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hello my name is Gwendolyn Hall Smith and I'm calling you from Cabot Vermont where I live in an eco village called the headwaters Garden Learning Center I'm the executive director of global community initiatives which is a non-profit tax-exempt organization doing projects all over the world and the founder of Vermonters for a new economy where we advocate for economic reform on the state level here in Vermont I'm going to share my screen with you and turn off my video so here we go I've been asked to talk about communal politics for alternative businesses and banks the topics we're going to discuss are the power of money public versus private banks making money for business the kovat 19 economic crisis and what it means for all of this strategies for surviving the crisis and how to move beyond it to thriving and resilience we're going to talk about the power of money first because money is actually a really key leverage point in changing the system that we all find problematic we need to understand what money is to do that we're told that money is a unit of account a store of value and a means of exchange but that's actually what money does what money is is an agreement that we use one particular form of money for all our transactions and the particulars of money that we've somehow agreed to is privately owned 90% or more of the money that we use is issued by banks and they make money by making money it's debt based it's issued through the issuance of debts when banks make loans to governments individuals and businesses that debt when it's issued has positive interest attached so that means that all of the interest and all of the debt don't actually add up there's more interest that needs to be paid back than there is ever money that's been issued to pay it back it's a monopoly when governments grant the status of legal tender to the dollar bills yen euros pesos that we use as the means that people can use to pay their taxes they effectively give this form of money on monopoly in the system for most of our transactions and it's also a monoculture the this form of money bank debt money I like to call it is the dominant form of money in the world right now there are a few outliers but generally the bank's issue the money they make a lot of money doing that and all of us are paying the interest fees both obviously when we take out a loan and as a hidden tax on all of our transactions money serves as essentially an economic operating system for the economy it's a lot like a computer operating system the operating system your PC or Apple computer uses does a lot of the stuff that makes your computer run but it's largely invisible to you back when I was younger and learning how to use computers the operating system was something we interacted with occasionally I remember the C prompt and Dawson maybe some of you do too but largely the operating system is there B underneath everything else and pulling the gears and levers to make our computer work well the money system is the same for the economy it controls most of the transactions we make after all the vast majority of transactions use this form of money and the values that it has embedded in its form are Kevin values to us it serves as a measuring stick for the economy both because the prices that are set using this form of money are the values that we pay for when we're buying something but it's also the way GDP and GNP is expressed in the economic analysis that's done the hidden values of money are largely due to its scarcity because when debt is issued with interest and the issue and the interest is issued at the same time as the debt that means that money is artificially scarce and artificially scarce money values things that are scarce more than it values things that are in abundance and that's a problem for humans that need things like care arts participation in government childcare and other things in abundance the system is also designed to consolidate wealth in the hands of very few people and the way it does this is fairly simple it's generally people that don't have access to a lot of money that need the loans and the interest that they pay is a net wealth transfer to the people who do have the money so it's a giant sucking sound upward that basically enriches the few and impoverished is the rest of us the economic power that we convert to those people through the invisible consolidation function means that they have a lot of political power as well that makes the money system hard to change and it gives them the right to change all the rules so that can they continue to work in their favor and not in our best interest now the banks and shareholders have this power and the rest of us don't so when we're looking at how to change the system one of the first places to look is how to change the banks here's a chart that was done that shows the breakdown of income in the United States it's a little bit old so the chart the values will be slightly different now but the distribution is the same you can see over here the blue squares are the bottom ninety percent of people in the US which their average income is twenty nine thousand the top ten percent of the people in the US have an average income of a hundred and sixty one thousand dollars the top one percent has an average income of million dollars but if you break that top 1% down and look in that one percent you can see that the top 10% of that category or the top 0.01% makes an average of two million dollars and the top 0.1% makes an average income of 23 million dollars now these are many orders of magnitude difference between the lowest paid and the highest paid people in our system it's unjust it's wrong and it's driving impoverishment and environmental destruction on a global scale so let's look at the banks for a minute and think about public banks and private banks private banks are the dominant form of banking in the world although there are a number of public banks around then help us understand how the differences work and what public banks benefits are but first what is a public thing public bank fundamentally is a bank that's owned by the public that means some level of government owns it or is in the case in Germany its own generally by the community that it serves the profits benefit the public so when a public bank makes loans and people pay interest on those loans that interest flows to the public coffers in North Dakota the payments of interest to the general fund