Newsletter No. 32 - January 2011

Links to other Newsletters can be found here. 

CONTENTS

1. A Happy New Year!

2. Monetary Reform and Banking Reform

3. Books

(2) Ellen LaConte, LIFE RULES: Why so much is going wrong everywhere at once and how Life teaches us to fix it

(3) Frances Hutchinson, UNDERSTANDING THE FINANCIAL SYSTEM: Social Credit Rediscovered

(4) Bruce Nixon, A BETTER WORLD IS POSSIBLE: What needs to be done and and how we can make it happen

(5) Anne B. Ryan, ENOUGH IS PLENTY: Public and Private Policies for the 21st Century

1. A HAPPY NEW YEAR!

Best wishes to all for 2011, and a few thoughts about happiness.

At the request of Prime Minister David Cameron, government statisticians in the UK will be developing a Happiness Index this year - www.bbc.co.uk/news/uk-11833241.

I hope they will remember the wisdom concealed in the old couplet:

"Regard the happy moron. He doesn't give a damn.
I wish I were a moron. My god! Perhaps I am."

They will find more serious wisdom at www.neweconomics.org/programmes/well-being.

It's difficult to construct happiness or wellbeing indexes based on different people's very different subjective experiences and opinions. It may be more practical for government policy-makers to approach the problem from the other end - minimising misery as an alternative to (or a contribution to) maximising wellbeing. (A genuinely useful Misery Index would have to cover much wider ground than the combination of unemployment and inflation used by economists to grade the performance of American presidents.)

2. MONETARY REFORM AND BANKING REFORM

Many people will not be expecting a happy year. The international financial breakdown that began in 2007 is now entering a new stage. Tough remedial measures are beginning to take effect to reduce "sovereign debt" - the excessive debts incurred by governments to relieve the excessive debts of commercial banks. 2011 could see widespread economic hardship, threats to public order, and a possible break-up of the Eurozone, as well as sensible changes in the balance of power in the international currency system in favour of China, India, Brazil, etc.

The good news is that in 2010 understanding spread that the root cause of this financial breakdown and others like it has been governments' unnecessary dependence on commercial banks to provide our national money supplies as profit-making debt. The challenge in 2011 is to persuade governments to look favourably at the necessary monetary reform - transferring the function of creating and managing national money supplies to public agencies that serve the public interest.

As an immediate emergency measure, that reform could help to minimise economic damage and social disruption resulting from unnecessarily harsh responses to the present crisis. As a longer-term remedy, it would help to prevent the continuing recurrence of similar crises. In the even larger scheme of things, it would help to change the money system from one that motivates us to destroy human civilisation and life on earth, into one that motivates us to save them. But I won't pursue these points here.

Recent signs of progress in the UK include:

(1) An Independent Commission on Banking set up by the UK Coalition Government in June 2010 - http://bankingcommission.independent.gov.uk/bankingcommission.

Unfortunately its terms of reference don't specifically include the root question: who should create the national money supply?

However, that point has been taken up in the important paper, "Towards a Twenty First Century Banking and Monetary System", submitted jointly to the Commission in November by Positive Money, the New Economics Foundation and Prof Richard Werner, Director of Banking, Finance and Sustainable Development at Southampton University.

It was very good to see the New Economics Foundation supporting the monetary reform proposal they published ten years ago in "Creating New Money" by Joseph Huber and myself with an enthusiastic foreword by their then director, Ed Mayo. For another recent nef contribution (14 November ) see Josh Ryan-Collins' blog post on the "beginning of a monetary revolution".

(2) In a speech on “Banking: From Bagehot to Basel, and Back Again” on 25 October 2010 in New York, the Governor of the Bank of England, Mervyn King, drew attention to the possibility of "eliminating fractional reserve banking" in recognition that "the pretence that risk-free deposits can be supported by risky assets is alchemy", and said that "of all the many ways of organising banking, the worst is the one we have today".

Recent signs of progress in the US include:

(1) A Bill introduced in Congress on 17 December "to end the current practice of fractional reserve lending" has been enthusiastically welcomed by the American Monetary Institute as "a crucial and heroic step to resolve our growing financial crisis and achieve a just and sustainable money system for our nation".

The proposed Act will be called the "National Emergency Employment Defense Act of 2010". In many ways it and its purposes resemble those of the Proposed Bank of England Act, 2010.

(2) At the American Monetary Institute's recent Annual Conference, Prof Kaoru Yamaguchi of the Doshisha Business School in Kyoto, Japan, gave a paper titled "On the Liquidation of Government Debt under A Debt-Free Money System – Modeling the American Monetary Act".

It "demonstrates how the government debt could be liquidated without cost under an alternative macroeconomic system of debt-free money that is proposed by the American Monetary Act. Finally, it is posed that a debt-free macroeconomic system is far superior to the debt-burdened current macroeconomic system in a sense that it can not only liquidate government debt but also attain higher economic growth".

(To UK readers: Please communicate this to Members of Parliament. Their constituents are going to be unnecessarily hurt by the Government's present policies for dealing with the public debt crisis.)

3. BOOKS

I hope these short reviews will give readers enough information to decide to find out more about the books reviewed. It would require more space to do full justice to them.

