Reviews
"...official money malfunctions in three ways: It is kept artificially scarce; it is misallocated at its source; and it systemically pumps wealth from other classes to the rich through "the debt trap."
--Suzanne Phillips, The "Banksters"
"...we, as ordinary citizens, can take responsibility for our own welfare. In taking that responsibility, we have the ability to create systems that work best for us, such our own currencies."
--Maya Porter, in Chaordic Commons
"The present dominant structure of monetary and finance, by their very nature, promote the concentration of power into fewer and fewer hands, increase disparities in the distribution of wealth, channel a huge portion of the earth's resources into wasteful production, and force both social and ecological degradation."
--Masaki Nakagome, Aoyama-Gakuin University, Tokyo
"Re-empowering ourselves by establishing community currencies is a first step toward building the kind of world we want. Tom Greco can help you get started. His thirty years' expertise dealing with these questions is a treasured gift."
--Suzanne Phillips, for Amazon.com
"This is the how-to manual of dozens of community currencies, past and present, with explanations of how, and more importantly, why certain steps are taken while other steps are avoided. ...there is a right way and a wrong way to issue money and a flawed community currency is not a long-term solution."
--J. Walter Plinge
review of Money by Suzanne Phillips
...official money malfunctions in three ways: It is kept artificially scarce; it is misallocated at its source; and it systemically pumps wealth from other classes to the rich through "the debt trap."
The "Banksters"
The revelations in Big Brother Files #34 about the operations of the World Bank/IMF are mind-boggling. These institutions, however, are "only the tip of the iceberg"--an increasingly popular phrase these days. The whole banking system, as operated for centuries, is set up to favor its wealthy owners and impoverish the rest of us.
I want to call your readers' attention to a newly-published book on the subject by Thomas H. Greco, Jr--Money: Understanding and Creating Alternatives to Legal Tender. Using the U.S. as an example, this remarkable book does two things. It tells us how the banking system works, and offers practical solutions enabling communities to take back control of their lives.
Greco, an MBA, former business professor and entrepreneur, has spent 30 years on both sides of these prime issues. He says official money malfunctions in three ways: It is kept artificially scarce; it is misallocated at its source; and it systemically pumps wealth from other classes to the rich through "the debt trap."
We need to fully grasp the fact that the primary way money (both currency and credit) comes into existence is through debt. Banks are not simply "depositories of wealth". Their main role is as banks of issue. "[In] order for money to come into circulation, someone must go into debt to a bank."
About 95% of existing money has been created by banks with the stroke of a pen as debt with interest due! This explains why the world's economic house of cards teeters on the verge of collapse; why 35,000 children die daily in the Third World from hunger or preventable disease; why governments fall; and why many people work two jobs and still can't make ends meet.
Money is kept artificially scarce. "Banks create money by making loans," Greco says, but the money to pay interest is not created at the same time. This guarantees that some will always lose. Like musical chairs where there's one less chair each time around.
Further, in an official publication, "The Federal Reserve unabashedly admits that it purposely tries to maintain the scarcity of money. It claims 'moneyderives its value from its scarcity in relation to its usefulness.'"
It is assumed that Federal Reserve Chairman Alan Greenspan is a public official. He is not. "The Federal Reserve is a private corporation to which Congress has delegated power (some say unconstitutionally) over money in the United States. The 'Fed' acts as a central bank that presides over a private banking cartel" *
Money is misallocated at its source, i.e. banks. because "allocation decisions are not made democratically but rather by elite groups of corporate bankers who are not held properly accountable. They act in their own interests, pursuing goals that are typical of any corporate business--profit and growth."
The debt trap. Banks are legally allowed to charge interest (which in this case is usury because the money doesn't yet exist), and also to confiscate your collateral if you are can't repay the loan. The standard practice of foreclosing mortgages on farms or houses sends people to work as 'wage slaves.'
But this is the least of the damage. Intertwining of private banks and central governments and their mutual dependence gives banks far-reaching power over our quality of life. "In return for its privileged position, the banking cartel must assure that the central government is able to borrow and spend virtually any amount of money it wishes. The banking system, despite its public rhetoric about the importance of fiscal responsibility, will always 'float' the necessary budget deficits of the central government, by 'monetizing' the debt.