of the state have totaled over 500 million dollars in the last 10 years the policies of the Bank are set by elected leadership not by private shareholders of private companies they generally have professional bankers to implement the policy so it's not as if politicians are taking in the loan applications and giving it only to their cronies the risks are the responsibility of the citizens and elected officials so if a public bank fails it's a public failure not a private failure but you have to look at the bank failures that we've had over the last 10 to 20 years and those big private banks when they fail have been getting bailouts from the public so this distinction isn't as important as they'd like to make it sound now the benefits of public banking include they have a fairly rapid response to natural disasters like Cove in nineteen this was proven in the United States back many years ago when the Red River Valley flooded and the business is in Fargo North Dakota recovered much more quickly than the businesses over the border where they didn't have a public bank because the state of North Dakota has a public bank there our source of credit and revenue for public projects public entities can borrow from their bank and the revenue that they make from lending generally comes in as a source of revenue to the general fund they can decide to make lower interest loans to individual students businesses and organizations in North Dakota for example the students there can take out student loans for 1% interest which doesn't happen anywhere else in the country they could also pay higher interest rates on public deposits when we did something similar to a public bank here in Vermont called the 10% for Lamont program the lending that was done by the state treasurer's office into the Vermont economy made several times more interest than the length than their normal deposits on deposit with the big Wall Street banks there's also more Democratic control of the investment of local tax dollars because when all the taxes are collected and put into a bank and it's a public bank the Democratic control of that bank can have more to say over how those tax dollars are used now one of the mission of private banks compared to the mission of public banks private banks mission includes making a return on investment for shareholders normal happens all the time it's a business just like most other businesses their job is to maximize profit and minimize risk and responsibility they need to make loans and investments that are repaid usually on a fairly short time frame except for mortgages it's unusual to get business loans from private banks that are longer than five years they also manage the quiddity interest rates and defaults that I have to have loan loss reserves and other things to protect them from when people don't pay the money back now the mission of a public bank is actually usually quite different their mission is economic development more broadly in the community that they serve they need to make a return on the deposits for citizens and taxpayers and they provide low-cost financing for public projects like in structure education housing water systems and public transit now where are the public banks in the world I've talked a little bit about North Dakota and Germany but 40 percent of the wall has some form of public banks including Costa Rica Brazil India Taiwan and Puerto Rico these are banks that work in the banking world might like most banks except that the benefits they accrue through lending go to the public instead of the private sector now there's a number of different kinds of public things some are community development finance institutions or CDFI here in the United States they typically are run by either local or regional authorities and may give out low-cost loans for different types of economic development projects banking services for the unbanked is another form of public bank most notably this was post office banks here in the United States and in Japan they still have post office banks that would be a great thing to bring back it would help strengthen our post offices and and provide important public banking service they can be an economic development partnership bank like one of the public banks in Germany works that way as a lender of last resort or a companion lender for the private banks to make riskier loans for businesses that need help student loan facilitator here in Vermont we have the Millat Student Assistance corporation that is essentially a public bank for student lending it can do public banks can do internal infrastructure lending like the state infrastructure bank here in Vermont and other places and they can be a lender of last resort for housing and businesses the North Dakota model is one that's owned by the state of North Dakota but there's a number of possibilities including local banks regional banks and small community banks in Germany the spark as a banks are found in every town no matter how small and they run as independent banks even though they are networked into a larger network for purposes of marketing and branding and accounting things like that now one good example of a public bank in history was Canada's public bank from 1939 to 74 the Canadian government borrowed from the Bank of Canada effectively interest-free and the public infrastructure projects they were able to build during that time including aircraft production during and after the war the education benefits for returning soldiers family and mat allowances old aid pensions the trans-canada highway the st. Lawrence Seaway and universal health care for all Canadians we're done largely because of the Canada's public bank but meanwhile when they joined the Bank of International Settlements and had to start playing with the other banks the federal debt ballooned as you can see here and the interest charges that people were paying on public debt increased public banks are good for business this chart shows the lending by community banks in North Dakota and some of the major neighboring states and the important thing to notice in that chart is the uptick in lending that North Dakota made after the crash in 2008 public banks are capable of counter cyclical lending whereas when economic crashes occur normally the private banks pull back a lot of their credit lines and other things and exacerbate the situation rather than helping it so business lending in the husband and decline nationally and regionally but North Dakota has kept it going and help