I have been predicting a global financial collapse since I was at school. I remember learning about both population growth, and world resources and how they are used, and came to the obvious conclusion that a system that relies on ever-increasing consumption of finite resources, by growing numbers of people, was clearly doomed. And that’s without knowing anything about our debt-based economy.
Many years on, it seems like we are always on the brink of total economic meltdown. But governments keep on pumping more hot air into the bloated system as it teeters and stumbles along leaving a trail of destruction and gigantic mountains of debt. They throw out news of ‘economic recovery’, but with the US economy in more debt than ever ($14 trillion as of end of last year) this ‘recovery’ sounds completely absurd.
And meanwhile our planet’s resources continue to be plundered to fuel the system, without being accounted for. In the abstractions of the classical economic model the true costs of the things we buy is ignored – the costs to the health of the planet and all who live on it.
The more I have informed myself about the current economic system, the more I realize how much we have been conned, how the very nature of the system is to become an ever more ravenous machine sucking all life from the planet, and encouraging waste, conflict and scarcity. All the while attempting to keep alive the myths (or the lies) that banks and governments work for the people, that taxes are used to pay for public services, that bankers are honest and will help you out by giving you a loan. The perpetuation of these myths is quite a staggering achievement, and one that has made a small number of people extraordinarily rich and powerful.
This system pervades throughout the entire globe, effecting even tribal peoples in remote locations, whose lands and lives are threatened by the insatiable need for resources to fuel it. Until the costs to the ecosystems and health of the planet are included in economic calculations this is unlikely to change. (See my post Ecosystem Economics)
These days, whenever I tune into the banking elite of the financial system, and the governments that are in service to it, I get the feeling they are a bit in panic, that they know on some level that the game that they have been winning for so long is nearly over. The whole thing is in a spin, but those in power will try and keep it afloat any way they can, pull out every trick in the book, (after all they have plenty of resources). But my feeling is that all the big old systems are unsustainable in the new world. They are too inflexible to survive in the age of greater fluidity and openness that we are moving into. And too reliant on rapidly dwindling supplies of oil. The internet has given people all over the world such a level of connectivity and possibility of sharing information very quickly, and I think it will pay a key part as we transition to a new economic paradigm.
In this article, I am not going to talk so much about the current fiat currency system and its limitations. There is loads of info out there that you can read about it. I will recommend just a few things that cover the general picture, and give more links at the end.
More and more people seem to be waking up to the ‘debt prison’ that we live in. And people are having fun with creative ways to get this message across. Here are some good ones:
For a good introduction to the current debt-based economy I recommend Money as Debt (you can watch in full here http://video.google.com/videoplay?docid=5352106773770802849#) 47mins.
Here is the trailer:
You can follow that up with Money as Debt II. which goes into the subject in even more depth, and also suggests alternatives to the current system such as I am discussing in this blog. Highly recommended,
This next short animation shows clearly where money is being spent….. watch it a few times… (There is the UK version too: Debtris UK)
… so if you still believe you need to pay taxes in order to fund public services, this might make you think again. Its obvious that most money by a long long way is being spent on wars. And who benefits from the wars? – The military-industrial complex …… no wonder those in power aren’t very interested in peace. In fact it serves them to keep creating wars wherever they can.
This all may look like a gloomy, or scary scenario. But ultimately it feels positive to me. Once we understand why we are in the predicament we are in, we can start to take back our freedom, and look at how we can do things differently. For the time being at least, I don’t think we can rely on governments doing much to help us out, they are too enmeshed in the old ways. What we can do as individual citizens, is get out of debt ourselves (there are even ways of doing this without needing to have money), become less reliant on the global banking system, and build alternatives that operate alongside the current money-as-debt system… use our creativity to come up with other methods of exchange. My main sense is that it all of this must feel somehow fun and uplifting, rather than heavy and oppressive. For me this is a key characteristic of the ‘new energy’. And there are many ways that you can opt into this new paradigm right now. Here are some I have found, which have varying levels of ‘radicality’ in respect to current familiar modes…….
