New Kind of Money to End Money

Yet another interesting post I found on the interwebs about alternative currencies . . .

from http://www.realitysandwich.com/a_new_kind_money_end_money

A New Kind of Money to End Money

Sanjay Perera

Originally published on Reality Sandwich June 10, 2008.

This piece will look at the new money that is coming into being, and which will replace money as we know it. Money will still be in use, but it will be of a nature that reflects the social relations between people as one that engenders cooperation and mutual respect. As such, I will not traverse more familiar territory that has been explored and expressed better than I could ever do. What I will do is look at three stages in the move from today’s crumbling debt based monetary system, to the transition and establishment of complementary currencies (CC) holding sway: this would signify the end of Money as we have known it.

It is hoped that for those of you who may not have heard much about CCs/new money before, and how they are the part of the wave that is cresting and which will move with us right into the future, then I would suggest some excellent starting points. To have a good acquaintance with the current crisis in money and credit and to get a better perspective of what follows please check out the following:

The Reality Sandwich blog entries “The End of Money?” and “Money: a New Beginning” parts 1 and 2 by Daniel Pinchbeck and Charles Eisenstein, respectively. Another site that is strongly recommended is Eisenstein’s “The Money of the Future” at http://www.ascentofhumanity.com/newmoney.php, which is an excellent primer on what the new money is about.

The Three-Step Move

The three-stage move I am looking at towards new money is descriptive as it is prescriptive. The first stage will involve a move to a new gold standard due to the impending collapse of the US dollar (USD) and other major fiat world currencies. The dollar will still be in use in the future of course, but it will collapse mainly as a global trading currency and in being used as a reserve currency by national banks of some countries. The second stage involves the rise and enhancement of social businesses as envisaged by Nobel Peace laureate Dr Muhammad Yunus. The third stage will see the establishment of CCs/new money as the prime form of value exchange, relegating national currencies to a limited role.

We need to be clear in understanding that national currencies will not just disappear. The role of CCs is that of complementing other forms of currencies. What will transpire in the years ahead will be the rise of a highly sophisticated system of barter with decentralized sources of new money taking center stage, thereby relegating national currencies to a disciplined and specific role.

The current credit crisis the world is facing is a result of an untenable debt based system of monetary expansion. This is primarily due to the effect of central banks like the US Fed which expand the money supply through the banking system via a pyramid scheme of expanding money which does not actually exist. This comes about by a system of double entry book keeping and expansion of credit. To get a good idea of how this works, check out the wonderful Creature from Jekyll Island by Edward Griffin.

This pyramid method of expanding money supply has been possible largely due to the use of floating fiat currencies, meaning money that has been unhinged from the gold standard and subject to being printed whenever it is convenient for it to be cranked out. This is soft money that has no tangible backing. A gold backed currency is a hard currency. The US only went off the gold standard in 1971 thanks to President Nixon thereby forcing other nations, by 1973, to all have full floating currencies as well. The reason for Nixon’s move was manifold, partly due to a misunderstanding of how the gold standard works and also, as is sometimes mentioned, the need to print more money to finance the Vietnam War.

Politicians tend to veer away from the discipline of the gold standard because it forces them to stay within the base money supply and ensure convertibility of their national currency into gold. This makes it difficult for self serving political projects and what are now known as earmarks (of the pork barrel kind) to be fully put into play unless there are lots of cash swirling about. But too much money in the system tends to lead to devaluation and eventually inflation which is devastating especially to low income people and the middle classes. Ron Paul’s latest book The Revolution: A Manifesto touches on this specifically.

(Please do check this out for greater insight into the matter: http://www.lewrockwell.com/paul/paul319.html)

The fact is the gold standard has long been a preventive cure for unnecessary wars. That is because politicians cannot just print cash to justify their next act of international ambition. It may be of interest that as this is being written, USD has fallen to almost $1,000 per ounce of gold. This is just the beginning. This fall in USD value is a massive vote of no-confidence in the politicians at Washington, politicos at the Fed and chieftains of the banking industry.