their economy recover much more quickly from the recession now businesses need money businesses often have credit lines to close the gap between the time they have to buy the materials and the time the person pays them for their final products and so finding ways that business businesses can use this type a different type of money or other forms of money is an important exercise if you're looking to make your economy more resilient and sustainable so one important and historic system for doing this is known as the veer Bank in Switzerland it's a commercial barter system that was developed during the depths of the depression in the last when businesses looked at each other and they said hey you know the reason I have to go to the bank that's just hold my credit line is so that I can pay you for the materials before my consumers pay me and the businesses got together and decided to start issuing each other debits and credits just like money only without actually using money and this helped keep the Swiss economy afloat during a very difficult time the bank's tried to stop the beer from being set up but they had been so thoroughly discredited in the crashes of the late 1920s or the 1930s that the people prevailed now 75% of the small and medium sized businesses in Switzerland are part of the beer bank and studies have been done showing that the beer the existence of the beer Bank has a counter cyclical effect again on the economy in Switzerland it's not because of the watches and chocolates it's actually because they have a dual monetary system there that works to help keep businesses in business when things get tough developing further oddness was another commercial credit circuit essentially at c3 that was developed by a Dutch group called the social trade organization for Brazil Uruguay was getting ready to implement the system I'm not sure they ever did but basically it's the same it just deals with the same problem businesses has between the time they buy the materials and the time they sell them to the consumers only in this case the currency is insured invoices so they get an insurance company to give the invoice that they issue for their products or their supplies in short and then these business box these insured invoices circulate can circulate among businesses is currency because they can either cash them in for dollars euros yawn or pesos the conventional bank money at the cost of paying the interest on the note to the point the invoice matures or they can pass these invoices on without cost to pay their own suppliers it really helps for the government to accept this type of thing for the payment of taxes there is an article that I wrote about it a few years ago on my website which is listed at the bottom here HTTPS Hall Smith org forward slash writing I'm actually running for office now in the United States in Vermont for the state legislature so that's a campaign website feel free to make contribution if you like cryptocurrencies are a new thing that is come in big time is a business training tool crypto currencies aren't really complementary currency yet because all of them that I am aware of require initial purchases in a national bank debt money system unless you're actually earning them and being paid with them which is one w y to earn cryptocurrency without paying dollars for it but all of them do actually can actually be cashed back in $4 so they really are more like a payment vehicle than they are like a new form of money but nonetheless there's a lot of people working on them to try and make them more public more open less tied to the National money system and because blockchain technology tends to be a disruptive technology to banking by setting out a distributed ledger system on that so all the people involved in that different cryptocurrency have all the transactions and ways to verify identities and things blockchain could definitely lead us to a better monetary future there's no question about that another currency that I've been working hard on getting people to understand and recognize it would be a carbon currency so that when individuals and businesses do things that improve their carbon footprint they can earn the carbon currency once we finally put a ubiquitous price on carbon and they could use that carbon currency to pay businesses who are also in the carbon sector so let's say they start riding their bicycle to work instead of threatening a car they earn carbon currency for that and they could use that to help pay the bike shop to do their annual tune-up every in addition businesses could use carbon currency to purchase from each other and they can redeem it through a couple of different mechanisms that already exist one is retiring it by selling it to environmental groups that want to pull the carbon out of the training system and retire it to lower greenhouse gas emissions or by offset training in the global carbon market markets of course if there was a carbon tax the carbon tax could also be part of how the businesses redeem that for the cash that they need to do other things another really important business currency our loyalty currencies which a lot of us have used in the form of frequent flyer miles after all you get frequent flyer miles and you can buy flights with them some places you can even buy groceries I've seen now if you had frequent flyer buyer miles that were set up in local communities that gave you points for when you use local businesses instead of buying things from distant corporations or combine punch card systems so that all the businesses in the community can benefit from consumer loyalty this could be a really powerful local currency and you do see a lot of sort of coupon based currencies springing up all over the place to get people to buy in their local businesses my colleague Bernard Lee ATAR was a military specialist and used to work for the central bank in Belgium developed another form of currency which would be like a basket of key internationally traded commodities and services all of which do have storage costs that occasionally need to be paid and so he designed this currency to be a Demerest currency that which means basically that if you hold on to it for any length of time you're basically losing money on the thing so it the demo raj or the negative interest helps keep money in circulation and and this particular type of currency could be used by some of the larger international corporations as a international system that could interestingly enough serve as a