1. Sustainable Banking. e.g. Triodos Bank.
Triodos is a bank which only lends to customers that fall into a very strict ethical/environmental criteria. They support many small enterprises, such as organic farms, renewable energy companies, charities, fair-trade companies, environmentally sound businesses etc. Lending/borrowing is done in a balanced way that is more connected to real world. There is total transparency – you can see exactly which businesses the bank has made loans to. The bank is also owned by its shareholders, many of whom are its customers and account holders. There are equivalent banks in countries around the world. Triodos is in the Netherlands, Germany, UK, Spain, and Belgium.
2. Gold and Silver
When people start losing faith in their national fiat currencies, there is a natural tendency to turn towards physical assets that hold their value. Precious metals are the popular choice and have been used historically as money for thousands of years. In recent years gold prices have shot up, and more recently silver prices have been rising very rapidly. This reflects the increased demand for these metals, relative to struggling currencies such as the US dollar. Countries like China have been in the news lately for buying up vast quantities of physical gold, leading some to speculate as to whether they are planning to return to a gold standard – i.e. a currency backed by gold. There is much talk about a return to a ‘gold standard’, as being a solution to our current monetary problems, but I’m not so sure. I see gold and silver as being useful things to have in the transition to a new economic paradigm…. for example, if national currencies suddenly devalue and your hard earned cash becomes worthless, a small stash of gold or silver could be useful to have for trading, until a new system is established.
If you were savvy enough to buy gold years ago, you will have done very well out of it. If you want to invest in metals now, its probably wiser to buy silver coins, they are cheaper and hence more handy to trade with. And you don’t need to go through money-laundering checks to buy it. Silver bars work out cheaper for larger amounts. And if you have a big amount of cash, its still worth buying some gold as its easier to store, and it does tend to hold its value.
However do steer clear of ‘paper gold or silver’ – such as metal stocks, derivatives, speculative investments etc. It is likely that the amount of gold a bank actually owns is now potentially 100 times less than what it sells on paper. So if everyone then demands the physical asset there will be problems. (Explained simply in this article).
If you are concerned about where to hide your metals, there are some reputable companies that will store it for you for a small charge, and that are fully and publicly audited to make sure the exact amount of gold or silver owned by their customers exists in their vaults. GoldMoney is the most well known one I would recommend. You can also take possession of your metals whenever you like.
4. Credit Unions
Credit Unions seem to be a decent alternative to banks, if you want to have your cash stashed with a reputable institution, or wish to borrow money for something. Larger Credit Unions also issue bank cards .
“A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members. Many credit unions exist to further community development or sustainable international development on a local level.”
4. Alternative banks. State-owned or Community Currencies.
These can operate alongside national currencies and can help keep more wealth circulating within the local community and reduce reliance on the national currency. These have become much more popular in recent years, as more and more communities are finding ways to boost the local economy, encourage buying of local food, and help create a strong and resilient community in the face of challenges such as Peak Oil. Most local currencies are backed by the national currency.
For an overview, and list of local currencies around the world: http://en.wikipedia.org/wiki/Local_currencies
In the US, The Public Banking Institute has a good site to check out. http://publicbanking.wordpress.com/
5. Other Community Initiatives
Local Barter schemes. Localisation. Sharing of skills and resources.
Local exchange networks such as LETS, offer the possibility to trade skills and time, by earning and spending credits. So far these have tended to operate within communities, but are not exchangeable on a global level, although several global barter networks have emerged on the internet in recent years. (e.g. Barter card, Skillsbox).
Linked to this are socioeconomic localisation movements such as the Transition Town movement in the UK that has now spread into a global phenomenon of grass-roots community empowerment. The vision of Transition US is stated as follows: “that every community in the United States will have engaged its collective creativity to unleash an extraordinary and historic transition to a future beyond fossil fuels; a future that is more vibrant, abundant and resilient; one that is ultimately preferable to the present”
I like the attitude that the current challenges we face on the planet, can be used as a motivator to create a more preferable reality (rather than only focusing on what is ‘wrong’). I recently joined my local Transition group, and like what they are up to.
