Here’s the power-point version of the presentation on open money I gave at the local currency preconference to the BALLE gathering in Burlington last month. The presentation came after a full day of folks like Bernard Lietaer and Tom Greco excellently setting stage by explaining how our current monetary system is both unstable and the structural underlying cause of many of our economic woes. They explained clearly how changing the monetary system is a necessary step for fixing our economic system.

So this presentation was aimed at showing how a decentralized community currency network platform in which individuals and communities are given the power to create an ecology of currencies, is the necessary second order mechanism so that we can change our monetary system. I argued that not only do you have to change the monetary system, but that you have to change how we change. This is a second order change. Which in this case, I propose, means setting up a system that allows for decentralized broad-based creation of many types (most yet unknown) of currencies in a unified network platform. Without that second order change in place I don’t think the system can be changed.

By the way, the red fish in the presentation is a herring. Get it, get it?

[tags]open money,local currency,money,community currency,BALLE,Eric Harris-Braun[/tags]

Below is part of a talk I gave at the E. F. Schumacher Society seminar Tools for Change.

I’m assuming that at least one of the reasons why you are all here because you understand that the current economic order isn’t leading us down a healthy path. This is pretty easy to explain and to see as manufacturing jobs are outsourced, as land goes fallow and is developed into unsustainable strip malls, and as workers are more and more disempowered. These are very visible things that we hear about all the time in the independent media, and even in the main-stream media. But it’s much more difficult to see, let alone, explain, the role of our monetary system in all this. So my goal here is to give you the basic tools to explain why we need local currencies. That is the “The case for local currencies.”

I’m going to spill the beans on the case for local currencies as I see it in just one sentence: I can’t live out my values without local currencies. It’s as simple as that. I can’t live out my values with out them. This is because money is actually a technology. Like all technologies, it has effects on two levels, one is the functional level in which it’s effects on society are related to our choices of how we use the technology, and the other is the structural level, where the effects are not ours to choose, because they are the result the nature of the technology itself.

The first level of connection between values and money is fairly broadly understood. At this level the connection between money and values is functional, that is, it’s about how we use it.. We know that if we are to live by our values, we must align how we spend and invest our money with those values. The breadth of understanding of this connection between money in values this is reflected in the growth of excellent things such as Erbin’s fair-trade movement and the socially responsible investing.

The second level of connection between money and values, the level of structural connection, is less broadly understood A this level we see that our values are not just expressed in how we use money, but are encoded into the structure of money itself. As we come to understand that money is just another one of our technologies, it becomes much easier to understand this second level in the case of money.

As a culture, we’ve come to understand the effects of our technologies both levels. We see that technologies are not value neutral, that the use of this or that technology in and of itself has effects because of the nature of the technology that is independent of how we choose to use it. For example, internal combustion engines emit CO2 whether they are in a tank or in a tractor. Even though the internal combustion engine is wonderful at one level (let’s face, it makes the good parts of modern lives possible), at a wider systemic level, it has a the devastating effect on the biosphere that we call global warming.

What we need to understand is that money is another one of our technologies, and just like the internal combustion engine, at one level, conventional money is great, but at that wider systemic level, it is devastating the entire econosphere.

Raise your hand’s if you are thinking: “wait, wait, you’ve got his analogy all mixed up. It’s not the internal combustion engine’s production of C02 that’s the cause of global warming, it’s the fact that petroleum is used as fuel.” (This is because the carbon in the oil is taken out of the ground where it’s been sitting safely for millions of years, and pumped into the atmosphere. We could run the same internal combustion engines with bio-fuels and add absolutely no net C02 to the atmosphere because the C02 it puts out, was just extracted from the atmosphere that year by the crops grown to produce the biofuels. Global warming solved.) Well, you get the gold star, and that’s a key thing, because that points to a structural solution to the problem. If you change the fuel, you have suddenly aligned structurally aligned the technology with your values of not destroying the biosphere. By noticing this, you’ve focused on the structural, not functional aspect of the technology. Local currencies are about doing that with money.

So what’s the CO2 (or petroleum) of money? Well just like CO2 isn’t the only thing that’s going on in the global warming equation, the situation with money also has many variables. However, not surprisingly, here at the Schumacher Society, we’d say that the C02 of money is its centralization. Or more specifically, the CO2 of money (the part of the technology that has deep side-effects on the econosphere) is that its issuance is strictly controlled by centralized monetary institutions. The case for local currencies is built on examining what happens if we take away that centralized aspect of money, and we let communities, businesses, and even people issue money.