"What this means is that the banking system will create enough new money to allow the market to absorb the new government bonds that must be issued to finance the deficit. Thus, it allows the government to spend as much as it wishes without raising taxes directly. Says Greco, "The primary cause of inflation is the issuance of money on the basis of ever increasing debts of central governments, which they are unable to repay."
"The most destructive aspect of this almost limitless power to spend is that, as E.C. Riegel has written 'it permits ambitious or designing or fanatical men who are in control of government to light the fires of war'. If government were required first to come to the people to obtain the money to fight, there would be few if any wars."
It is increasingly evident that the U.S. government is beholden to corporations. This has special dangers in regard to banks. In New Money for Healthy Communities, Greco states "Economics drives politics, and money is the central mechanism through which economic power is exerted in the modern world. The history of the United States shows how power has progressively migrated from the people, local communities, counties, and states toward the Federal government in general, and the executive branch in particular"
Greco believes the main way communities can improve their lot is to take back power at the grassroots. It is exciting to know that many have taken matters into their own hands. Recognizing that government is either powerless or unwilling, people have created alternative currencies to supplement scarce "official money." In so doing, they have supplied their own needs and found their communities thriving. Best yet, they have empowered themselves to make their own decisions about their quality of life. Space doesn't permit details of these plans but you can read about them in Greco's books or on www.communitycurrency.org
Henry Ford, Sr., staunch member of the United States' business community, once said "If the people of the nation understood our banking and monetary system, I believe there would be a revolution before tomorrow morning."
Our beleaguered Earth and suffering people call us to understand and act now. Economic scarcity at all levels will not be solved until the monetary system is changed. First item is returning to each central and responsible government the power to issue its nation's currency without interest. Second, returning economic and decision-making power to each community.
Says Greco: "Imagine a world in which war and abuse are only dimly remembered, in which everyone has enough to live a dignified life, in which harmony among the species prevails and the rape of the earth has ceased."
Where there's a will there's a way. If this is our true vision, we can make it happen.
review of
Money by Maya Porter
from April 2002 issue of the
Chaordic Commons...we, as ordinary citizens, can take responsibility for our own welfare. In taking that responsibility, we have the ability to create systems that work best for us, such our own currencies.
Tom Greco, has centered his life's work on the study of money-how the global financial system affects our lives and our society. He concludes that our present system of finance does not serve us well, and suggests that we establish additional, alternative systems that will allow money to sustain us, not destroy us.
In this book, Tom explains just what money really is, how a finance system works, how banks create money through debt, and how local communities are depleted by the global financial system. He warns that our present system of continually escalating debt cannot continue forever, and will do great damage to society before it collapses. He then describes several alternative currency systems that exist today, both in the United States and in many other countries.
Unlike barter, alternative currencies provide a means of exchange, just as a federal currency does, but the currency is created and maintained locally and is usually spent there. Such a system keeps a community's resources in the local area, and provides sustenance to people who may not have access to "regular" money, including the unemployed.
This book is intended more for the lay person than for the financial professional. The theories are described first in general terms for the casual reader and then in detail for those who want to explore the currency systems in more depth. Tom's thesis is that we, as ordinary citizens, can take responsibility for our own welfare. In taking that responsibility, we have the ability to create systems that work best for us, such our own currencies.
As alternative ways of organizing the relationships among individuals and institutions in a community, these local currency systems are surprisingly chaordic. In general, they demonstrate most of the principles set out by the Chaordic Commons. (Tom Greco is an Owning Member.) What would it take for the Commons to establish one or more these currencies for itself?
review of
Money by Masaki Nakagome
(Aoyama-Gakuin University, Tokyo)
...The present dominant structure of monetary and finance, by their very nature, promote the concentration of power into fewer and fewer hands, increase disparities in the distribution of wealth, channel a huge portion of the earth's resources into wasteful production, and force both social and ecological degradation.
This book is a fruit of the author's "warm heart and cool head." The value of this book is to demonstrate a theory and a method for democratizing the power to issue money. We can understand the necessity for local currencies in order to decrease the concentration of power in monetary and financial system. The purpose of this paper is clearly summarized by the following sentences.
