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Towards a monetary ecology - scientific evidence for complementary currencies. Stockholm 28 January 2013
Citation preview
Towards a Monetary Ecology?Scientific Evidence for Complementary Currencies
Bernard [email protected]
Key Ideas
• Chicago Plan is a significant improvement• It solves 2/3 of systemic monetary crises
• A monetary ecology can solve 3/3 of monetary crises
• + lower risk • + solve a series of non-financial sustainability
issues
Plan
• Systemic Cause for Instability
• Systemic Solution
• Chicago Plan: Advantages and Limitations
Symptoms of Systemic Monetary Instability ?
On-going financial crisis is the biggest, but not the first such crisis:Since 1970, IMF identified:
145 banking crashes 204 monetary collapses72 sovereign debt crises
Such crises are a remarkably “hardy perennial” (Kindleberger)
48 well documented major meltdowns between 1637 and 1929.
My claim: financial system is structurally unstable
Sustainability of Complex Networks
• Robert Ulanowicz 25 years of ecosystems flow data. Natural ecosystems have in common to be sustainable. What else do they have in common?
• Sustainability of complex network results from appropriate balance between Efficiency and Resilience, emergent properties from 2 structural variables of complex networks: diversity and interconnectivity
Complex Networks
Diversity and interconnectivity are 2 structural variables => applies to all networks with similar structure, including money system!
Structural variables are independent from what is being processed in networkbiomass in an ecosystem,
electrons in electrical circuit,
information in immune system,
money in an economy…
Resilience
Efficiency
Balance in Natural Networks
Efficiency
Resilience
(In)Balance in Our Financial Network“Monoculture = accident waiting to happen”
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100% Excess Efficiency
Excess Resilience
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Window of Viability
Natural Ecosystems
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Current Operation of Financial System
Window of Viability
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Collapse of Financial System
Window of Viability
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Collapse
Window of Viability
Natural Recovery
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Collapse of Financial System
Window of Viability
Reestablishment of Monopoly of Bank-debt Money
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Collapse of Financial System
Window of Viability
Reestablishment of Monopoly of Bank-debt Money
Plan
• Systemic Cause
• Systemic Solution
Resilience (Efficiency (A)(Diversity + Redundant Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Effect of Complementary
Currencies
Current Operation of Financial System
Window of Viability
Resilience ( Efficiency (A)(Diversity + Interconnections) (Streamlined)
Sustainability Optimum
0%
100%
Collapse
Window of Viability
Natural Recovery
Connectivity c
Sustainability Optimum
0%
100%
Diversity n n
3D Views
Plan
• Systemic Cause for Instability
• Systemic Solution
• Chicago Plan: Advantages and Limitations
Advantages of Chicago Plan
• Arguments of Dr. Kumhof are all valid
• If Chicago Plan had been in place145 banking crashes 72 sovereign debt criseswould not have taken place
Limitations of Chicago Plan
• It replaces a private monopoly with a public monopoly => lack of diversity in types of currency!
• 204 monetary collapses could still happen
• Chicago plan can only be implemented all or nothing => more risky than monetary ecosystem approach
Solution
Chicago Plan + allow experimentation with other types of media of exchange. Examples:
=> Business to Business Currencies (e.g. WIR)
=> Environmental currencies (e.g. Terra making profitable to think long term)
=> Social purpose currenceis (e.g Torekes)
Follow Up
• www.lietaer.com• [email protected]
• « Money and Sustainability: the Missing Link » (Triarchy Press, 2012)
• Articles in 5 different peer-reviewed journals
=> see www.lietaer.com/research