10.10.10 Program & Activities

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1. Dr. Frans C. Verhagen says:

   October 1, 2010 at 10:44 AM

   The following scenario encapsulates many of the challenges mentioned in the powerofone website. It integrates them based upon the transformation of the international monetary system, which acts like glue of the other international systems. Transforming it means transforming them.

   The following version of the Scenario will be updated, particularly since the author was invited by UNITAR to write a paper on the carbon-based TFD global governance system for its second Yale/UNITAR Conference on Global Governance that took place from 1-7-19 September.

   The following scenario is placed at the beginning of the 2010 COSIMO book entitled The Tierra Fee & Dividend System: A Monetary Approach to Low Carbon and Climate-resilient Development by Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist. He is the founding president of International Institute of Monetary Transformation and the creator of the TFD Global Governance system. See. http://www.timun.net; gaia1@rcn.com
   C IIMT, June 2010

   Tierra Land 2025

   It is the year 2025. So much has changed since 2010, affecting in a very fundamental manner the lives of individuals, families, businesses and the States and the institutions that govern them both on a national and global level. Indeed, it was well-nigh impossible to have predicted these changes around 2010, let alone at the beginning of the new century ten years earlier.

   To help you understand what happened, you are invited to take a trip into the future—to Tierra Land to look at/learn about some of those changes—brought about by the introduction of a carbon-based monetary standard and its unit of account, the Tierra, thus transforming the international monetary system of 2010..

   Our energy system is no longer carbon-based. Coal and oil companies now operate a low carbon system and are leading in the promotion of the many renewable energy technologies that we now have. Wind turbines dot our landscape and offshore installations have replaced those hundreds of oil rigs. We read in our textbooks how the 2010 BP oil disaster in the Gulf of Mexico and the many years long cleanup was a major precipitant for energy change in the USA and other parts of the world. The oceans are now used for converting wave action and ocean thermal differences into energy. Almost every building produces a part of its own electricity. We in the industrialized countries are proud to have developed a decentralized solar energy system that is far more secure than the highly centralized power stations of the past.

   One of the reasons for this efficient and secure decentralized energy system is the role that national governments have played. In the face of the economic and climate crises of 2007 – 2009 and the ongoing food, fuel and water crises they realized how necessary it was to cooperate in transforming the monetary, financial and economic systems. The pressure of emerging economies, which wanted a more equitable world order, also contributed to this change from a competitive multipolarity to a cooperative multilaterism.

   As a result, the world’s financial system is no longer controlled by the Bank of International
   Settlements and its Financial Stability Forum, the International Monetary Fund and the World Trade Organization. Nor is it influenced by large financial services corporation. These corporations, many of which had signed on to the World Corporate Charter Organization established a few years after the Rio Summit, are now monitored and regulated by the UN World Central Bank. It is encouraging to observe that under the financial system in Tierra Land 80% of all financial resources are invested in the real economy of goods and services. Fifteen years ago only 20% of those resources were invested in the real economy and 80% was “invested” in the shadow economy.

   Commercial banks and privately owned banking systems no longer have the privilege of fractional reserve banking. Governments have withdrawn this privilege. Nor is the economy debt-based with governments borrowing money from privately-owned banking systems. Now banks make careful loans to prospective homeowners and enterprising business women.and men. When an individual makes a loan from a bank, he/she pays a very low interest.

   The international monetary system in 2025, i.e. the Tierra Fee and Dividend (TFD) system, is no longer without a monetary standard which is carbon based using the Tierra as its unit of account. It aims to address itself to the century’s greatest challenge—reducing GHG emissions to non dangerous levels. With its fixed exchange rates, the TFD system has reduced currency manipulation and speculation drastically. Anchored in the Tierra, the TFD’s unit of account, the nations’ currencies are convertible thus removing the need for a costly global reserve system. We are now looking forward to instituting a single carbon-based world currency using the Tierra as the unit of account, making it, at the same time, a nation’s or individual’s store of value and means of exchange. The method of computing a nation’s balance of payments have also changed. The account lines will include both its financial and ecological credits and debits

   But how did these changes come about? Looking back to 2010 we envision the steps the world community needed to have followed to propel these changes forward.

   One might have expected that the crisis years 2008-9 to bring forth new thinking and institutions. They did not. Rather, the economic crisis resulted in a near collapse of not only the global financial system, but also the global economic system. Besides, human survival was threatened by the climate crisis. The Copenhagen conference of 2009 and its successor in Cancun the following year only minimally dealt with the perils of global warming. However, the two working groups in the UN Framework Convention on Climate Change (UNFCCC) continued working on the Bali Plan of Action including the weak and undemocratic Copenhagen Accord into their discussions. They also looked at various ways of improving long-term cooperative action among the nations. Progress was made when the climate crisis gained the top spot on the agenda of the 2012 UN Earth Summit in Brazil, the 20th anniversary of the 1992 UN Earth Summit held in Rio de Janeiro.

   During the years 2010 – 2015 new global policies were developed. People started to understand the serious drawbacks of the financialization process that had taken place around the 1990s and wanted to definancialize their societies. They remembered that the hegemonic empires of Spain, Holland and Britain lost their power when their societies were financialized at the cost of manufacturing and agriculture. The financialization of the US society was considered to be one of the main causes of the Great Recession of 2007-9. Following the Recession legislation was passed to curtail the excesses of the financial sector and decrease its overbearing nature on the economy as a whole. Thus, greater space became available in national economies to engage in manufacturing and agriculture. The restoration of ecologically benign farming and high tech manufacturing by the US had a beneficial impact world wide. We are the present beneficiaries of this restoration, which also took place in other industrialized countries. This definancialization process also created greater financial policy space in developing nations because of the unfettering of their financial ties with large expatriate corporations in finance, insurance and real estate (FIRE).