In addressing the megacrisis that confronts the world today, it should be clear that decisive changes will need to made in the methods we humans use to distribute political/economic power and allocate material resources... The present dominant structure of monetary and finance, by their very nature, promote the concentration of power into fewer and fewer hands, increase disparities in the distribution of wealth, channel a huge portion of the earth's resources into wasteful production, and force both social and ecological degradation. The pinnacle of power today is the power to issue money. If that power can be democratized and focused in a direction that gives social and ecological concerns top priority, there may yet be hope for saving the world. (p.179)
The history of community currencies as well as new ideas for the development of community exchange system are clearly written. So the book is useful and instructive for readers. Local currencies can construct the new communities with freedom, and these communities provide the "innovative power" for local currencies . Such "interaction" can be understood. I expect that the value of this book will be widely admitted by many people who are interested in economics, sociology, and ecological science.
(a theoretical comment)
I have been studying macroeconomics. And from the view of the macroeconomics, I have one theoretical question. This question is not only about the methodology of this book but also about all the papers and books in the literature of "Gesell's economics." This question is the theoretical relation between the "burden of interest rate" and "scarce money." "The game of musical chairs" is refereed as an example to help readers to understand the relation (p.9). But I think that this theoretical relation holds in the restrictive case only with inside money. In the general case with inside money as well as high powered money issued by the central bank, the "burden of interest rate" does not produce the situation of "scarce money." If the velocity of money increases, borrowers who pay interest rate can avoid defaulting on their debts. Generally speaking, velocity of money fluctuates with many economic factors, for example short-run as well as long-run expectations. So I think that the burden of interest rate and "scarce money" should not be asserted excessively as a shortcoming of modern monetary system. (On the other hand, as Hayek said, the shortcoming of modern monetary system is to produce the inflation process with "excessive money." )
However, this question does not decrease the important implications of local currencies. As this book appropriately mentions, local currencies democratizes the modern monetary system by decreasing the monopoly power to issue money.
review of Money by Suzanne Phillips, reviewed for Amazon.com
Re-empowering ourselves by establishing community currencies is a first step toward building the kind of world we want. Tom Greco can help you get started. His thirty years' expertise dealing with these questions is a treasured gift.
"Debtors, as a group," says Thomas Greco, "are in an impossible situation of always owing more money than there is in existence. They are forced to compete with one another for scarce money, in a futile attempt to avoid defaulting on their debts."
How can this be? "Banks create money by making loans," but the money to pay interest is not created at the same time. This guarantees that some will always lose. Like musical chairs where there's one chair less each time around.
About ninety-five percent of existing money has been created as debt with interest due. Events today indicate an economic system on the verge of collapse.
Ultimate solution to scarce money? Money was created by humans. It can be redesigned to benefit humanity. Immediate action to ease economic stress? Create your own community exchange system to supplement official currency.
This book is empowering. Over half of it describes alternative currencies. It tells which systems have proven themselves and how to get them going. In the Great Depression, USA, "People learned to share what they had and to bypass the market and financial systems." They took matters into their own hands. They found ways to pay for goods and services. They helped put the country back on its feet.
I like Greco's compassion and integrity. "Imagine a world in which war and abuse are only dimly remembered, in which everyone has enough to live a dignified life, in which harmony among the species prevails and the rape of the earth has ceased…."
He helps understand the basic problem: "Economics drives politics, and money is the central mechanism through which economic power is exerted in most of the world…" To change the world, we have to build "new structures that support and nurture rather than coerce and brutalize."
If you're tired of working two jobs and still not making ends meet; if you know people who've lost their jobs or old folks living in poverty; if your community needs a health clinic, READ THIS BOOK.
Re-empowering ourselves by establishing community currencies is a first step toward building the kind of world we want. Tom Greco can help you get started. His thirty years' expertise dealing with these questions is a treasured gift.
review of Money by J. Walter Plinge
This is the how-to manual of dozens of community currencies, past and present, with explanations of how, and more importantly, why certain steps are taken while other steps are avoided. ...there is a right way and a wrong way to issue money and a flawed community currency is not a long-term solution.
