Bernard Lietaer - Scientific Evidence for Complementary Currencies

Why we Need a Monetary Ecosystem Scientific Evidence for Complementary Currencies JIUIUI .

Espftard Li

i0 0105oTT 1 01oiooioTT

P ,

*-

)"|ÿOTOTJÿol(TlDroÿ/,I *

U10101010U101

*

4,

V

I

J

E

J

vW !J lr i

“

% HE

:

iP

*

ft

-

rf-

*

*

l *

™l K

L

t

W“

T.

/ /

\

- HO;, L*.

)1 10101010101C

ninimnininimmii ,

+

i

1101

>1010101010100I noioioioioioioi.

£

-

*

1

fa; Jiang jioioioioioioiÿHteHM

s

f

j

1

r

V.

Mi

1

Vj

=A

i

7

V

*I

What to answer to • Those who claim that Bitcoin is a potential problem for banks or the official money system?

What to answer to • Those who claim that Bitcoin is a potential problem for banks or the official money system?

Š

Conventional money provokes various un-

sustainabilities (2) Conventional money is structurally unstable (3) Bitcoin as part of a monetary ecosystem is part of a solution for systemic instability!

A Simple Question

• Who creates conventional money?

A Simple Question

creates conventional • Who

money?

-The Government?

-Central Banks?

A Simple Question

• Who creates conventional money?

—The Government?

—Central Banks?

—Someone else?

All « national » moneys are created - out of nothing (« fiat » money)

- through bank debt - with interest!

How many of you have used a complementary (non-conventional) currency other than Bitcoin?

Plan • Conventional Money generates un-

sustainabilities *

Systemic Cause for Monetary Instability

*

Systemic Solution

• Conclusions

Conventional Money System is the Systemic Cause for 4 Un-sustainabilities 1 !t Amplifies Business Cycles 2) It Makes Economic Growth Compulsory

(3) It Automatically Concentrates Wealth

@ It Programs Short-Termism

1. Money Creation Process amplifies the business cycle Economic Cycle

after money Creation

Business (Inventory) Cycle

2. Compulsory Growth

GRO

•When a bank creates money through a loan, only the principal is being created, not the interest. •Without new loans (i.e. new growth), everybody goes bankrupt!

3. Money System Automatically Concentrates Wealth

.i

T

5

•What is the Median wealth (most frequent amount) of US

households?

<L>

tJ

C 0/

'9

a.

3

a

|

fl

짜

a

4

!

it

i

I

* *

* O

4 n

u

r

:

B

a

'

3

2

I

u.

l

-0 5

0.0

0S Wealth, millions

1.0

15

of dollars

Figure 2.4: 2007 U.S. wealth distribution [48] (Federal Reserve Reserve Bank, 2007}

*

Comparison of Interest Paid & Gained in ten groups of households of 3 8 million each reference year 2000 all values in thousands of Euros per household per year

Th*,â&#x201A;Ź

80 70

fl

Germany 80% bottom always pays net interest to Top 10%

InltiHl pan! tor monttvy and ItEM* Hwiijinci Banktmi

60 Interest galnad HI monetary

fttad

fine! Sink IHI}

50 40 30

20

0 Household Groups:

n unmi I

10

f

L

T

1234

T

56

769

10

1

The Transparency Misconception:

"Interest is paid only when we borrow money"

r Cost of interest on capital 12%

*

/A

.i V

b

A

d每 Cost of

jnierest

on capital

o

KM / d

I.

\\

So每tc H

CreuTi

3 Rent in Public Housin Cost of interest on capital 77%

38%

4. Conventional Money Generates

Short-termism

ma*Or>

o.:o s

o

/

o(/

_ t

V

r

Short-termism A.

lUyvart

*

*

% lOft iOQyear* 9

Iurrsti; t

* ilk pMitivz

Financial Viewpoint

ยง

I/tf

a jVfw

Value ilhuuntd lo today.

