you can pay for it with those credits. Of, if I install solar panels
on my house, I get carbon credits, which I can use to take the subway."
The NU system works entirely electronically - consumers in the Rotterdam pilot project
accumulated and paid our credits with a NU "smart" card, which works much like a standard
"The carbon currency works only in carbon-reducing activities, so the NU helps create an
economy that favors carbon reduction," says Lietaer. "In the US, the way the government trues to
motivate people to buy a hybrid is they give you a few thousand dollars in a tax rebate. And then if
you use those dollars to fly to Hawaii, you would emit more carbon than [you would save in a
year's worth of driving] that hybrid. So there's no way of influencing behavior patterns except for
with the first transaction."
Another example of a functional currency is the Interra, developed in Seattle, WA, a complementary
currency intended to encourage people to purchase from socially and environmentally
responsible local businesses.
Functioning somewhat like an airline miles program, the Interra system centers on the Interra
Card, which gives consumers reward points every time they buy from local green businesses.
Participants can use their Interra points for credit on additional green purchases, or donate them
to schools or nonprofits. Already, the card is being used in communities in Seattle, Boston and
While all types of complementary currencies can have marked positive effects on the economy,
there's one that Lietaer says could come as close as possible to being the magic bullet the world
needs to reverse the economic crisis - the business-to-business or B2B currency. The reason: it
can be implemented swiftly and at a small or massive scale, and it can go a long way toward
keeping businesses across economic sectors resilient by reducing their dependence on a failing
THE B2B SOLUTION
A good part of our financial meltdown is due to the credit crunch - banks aren't as willing to loan to
businesses and individuals, which is feeding unemployment and economic stagnation, which in
turn is making banks even less willing to provide credit. With massive layoffs and bankruptcy
looming, many US industries - like the mortgage companies and the Detroit auto companies - are
turning to the government for bailout loans.
But as the crisis deepens, Lietaer warns, there isn't going to be enough bailout money for
everyone. So businesses need to save themselves. To do so, he proposes that companies
across the US, in every sector, implement a B2B currency to increase overall resilience and
The biggest B2B success story to date is the Swiss WIR currency (WIR is the abbreviation of
wirtschaftsring, or "economic circle"), a 75-year-old program that is still going strong today.
In 1934, amidst the economic turmoil following the stock market crash of 1929, Werner
Zimmermann and Paul Enz got together with 14 other businessmen in Zurich, Switzerland, to see
if they could find a way to cooperatively weather an economic crisis similar to the one the world is
experiencing today. They had all received notices from their banks that their credit lines were
being reduced or eliminated, and bankruptcy was imminent. So, they formed the WIR economic
circle cooperative, within which they would trade goods and services among themselves, to
reduce the need for bank credit.
For example, if Business A - let's say it's a shipping company - needs wooden pallets, it could go
to Business B within the WIR circle and purchase them with WIR currency, instead of applyi8ng for
a bank loan that it probably wouldn't get anyway. Then it could earn more WIR currency to spend
within the circle by providing its shipping services to Business C.
What resulted was a B2B currency where participants "put their buying power at each other's
disposal and keep it circulating within their ranks, thereby providing members with additional
sales volume." The system operates interest-free, with one WIR credit equal to one Swiss franc -
a company simply gives goods and services to another business in the circle in exchange for
some value in goods and services that it needs.
By relying on each other instead of the nearly defunct banking system, all 15 of the original WIR
businesses survived while others went bankrupt. Within three months of its inception, the WIR
circle grew from 16 participants to 1,700. A year later, there were3,000 members, offering goods
and services in 850 categories.
The WIR economic circle eventually evolved into the Swiss WIR Bank, which still operates today
as an independent complementary currency system serving 62,000 small- and medium sized
businesses, a quarter of all the businesses in Switzerland. The stability of the Swiss economy as
a whole is often attributed to the WIR.
Lietaer strongly advocates that businesses that want to survive the economic crisis follow the
Swiss example and create a B2B system at whatever scale meets their needs. Businesses
around the world today have a huge advantage compared to the Swiss in the 1930s - the software
for B2B systems already exists, and its free. A group of companies could have a system in place
and fully operational within three to six months, he says.
"And timeliness is going to be critical, if one wants to avoid the social and economic ravages that
will be unleashed by the unraveling of today's complex business supply chains," he says.
Currently, Lietaer is the driving force behind four B2B pilot projects starting in the EU, which have
launched individually and will be-come interconnected in the second half of 2009. That currency,
called the "Com" for "complementary" and "commercial", is equal unit for unit with the Euro, and is
interest-free. Businesses can accept full or partial payment in Coms for their goods and services
sold to other businesses --and together, they help prop each other up during economic
"It keeps the businesses interconnected and trading with each other, without borrowing money
from the banks, which is the real problem," says Lietaer. "Because the money is not available
from the banks, period."
The goal is to have all 16 Euro-zone countries using the Com as soon as possible, in parallel
with the Euro.
To weather the economic crisis, Lietaer says its vital that individuals and businesses stop being
isolated, and start developing interconnections that foster resiliency - including informal social
interconnections that build community (like TIME DOLLARS). And above all, the US and the world
needs to stop relying on old, dysfunctional monetary systems and build interconnection, diversity,
and sustainibility into a new monetary system made up of complementary currencies, particularly
"It's time to do it differently - structurally differently," he says. "The faster we [shift to a B2B barter
currency], the less suffering we will engender. Time is of the essence. American business has
proven it's capable of turning on a dime, and it could provide the leadership we need. It doesn't
have to come from the government."
Tracy Fernandez Rysavy
For more information, visit Dr. Bernard Lietaer's Website at www.lietaer.com
NOTE FROM TOM KUNA:
Neither the "Com" nor the "WIR", nor "The TERRA" is "the mark of the beast". That was the Nazi
Swastika, as made clear in Ezekiel 38:3,12,20 [RE: "Tubal"(the Hitlerite war-machine)"against a
people concerned with goods and cattle" (the Nazi invasion of the USSR); and "cliffs (of
Normandy) tumbled"]. Cf: "Hitler as the Anti-Christ of this Age: ...." 1999, 2002, 2009; "Peace
Process in the Holy Land...Qur'an Guarantees Israel's Right to Exist Securely...." 1983-2009; and
"God's Plans for the American Working-Class and the Holy Land After 9/11...", 2001, 2009, each by
Jacob, Peace Works Press; www.powells.com