Thomas Greco on the State of the Monetary Reform Movement

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By Thomas Greco, excerpted from Toward a New Economic Order, at


"The State of the Monetary "Reform" Movement

1. Status Report and Critique

Money has been a recurrent political issue throughout history, but from World War II on into the 1980s, it became obscured from general public view. The debate, if there was any, shifted away from the proper structuring of money and banking to mere policy issues - how to operate a system that was deemed by its proponents to be "the best of all possible worlds." Even today, the vast majority of people are oblivious to the dysfunctions inherent in the dominant monetary regime and its impact upon their personal fortunes.

Beginning in the nineteen-eighties with the advent of commercial "barter" or trade exchanges, and the emergence from the grassroots of mutual credit associations and local currencies, the money issue once more began to attract attention. From that time until the present, we have seen a rapid proliferation of these systems around the world until they now number in the thousands. There is a growing recognition of systems like LETS (Local Exchange Trading System), Time Dollars, and local currencies. We have also seen a growing wave of activist energy directed toward attempts to reform the dominant national monetary and financial systems, with a particular emphasis on the matter of usury.

While the commercial "barter" exchanges involving business-to-business transactions have had some notable success, the grassroots alternative exchange movement remains fragmented and has yet to make a significant economic impact or to involve more than a handful of individuals. The typical pattern for grassroots-based mutual credit, LETS, and community currency systems is strong initial enthusiasm and rapid growth in participation, followed by a slow decline and volunteer burn-out, followed by the system either going defunct or limping along at a minimal level with little trading and a much diminished participant base.

The pertinent questions it seems to me are:

• What are the main factors responsible for this pattern?

• How can mutual credit and community currency systems be made to sustain themselves, and to thrive beyond the initial spurt of enthusiasm?

• What are the issues that are preventing those seeking monetary reform from working together, and

• How can we build synergy toward empowerment of the people?"

If we can find satisfactory answers to these last two questions, we will, I think, be well on our way toward answering the others.

2. Proposals

Here are some of my views on that.

First of all, there are, on the one hand, those who are aiming at monetary reform, while on the other, there are those who are seeking to transcend the dominant structures of money and banking. These two approaches are quite different from one another. The former accepts as given the socio-political foundations of the present regime and does not question its basic assumptions. The latter takes little for granted and seeks to reinvent money and banking to better serve their intended purposes; it is a more thoroughgoing, more "radical," approach that begins with a particular set of principles and ideals.

Most of the reform attempts, for example, accept the dogma of statism as the dominant "religion," and believe the fallacy that the money power should rest solely in the hands of the state. A few would admit the possibility of supplementing state (or central bank) money with local community currencies, but fail to see the deeper implications. As Ulrich von Beckerath says, "extension of exchange transactions without State money is in reality the beginning of a new system of settling accounts, indeed the beginning of a new economic order."

I do not raise this point to further divide the "reformers" from the "transformers," but to show how they might be brought into alignment toward a common goal. If the fundamental goal is "empowerment of the people," then action needs to be taken on every level, and every opportunity must be exploited. If we can find a way to ramp-up the pressure toward empowerment, then it will ooze into every available nook and cranny and expand into every opportunity that presents itself. Sometimes it may look like a step toward reform, and sometimes it will be a new, complementary approach to mediating exchange.

There are many of us who have become aware that solving the money problem is fundamental to solving the other critical problems facing civilization, and have made it the central focus of our energies. I believe that those of us who are serious about making a contribution to solving it must first educate ourselves, learning everything we can about the principles of exchange and finance.

As a comparison, we might ask, why were the Wright brothers successful in achieving manned powered flight when so many others had failed? It seems clear to me that it is because their approach was systematic and scientific. They learned all the could about the principles of flight by reading what others had already learned, by observing the phenomenon of flight in nature, and by experimenting with different possibilities that presented themselves.

We must do the same. It is important to study both the history of money and the theory of money, to observe how things work in nature, to study the systems that already exist, and to design our experiments to be unambiguous in their answers. What has and has not worked in the past? Who has proposed promising solutions that have not yet been adequately tested or demonstrated? How, where, and under what circumstances, can those proposed solutions be adapted to today's situation?

My own inclination is toward "freedom approaches," with a particular focus on what can be done by associations of businesses, by grassroots organizations, and even by municipal and provincial governments. I do not wish to shift control of the money monopoly from one group to another; I seek ways to transcend it. Thanks to some very brilliant thinkers who have preceded us, we now have an adequate understanding of the principles needed to design exchange mechanisms that are sound, effective, and economical, but more importantly, honest, fair, and empowering. And, thanks to the new computerized telecommunications technologies, we have the necessary tools and infrastructure to easily implement them.

If the various approaches to solving the money problem are to be harmonized toward a common goal, we must at least have a common understanding about what money is. Based on almost 30 years of intensive research, it has become clear to me that money has evolved through several different stages. We must make a clear distinction among the different kinds of money that have been used, and understand the characteristics and limitations of each.

Everyone needs to understand the progression in the chain of evolution of the reciprocal exchange process. It has evolved from simple barter, to commodity money, to symbolic money, to credit money, to credit clearing. While all of these forms are called "money," they are each distinctly different "animals" with distinctly different characteristics. Commodity money, like gold and silver coins, while it may offer a partial solution when things become chaotic, remains a primitive medium of exchange. It can serve as a store-of-value, is useful for impersonal exchange transactions, and provides portability of wealth. But ultimately, our best security is in our relationships with each other. Mutual credit clearing will ultimately provide a much more economical, efficient and effective mechanism for exchange. This requires a high level of organization and a business-like approach to operations. It also means that the clearing debits against credits (purchases against sales) need not be limited to small local circles, but these can proliferate and combine into a federation that can span the globe.

The website Reinventing Money, dedicated to promoting freedom approaches to solving the money problem, has been compiling and making accessible the most insightful and promising materials available. For those who really want to understand money and banking I particularly recommend the writings of E. C. Riegel, Heinrich Rittershausen, and Ulrich von Beckerath. There is enough there to keep a graduate student busy for quite a long time but a good start can be made with Riegel's Flight From Inflation, and Beckerath's The Practical Realization of the Milhaud Proposals. Just these two will provide a better education in money and banking than can be had at any university. That site is also home to much of my own writing on the subject. My most current works can be seen at my blog," (