Changing the Credit System in Sonoma County with the GoLocal Cooperative
 |
0.0 (0) |
Changing the Credit System in Sonoma County with the GoLocal Cooperative
by Philip Beard, Ph.D.
May 30, 2009
Money. It’s what everybody needs to run their lives. And right now, everybody’s asking: How come we don’t have enough money to do what we need to do? Everybody’s in the red. States, cities, homeowners, businesses, non-profits. Our jobs are disappearing, our mortgages unpayable, our social services evaporating along with our 401k’s. And the banks won’t lend us the money we need, even when our government gives it to them to lend! WHAT’S GOING ON HERE? Why is our financial system betraying us? And even more important: What can we do about it?
Here’s the short version. Our financial system is betraying us because ever since the Federal Reserve Act of 1913, our credit has been created by private banks, and private banks put private interests ahead of the public interest. It’s not a conspiracy; it’s just their nature. Give them free rein to find more short-term profits, and that’s exactly what they’ll do, because that’s what their stockholders demand, and they’d betray their fiduciary responsibility if they didn’t comply. Clever innovators come up with high-risk derivatives, collateralized debt swaps, subprime mortgage packages, and a host of other high-finance big-profit schemes — and the deregulated investment banks, insurance companies, hedge funds are quick to jump in, to share in the profit-taking. The result is uncontrolled money creation via fractional-reserve leverage. Huge amounts of speculative loan money get pumped into the economy. That money represents no real value, but just casino value: global big bets. David Korten calls the trillions of dollars that originate this way “phantom wealth”. And when the bubble bursts, we all pay the price, although most of us had nothing whatever to do with creating the bubble.
For a superb animation that explains this high-finance hokus-pokus, go to http://www.poetv.com/video.php?vid=54000. It’s high time we understood what these gamblers are doing with our money, and this video makes it entertainingly clear.
OK, but what can we do about it?
For starters, we can do what North Dakota (of all places) did in 1919, which is to set up our own public-owned state bank. All revenues and expenditures of the state are processed through this Bank of North Dakota. For all these years, the BND has been financing, at low or no interest, public-benefit projects and programs: loans to foreclosure-endangered farmers, loans to students, infrastructure projects, etc. And now, in the teeth of this devastating recession, North Dakota is one of a very small number of states (three, I’m told) that are fiscally solvent. That sounds to me like a model worth emulating. What’s stopping us?
That create-your-own-credit model could work at the national level as well, of course. And in fact it has done so at various times in our history, most notably in the 1860’s when Abraham Lincoln used it to finance the Civil War, rather than borrowing money from British private banks at 24% interest. What’s stopping us?
But we’d be foolish to rely only on state and federal politicians to do the right thing. Whatever they do or refuse to do, we’ve got a more reliable option: regional credit clearing systems. These are alliances entered into freely by local governments, non-profits, businesses, and individual citizens, for the economic benefit of their shared region. The principle they operate on is this: When the banks aren’t issuing the credit we need for running our lives, we can issue it ourselves. And unlike for-profit banks, we can do it without charging an arm and a leg. (Banks call that arm and leg “interest”; it used to be called “usury”, and every religion in the world forbids it. That’s a pretty good sign that we’d do well to seek other options.) We can actually spend the credit into existence that we need to run our lives, at low or no interest. All it takes for the system to work is a critical mass of groups and individuals ready to accept this self-issued credit in full or partial payment for their goods or services, and a disciplined issuance mechanism that allows them to buy only as much value as they can sell.
Sound utopian? Maybe (gasp) anti-capitalist or something? Guess again. Check out the WIR system in Switzerland, a place not exactly known for red-eyed radicalism or irresponsible monetary schemes. The WIR folks have existed as an independent credit clearing alliance of small and mid-sized businesses since 1934. Currently they do WIR-denominated trade to the tune of around $2 billion a year. What’s stopping us from emulating them?
The answer to these why-don’t-we-do-it questions is that nothing’s stopping us but our own ignorance. Conditioned to believe that the Federal Reserve works in our own best interest, we’re ignorant of its private, for-profit status. Raised believing that only centrally-issued “legal tender” can be real, reliable money, we’re ignorant of the credit-issuing power that’s available for us to use locally, in support of our neighbors, our regional economies – in support of our own lives.
In California’s Sonoma County an alliance of forward-thinking citizens, businesses, and non-profits, soon to be joined by local governments wanting to take responsibility for their own economic welfare, is working to adopt and promote this new, sustainable approach to credit. We’re called the Sonoma County GoLocal Cooperative. Check us out at www.golocal.coop. With startup funding from some major socially responsible foundations and in collaboration with two other progressive communities (Santa Fe NM and Bethesda MD), we’re setting up a regional economic development model that we intend to see replicated nationwide. It holds the promise of value-based, trustworthy economic renewal in the face of a big-bank-dominated global system that has bequeathed to us economic chaos and has broken our trust.
We can continue down the infuriating, fear-producing, same-old path of bank bailouts, ineffective federal stimulus packages, and social disintegration. Or we can embrace a free, democratically controlled, collaborative approach to shaping our own economic destiny. The choice is ours, and the choice is clear. It’s high time for us to act on it. •
phbeard@mac.com
Professor Beard also sent this personal note along with his article (and yes, if you were asking if I sent this on to the Ojai Econoomy Group... I certainly did!)
<< By now, though, we've got the software in place and the reward cards produced, and we shall begin signing businesses up within the month. We've received lots of enthusiasm about the reward card program from member businesses of our GoLocal Cooperative, and have been promised large-scale financial support from a group of donors/investors that we met at last week's BALLE [Business Alliance for Local Living Economies] conference in Denver, for expanding and replicating the system as rapidly as possible.>>
by Philip Beard, Ph.D.
