The Ecology of Money	Reviewed by Patricia Knox. Prosperity, May 2000
by Richard Douthwaite

 

Richard Douthwaite asks questions of the money system. Who issued the money? Why did they do so? Where was the money created? What gives money its value? How was the money created? When was the money created? How well does it work? And is the money system compatible with sustainability?

Only about 3% of the money at present in circulation is notes and coins. The other 97% is debt money, ultimately owed to the banks, and borrowed into existence by people who take out mortgages and loans.

The money system is fundamentally unstable, causes recessions and inflation, and is the driving force behind constant economic growth.

Money is created for the profit of banks. In 1998/99, profits of the UK's twelve banks and former building societies was £22 billion, equal to about £400 for every man woman and child in the country.

This system causes not only the flow of wealth from poor people to rich people, it also causes the flow of wealth from poor countries to rich countries.

After dissecting the present money system and finding it wanting, Douthwaite goes on to examine the money systems that have been used in the past, and in other places, and then goes on to describe how a well-functioning money system should be designed....
Money should be created by a non-profit making body and spent into the economy rather than being lent into the economy. Money that has been spent into the economy remains in circulation, but money that has been lent into the economy is contantly removed, as loans are repaid.

Douthwaite believes that we not only need one money system, we need several -- an integrated multi-currency. We need an international currency, national currencies, regional currencies and local currencies; all convertible, one to another, using plastic card and computer technology. The author believes that we also need a separate store-of-value currency.

Douthwaite also believes that the international currency should be based on a scarce resource -- he believes that a steadily diminishing licence to pollute with fossil fuels could be the backing for the international currency. Not everyone agrees, and this is the controversial part of the book. Read it and join the debate!