[tags]money,local currency,community currency,peak oil,global warming,technology,value neutral,economy[/tags]

Since mutual credit money is truly valueless, it cannot BE a unit of measure. It must USE a unit of measure. This means that there must be something with which to set the price of things. You could use chickens or bales of tobbacco or kilowats, or hours as your unit of measure in which the mutual credit money is denomitated, but you can’t really do this because the “value” of any of those things varys across and within communities. Instead, the proper unit of measure is a conventional money, which is determined by an arbitrage market. So in fact, I think what I’m claiming is that the true role of conventional money is to determine aggregate value of things, skills and time, to be a unit of measure. Once we have that (which we allready do), then we can do the bulk of our exchanging using mutual credit money.
[tags]money,mutual credit,LETS,price,value[/tags]

For that last 2 years I’ve begun a process of examining perhaps one of the most fundamental ways that I “participate in the consumer economy” and that is simply my use of money, specifically US dollars. Before this period money seemed primarily mundane. Money was just a practical thing about living life. It’s there, and I didn’t question it very much. In my mind, the connection between money and spiritual matters was mostly from biblical quotes, for example “the love of money is the root of all evil,” “render to Caesar what is Caesar’s,” “seek ye first the kingdom of the lord and his righteousness,” the kicking out of the money-changers from the temple, and perhaps the most influential for me is where Jesus says “look at how beautifully God as clothed the lilies of the field, not even Solomon in all his glory was arrayed such as they, how much more will he care for you?” All of these quotes set up the primacy of ones spiritual life and faith in the divine provider over what ever promise of security we might find in money. In a sense, these are all more about the disconnection between money and those higher spiritual aims.

These last two years, however is bringing me to a new place. I’m now seeing that at least some of the power of money to distract us from the divine, is not inherent in money itself, but rather in the form of our current monetary system, and further that news types of money can be re-invented such that much of that power is removed from it, even more so, such that money itself will become yet another part of living a God centered life. If so, that would be a real step toward achieving that third QIVP purpose. An economy more aligned with our Quaker testimonies.

At the most fundamental level, money is the information that encodes who has how much of a claim on things of value in a community. Historically this information was encoded very simply in the the ownership of scarce metals. Later we used paper that was legally equated to that same scarce metal. Our current monetary system no longer equates the medium of exchange with gold, but it it still relies on treating that information, be it paper or numbers in a bank account, as valuable in and of itself by maintaining its scarcity. How is it possible to make information scarce? It’s difficult, but that’s exactly what our monetary system is, a large body of regulations that use the coercive force of law to create a very precise scarcity of the medium of exchange (information) so that it will “maintain its value.” That’s exactly what’s going on when the Fed changes interest rates.

The assumption behind this is that people won’t use a medium of exchange to trade if the medium itself is not valuable. In other words, the medium of exchange will only work if you can trust it, and the way to make it trustworthy is to make it valuable. Well, there’s one case where this equation doesn’t apply. Namely when you are trading with people whom you trust. If you trust the people with whom you trade, then you don’t need to trust in the medium of exchange itself. The medium of exchange can just devolve into its purest form, i.e. simply the record of who has a claim on the economy.

Here’s how it works: when you trade with another individual, money (information) is created on the spot. How? With a ledger book. If I buy something, I subtract from the balance in my ledger the price of the item, and seller adds the price to balance in her ledger book. Remember that money is just the information on who has a claim on the economy. So now, the seller has a positive value in her ledger book. That positive value represents the claim she has on the community. The negative value in my ledger represents the obligation I have to give to the economy. In this system money is created on the spot by the purchaser and given to the seller who then has a claim on the economy (as represented by the positive value in the ledger book), a claim which will be redeemed when seller in turn goes to purchase something from someone else, just as the obligation of the purchaser will be fulfilled later when he or she sells something.

So if the medium of exchange isn’t valuable in and of itself a whole world of things change: the task becomes how to enlarge the circle of people I trust so I can trade in using this incredibly available money; I don’t have to earn it, I can create it on the spot, as long as it’s being used in a circle of trust people will know that I won’t create more than I can redeem; relationships become primary.

To me this is the fundamental spiritual issue of money: Do I trust my neighbor? Do I trust that of God in my neighbor enough to transact with him or her and not have the coercive force of law in place to back up the claim I might have in my ledger book? Our US dollars say “in God we trust” but we don’t, we trust in the coercive force of law that backs the dollar.

[tags]money,spirit,trust[/tags]