Something is wrong with the global financial system. Duh.

“Something is wrong with the global financial system. International financial crises or near-crises have become regular events… The question is not whether there will be another crisis, but where it will be.”

—Nobel Laureate Joseph Stiglitz, 2003

It couldn’t be better timing. I’m reading New Money for a New World, a forthcoming book by economist Bernard Lietaer and co-author Stefan Belgin that examines the systemic failures of our current money system. Meantime, U.S. politicians are offering up drama, paradox, contradiction and befuddlement as we tumble toward the prospect of defaulting on our nation’s debt.

If we look at a snapshot of our money system and its effects in just the last four years, here’s what we’ll find:

Federal budget deficit of nearly $1.4 trillion… U.S. national debt of $14 trillion… Subprime mortgage crisis, evictions, foreclosures… Too Big to Fail, bank bailouts, TARP… Commodity prices spiking and plummeting… Tens of millions of job losses and unemployment over 9 percent…

And so on.

Remember the two loops that Meg Wheatley and I have written about? As a system reaches its peak, there are increasing signs of turbulence—price fluctuations, pressure on supply and demand, unpredictable and unprecedented behavior (something like, say, Senator Mitch McConnell’s unusual “last-choice option” to resolving the default crisis?). The system in this case is our global financial system that is built on a single money model: national currencies created out of bank debt. This, say Lietaer and Belgin, constitutes a monopoly. “While the vast majority of economists universally regard monopolies as destructive,” they write, “the monopoly of one type of money [fiat-based, interest-bearing currency created through bank debt] has continued unchallenged from Adam Smith onward.” That monopoly makes for a very brittle financial system—one that is entirely dependent on the success of our national currencies, which today are linked across the globe.

Just like industrial agriculture.


Here’s what I mean. Industrial agriculture relies on monoculture—a single crop cultivated across thousands of acres. The intent is to increase yield and maximize efficiency. But the reality is crops that rely on increasing proportions of inputs (fertilizers, pesticides, water) and can be brought down by a single disturbance (such as disease, drought or the price of oil).

Fortunately, in agriculture, there’s an alternative to this system. Permaculture and other forms of small-scale, local and organic agriculture create resilient food systems by cultivating a diversity of crops. These crops are best suited to the local environment; they’re positioned where they can best interact with each other; a disease that affects one will likely be resisted by another. As a result, these localized agricultural systems are able to rebound from shocks and adapt to disturbances.

Might we not consider a similar approach when it comes to our money system? That is, how much more resilient might our global financial system be if it were based on a basket of currencies rather than a single currency?

This idea is not without precedent. Lietaer and Belgin describe how scores of complementary currencies were in operation during the 1920s and 1930s, particularly in Germany and Austria, when inflation drove communities to invent another way to meet their needs. In each case, the local currency created greater economic resilience—until it was banned, as it was every time, by the national government.

Today, there are thousands of meaningful complementary currency experiments happening worldwide. But it’s going to take a major shift in mindset to recognize that the bank-debt money monopoly that dominates the globe has proven itself to be a failed system.

No one is suggesting that we should abandon this money system. But we do need to walk out of the money monoculture and walk on to create an ecosystem of complementary currencies that will bring resilience to our global economy.

Do you participate in a local currency system in your community?

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  1. […] pesos, Japanese yen are all different kinds of money. Essentially, they are all one kind of money: fiat based, bank debt, interest bearing currencies. These national currencies came into being several hundred years ago at the beginning of the […]

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