Today’s headlines are the rising of oil prices to USD135 per barrel. What is not fully explained by the media pundits is that this is due not to a shortage of oil as such, but to the devaluating USD. There is far more money in the system than demand for it, which is the classic cause of inflation as we know it. So calls for oil from strategic reserves to be used, and trashing the Arctic and other areas for even more oil is NOT the answer.

Fiat currencies are among the principal causes for misdiagnosing problems and leading to even worse ones. A similar spike occurred in oil prices, as research will show, in the early ‘70s after Nixon wrenched the US off the gold standard. Yes, there were problems in the Mid East (when were there never?) but the surge in quantity of fiat USD was central to the rise in energy prices.

But the monetarists and the neo-classical economists that are largely responsible for the economic rut we are in are great believers in fooling around with the money supply. It not only, they think, gives us lots of “moolah,” but allows the economy to expand. Yet, what it does instead is lead to bubbles and booms and busts. Money becomes a tool manipulated via interest rates by unelected super-bureaucrats at various central banks.

For instance, check out a recent book by one-time Fed governor-general Laurence H. Meyer in his A Term at the Fed, chronicling the crucial years of 1996-2002. He states that the key things the FOMC (Federal Open Market Committee) was interested in were NAIRU (Non-Accelerating Inflation Rate of Unemployment) and the Taylor rule. What this basically means is that Fed gurus would manipulate rates based on economic theories of the Phillips Curve and what the acceptable rate of unemployment was before inflation would kick in, and also when GDP would move away from expected/estimated GDP growth. All this would make it necessary to raise/drop rates based on projections. How effective do you think these people can be within the constraints of the highly charged political framework they operate in? Look around you for the results.

Also, it is worth checking out Bonner and Wiggins’s book Empire of Debt to see why the USD cannot last as it is the way it is going. How can the world’s greatest debtor nation with trillions of dollars of debt carry on by increasing expenditure, lowering rates, and not a sign of increasing taxes on the horizon? How much of this money that is being pumped in can stay the course without leading to severe devaluation? Is there productivity to match this artificial influx of cash into the economy? To what extent can you tell a drunk that the way to get over his inebriate state is to drink another bottle of vodka 75 proof? Who will pay for all these debts (or clean up after the drunk for that matter)?

What is happening now is similar to Americans who go to a diner, have a meal, and tell the cashier to pass the check to their grandchildren. The future generation will have to pay for all the current debt. It looks like there is going to be a massive devaluation of the USD coming up (best way to settle debts is to lower the value of what you owe, too) and alas, record hyperinflation. At the first sign of this, or something to this effect, states like Japan and China are going to throw their US bonds in saying, “Give me the money!” When that happens there will quite likely be a run against the dollar world wide, and then my friends, financial meltdown takes on a new meaning.

All that glitters is sometimes gold

That is why the historical move as practiced in the past will be the viable return to gold. It has been tried, it has been tested, it leads to economic growth and expansion because it is stable money and brings along low taxes. But we will also have been so badly bitten by fiat currencies, that CCs and new money will be the answer whether anyone likes it or not. If you do some research you will find that even Karl Marx advocated a gold backed currency.

We will finally come to see the need to move beyond the blinkered cost-benefit analysis of neo-classical economics to a new kind of economics. Part of that involves going back to basic human values, of older ways of life, of ancient spiritual teachings and practices, and an ecological approach to economics. Part of this process involves going back to mutual trust and reciprocity between people and to the system of barter represented by CCs. Part of this also involves going back to what has worked for millennia, the gold standard.

A new gold standard does not mean 100% reserves of gold backing a currency hiding in a vault somewhere. The new gold standard would be something as advocated by Nathan Lewis in his outstanding Gold: The Once and Future Money. Basically, how it works is that all the currency in a nation will be backed by a value of gold per ounce. What Lewis suggests for the US is a range of USD 360-380 per ounce of gold (lots of USD will have to be recalled and done away with).