   People also started to understand the larger scope of the definancialization process by connecting it to deglobalization process and started emphasizing the benefits of living well within the Earth’s limits in their own bioregions.

   The link between definancialization and deglobalization became clearer to most people in government, business and civil society. Individuals, local communities and their national governments started emphasizing the benefits of living well within the Earth’s limits in their own bioregions. People were encouraged to become ‘locavores’ eating food grown in their region. The concept of frugal trade which included the environmental costs of the aviation and shipping industries in providing goods and services was introduced and guided business practice. .

   Some of this thinking passed into the international community’s effort to implement the Millennium Development Goals (MDG), particularly in 2010, when high level sessions took place in March and September in a last ditch effort to ensure basic human services promised by the MDGs to all by 2015. It took about ten years to have this new thinking and its related policies implemented both globally, regionally, nationally. We have to thank those valiant persons and institutions who did not give up during the last 15 years but rather kept battling a world order that enriched the few, impoverished the many and imperiled species and planet

   At the same time, the idea of a carbon-based monetary standard (CBMS) was introduced to deal with the serious shortcomings of the existing international monetary system. Fluctuating exchange rates, currency manipulation and speculation and an expensive global reserve system that costs developing countries some $100 billion annually had to be brought under control. It was finally recognized that the international monetary system, the glue which binds the monetary, financial, economic and commercial systems, had to change if those other systems were to function properly. In other words, the economy, trade and financial institutions had to be based on an equitable, sustainable, and, therefore, stable monetary system if they were to provide resources for low carbon and climate-resilient development in both the global North and South.

   A carbon standard was, therefore, proposed to be the new monetary standard. It was developed to put the international monetary system into the service of combating the climate crisis. Its accounting unit was the Tierra, Spanish for Earth. By basing the new international monetary standard on carbon rather than upon a basket of major currencies, commodities or an adapted SDR as the reformist authors in the important Chatham House report were proposing, the international monetary system was transformed leading to changes in the financial, economic and commercial systems, which now had to operate within the limits set by the carbon monetary standard internationally, regionally and nationally. All nations had to express their national currencies in terms of the Tierra, the unit of account of the new monetary system. Pegged or anchored on the Tierra, their currencies became carbon-based and thus convertible with each other.

   The way history develops is a wondrous thing. Serendipity and planning often go together, and then the truth of the saying “opportunity favors the prepared mind” becomes clear. One of the outcomes of the minimally effective Copenhagen conference of 2009 was the emphasis on climate justice by a substantial number of members of Civil Society. They stressed the ecological indebtedness of the countries in the global North. It was the emissions of their greenhouse gases over the last 200 years that had brought on the climate crisis. The president of Bolivia, Evo Morales, gave leadership to organizing peoples from around the world to redress ecological indebtedness. The recommendations of his conference, held in Cochabamba from 19-22 April 2010, with its many internet working groups were submitted to various venues at the UN in early May of the same year and submitted to the UNFCCC in Cancun in November 2010. Several member states, particularly from South America, took leadership in having the UN General Assembly pass a resolution to establish a UN Commission of Experts on Monetary Transformation and Low Carbon, Climate-Resilient Development in fall 2010. It was mandated to present its recommendations, including a Monetary Plan of Climate Action to the UNFCCC either in Cancun or South Africa, with its recommendation and Monetary Plan for Climate Action, to the Second Rio Earth Summit in 2012. This summit initiated thousands of meetings and consultations in all continents and by all kinds of groups of government, business and civil society which continued for three years and led to the Tierra Treaty of 2015. Initially it was thought that the process would take longer and that the Treaty could only be signed around 2020, but Mother Nature spoke up in her own way. Such catastrophic droughts and floods took place between 2010-15 that her human inhabitants were pushed as a matter of high urgency to expedite the Tierra Treaty.

   It is also worth mentioning that the second Obama Administration finally developed a global monetary vision based upon its New Foundation philosophy that enabled the USA to assume global monetary leadership within the framework of the United Nations together with China and other emerging economies. That vision also prevailed on the US Senate, the historic graveyard of international treaties, to accept co-leadership in forging the Treaty forward after its Treasury Department had gradually moved away from having the US dollar remain an international reserve currency. It had already noted this trend of nations moving away from the US dollar in its 2010 National Intelligence Council Project, entitled “Global Trends 2025: A Transformed World”.

   This imaginary trip is offered as a prelude and introduction to a proposal for a monetary approach to a low carbon and climate resilient development, i.e. the Tierra Fee and Dividend System (TFD), the various dimensions of which will be elaborated in the chapters that follow.

   “Can we move nations and people in the direction of sustainability? Such a move would be a modification of society comparable in scale to only two other changes: the Agricultural Revolution of the late Neolithic, and the Industrial Revolution of the past two centuries. These revolutions were gradual, spontaneous, and largely unconscious. This one will have to be a fully conscious operation, guided by the foresight that science can provide. If we actually do it, the undertaking will be absolutely unique in humanity’s stay on Earth.”
   William D. Ruckleshaus,
   Head of the U.S. Environmental Protection Agency 1970-73.