Newsletter No. 22 - March 2009

Links to other Newsletters can be found here.

This Progress Report on the campaign to put national and international monetary reform on the G20 agenda for 2nd April includes news about:

1. The No 10 petition to the Prime Minister is now supported by more than 400 signatories.

http://petitions.number10.gov.uk/G20moneyreform

If you haven't already signed, please consider signing. It only asks for the subject to be discussed at this stage. It is quick and easy to sign. Please tell anyone else about it who may be interested, including any networks you belong to.

If you have signed, please check to see that your name is actually on the list of signatories. We know of people who think they have signed, but who must have failed to complete the confirming stage.

If you find that your name isn't there and should be, please sign up again and then make sure you click on the link in the confirmation email that the Number 10 website will send you. Only once you have done this will your name appear on the petition.

NB. For immediate practical purposes the deadline is 30th March, not 30th April as the petition states. So there are only a few days left. But signatures after 30 March will still be valuable for supporting follow-up action by G20 governments after their 2nd April Summit.  

2. The important link between mainstream monetary reform and complementary local currencies, local banks, etc.

I was very pleased to be interviewed on the phone by Marian Farrell of Transition Derry (http://transitionderry.ning.com) on 11 March. The interview can be heard at www.jamesrobertson.com/videoandaudio.htm #audio.

The interview was about the need for mainstream monetary reform, what it would involve, and why it is important for local monetary, financial and economic decentralisation in Transition Towns like Derry and other places aiming for local sustainability.

This prompts a comment about the wider context.

The aim, after this G20 Summit, must be to help to transform the world's money system into a multilevel system - international, national and local - primarily designed to serve the public interest but also allowing groups of people and businesses to develop their own systems of exchange between their members - like LETSystems.

These local community currencies like Time Dollars, Ithaca Hours, LETS, Chiemgauers and others already existing in many countries - together with new local community banks, credit unions, investment funds, etc - can make an essential contribution to financial and economic decentralisation and self-reliance on a greater scale than exists today. For a vision of this, see www.neweconomics.org/gen/iouk100309.aspx.

Decentralisation and self-reliance can become a real possibility once mainstream monetary reform has freed us from depending on a public money supply created by banks as debt. If the banks are allowed to keep that power, they will obviously do what they can to limit the development of local competitors.

In other words they will use their power to keep us as dependent as they can on paying and being paid in the national currency for our purchases, earnings, pensions, benefits, etc. But, if the nationalised central bank has been given responsibility for creating the national money supply in the public interest, it will not have that reason to prevent us committing ourselves increasingly to decentralised alternatives.

Some well-intentioned advocates of local currencies oppose the proposal to transfer the creation of national money supply to a central bank which is democratically accountable to parliament and people, and to deprive the banks of their unaccountable power.

They think that that would transfer too much power to government, and suppose that just by deciding to use decentralised currencies and local banks ourselves we could painlessly erode the power of the banks. The banks love that idea!

3. International monetary reform SHOULD be on the G20 Agenda. Russia says so. So does China. So do UN advisers.

A head of steam is now building up on international monetary reform.

Detailed Russian proposals for the G20 meeting have now been published - www.euractiv.com/en/euro/russia-reaches-eu-ahead-g20-summit/article-180389.

A ten-page paper - www.kremlin.ru/eng/text/docs/2009/03/ 213995.shtml - includes the proposal to consider the "Introduction of a supra-national reserve currency to be issued by international financial institutions. It seems appropriate to consider the role of IMF in this process and to review the feasibility of and the need for measures to ensure the recognition of SDRs [special drawing rights] as a "supra-reserve" currency by the whole world community".

China yesterday proposed replacing the US dollar as the international reserve currency with a new global system. The goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”. The Chinese central bank Governor acknowledged a debt to John Maynard Keynes in the 1940s.

See - www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html.