The issue of convertibility comes in when the government authorizes banks to give back gold certificates (representing the gold) to those who want to cash the USD for gold. The use of gold certificates is how gold is bought and sold today – nobody goes around lugging nuggets and bars anymore (as some critics think). The banks will hold enough gold as reserves to provide for conversion if required, but this will not happen often as long as the money supply stays disciplined to the value of gold at the fixed exchange rate.

This is where the value of convertibility comes in. Convertibility ensures that the Fed/Treasury maintains and adjusts the base money supply to allow for the demand and supply of USD based on people’s use of Money aligned with the backing in gold. This calls for financial discipline and an end to fiat money 100%. If the supply of money exceeds the gold backing, and that leads to people trading in cash for gold, the Treasury sells gold to banks and takes in cash. If and when the opposite occurs, the Treasury buys gold back and provides cash accordingly. This is a self regulating mechanism akin to what Adam Smith envisioned. The interest mongering monetarists will no longer be the uber bureaucrats controlling fluctuating rate mechanisms and swinging currency values.

The range of movement for gold prices will be minimal. One reason is because only 2% of gold is mined worldwide every year and there is only limited use for it. Apart from dental work, limited industrial use, and jewelry, gold is a singularly useless metal. Apart that is from being used as an ultimate Monetary measurement – its sole purpose of existence. And anyone deluded enough to try to hoard gold is going to find that he is going to need cash sometime and will have to, well, trade the gold in back for gold backed currency. With the rise of CCs and new monies, there is hardly going to be a scarcity of national currency. This will also spell the death of the money market as we know it. In itself, when the gold standard is in play, the gold does nothing for hoarders because the national currency is now as good as gold.

The system would work the same on the international level and, except unlike what Nixon feared was happening, countries that move back to gold and trade with the US are not going to start throwing USD back and say, “Send me the bullion, dude!” They will have the same process in exchange for gold certificates as individual users of currency. What matters is that as long as the US money base is not inflated (as per fiat currencies), the strict discipline and convertibility of USD to gold means they do not need gold to be shipped to them. When they know they can convert USD to gold and trust has been sealed on this, they simply exchange the gold certificates again to buy back the very stable and clearly guaranteed USD. Also, in all this exchange the gold does not physically ship away; what happens is as was done in the post Bretton Woods period, the gold is shifted to an account of the country in the secure vaults of a bank.

So now we have a stable money system backed by gold. There is a fixed exchange rate that ensures this. Gone are the days of currency speculation and falling USDs. But wait, shout the final coterie of monetarists out there, how are we going to create money now that the Fed has been reinvented, and since fiat money and its printing presses cannot just operate to satisfy the political whims of those in charge: how are we going to create jobs, they scream.

Well, by being actually productive for a change and not via the so-called productivity of the wild speculative frenzy of money markets. Interest free banks will operate (some research will show that they exist) and the pyramid scheme of double-accounting-money-expansion will be replaced by the rise of social businesses and CCs. We do not need so much money to make things work. National currencies backed by gold will serve the purpose of official government transactions and trade, while the new system of money will complement this and start a new productive and healthy drive to creating genuine wealth.

A Marxist way to be capitalist?

Then comes stage two of the Three Step Move. In order to lessen the burden and need for national currencies, the social business model will start to play a prominent part around the world. This idea is an extension of what was put forward and practiced by Dr Muhd Yunus who won the Nobel Peace prize for his idea of the Grameen Bank which gave microcredit for the world’s poor. In his latest book, Creating a World Without Poverty: Social Business and the Future of Capitalism, Yunus explains that a social business is an enterprise quite different from a cooperative or a charity. It is essentially a business set up to provide necessities for the poor like drinking water, food, or healthcare.

