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1. BOOK REVIEW: Greco, Thomas H., "Money. Understanding and Creating Alternatives to Legal Tender"
From: J. Walter Plinge <[email protected]>
Date: Sun, 10 Mar 2002 12:32:51
From: Walt <[email protected]>
Subject: BOOK REVIEW: Greco, Thomas H., "Money. Understanding and Creating Alternatives to Legal Tender"
BOOK REVIEW: Greco, Thomas H., "Money. Understanding and Creating Alternatives to Legal Tender"
Greco, Thomas H., "Money. Understanding and Creating Alternatives to Legal Tender", Chelsea Green, U. S., 2002, $19.95, ISBN 1-890132-37-3, 295 pages
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 -- they have the money; th!
ey 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. (which ought to be correctly called usury)
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
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."
J. Walter Plinge
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