S 1,000

JL' JL

$7.60

V

L

t

V

6 3 A

r i

*

iB

Plan • Conventional Money generates

unsustainabities • Systemic Cause for Monetary Instability • Systemic Solution • Conclusions

Money System is itself structurally unstable

iII

1+1

FI

1 i

â&#x20AC;&#x201D; *

a

k f:

r .

*

, * .

\\

'

i

Between 1970 -2010 IMF identified: 145 banking crashes 204 monetary collapses 76 sovereign debt crises 425 systemic crises = more than 10 countries/year!

My Claim: Our conventional money system is

structurally unstable!

i

m * I

1 rim

.

:IA l C

V

nr

f jt

IS

*

r

I

9

iJ

*

L-*

n

*ÿ

„ÿ

*>

1m

im * #ÿ

m

p

I

B

7_

%

4

j

«

' m a

"S J

(r

-

-

,i

I ttl-J i 1{\ / »«'

* -T

/ÿ

i

' %

J

i

I

-»

.

i 1

A

*

*

5

S.%

Sjfe 4

t*

Sustainability of Complex Networks â&#x20AC;˘ Robert Ulanowicz 25 years of ecosystems flow data. Natural ecosystems have in common to be sustainable. What else do they have in common?

Sustainability of Complex Networks â&#x20AC;˘ Robert Ulanowicz 25 years of ecosystems flow data. Natural ecosystems have in common to be sustainable. What else do they have in common? â&#x20AC;˘ Sustainability of complex network results from appropriate balance between and Resilience, emergent properties from 2 structural variables of complex networks: diversity and interconnectivity

Balance in Natural Networks Resilience

Efficiency

(In)Balance in Our Financial Network "Monoculture = accident waiting to happen" Efficiency

Resilience

r

w-

i

\\

J

V

1

La

r

1

I

m

_

v»*>y

r.v«y

mu

r-

li

A,

1

J!

'4

S

J

i

_

*

* •f

nI

-

i

* 7;

A M -* J #Xi“l E

f

#

r

J

' i

L

v r

h 1

- 's r W

*t %

*

***

IV

I

K J

H

*

|r J

I

1 1

H

[

'

»

, XT

*«J[/'

X.

i,

*,

m

'*<&.

-C* .flf ,4* 1 ** '

~

.

*

'

I

-

X»

'‘t

\

: s*

Pt

<il .ÿ

•*A "f Li

I

sw

l:£.

A ft* '

>V*« —

; /r .Vc

\A

32* /

L

*y

;

r 1

J*-.

1

t

*

(Lflf1

£

j

> **>

J?

ft

X

w

!fc-

HAFV J#

»

gh

V.

A ft

*ÿ

r

V

l i

-

i

+.,

ii

w

%

n

s

£

-#J

|f.

#n i

«

i

*

r

i

X

r

*

A

:v

-

r

r r* ‘i

ft

-

s' .y*M, n

.

j*

f /ÿÿ

3 rÿL

*

•*

*

JH

't

£

3 Tony Northrup

i

_

y i pd

;<r

1

*:

-d

-

iL 4

t

»V

A*.

r

Lÿ4

h

"If*

•tr

f

C

p

I

f

1

*

«

*

r

P

*

i

*

#

1

if

¥ 4

Jri

V

*

fr

i

A >.

1

v$

23U1U

Si

w >i

4

i

I

.&

i

i

f

ri

T

f’ §l% 4

»ÿ

#I

r

UJfe)

I

>

**

J*I

fit*'

-

1

a

4

‘T

* 4

T

i

r

-

3

i

<< m

\

M

I ** f| *A

u

A'

P1

j:

*

1

r

I

*

«.

tr *

P i

T

m

u)fe)

r

*

d1-

;<

**

m r f

'ÿ4

r

r

J#

«i

#

*1

*

1 -I

i

I

t

f

« Monetary Ecosystem » is NOT a metaphor !!!

• Diversity a nd intercormectivity are 2 structural variables => applies to all complex flow networks with similar structure, including money system!

