An Interview with Bernard Lietaer and Jacqui Dunne


Communities, businesses and governments around the globe are rethinking money. Transformation is taking place, not through conventional taxation, enlightened self-interest or government programs, but by people simply reconsidering the concept of money. In their visionary new book, Rethinking Money: How New Currencies Turn Scarcity into Prosperity, Bernard Lietaer and Jacqui Dunne explore the origins of our current monetary system, which was built on bank debt and scarcity, and reveal the surprising ways its unconscious limitations give rise to so many serious problems. They propose establishing “complementary” private currency systems, something that is already successfully operational in thousands of cases around the world.

Lietaer, MIT Ph.D. in economics, served as an official of the Central Bank of Belgium, and was an architect of the European Union. Dunne is an award-winning journalist and a leader in promoting development of environment friendly technologies.

Last month, prior to a presentation before an audience in Eldorado, near Santa Fe, NM, Lietaer and Dunne sat down for an interview with Seth Roffman of Green Fire Times.

GFT: What is the relationship between our monetary system and regional sustainability?

BL: Anybody who talks about sustainable regions without touching the money system is wasting their time. Usually, when they talk about that, they then budget dollars to make it happen. When you do that, it’s like prescribing alcohol to an alcoholic.

JD: Ecological sustainability is not going to be possible without addressing the monetary system.

BL: Spontaneously, people used to live in bioregions and adapt their lifestyle. By imposing a single currency, top down, which is basically putting everybody in competition with everybody else within that space where that currency functions, you are destroying bioregions.

BL: We call conventional money competitive currency. When you pay back interest, you’re actually using someone else’s principal. The money is created at the moment of the debt. And then it is sent into the world, bringing back double in 20 years. That’s how you pay your mortgage. Where is that second amount of money coming from? From the principal of someone else. So we are all competing. Bankruptcy is actually part and parcel of this crazy banking system that we have.

There is a second feature that directly relates to sustainability. Any currency with a positive interest rate, like the dollar or the Euro or any other national currency, is automatically discounted in the future if you’re a rational investor. Corporations are not run by bad people who just decide to screw the planet. They are just programmed to think short-term. The financial markets are thinking short-term. Why? Because the dollar is always with interest. And when you’re rational about using a currency with an interest rate, the future doesn’t matter. If you discount the future, anything over 20 years is irrelevant. That’s one of the consequences. So you see how that is built into the money system?

We’re suggesting that the hyper-competitiveness can be dampened with a number of different types of complementary currencies, namely regional currencies, be they local currencies, healthcare currencies, educational currencies… You can structure a monetary ecosystem that can adapt to the bioregion in question. You can have regional development if you have a currency for that region. This can be done both for the inhabitants there and for tourism. You could have a tourist currency, for example, in New Mexico that leads you through many of the interesting things in the state.

GFT: How might that work?

BL: it’s very simple. When you come into NM, in the gas stations or wherever, you have for sale a checkbook with very beautiful pictures, different landscapes. And you buy it, say, for $100 and you have in it 10 units or 120 units on “The New Mexican” or the “Pueblo Dollar” or whatever you want to call it. So you have 120 “pueblos” for $100. And on the back of the checks, you actually have a list of all the places where you can spend them. And it includes many of the typical attractions here, so there is something in it for the tourist.

Let me tell you what happens: If you make it very beautiful, people will keep it as souvenirs. So, the whole thing can actually pay for itself. It will take about 2-3 years to start these things from scratch.

GFT: Who would administer it?

BL: Well, you have a choice. It could be the state; it could be a NGO that deals with beautifying the region; it could be the chamber of commerce—whatever organization is willing to take this on, because you need to bring to the table, of course, all the participants.

Understanding Money

JD: I think a more fundamental understanding needs to be in place. What Is Money? Most people think it’s a thing, you know, you say money and you get out your billfold. Classical textbooks never touch what money really is. They say what it does: It’s a unit of account; it’s a store of value; something that you save, or it’s a medium of exchange—something that you spend. That’s what it does.

What money is, is an agreement; an agreement to a means of exchange. All through history, lots of different things have been used as a means of exchange: kola nuts, rocks, stones, axes—a bunch of different things. So, we have a modern money system that was created about 400 years ago. It is brilliant, but it is based on banks—which is a monopoly—creating money. And as a result of the way it is structured, its DNA if you will, money has to remain scarce or else it would lose its value. As a result of that, there isn’t enough to go around.

Linking Unused Resources with Unmet Needs

So, ordinary people in various communities (a geographical community, a community around a certain interest; a business-to-business community, a community on the internet, a global community, etc.) are getting together; ordinary people are stepping outside the box and saying, “Why are we poor? Why isn’t this working?” And what they are doing is making an inventory of the unused resources… there could be spare capacities in restaurants, empty seats on an airline, empty seats in a theater, it could be vacant football fields at schools… and all the unmet needs. You list all the unmet needs: kids to be educated, elderly to be looked after, places to be beautified—you name it.

So they come together as a community and link their unused resource with their unmet need with the currency. And this currency could be designed in many, many different ways. Bernard has made an inventory of at least 50 different types of money. By type we’re not talking about different looking paper—we’re talking about actual interior design of the currency with very precise outcomes.

Another way of looking at it is: we describe our current monetary system as a hammer. A hammer is fantastic for hammering a nail into the wall. What if you want to paint? What if you want to saw a piece of wood in half? You need different tools. What we’re saying is, we now need a monetary toolkit. The hammer is great; we’re not saying replace the hammer; what we are saying is, we need the monetary equivalent of a screwdriver, a Phillips-head, a saw… you name it. And so these communities are coming together and saying, “What we need to resolve our particular problem, and we need the monetary version of a particular tool.”

