Bernard Lietaer - Scientific Evidence For Complementary Currencies

Why we Need a Monetary Ecosystem
Scientific Evidence for Complementary Currencies

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What to answer to
Those who claim that Bitcoin is a potential
problem for banks or the official money
system?
What to answer to
Those who claim that Bitcoin is a potential
problem for banks or the official money
system?
Conventional money provokes various un-
sustainabilities
(2) Conventional money is structurally unstable
(3) Bitcoin as part of a monetary ecosystem is part of
a solution for systemic instability!
A Simple Question
Who creates conventional

money?
A Simple Question
creates conventional
Who
money?
-The Government?
-Central Banks?
A Simple Question
Who creates conventional

money?
The Government?
Central Banks?
Someone else?
All national moneys are created

- out of nothing ( fiat money)
- through bank debt

- with interest!
How many of you have used a

complementary (non-conventional)
currency other than Bitcoin?
Plan
Conventional Money generates un-
sustainabilities
*
Systemic Cause for Monetary Instability
Systemic Solution
Conclusions
Conventional Money System is the

Systemic Cause for 4 Un-sustainabilities
1 !t Amplifies Business Cycles
2) It Makes Economic Growth Compulsory
(3) It Automatically Concentrates Wealth
@ It Programs Short-Termism
1. Money Creation Process amplifies

the business cycle
Economic
Cycle
after money
Creation
Business
(Inventory)
Cycle
2. Compulsory Growth
GRO
When a bank creates money through

a loan, only the principal is being
created, not the interest.
Without new loans (i.e. new growth),
everybody goes bankrupt!
3. Money System Automatically

Concentrates Wealth
.i
What is the Median wealth

(most frequent amount) of US
households?
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Wealth, millions
1.0
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of dollars
Figure 2.4: 2007 U.S. wealth distribution [48]

(Federal Reserve Reserve Bank, 2007}
Comparison of Interest Paid & Gained

in ten groups of households of 3 8 million each
reference year 2000
all values in thousands of Euros per household per year
Th*,
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to Top 10%
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Household Groups:
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The Transparency Misconception:
"Interest is paid only when we borrow money"
r
Cost of interest on capital 12%
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Cost of
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Cost of interest on capital 77%
38%
4. Conventional Money Generates
Short-termism
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Financial Viewpoint
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Value ilhuuntd lo today.
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Plan
Conventional Money generates
unsustainabities
Systemic Solution
Conclusions
Money System is itself

structurally unstable
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Between 1970 -2010 IMF identified:

145 banking crashes
204 monetary collapses
76 sovereign debt crises
425 systemic crises = more than 10 countries/year!
My Claim: Our conventional money system is
structurally unstable!
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Sustainability of Complex Networks

Robert Ulanowicz 25 years of ecosystems flow
data. Natural ecosystems have in common to be
sustainable. What else do they have in
common?
Sustainability of Complex Networks

Robert Ulanowicz 25 years of ecosystems flow
data. Natural ecosystems have in common to be
sustainable. What else do they have in
common?
Sustainability of complex network results from
appropriate balance between
and
Resilience, emergent properties from 2
structural variables of complex networks:
diversity and interconnectivity
Balance in Natural Networks

Resilience
Efficiency
(In)Balance in Our Financial Network

"Monoculture = accident waiting to happen"
Efficiency
Resilience
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Monetary Ecosystem is NOT a

metaphor !!!
Diversity a nd intercormectivity are 2 structural
variables => applies to all complex flow networks
with similar structure, including money system!
Structural variables are independent from what is

being processed in network
biomass in an ecosystem,
electrons in electrical circuit,
information in immune system,
- money in an economy
Key Points
We need monetary diversity, even to stabilize

the conventional money system
(2) Resilience requires sacrificing some efficiency
(3) Digital Age Monetary innovations provide
tools to motivate people at different scales
and issues.
Plan
*
Conventional Money generates
unsustainabities
Systemic Solution
Conclusions
Sustainability
100%
Optimum
Excess
xcess
Resilience
o%
Resilience <<fci
{Diversity + Interconnections)
Efficiency (A)
{Streamlined)
Sustainability
100%
Op6mNaturai
Ecosystems
0%
Resilience ()
(Diversity + Interconnections)
Efficiency (A)
(Streamliner!)
S us ta inability
100
Optimum jyja(||r a|
Ecosystems
0%
Resilience
Efficiency (A)
(Streamlined)
Susiarn ability
100%
Optimum \a|Ural
g0k!EcosYstcms
>
0%
Resilience (<M
Efficiency (A)
(Streamlined)
Sustain ability
100%
Optimum
*
a
Window of
Viability
Current
Operation of
Financial Systerr?
0%
Resilience (*)
{Diversity + Interconnections}
Efficiency (A)
(Streamlined)
Optimum
Sustainability
100%
0%
/
/
Window of "
Viability
Collapse of
Financial System
Resilience (*t)
Efficiency (A)
(Streamlined)
Natural Recovery
Optimum
Su slam ability
m
100%
Window rf
Viability
0%
Collapse
Resilience (<tl
[Diversity + tntercomecnons)
Efficiency [A)
[Streamlined}
Optimum
Sustain ability
100%
0%
Reestablishment of
Monopoly of Bank -debt Money
Window of
Coilap&e of
Financial System
Resilience {<it
Efficiency lA)
(Streamlined)
Optimum
Sustain ability
100%
Reestablishment of
Monopoly of Bank-debt Money
\LggZX
0%
Collapse of
Financial System
Resilience (4>l
Efficiency (A)
(Streamlined)
Plan
Conventional Money generates un
sustainabilities