• Structural variables are independent from what is being processed in network

— biomass in an ecosystem,

—-

electrons in electrical circuit,

information in immune system,

- money in an economy

Key Points

Š We need monetary diversity, even to stabilize the conventional money system (2) Resilience requires sacrificing some efficiency (3) Digital Age Monetary innovations provide tools to motivate people at different scales and issues.

Plan *

Conventional Money generates

unsustainabities • Systemic Cause for Monetary Instability

• Systemic Solution • Conclusions

Sustainability 100%

Optimum

/

Excess

xcess Resilience

o%

Resilience <<fci {Diversity + Interconnections)

Efficiency (A) {Streamlined)

Sustainability

100%

Op6™mNaturai

Ecosystems

0%

Resilience (ÿ) (Diversity + Interconnections)

Efficiency (A) (Streamliner!)

S us ta inability 100每

Optimum每 jyja(||r a| Ecosystems

0%

Resilience (Diversity + Interconnections)

Efficiency (A) (Streamlined)

Susiarn ability 100%

*

Optimum \a|Ural

g0k拢每!EcosYstcms >

0%

Resilience (<M (Diversity + Interconnections)

Efficiency (A) (Streamlined)

Sustain ability 100%

Optimum

â&#x20AC;˘ m

*

* a

Window of

*

Viability

Current

N

Operation of Financial Systerr?

0%

Resilience (*) {Diversity + Interconnections}

Efficiency (A) (Streamlined)

Optimum

Sustainability

100%

0%

1

—

/ /

4

f

“ Window of "

Viability

*ÿ

Collapse of Financial System

Resilience (*t»)

(Diversity + Interconnections)

Efficiency (A) (Streamlined)

_

Natural Recovery Optimum

Su slam ability m

100%

9

m

Window rf Viability

0%

Collapse

Resilience (<tÂťl [Diversity + tntercomecnons)

Efficiency [A) [Streamlined}

Optimum

Sustain ability

100%

f

0%

f

;

*

*

Reestablishment of Monopoly of Bank -debt Money

Window of

Coilap&e of Financial System

Resilience {<iÂťt (Diversity + Interconnections)

Efficiency lA) (Streamlined)

Optimum

Sustain ability

100%

;

*

Reestablishment of Monopoly of Bank-debt Money

\LggZX 0%

w

Collapse of Financial System

Resilience (4>l (Diversity + Interconnections)

Efficiency (A) (Streamlined)

Plan • Conventional Money generates un¬

sustainabilities

• Systemic Cause for Monetary Instability • Systemic Solution

Towards a Monetary Ecosystem: FROM

TO

*

n

#

; 1 jj

(

JJ

:*a>:

'<L

J

A.

>

*

s

*

â&#x20AC;&#x2DC;f

Opt jmum

Sustainability

Effect of

100% J

Complementary Currencies

*

I Window of Z

Viability

Current Operation of A Financial Systei 0%

Resilience HO (Diversity + Redundant Interconnections)

Efficiency (A) (Streamlined]

WIRiBank •feX*R< WIR-Karte

•Carte WIR * Carta WIR

SH5b 01001 ’jJ

SS'rSOÿSi

I KKLEK H AR! E-LQU l $£

5 5905-00 *

jQ 09. Oc

; i

Giiltiq bis

1

•Vaiable jusqu’au * Valiflo fino al

*-

Other Example: Regios in Germany

i 1

s

J[

Q\\ Chiemgauer

1

542219

ji

j

5

542538

Chiemgauer

EH

f 1*

10 542389 £ Chiemgauer

i

d

\1 %

"K 3l ~ I >4? 5 pal L*1 w i t

V

I

i

t,»o

u*

tit

<L

20 542743 Chiemgauer

-ii

|*<Stit

H

AT

3

1 i iJfllj 1 1 Lu

\

a> ai

1A ™ U

O

fD

u

o

a>

0> -Q

s

\

i

\ \ \

u ro

I

I

3

O

</>

!

\v \

<u CL

a

1 11i

1

£

i

<u Q.

i OE

u

1

!

I

1

i

a

a

Other Examples * Big variety of social purpose currencies: elderly care, ecological, learning, etc.