The Economics of Happiness is a new film that looks at this movement towards localisation. Here is the trailer:
In this section I will also include things such as Freecycle, and the Freeconomy movement – web based networks of local people giving away things they don’t need anymore (Freecycle), or offering and exchanging services, goods, a helping hand, and sharing tools, gadgets, cars, machines etc (Freeconomy), without any money changing hands. Both also help people to forge local connections.
The freeconomy movement is about moving towards a future with no money at all, and is based on the ‘pay it forward’ idea, that people freely offer of themselves ‘for the love of it’, and in the future may receive what they need in return, or not. To fully live in this way requires a high level of trust that you will be supported and receive what you need. In the present world this is something small numbers are experimenting with in different ways. Here is a place to find out more: http://sites.google.com/site/livingwithoutmoney/.
Another money-free proposal is that for a Resource-Based Economy – as put forward by the Venus project. Although at the moment it is still at the stage of theory and discussion, as to implement it would require that the existing monetary system has fallen apart.
I think ultimately we will live in a world without money, with sustainable and efficient production and distribution of foods and goods, based on principles of sharing and taking care of each other and the planet, but it will be a gradual evolution.
As part of that evolution, the number of ‘peer to peer’ exchange, barter, gifting and lending networks, based on mutual trust is rapidly growing. (Check out this link for more on this story: http://www.collaborativeconsumption.com/the-movement/)
It is this ground level sprouting of hundreds of small scale networks that will survive the fall of the big banking institutions.
6. Digital Currencies
Person to person digital currencies are another phenomena that I predict will become more popular and are another way that we can already opt out of government fiat currency systems. These digital currencies are often gold-backed, (such as C-gold and Pecunix) or in the case of Bitcoin, backed by computer power and ‘cryptographic difficulty’ (see more about this below). They are based on actual digital ‘coins’ or units, – tangible assets that behave as actual money to facilitate the exchange of goods and services, unlike the promisary hot-air money that we have become accustomed to.
These currencies cut out the middlemen (the banks), and allow for easy transfer of funds all over the world via the internet, without having the added complication of foreign currency exchange fluctuations. They can be exchanged for national currencies or for other digital currencies through Currency Exchangers. They also offer a high degree of anonymity, which also makes them susceptible to money laundering and tax evasion. This then gives governments a reason to crack down on them, as happened with e-gold in the USA.
Having looked into these digital currencies, the one that feels like it has the most potential is Bitcoin.
It is a peer-to-peer cryptocurrency. Explained in the most simple terms: it is a completely de-centralised, global network, spread over everyone’s computers. Bitcoins are ‘mined’, by using computer power to solve a very difficult cryptographic code. Anyone with a powerful enough computer can do this. Or you can buy them. Here is a short video explaining the basics:
Read this article for more of the details: http://www.investitwisely.com/bitcoin-the-digital-currency-of-the-future/
Bitcoin is becoming big in the geek/hacker community, and is now starting to spread beyond it (to me for example!). I have had some fun playing with Bitcoin, as it feels very new and experimental, and has been a rapid learning-curve for me in terms of grasping the technology and the scope of it. You can download it in minutes. There’s no need for passwords or security questions, and I am told by a computer-savvy friend that its way more secure than online banking. There is no charge to send or receive Bitcoins with other Bitcoin users. I quickly realised however, that its not worth trying to generate Bitcoins (BTC) on my old Mac – its just not powerful enough, and as soon as I clicked on the generate Bitcoin button the fans on my computer started whirring like crazy. So I bought a few BTC via Paypal, and am now experimenting with paying a guy with some serious hardware to mine some BTC for me, which is working out cheaper than buying them. They arrive in the ‘Bitcoin wallet’ on my computer. Its hard to know what will happen with this currency, as its still very early days, and as yet there is still not a whole lot you can do with it outside of the computer/techie world, but more and more people and businesses are beginning to accept payment in BTC.