(1) Alanna Hartzok, THE EARTH BELONGS TO EVERYONE, Institute for Democracy Press, in cooperation with Earthrights Institute, 2008, 359pp, $25 from Earthrights Institute. Also see www.amazon.com/Earth-Belongs-Everyone-Alanna-Hartzok/dp/193356704X.

The information on those three websites is enough to establish the importance of this book. My endorsement on the book's back cover is that:

"more and more people are convinced that the only way to a just, prosperous and ecologically sustainable future is to share the value of earth's resources more fairly. One of the many merits of Alanna Hartzok's collection of writings is to ground that conviction in practical proposals. She inspires us to do something about it".

Among her continuing commitments now is to get the United Nations to establish a Global Resources Agency - see www.interunion.org.uk/ahffdpaper 10124.htm - a paper which I recommend as highly as I recommend her book.

(2) Ellen LaConte, LIFE RULES: Why so much is going wrong everywhere at once and how Life teaches us to fix it, iUniverse, 2010, 283 pages. For details and ordering, click here.

"If you read just one book about the sickness that threatens the Earth, you cannot choose better than this one. In eminently readable style and with images, LaConte diagnoses the disease and proposes promising responses. She finds seeds of hope without obscuring the imminence of catastrophe. Her message needs to reach a mass audience".

This endorsement by John B. Cobb, co-author of For the Common Good with Herman Daly, is typical of a score of similar endorsements.

Ellen likens the sickness that threatens the Earth with the HIV that destroys human immune systems. She explains why the gathering "Critical Mass" of crises - such as Food and Water Shortages, Pollution of Water, Earth and Air, and Species Extinction and Ecosystem Collapse - now calls for a coherent Critical Mass of understanding and action to deal not just with all these separate systems separately but with the causes of the disease underlying them.

The last of the three parts of the book is on "Deep Green Methods for Surviving the Global Economy". It includes chapters on "Mimicking Life's Economics", "Mimicking Life's Politics", and "Overcoming Obstacles to Deep Green".

There are no easy answers to the present challenge of overcoming the obstacles to the survival of our species, but this book offers the wisdom we need to face up to it.  

(3) Frances Hutchinson, UNDERSTANDING THE FINANCIAL SYSTEM: Social Credit Rediscovered, Jon Carpenter Publishing, Alder House, Market Street, Charlbury OX7 3PH (Tel 01608 819117), 2010, 277pp, £15.

There is a useful review of this book on Amazon UK (click here). It begins "Excellent book. Top marks", and ends "We are still being blood-sucked by the monster vampire that is Big Finance. This is a MUST-READ book which tells you how we might have escaped from this -- and why if we fight for it we still might".

This much-needed new academic work by a leading contemporary expert on Social Credit has obvious relevance to our economic and political problems today. But unfortunately the "monster vampire that is Big Finance" now dictates what is proper for people pursuing careers in the academic world to study, just as it dictates what is proper for people making careers in the media to report and discuss.

The book is a worthy successor to Jon Carpenter's publication in 1998 of Michael Rowbotham's The Grip of Death. I hope it is widely read. It will be important to introduce it to students whose minds are not yet hidebound by the limits of conventional economic and financial studies.

(4) Bruce Nixon, A BETTER WORLD IS POSSIBLE: What needs to be done and and how we can make it happen. For full details, click here.

It will be enough for me to copy here the first two on the list of 14 endorsements of Bruce Nixon's book.

“We are in a place we have never been before. We are facing a series of interconnected systemic crises that put both humanity and the planet in serious peril. This book not only clearly describes the problem but, most importantly, points to the solution. The ‘rules of the game’ need to be radically changed and this will only happen if enough people, speaking with a clear enough voice, demand such a change. This book is not, therefore, a ‘worthy’ text on economics, but a vital handbook for our survival!” 
Stewart Wallis, Executive Director, New Economics Foundation

“Bruce Nixon's book is a powerful call for a peaceful and constructive mass revolt by the people of the world. He shows that the present way our lives are organised threatens the suicide of our own species and the further destruction of many others. His analysis points clearly to what we need to do to change it. I hope the book will be widely read and acted on.”  
James Robertson

(5) Anne B. Ryan, ENOUGH IS PLENTY: Public and Private Policies for the 21st Century. For very full details, click here. This book has a special interest, given Ireland's present economic and financial problems - and the author's connection with Feasta.

Here are three of its endorsements.

In Enough is Plenty Anne Ryan sets out pathways to replace the West's idolatrous canonisation of greed with the dignified sufficiency of enough. It's a message the world needs urgently, as the non-indigenous Celtic Tiger leaps up and bites the hand that reared it on the never-never.
Alastair McIntosh, author of Rekindling Community, Soil and Soul and Hell and High Water .

In future, the global economy will shrink rather than grow. There will be less of everything to go around. For anyone who wants to think through some of the changes in systems and values that will be required to maintain our humanity during this contraction, 'Enough is Plenty' is an excellent start.
Richard Douthwaite. Founder member, Feasta: the Foundation for the Economics of Sustainability; author of 'The Growth Illusion', 'Short Circuit' and 'The Ecology of Money'.

Best wishes,

James Robertson

7th January 2011