How it works is that companies or people put in capital to set up the business and provide low cost products for the poor. Once the money invested is earned by the initial investors, all other money that comes in goes towards financing the business itself. Hence, this becomes an exemplar of a self sustaining enterprise. This is a non-profit, non-loss business which does not answer to shareholders in providing them great returns on equity, just the basic sum they put in for that equity. The example looked at in detail in the book is how French corporate giant Danone provides daily yogurt cups that cost 6 Euro cents (9 cents US) for the Bangladeshis.

(Check out these links for more on Danone’s efforts: www.youtube.com/watch?v=M_xlYHm_BEs;
http://www.danonecommunities.com/?page_id=145.)

This will ensure that the poor (and even those belonging to low income groups and not necessarily classified as the poor) can also have similar set ups working in their favor all over the world. This concept is spreading throughout many developing countries even as of now. So in the long term, the need for national currencies when such businesses are up and running will be for a limited period. Money given as aid and charity will be lessened as more of such social businesses take center stage. And these businesses can also eventually operate under the auspices of CCs and the new money, which leads to even less of a demand and strain in siphoning off national currencies to meet the needs of commerce, etc. The days of scarcity of national currencies will slowly become a thing of the past, and so will all the negative competition that this process engenders.

Money like you have never seen it

Here we will look at CCs briefly in the context of what they are and how they operate according to the ideas of Bernard Lietaer, the former senior Central Bank executive of Belgium who has proposed a new money called the Terra. The ideas that follow will be based on and evolved from those of Lietaer. What will be proposed as a CC that can be used in conjunction with the Three Step Move is a currency that I call the Indigo.

Briefly, a CC is one that involves the use of private money or scrips as distinct from national currencies, which are national legal tender. As Dr Gill Seyfang says in her important “Bartering for a Better Future? Community Currencies and Sustainable Consumption”, a CC is “the generic term for a wealth of alternative types of money which are springing up in communities throughout the world to address social, economic and environmental needs.”

Seyfang goes on to elaborate three main types of CCs. These include Local Exchange Trading Schemes/Systems (LETS) which aim to “rebuild local economies through cashless exchange; Time Banks [that] promote volunteering, civic engagement and mutual self-help by rewarding unpaid work in the community; the…NU-card, a mainstream ‘green loyalty point’ currency piloted in the Netherlands which incentivises sustainable consumption.”

The focus here will be on the CCs which would fall under the LETS type of new money, or what Lietaer would also classify as the Terra new money. According to Lietaer in his influential The Future of Money, there is a four-tiered monetary system for the future. People and businesses will routinely and comfortably deal in this multiple currency system, just as we today use all kinds of value cards, air miles, vouchers, credit and debit cards and virtual currencies in the course of our lives.

The first tier of this monetary structure would be a “global reference currency” that is not linked to nation states as such. This currency, which is what the Terra is supposed to evolve into, is there to provide a steady reliable type of money that can be used for international trade. The Terra will be based on internationally traded items like gold, copper, and wheat. It appears that Lietaer believes this kind of new world currency could morph into being from various corporate scrips used in cashless trade between businesses today.

Apparently, 400,000 businesses in the US are linked to about 700 barter exchanges, which result in $8.5 billion in cashless trade. It seems that this kind of trade rips along at 15% a year, three times the speed of dollar commercial exchanges.

A second tier in this monetary structure would be, for example, certain multinational currencies utilized by what would be deemed as geopolitically close countries. This could include, say, the NAFTA dollar, the Euro, and an ASEAN (the 10-member Association of Southeast Asian Nations) currency.

On the third level, we have some remaining national currencies which run within or outside the multinational currency regions. But this time, individual states no longer have the monopoly in issuance of currency.

At the fourth level, we have CCs/new money as has been discussed. To Lietaer, these CCs could have an expanded role and greater influence, as they may be widely used and exchanged through community internet clearing houses. The Terra, as it is envisaged now, would have evolved from this category. What we need to look at in some detail is what the Terra is and how this may affect its future as a world reference currency.