A U.N. panel will recommend this week that the world should ditch the dollar as its reserve currency in favour of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar. The proposal is to create something like the old Ecu, or European currency unit - www.reuters.com/article/newsOne/idUSTRE52H2CY20090318.

Comment. International acceptance of the idea of a genuinely international supply of money created by an international agency, rather than continuing to rely on the currency of one self-interested nation, will have an additional significance beyond itself.

It will help more people to see that a corresponding reform is needed at the national level - to replace a money supply created by a self-interested group of profit-making banks with a money supply created by a public agency in the public interest.

4. Could the G20 meeting be a serious failure? If so, what then?

It is becoming clear that differences between important groups of participants will probably prevent the 2nd April meeting agreeing on a concerted global strategy to deal with the deepening world financial and economic crisis. The spin doctors may not be able to hide that.

So what will it mean for the two leading characters in the drama?

Gordon Brown, chairman of the meeting and the only current political leader with clear responsibility for the credit boom, will now be blamed for failing to save the world from its disastrous consequences. The writing on the wall will be horribly clear to him. His political career may be over, his historical reputation a tragi-comical story of hubris and nemesis. But he has a possible escape route.

Barack Obama's problem, though not so obviously terminal, is also very serious. He is under growing pressure to justify the scale of his recovery programme at home. See www.reuters.com/article/newsOne /idUSTRE52L0J820090322.

His initial poll ratings are falling because he cannot prevent arrogant bankers in failed banks from diverting American taxpayers' bail-out money into bonuses for failure. The most telling criticism is that, although he is an outstanding rhetorician, it is action not words that count. This crisis could badly damage his presidential career.

The same escape route is open to him as to Gordon Brown. It is, of course, to initiate serious study of the need for and feasibility of monetary reform.

Their explanation for this volte-face could be on the following lines.

(1) The deepening crisis calls for every possible solution to be examined carefully. The practicalities of monetary reform have been sufficiently explored in both the US and UK for our advisers to examine their feasibility, and not to reject them with knee-jerk conventional wisdom.

(2) The debt burden on our future created by the enormous and still growing programmes of financial help necessary to restore the ability of the banks to provide our public money supply will continue to be met with increasing opposition.

(3) Justified public anger will continue to grow at the banks' behaviour over the credit crunch that has created the present global crisis. It includes the banks' failure to lend the money provided by taxpayers for that purpose, and their diversion of it into outrageously high pensions and bonuses to bankers responsible for the crisis. Anger at their arrogance continues to be fuelled by growing evidence of bankers' complicity in schemes to defraud the taxman and the public - and evidence that the whole crisis has been caused by a culture of complicity too deep-seated to be eradicated – see www.spiegel.de/ international/business/0,1518,614297,00.html.

(4) "Quantitative easing" involving the central bank directly creating new money to add to the money supply has been accepted, and could be a step toward a new future. See Item 4 in the last newsletter.

The political advantage to the President and Prime Minster of announcing that they are having this change of course seriously examined could be great.

It would wrongfoot opposition politicians in both countries, none of whom have convincing alternative policies to deal with the present global and national emergencies. To capture that advantage they would have to announce it quickly enough to preempt the others mentioning it publicly before them.

It should be an attractive idea for the President. He is steeped in the wisdom of the US founding fathers, and Jefferson, Madison, and Lincoln all opposed giving "the money power" to the bankers. He will know too that Woodrow Wilson wrote a few years after signing the 1913 Federal Reserve Act: “I have unwittingly ruined my country …" by handing it over to the bankers.

How does the Prime Minister see the challenge? Did he learn during his childhood in Scotland, as I did, the words of the Earl of Montrose in the 1640s, and may he be remembering them now?

"He either fears his fate too much,
Or his deserts are small,
Who dares not put it to the touch,
To win or lose it all!"

What will history say about these two men? Will it present them as great statesmen, who liberated humankind from subservience to bankers? Or as disappointing politicians who failed to live up to their early promise?

James Robertson
24th March, 2009