More good articles on the Bitcoin phenomena here:
And if you have enjoyed this article, send me a Bitcoin to this address! 12qhXLsEM9aM2nRBTfW27pS3G4f5ymcj95
So there seem to be two directions we are going in, and I think they are both valid and can co-exist. What they have in common is decentralisation – economic power being returned to the people.
One is characterised by localisation, back to the land, grass-roots community, human-scale. The other is global, high-tech, internet-based and anonymous, utilising the technology and models of social networks and online games, open-source principals, and the hacker community. (This article by my friend Servan, discusses how things could develop in this the second direction http://servanlog.blogspot.com/2010/12/state-is-dead-roll-on-global-free.html)
All these alternatives can also be combined, experimented with, developed further. There is no need to choose one and stick to it. Remember that a key characteristic of the new way is fluidity and flexibility, and systems that can adapt in times of rapid change.
Our participation in creating this new paradigm is required for it to grow and establish itself. I encourage you to look at where you are putting your energy, what you are supporting in terms of how you are utilising money, and where you are putting it.
So if you want to prepare yourself for the coming transformation of our economic reality, and help create a more balanced and healthy system, here are my suggestions: Get out of solely relying on the major banks. Spread yourself out, (don’t have all you eggs in one basket). Buy some silver. Experiment with alternative currencies, or create your own. Get to know your neighbours and start sharing and bartering. If you have money to invest, invest it wisely, in people that are contributing to creating the kind of world you wish to live in.
Have fun. Don’t be afraid. And remember, that true wealth and abundance has nothing to do with having money or ‘stuff’, but is a state of being, and an attitude of gratitude.
Solari – I really like Catherine Austin-Fitts. She is a great source of grounded and insightful information. This is her site.
Share the World’s Resources – a good source of articles and information from this organisation that advocates sustainable and fair economics.
Wikinomics is another word coined to describe the new economy – here is a good article which covers much of the same ground as this article http://www.marketwatch.com/story/wikileaks-vs-wall-street-in-a-war-for-our-souls-2011-02-01
Yes! Magazine has a good section of articles on the New Economy: http://www.yesmagazine.org/new-economy
Max Keiser – an entertaining source of news about the corruption in the banking and corporate world from ex-banker Max.
http://www.lietaer.com/ – Bernard Lietner, author of The Future of Money.
http://www.webofdebt.com/ – website of Ellen Hodgson Brown, author of the book Web of Debt. You can listen to excerpts from the book via the site.
Article about barter from the times http://www.timesonline.co.uk/tol/news/uk/article5488528.ece
The American Dream – 30 minute animation on the history of the current financial system.
The Money Masters long documentary about “How Banks Create 90% of the World’s Money”
(watch on Google: http://video.google.com/videoplay?docid=-515319560256183936#
Beyond Money – Good resource and articles from Thomas Greco. His book “The End of Money and the Future of Civilisation” looks good but I have not read it yet.
http://spiritualeconomicsnow.net/ – website of Mary Elisabeth Croft, author of “How I Clobbered every Bureaucratic Cash-Confiscatory Agency Know to Man”, which you can download free from the site. I have read about half of this book. Its a fascinating story and I particularly admire Mary’s courage and persistence in unraveling the legal web that entraps us. Even though (right now at least) I don’t feel to the need to go down this road, it feels useful to know that one can step completely out of the system, if necessary. And that maybe this knowing in itself is part of the transformation. Read this if you are in a lot of debt or in any sort of legal trouble.
http://digitalcoin.info/ – Paul Grignon, the maker of the “Money as Debt” films has created a proposal for a new Digital Coin. You can read it in detail in pdf’s from this site.
Proposal for a ‘Model Economy’ http://model-economy.wikispaces.com/Model+Economy+Proposal
David Korten’s site: http://livingeconomiesforum.org/the-new-economy
Plans for a gold currency, the AUric to boost the economy of the African Union, look interesting. You can downlowd pdf’s of this proposal here: http://docs.swansatfoundation.com/25.htm