It was in 1975, wrote Helena Norberg-Hodge in the January 2002 issue of The Ecologist, that "the emergence of tensions" developed in the village of Ladakh in the western Himalayas following 600 years of peace and harmony. She attributes this sudden change to a shift in political and economic life caused by "external investments," "development,"and yes, "globalization." Such a perceptive observation deserves an explanation and surely that explanation involves Money, the title of Greco's book.
In today's modern world (since 1971, and slightly earlier in the U.S.) money is created by credit. Loans. Our money, 95 percent of it, is lent into existence. As Thomas Greco puts it, "If there were no bank debt, there would be virtually no money--it's as simple as that" (p. 5). Things were not always thus, and there are repercussions.
Look at it this way: suppose you are a plumber. You can earn $15 an hour in Akron, Ohio, or $35 an hour in New York. Now you are thinking about the cost of living, right?; it costs more to live in NYC so the pay is higher. Very good. But consider this. In Akron, if you go to the bank, the bankers will tell you your "creditworthiness" is based on a $30,000 earning potential and in New York your "creditworthiness" is based on a $70,000 earning potential. But you, in your dual Akron/NYC personality above, are eligible to create two different amounts of money simply by changing your address and nothing else. Furthermore your rates of savings, investments and pensions will be equally elevated in the inflated economy of New York. Because the "cost of living" is so low in the Himalayas their "creditworthiness" is virtually nil and, thus, they create no money by comparison. This right here explains why city people will always colonize rural and "poor" areas--hey have the money; they create it.
The best defense available to the people of Ladakh is to create their own currency and avoid inflated national currencies. If that is not a simple solution, at least it's a realistic one, and that's where Thomas Greco's newest book comes in. This is the how-to manual of dozens of community currencies, past and present, with explanations of how, and more importantly, why certain steps are taken while other steps are avoided. For one example, to the great relief of many community currency fans, Greco patiently points out some flaws in the Ithaca Hours model and details corrective measures. This is important; there is a right way and a wrong way to issue money and a flawed community currency is not a long-term solution.
If you have always wondered what is meant when people say that capitalism requires continuous expansion, Greco explains it on page 8. A typical home buyer may take out a loan of $100,000 but must repay some $200,000 including interest. Since only the principal is lent into existence, the money to repay the interest does not exist. Thus the only way to put sufficient money into circulation is to lend more money. The net result is a continuous spiral of loans. Bankers call it growth but to the people of Ladakh it may seem more like colonization.
For those of you who are concerned about the events in Afghanistan, Greco has some quotable quotes: "The entire machinery of money and finance has now been appropriated to serve the interests of centralized power," (p. 13) and "If governments were required first to come to the people to obtain the money to fight, there would be few if any wars" (p. 10). That's what George W. Bush meant when he said (same Ecologist magazine, page 14) "We fight the war on two fronts. Part of the war we fight is to make sure our economy continues to grow." The point is that if U.S. citizens had to work longer hours or pay higher taxes they would be less enthusiastic about war, but since the U.S. government can just issue bonds and Treasury notes and simply wish money into existence to save their flagging economy, the death and destruction in Afghanistan is as painless -- even pleasant -- as possible for the average U.S. citizen.
These community currencies should not be passed off as a fad or as simplistic solutions; they offer a means to correct the way money is issued. The WIR (p. 67) for example has been in operation since 1934 in Switzerland. Some observers have legitimate concerns about savings and investment and the ultimate usefulness of a community currency. Greco acknowledges this. While the WIR succesfully addresses this subject, many other currencies do not. "At some point," says Greco "it should be possible to 'network' community exchange systems together into a web extending over a wide geographic area and including a very large total population" (p. 51). A lot more work needs to be done in this area but Greco makes some worthy suggestions, especially in his appendices A and B.
In the end, you need to learn to walk before you can run. It's necessary to acknowledge the problem and focus on the solution; there is nothing to be gained by complaining about the solution. The problem is the un-democratic nature of today's money systems and the solution is for individuals to assert their rightful control over their own money. The correct way to create money for individuals to issue it; money, like free speech, issues from the individual.
As Thomas Greco says (p. 179), "The pinnacle of power today is the power to issue money. If that power can be democratized and focused in a direction that gives social and ecological concerns top priority, there may yet be hope for saving the world."
View Cart
View Wishlist
Print this page.