• Terra: A global currency that makes it profitable for multinationals to think long-term * Dual Currency Banking reduces poverty (Brazil) • Loyalty Currencies: most common commercial complementary currencies • Etc. etc. etc.

’ k

<T. tE

I®.

IIS % »

m

v 1J

c>?.

K« i

•

•

*g?

p

'

?%

4?

J.

\

m

% %

Plan • Conventional Money generates several

un-sustainabilities • Systemic Cause for Monetary Instability • Systemic Solution • Conclusions

Our international monetary system is in

[TROUBLE | [ TROUBLE }

{TROUBLE?

—|-r»ouBur

(TMnucf

GEIJ

rEb rIH3 E G EHH prp:

<ÿ

f

—r

—-

( Tjeiovcc'i

& r

—.

Fÿf

4si r

J

Value Shift Patriarchal vs, Matrrfocal

Patriarchal Societies

m 4

â&#x20AC;˘ Matrifocal Societies

i i

r

C' v

S

}*

\

r>

*

<

Vr

, P8 I

*

-

,

1

I

i

;

0

/

\;,

\

a?>77!

m L

/

i/

a.

B 5SÂŁ A;

'

i

Value Shift Patriarchal vs. Matrifocal

*

Patriarchal Societies

â&#x20AC;˘

Monopoly of centralizing Currency with interest => Great for Industrial Revolution

â&#x20AC;˘ But Promotes: - Booms & Bust cycles - Concentration of wealth - Destroys community (incompatible with gift economy)

?

-4

Matrifocal Societies

Value Shift Patriarchal vs. Matrrfocal

*

Patriarchal Societies

Monopoly of centralizing Currency with interest => Great for Industrial Revolution

•

But Promotes:

-

Booms & Bust cycles

Concentration of wealth

Destroys community (incompatible with gift economy)

* Matrifocal Societies Duai Currency Systems - Partriarchal one for long-distance - Different type of currency (bottom up) for local exchanges

• Promotes: -

General well-being for the "little

-

people” Builds and sustains community

Economic stability for centuries

Value Shift Patriarchal vs. Matrifocal

•

Patriarchal Societies

•

L*j fy

hr

,

LitgdN

-L

*

.

Matrifocal Societies

i

Yi

/ i

L"

m 5®S L

_

Conclusions

Š We need monetary diversity, even to stabilize the conventional money system

(2) Complementary currencies make it possible to flexibly adapt to the changes coming in the 21st century

(3) Bitcoin and other crypto-currencies are part of a systemic solution in an emerging monetary ecosystem!

flrHI /

f

is

f

V

r

V'

.r

,

F

1

, r

v

i

{

if

i r

V

V

Bernard Lietacr e.i,

VJV

!A

Htmjird

Lictacrh Christian ArmpcrgcT.

Salty Goemcr Stefan Brimnhtiher

o

Money anu Sustainability

0V

The Missing Link

\

b

V

b REPOT HEM Trf CLUB Of ROHE Eu CwtfTBt

.

KJ

Lind Geld Nachhaltiirkeit Von dnem iibt rWhen FiiunzsyitEiq £ii cincm mutictiivn OLovystem

GELD EN DUURZAAMHEID u PH

1

i

*

Of .

I

** jÿh-ÿi.CiuboL Rome Ik inurd I.LILHI' MfiÿT|n \*lh fi**rrw

tÿriHun

>k Un nruuihukii

mVt A I V rfcltlt LlN

\ HIU

•www.lietaer.com

ft

IT

3 5i

A

t

I

PEOPLE MONEY

£

(

HOW f

r : Vlui

NEW CURRENCIES TURN SCARCITY INTO PROSPERITY

r RETHINKING (

M KNEY

>

Denuinl LieUier illHI Jar»|iii Dunne

=4§f[t

SR

ir

s

T

4

Follow Up • www.lietaer.com • bernard@iietaer.com • Articles in 4 different peer-reviewed journals • => see www.lietaer.com/research