Our modern monetary systems share in common the fact that they consist of a nationwide, government-enforced monopoly of a single type of currency, created by banks through loans attached to positive interest rates, and naturally or artificially kept scarce. While these particular features of our money system have permitted the accumulation of capital that enabled rapid industrialization during the modern era, they also have a number of hidden but far-reaching counterproductive side effects.
The use of positive interest alone is responsible for driving (1) the short-term thinking that drives our economic decisions, (2) the relentless pressure for economic growth which feeds hyper-consumerism; (3) growing inequities; (4) the greed and rampant speculation which regularly make the front page of our media, (5) and the weakening of social ties and erosion of community. I have written more at length about these dynamics in my books, articles, and interviews, but I invite you to read a brief overview of the main effects of interest to understand how our national currencies generate competition and erodes community.
From Monopoly to Monetary Ecology. To be clear, the problem is neither our national currencies nor the use of interest per se, but the monopolistic use of these types of currencies which are only well-suited for certain purposes but not for others. The fundamental problem with our current monetary system is that it is not sufficiently diverse, and as a result it dams and bottlenecks our creative energies, and keeps us trapped in a world of scarcity and suffering, when we actually have the capacity to create a very different reality. Our conventional money facilitates particular types of (commercial) flows but does not adequately support other types of flows within communities. When a broader spectrum of currencies is in place, people can complete more transactions, enabling more people to meet their needs and enter into exchange relationships. Because complementary currencies do not bear interests and are issued in sufficient supply, they encourage cooperation amongst participants, and can counterbalance some of the side-effects of conventional money.
Biologist Elizabeth Sahtouris once asked: “How would a body survive if we decided that all the blood should go to the brain or the liver, or certain organs should only be irrigated with blood on certain conditions?” This is precisely what is happening to our world economy under a monoculture of national currencies that are distributed based on a centralized decision making system controlled by a few financial institutions. All the blood (dollars, euros etc.) is being sent to specific organs that are supplied while others (communities and regions) are often starved to death. When they are not properly counterbalanced by complementary currencies, national currencies promote embolism (which is the accumulation of blood in one place).
Adopting a diversity of currencies is just as important to human survival as biodiversity is to the fate of the earth. This is not a metaphor. Our peer-reviewed scientific research on the conditions under which complex flow networks are sustainable demonstrates that money systems share with natural ecosystems the need for a higher diversity and interconnectivity. The conclusion: to ensure such diversity, we need to actively support the circulation of different types of currencies for different types of purposes. Promoting a healthier monetary system requires the use of three different kinds of currencies alongside our national currencies: (1) an inflation-proof global complementary currency designed to stabilize the world economy; (2) business-to-business currencies designed to counteract the effects of conventional money shortages during periods of economic crises and contraction; and (3) community currencies that address a variety of social problems and strengthen the fabric of society.
Revising our agreements around money. Most of the fundamental rules and agreements we have around money were created centuries ago, at a time that was widely different from ours, and by a small group of stakeholders concerned with a narrow set of interests. As a consequence, they are ill-equipped to serve the challenges and objectives of our current world. As long as our monetary system remains a blind spot to us, we remain unable to alter its powerful influence on the way we think and act. As soon as we gain monetary literacy, we can begin examining the nature and implications of the monetary agreements in which we unconsciously participate. We can start identifying the conditions under which they serve or do not serve the needs of our times, and begin create agreements that better serve our needs.