Systemic Solution
Towards a Monetary Ecosystem:

FROM
TO
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Opt jmum
Sustainability
Effect of
100%
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Complementary
Currencies
I Window of
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Viability
Current
Operation of A
Financial Systei
0%
Resilience HO
(Diversity + Redundant Interconnections)
Efficiency (A)
(Streamlined]
WIRiBank
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Other Example: Regios in Germany
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Other Examples
* Big variety of social purpose currencies: elderly
care, ecological, learning, etc.
Terra: A global currency that makes it profitable

for multinationals to think long-term
* Dual Currency Banking reduces poverty (Brazil)
Loyalty Currencies: most common commercial
complementary currencies
Etc. etc. etc.
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Plan
Conventional Money generates several
un-sustainabilities
Systemic Solution
Conclusions
Our international monetary system is in
[TROUBLE |
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Value Shift
Patriarchal vs, Matrrfocal
Patriarchal Societies
m
4
Matrifocal Societies
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Value Shift
Patriarchal vs. Matrifocal
Monopoly of centralizing
Currency with interest
=> Great for Industrial Revolution
But Promotes:
- Booms & Bust cycles
- Concentration of wealth
- Destroys community
(incompatible with gift
economy)
-4
Value Shift
Patriarchal vs. Matrrfocal
Monopoly of centralizing
Currency with interest
=> Great for Industrial Revolution
But Promotes:
Booms & Bust cycles
Concentration of wealth
Destroys community
(incompatible with gift
economy)
* Matrifocal Societies
Duai Currency Systems
- Partriarchal one for long-distance
- Different type of currency (bottom
up) for local exchanges
Promotes:
-
General well-being for the "little
people
Builds and sustains community
Economic stability for centuries
Value Shift
Patriarchal vs. Matrifocal
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Conclusions
We need monetary diversity, even to stabilize

the conventional money system
(2) Complementary currencies make it possible

to flexibly adapt to the changes coming in the
21st century
(3) Bitcoin and other crypto-currencies are part

of a systemic solution in an emerging
monetary ecosystem!
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Bernard Lietacr e.i,
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Lictacrh Christian ArmpcrgcT.
Salty Goemcr Stefan Brimnhtiher
Money anu Sustainability
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The Missing Link
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Follow Up
www.lietaer.com
[email protected]
Articles in 4 different peer-reviewed journals
=> see www.lietaer.com/research

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Bernard Lietaer - Scientific Evidence For Complementary Currencies

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Why we Need a Monetary Ecosystem

Scientific Evidence for Complementary Currencies

Conventional money provokes various un-

Who creates conventional

Who creates conventional

All national moneys are created

- through bank debt

How many of you have used a

Systemic Cause for Monetary Instability

Conventional Money System is the

(3) It Automatically Concentrates Wealth

1. Money Creation Process amplifies

When a bank creates money through

3. Money System Automatically

What is the Median wealth

Figure 2.4: 2007 U.S. wealth distribution [48]

Comparison of Interest Paid & Gained

InltiHl pan! tor monttvy and ItEM*

fine! Sink IHI}

The Transparency Misconception:

"Interest is paid only when we borrow money"

3 Rent in Public Housin

4. Conventional Money Generates

Value ilhuuntd lo today.

Money System is itself

Between 1970 -2010 IMF identified:

My Claim: Our conventional money system is

Sustainability of Complex Networks

Sustainability of Complex Networks

Balance in Natural Networks

(In)Balance in Our Financial Network

Monetary Ecosystem is NOT a

Structural variables are independent from what is

electrons in electrical circuit,

information in immune system,

We need monetary diversity, even to stabilize

Conventional Money generates

Systemic Cause for Monetary Instability

Towards a Monetary Ecosystem:

Carte WIR * Carta WIR

I KKLEK H AR! E-LQU l $

Vaiable jusquau * Valiflo fino al

Other Example: Regios in Germany

Terra: A global currency that makes it profitable

Our international monetary system is in

Booms & Bust cycles

General well-being for the "little

Economic stability for centuries

We need monetary diversity, even to stabilize

(2) Complementary currencies make it possible

(3) Bitcoin and other crypto-currencies are part

Bernard Lietacr e.i,

Lictacrh Christian ArmpcrgcT.

Salty Goemcr Stefan Brimnhtiher

Money anu Sustainability

The Missing Link

mVt A I V rfcltlt LlN

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