The Terra is a CC that would be issued by a nation’s central bank. As outlined by Lietaer in his seminal “A ‘Green’ Convertible Currency”, what we will have is a “commodity-based currency, [for ] a … New Currency backed by a basket of from three to a dozen different commodities for which there are existing international commodity markets. For instance, 100 New Currency could be worth 0.05 ounces of gold, plus 3 ounces of silver, plus 15 pounds of copper, plus 1 barrel of oil, plus 5 pounds of wool.”

This CC/new money is therefore backed by the valuation of the commodities in the basket at the value of the national currency of the society it originates from. So in the US the value of the basket, in terms of USD, will determine the exchange rate between those trading in USD for the Terra in America.

Once again, we need to understand that the Terra works in tandem with the national currency and is not a new money that supplants everything else in its wake. As the Terra TRC (Trade Reference Currency) White Paper by Takashi Kiuchi, Chairman of The Future 500, states:

“The Terra is designed as a complementary currency operating in parallel with national currencies. Therefore, everything that exists today as monetary and financial products or practices continues to exist. The Terra mechanism is only one additional option available for those international economic actors who voluntarily choose to use it.”

Of course, this may advance into the more generic realm of the four tiered monetary structure put forward by Lietaer. So the Terra would be used as a complement in international trade alongside national currencies. The idea being to not only provide an alternative, but wean nations away from relying on conventional currencies which are fiat money subject to the swings of money markets and the designs of central banks and politicians.

But herein lies a problem. The nub of the issue is that the valuation of the Terra basket is done in the US, for example, in terms of USD. At this point, all hell may break loose due to the unreliability of fiat currencies. That is why the Three Step was proposed to overcome the problem of the Terra’s system of backing and help move it further onto the path of its contribution to the world.

Moving the Terra back to Firma

The trouble is how stable can the value of the Terra basket be when based on a valuation of what the source of the problem of our monetary system is: floating fiat currencies. Given the vagaries of the floating currency, anytime a disruption occurs, like the impending crisis coming for the USD as discussed earlier, the value of the Terra basket is going to be affected severely.

So I put this question to Lietaer himself and in a recent email (received only just as I was starting to write this piece), he says in effect that, yes, the components of the basket are quoted in whatever national money as they are today. But, however, the Terra instability I mentioned “is the one reflecting changes in value of those national moneys, not of the Terra. If there is a drop in value of the US$, that would simply mean that the
Terra /in US$ /becomes more expensive. The real measure of value is the basket of the Terra itself.”

But it seems to me that it begs the issue of what is the value of the Terra? That is, it is measured in the national currency, but that currency is unstable due to its floating fiat nature, and in the case of USD … potentially worse is yet to come. And it gives rise to another exchange rate problem of the falling currency of the USD, say, and the now ever more expensive Terra. This seems like it is back to Money as we still know it today.

Which is where gold comes in: once a national currency (e.g., USD) is on a fixed real value exchange to something truly stable and reliable like gold, the problem vanishes completely. Now we have a Terra basket valued solidly to commodities valued solidly to a currency fully backed by the value of gold. No more exchange rise-and-fall fiascos associated with fiat currencies.

This stable CC of the Terra then goes onto its next phase, which is the process of demurrage that comes in thanks to the genius of Silvio Gessel. The currency, in true ecological fashion, has built in entropy that allows it to depreciate at the rate of say 10% a month, which means that if it is not used in 10 months time it will be worth nothing.

This is where the value of this type of CC becomes apparent, as it forces the use of the currency in productive enterprises and not in hoarding or speculation of money markets. This inevitably leads to the kind of stimulus to productivity that standard Money can never equate. As seen in practice throughout history, the demurrage of this kind of new money or scrip leads to rapid growth and it does not place a strain on national currencies, nor create the harmful economic competition that national currencies foster. In fact, with a shift back to gold, the CC will truly be a complementary currency in every sense of the term as it comfortably complements the use of stable non-inflationary national Money guaranteed by gold.