BL: Let’s give an example; one that you’re familiar with, but haven’t thought about: frequent-flyer miles. This is been used for 40 years. There are now five airline alliances in the world that are issuing them. Ninety-one airlines are participating. Fifty-thousand billion miles are in circulation. This is not marginal. It is huge. It has proven two things: 1) It’s possible to have a currency system, even very large-scale systems, at very low cost. Without an army of clerks tracking miles it would never have happened. 2) The second thing this proves is that you can change behavior of people from what they would spontaneously do; you can channel behavior patterns in a particular direction on a large scale for a long time.

So, what is an airline mile? It links an empty seat, an unused resource, with an unmet need: loyalty—customer loyalty from the airline viewpoint. There are periods where you can’t use them; they try to encourage flights for a particular thing; they give you extra miles for that, and so on. It becomes another management tool.

A conventional economist may say, “Well, we can do this with dollars and cut the price,” but then you would simply have more airlines going bankrupt than they are now.

So, it is a managerial tool that is working on a large scale. But from our perspective, it doesn’t do anything, really, for society. It does something for the airline that uses it. But it doesn’t really change important things. So, our claim is, the time has come to use this technology for something useful, such as ecological sustainability; things that we don’t have: elderly care, training of kids; all the “soft” stuff that doesn’t get done. Those people don’t have dollars. So you see the point? That’s an example of commercial complementary currency; currency that everybody uses, but they haven’t thought about it as a currency. You can apply it in all kinds of other ways.

JD: A very important point to make here is that these currencies (we use the term “complementary” – we never use the term “alternative”) are not an alternative to the dollar; they complement the national system. You’re never going to be able to buy your next car using a complementary currency because all the parts come from abroad. However, there’s a whole bandwidth of activity and resources that can be paid for in complementary currencies. They could be regional currencies, they could be neighborhood, they could be around a certain topic.

For example, Japan has a huge problem around their aging population, and they just don’t have sufficient yen to deal with it. So about 10 years ago they set up something called Fureai Kippu, which are “caring friendship” tickets, whereby I look after the old lady next door, I help her write a letter to an insurance company, I might drive her to the doctor… And so for every hour that I spend taking care of her I get an electronic unit in my Fureai Kippu account, which I can maintain until I’m older and need help, or, alternatively in that particular system I can transfer it to the other side of the country to my Mom, who needs care.

The beauty of this is that the elderly can stay in their home longer, and what grows is this very important thing that is very much under threat, particularly here in American society: the erosion of community. And what happens is that a bond grows between younger people and the elderly because it’s usually the younger people who are coming in and doing the work. And they get to know the elderly people; they listen to their stories, and they’re loving the intergenerational relationships that are developing. And the elderly have the dignity of staying in their homes longer. This is not done in yen; it is done in Fureai Kippu. That’s just one example.

BL: BL: Everything that is not covered by the Japanese national health insurance is payable in that currency. If a woman breaks her leg, she goes to the hospital and it’s paid in yen.

JD: This is not marginal stuff. The reason why Switzerland is so economically stable is that they’ve had a business-to-business currency, a complementary currency, operational for 80 years. And studies have shown that this is because they have this dual currency system working. It came into being when 17 businessmen in 1934 got letters from their bank saying their credit lines were cut, and they didn’t know what they were going to do. Then they realized, by looking around the table, that they were buying stuff and trading with one another, but they were going to a bank to pay for their bills. They created their own currency to look after their invoices and pay their employees. There is very strong economic data available to prove that this works, and it has led to the sustainability of the Swiss economy.

Incentivizing” Sustainability

Where it gets interesting, is what can be done regionally; not only on a regional perspective, but also what can be done in order to maintain the ecology or incentivize greening of an area or the greater sustainability of the area.

BL: In Germany right now, there are 43 operational regional currencies. In southern Bavaria, a mountain area like yours, it started in a Waldorf School. The teacher of economics started the system with the objectives of getting more funding for the school, as well as to activate the local economy and encourage organic agriculture. He sent two 16-year-old girls to all the shops that serve organic food, and they would be the salesmen. They would introduce the idea of this local currency to the local businesspeople. That was how it started, and it worked very well. There are now about 600 businesses involved, and they create ecological chains. So now they have producers of goat cheese and all kinds of things being sold. It has actually spread beyond the border of Germany into Austria, where they have added another 600 businesses.

JD: So the idea is, this currency is designed in a way to incentivize purchasing of local produce and purchasing of local services.

BL: There is a little trick they have been using for this: It’s a stamp script. Every quarter, you have the back of the bill, and you have little places where you can put stamps. And the stamps you buy with Euros are 2 percent the face value of the bill. So that produces an income that, when you buy the complementary currency with conventional money, you choose the nonprofit organization to which that income goes. It could be the school; it could be something else such as an ecological group.

JD: Additionally, because of the stamp, it incentivizes people to buy with the local currency before the expiration date. So the idea is to get people to spend that money, which really gets the currency spent in that region to make sure that the money stays in the region, and also that it’s spent. It’s not used as a saving mechanism.

So, what’s happening is that there is a great confluence between cheaper computing, access to the Internet, social media and mobile telephony that is enabling this spark of these currencies to come into existence. We, the ordinary people are understanding that the democratization of money is now possible. So basically, if you can come up with what is a problem here in Santa Fe or in NM in general, there is a currency that can address that problem—you name it—a currency can be designed. And the advantage of the currency is that it incentivizes different behavior and also gives cash to people to be able to go out and do things. And none of this is illegal. It is taxable. The only requirement you have is to pay your taxes in federal money, in US dollars.




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