Forget the IMF, all real money is local
The East African, 29 May to 4 June 2006
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The word is out that economics, never a science, has always been politics
in disguise. Civic action with local currencies, barter, community credit
and the more dubious rash of digital cyber-money all reveal the politics
Economics is now widely seen as the faulty source-code deep in societies'
hard drives, replicating unsustainability: booms, busts, bubbles,
recessions, energy crises, resource depletion, poverty, trade wars,
pollution, disruption of communities, and the loss of cultural and
Citizens all over the world are rejecting this malfunctioning code and its
operating systems: the World Bank, the International Monetary Fund (IMF),
the World Trade Organisation (WTO), and imperious central banks.
Its hard-wired programme, the now derided Washington Consensus recipe for
hyping GDP growth, is challenged by the Human Development Index (HDI), the
Ecological Footprint Analysis, the Living Planet Index, the
Calvert-Henderson Quality of Life indicators and other indices.
As with politics, all real money is local, created by people to facilitate
exchange and based on trust. The story of how this useful invention, money
grew into abstract national fiat currencies backed only by the promises of
rulers and central bankers is being told anew. We witness how information
technology and deregulation of banking and finance in the 1980s helped
create today's monstrous global casino where $1.15 trillion worth of fiat
currencies slosh around the planet daily via electronic exchanges, 90
percent in purely speculative trading.
US President George W Bush embraced the opinion of the new US Federal
Reserve Bank Chairman Benernanke that the mystery of low bond yields and
interest rates was due to a "global savings glut".
Former US Federal Reserve Bank Chairman Greenspan, whose zero interest
rates flooded the US economy with excess liquidity and helped create the
dot-com, housing, and global asset bubbles, declared himself "perplexed".
The anomaly involves the global economic imbalances between the US, the
world's largest debtor - borrowing the lion's share of global capital -
and the developing countries of Asia and those exporting oil as the
world's new lenders.
I doubt there is a "global savings glut" or a "Shift of Thrift" from
indebted US household' zero saving rates to thrifty Asian savers as
claimed in The Economist editorial of September 24, 2005.
My view is that there's a global flood of fiat paper money - mostly
trillions of US dollars amplified by the pyramiding of financial
"innovations" such as derivatives, hedge funds, off-shore "special purpose
entities", currency speculation, and tax havens - vis-à-vis real
production of goods and services in the real world.
Today we see worldwide experimentation with local exchange, barter and
swap clubs, such as Deli-Dollars, LETS, Ithaca Hours, and other scrip
currencies in the US and Canada. Billions of people still live in
traditional non-money societies and the world's mostly female voluntary
As local groups and communities created their own local scrip currencies
and exchange systems, they learned about economists' deepest secret: money
and information are equivalent - and neither is scarce! Barter, dismissed
in economic textbooks as a primitive relic, went hi-tech. eBay, the
world's largest garage sale, is an example of how to bypass existing
People began to see how central banks and national money-systems control
populations by macroeconomic managing of scarcity, employment levels,
availability of mortgages and car loans, via the money-supply, credit,
interest rates, and all the secretive levers and spigots used by central
In spite of such mechanisms, the defrocking of economics, the
deconstructing of money systems, and the growth of all the healthy local,
real world alternatives is propagating widely.
Before we fall into "either/or" errors, we should avoid doctrinaire
"smallness", ideological localism, and knee-jerk libertarianism. None of
these can protect local communities from the ravages of market
fundamentalist-driven globalisation. Like it or not, we are all "global"
now. In today's information-saturated world, communities need to
understand anew which elements to reject and which elements to embrace.
Wholesale rejection can lead to rigidity, xenophobia and misreading of
history. Wholesale acceptance of the current unsustainable economic global
trends will surely lead to loss of local culture, biodiversity, and
We humans have been adept at creating new scenarios and technologies that
mirror our lack of systematic knowledge and foresight. From such social
changes and unanticipated consequences, we must learn and evolve - or
suffer ecological collapse.
Hazel Henderson, author of
Creating Alternative Futures, is co-creator of
the Calvert Group, and the Calvert-Henderson Quality of Life Indicators.
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