The use of the Terra as shown in the Terra TRC White Paper involves a TRC Alliance that issues out the TRC to an oil company producing barrels of oil. The value of barrels of oil for sale is then translated into Terras through a currency conversion. The Terra is then used among those allied to the TRC network, as the demurrage takes effect. The demurrage takes place over the period of a year.

Indigos and Terra Firmas

With all this in place, I will look at a specific type of CC, the Indigo, that can be used within a LETS framework of a community and which is a parallel prototype of the Terra. This is the kind of currency that can be used before long and can evolve to the type envisioned in the form of the Terra (with the use of a commodities basket). The following way of creating the Indigo is an analogue of Terra creation adapted accordingly from the TRC White Paper.

Let us say we take a community of several municipalities or a province. This would provide a framework for a healthy dose of activity and business. These steps would follow in the creation of Indigos for a community of 50,000:

1. Let’s say the population of 50,000 has a median income of $24,000 a year (this national $ is backed by the new gold standard).
2. We take one-third the median income (as the rest of the income will be for other use, savings, insurance, etc) and multiply that by 50,000 so we get $8000 x 50,000 = $400 000 000.
3. The basket of commodities for the Indigo includes the value of selected areas in townships like property value of public housing, areas of green spaces and/or agricultural land, community playgrounds, and healthcare centers. Choice of items and areas can be changed or rotated. So let us say that the value of this basket comes to $500. (Figures chosen are for simplicity to get the calculation going.)
4. We now have $400,000,000 divided by $500 = 800,000 Indigos.
5. The Indigo has a 1:1 exchange with the $ (national currency). So this amount within a year is available from banks in the area. People buy them and this paper and virtual currency system (which will have a proper system of accounting) starts with its demurrage from the moment of purchase.
   
6. The rate of demurrage is 8.3% per month, which means that the Indigo will be worth almost zero right at the end of the time period of the year from its issuance. This would come to about 0.27% depreciation of the Indigo per day.

Anyone can cash-in on the Indigo at the bank at anytime for an equivalent $ exchange, which would be less than initial purchase due to the demurrage. The difference from loss in $ value from the cash-in (thanks to demurrage) goes into a fund that various municipalities or communities will redistribute as funding for community projects. These recipients from the cash-in fund are designated each year by each local government (for e.g.). This is gleaned from the practice of demurrage used in certain north European townships where the cash-in ‘loss’ goes to various good causes.

All national money used to purchase the Indigo goes to a community fund. This fund will also issue out reimbursements from depreciating Indigo notes and also keep the difference from cash-ins. At the end of the year, the community fund is recycled into community projects, etc.

What happens to Indigos cashed-in early? Well, they are up for sale to others. They are still bought at the 1:1 ratio with national $. So if the Indigos are reacquired say 6 months before their expiry, then the demurrage that kicks in will be twice the official one. That is because the money is not an infinite value store, nor like the pyramid scheme expansion of current Money. That is one of the reasons for the demurrage, to eradicate pyramid schemes for money and an obsession in it as an end in itself.

So the reacquired Indigos with a shorter life span simply leads to more intense usage of the Indigo which is all the better in promoting growth. Also, if there are further cash-ins for reacquired Indigos, then the cash-in difference goes back as usual to the community fund. People who acquire cashed-in Indigos would be aware of this and would participate wholeheartedly in what is a community currency.

This process only emphasizes the natural and ecological nature of the Indigo and such CCs or new money. It is meant to decay and rejuvenate again when the next batch is issued for the following year based on renewed calculations for the Indigo currency basket. This is ecological money.

This reinvestment cycle from the use of the Indigo is a great way to improve community wealth. This in turn adds to societal growth. In the end, it is about the community, not the money per se. This in turn ensures that anyone buying and selling Indigos thinking they can “profit” or “make a killing” in exchanges with the $ are genuinely mistaken. They have to spend the new money or they will simply lose its monetary value. So when they realize this and cash-in, the difference from this goes back to the community yet again. The purpose of the new money is always to promote growth, mutual trust and reciprocity, and more $ actually put back into the community.