May 30, 2009
Money. It’s what everybody needs to run their lives. And right now, everybody’s asking: How come we don’t have enough money to do what we need to do? Everybody’s in the red. States, cities, homeowners, businesses, non-profits. Our jobs are disappearing, our mortgages unpayable, our social services evaporating along with our 401k’s. And the banks won’t lend us the money we need, even when our government gives it to them to lend! WHAT’S GOING ON HERE? Why is our financial system betraying us? And even more important: What can we do about it?
Here’s the short version. Our financial system is betraying us because ever since the Federal Reserve Act of 1913, our credit has been created by private banks, and private banks put private interests ahead of the public interest. It’s not a conspiracy; it’s just their nature. Give them free rein to find more short-term profits, and that’s exactly what they’ll do, because that’s what their stockholders demand, and they’d betray their fiduciary responsibility if they didn’t comply. Clever innovators come up with high-risk derivatives, collateralized debt swaps, subprime mortgage packages, and a host of other high-finance big-profit schemes — and the deregulated investment banks, insurance companies, hedge funds are quick to jump in, to share in the profit-taking. The result is uncontrolled money creation via fractional-reserve leverage. Huge amounts of speculative loan money get pumped into the economy. That money represents no real value, but just casino value: global big bets. David Korten calls the trillions of dollars that originate this way “phantom wealth”. And when the bubble bursts, we all pay the price, although most of us had nothing whatever to do with creating the bubble.
For a superb animation that explains this high-finance hokus-pokus, go to http://www.poetv.com/video.php?vid=54000. It’s high time we understood what these gamblers are doing with our money, and this video makes it entertainingly clear.
OK, but what can we do about it?
For starters, we can do what North Dakota (of all places) did in 1919, which is to set up our own public-owned state bank. All revenues and expenditures of the state are processed through this Bank of North Dakota. For all these years, the BND has been financing, at low or no interest, public-benefit projects and programs: loans to foreclosure-endangered farmers, loans to students, infrastructure projects, etc. And now, in the teeth of this devastating recession, North Dakota is one of a very small number of states (three, I’m told) that are fiscally solvent. That sounds to me like a model worth emulating. What’s stopping us?
That create-your-own-credit model could work at the national level as well, of course. And in fact it has done so at various times in our history, most notably in the 1860’s when Abraham Lincoln used it to finance the Civil War, rather than borrowing money from British private banks at 24% interest. What’s stopping us?
But we’d be foolish to rely only on state and federal politicians to do the right thing. Whatever they do or refuse to do, we’ve got a more reliable option: regional credit clearing systems. These are alliances entered into freely by local governments, non-profits, businesses, and individual citizens, for the economic benefit of their shared region. The principle they operate on is this: When the banks aren’t issuing the credit we need for running our lives, we can issue it ourselves. And unlike for-profit banks, we can do it without charging an arm and a leg. (Banks call that arm and leg “interest”; it used to be called “usury”, and every religion in the world forbids it. That’s a pretty good sign that we’d do well to seek other options.) We can actually spend the credit into existence that we need to run our lives, at low or no interest. All it takes for the system to work is a critical mass of groups and individuals ready to accept this self-issued credit in full or partial payment for their goods or services, and a disciplined issuance mechanism that allows them to buy only as much value as they can sell.
Sound utopian? Maybe (gasp) anti-capitalist or something? Guess again. Check out the WIR system in Switzerland, a place not exactly known for red-eyed radicalism or irresponsible monetary schemes. The WIR folks have existed as an independent credit clearing alliance of small and mid-sized businesses since 1934. Currently they do WIR-denominated trade to the tune of around $2 billion a year. What’s stopping us from emulating them?
The answer to these why-don’t-we-do-it questions is that nothing’s stopping us but our own ignorance. Conditioned to believe that the Federal Reserve works in our own best interest, we’re ignorant of its private, for-profit status. Raised believing that only centrally-issued “legal tender” can be real, reliable money, we’re ignorant of the credit-issuing power that’s available for us to use locally, in support of our neighbors, our regional economies – in support of our own lives.
In California’s Sonoma County an alliance of forward-thinking citizens, businesses, and non-profits, soon to be joined by local governments wanting to take responsibility for their own economic welfare, is working to adopt and promote this new, sustainable approach to credit. We’re called the Sonoma County GoLocal Cooperative. Check us out at www.golocal.coop. With startup funding from some major socially responsible foundations and in collaboration with two other progressive communities (Santa Fe NM and Bethesda MD), we’re setting up a regional economic development model that we intend to see replicated nationwide. It holds the promise of value-based, trustworthy economic renewal in the face of a big-bank-dominated global system that has bequeathed to us economic chaos and has broken our trust.
We can continue down the infuriating, fear-producing, same-old path of bank bailouts, ineffective federal stimulus packages, and social disintegration. Or we can embrace a free, democratically controlled, collaborative approach to shaping our own economic destiny. The choice is ours, and the choice is clear. It’s high time for us to act on it. •
phbeard@mac.com
Professor Beard also sent this personal note along with his article (and yes, if you were asking if I sent this on to the Ojai Econoomy Group... I certainly did!)
<< By now, though, we've got the software in place and the reward cards produced, and we shall begin signing businesses up within the month. We've received lots of enthusiasm about the reward card program from member businesses of our GoLocal Cooperative, and have been promised large-scale financial support from a group of donors/investors that we met at last week's BALLE [Business Alliance for Local Living Economies] conference in Denver, for expanding and replicating the system as rapidly as possible.>>
User reviews
There are no user reviews for this listing.
To write a review please register or login.
To write a review please register or login.
Powered by JReviews