This is a complete virtuous cycle meant to move forwards and upwards with communities gaining more and more each time. It is win-win in the best sense of the term. At an international level, the Indigo would transform into a firmer version of the Terra. Now we can have a Terra used by individual states backed not just by commodities, but by a nation’s value of other natural land areas, and high end human spaces. Cash-ins would be given to the state treasury for reinvestment into communities and/or national areas in need of assistance.

Or let us take it a step further. If the world’s nations have generally moved back to a gold standard, then a new world currency could develop backed by an international basket of swathes of the Amazon, arctic wildlife areas, world cultural icons, commodities like rice and wheat, solar and wind farms, etc. The basket would be measured in this case against the value of gold. So when this new world reference currency comes into play, called the Terra Firma, we actually finally have a stable world currency which can be cashed in any country because the equivalent in national $ will be given back with ease since everything is now measured in terms of stable gold value.

So a Terra Firma worth say 10 ounces in gold may be cashed in (after demurrage sets in) for the national currency in its country of use depending on that national currency’s gold value. The difference from the cash-in goes to a national fund of the country which reinvests into either needful areas in that country or splits into reinvesting at an international level as well (that is, the reinvestment is handled by, for example, a new and reinvented UN backed International Monetary Fund). Since the basket involves world heritage areas and resources, a UN type body can supervise reinvestment into similar areas. This needs further clarification for as of now, international law is such that the natural green areas of the world, for example, would fall under the jurisdiction of the nation state it is in. In the end, the plan is for the world community to gain from this, and it reduces again competition for national currencies.

There will be a national CC fund from which countries participating in the Terra Firma Alliance will buy their new money from. The fund will also handle reimbursements and keep the difference from cash-ins. All the money earned here will be recycled into community/national community projects as designated by national government in consultation with some local governmental entities, at year end. Similarly at the international level, a UN body (IMF) would look to the reinvestment process from money earmarked for it from the relevant national CC funds.

One objection that tends to arise is would people start to rush to change national $ for Terras or Terra Firmas? Why would they when there would be a four-tier world currency system and a whole host of CCs and new money all over the world among different communities to use? Terra Firmas are but the top layer of a multi-tier monetary environment. This decentralized use of money ensures we will relate to and use money in completely new and sophisticated ways different from the way it is used and viewed today.

What if people horde this new money and try to create shortages? Please go ahead and watch the demurrage eat away at your “golden hoard.” Again, there is such a choice for the new money in a multilayered monetary system that makes hoarding quite meaningless. There is the assumption, I must admit, that in the years ahead there will be a fundamental shift in human nature. And that shift would be complemented by CCs (proving its complementariness yet again) and that will ensure the growth, success and meaningfulness of the new money.

How it all hangs …

So, my friends, at the end of this experiment in ideas for CCs and new money, the Three Step move is of use because the crash of floating fiat currencies is in the works whether any of us like it or not. The USD, which some countries are rethinking as use as a reserve currency even as you read this, is going through the calm before the Great Debt Unraveling. When this happens the natural recourse of nations, as has been done throughout the ages ,will be to return to the stable form of money that it has always used in such times: gold.

The advent of a new gold standard will see to a stabilization of the world monetary system. This will also allow for the flourishing of innovative forms of business like social businesses and CCs and the possible advent of the Terra. Examples of use of CCs linked to stable national money would be the Indigo, which can be fine tuned and improved by those better experienced in the operation of CCs. This in turn could lead to the Terra Firma, a real world reference currency.

These will be the first moves in serious decentralization of power from central governments, and to a more democratic participation of people in their communities and countries. Whichever way one wants to see this, it cannot but bode well for all of us in the long run by returning to what matters more than all the money in the word: human values.

Be well and happy.

Images by Roby72 and jenn_jenn, used under Creative Commons license.