and mitigating effect on the growth imperative it's driven by the positive interest currency in the normal system again there's more about this system in that article I mentioned making money for business I've also written another book this has always been available for free online called Vermont dollars Vermont cents which gives people a wide variety of strategies to build the local economy support local businesses and meet critical human needs it's basically a collection of interesting ways of financing a startup business or working as a governmental entity to help build affordable housing or other things that you can do to strengthen your local economy by using your dollars that are maybe now socked away in an investment somewhere that you don't even know what they're doing and moving them back home and back to the businesses that you depend on for your everyday needs now what the economic crisis is going to bring us remains to be seen but if you think about it the last big crash happened in 2008 after the banks were giving out more gauges to people that weren't able to pay them back since comat has hit it's not just mortgages that aren't being paid back it's business loans it's government loans it's rent it's you know the average daily consumption patterns of people all of this has been disrupted and so my opinion is that the economic crisis were walking into the rest of this year next year is much more serious than the last time the world has changed with this pandemic and the change is occurring rapidly in some cases and slow in others but we all need to be attentive to how to deal with our local economy and our own personal economy if we're going to hope to sail through the storms that are ahead if you look at it the lock down vocabulary that has sprung up in the last few months has already put some of our normal economic assumptions on their heads the essential businesses that were allowed to stay open with essential workers working there are some of the lower paid people in our economic system again getting back to this thing of scarcity and abundance when you know food stores are abundant and the clerk's that work there are also abundant they are incredibly low paid where somebody who has a good pitching arm for the Red Sox can make million dollars a year talent health appointments were meeting with our doctors now online remote learning all the students started having to stay at home and have access to decent internet and and a lot of people started working at how now that's a big change in our culture that the economy has not caught up with yet the massive unemployment in the u.s. that we saw as a result of the lock downs was very serious very different than Europe which tended to subsidize the salaries to pay people to stay home instead of forcing people out of their jobs and interestingly enough here out of their health insurance during one of the biggest health catastrophes in our lifetime businesses have closed there's more bankruptcies being filed huge fund losses for pension holders our local Blue Cross Blue Shield and Vermont had a soft 40 million dollar loss last week that they attributed to a mistake made by their pension fund management but it will certainly have a big impact on their ability to continue to provide health care in Vermont later on without people paying mortgages and paying rent we're gonna see more foreclosures and evictions and here in Vermont we've also seen massive money coming in to subsidize the continuation of utility services in the event that people don't pay their bills what's happening next well the fact that the kind of money we use is all based on bank debt and when loans stop being repaid back because of the kinds of things that have happened during this crisis I think we're gonna be seeing thankfully before the end of the year I hope I'm wrong but it wouldn't surprise me now when you compared 2008 crash to 2020 in 2008 in the US it was driven by a subprime mortgage crisis in Europe it was really more like a subprime country crisis where Portugal Italy Greece and Spain at least were forced into this horrible death spiral of debt that um Yanis varoufakis one of the former finance ministers of Greece has written some extensively on I recommend you pick up this book how many people aren't paying their debts now we've got mortgages around student loans business loans not being paid I dare say there will be potential government loans that aren't being paid and all of this will add up to a bank failure crisis again a day of reckoning is coming and it's it's good to prepare for that now strategies for surviving this are numerous I suppose and I'm just going to talk about what I've been doing in my personal life to try and prepare for it and cope with the crisis the first thing of course is community you know right now in the United States especially we have a very individualistic culture and this individualistic culture is a problem moving forward I think we really need to take advantage of our species strength in community humans are essentially a communal species and and start doing things more in community the picture here is my house I'm sitting in the very front porch right now talking to you in an eco village and Cabot's or not we have a little eco village that's designed to be permanently affordable with permanent affordable housing being constructed we have this big community garden that you can see in the foreground so maybe putting up a green house later this year so we can grow more food in the shoulder seasons but I can tell you having lived here for many years now that community life is a big paradigm change and it's one of the important paradigm changes that we need to make to move into the future a more sustainable way so where is your community building one and in an urban setting is maybe more challenging than out here in the country but you really do need to start thinking about who is your tribe whose your community who helps you get through the difficult times ahead I think it's time to localize everything and the critical economic flows that you need to study to make sure you have a sustainable local economy or food water energy fiber and fun fun being you know the kind of tourist and entertainment activities that make human life interesting and bearable but if you're depending on distant Hollywood for all your movies maybe look at ways that you can make plays in your local community and look at local things that you can do that people would pay for to keep entertaining keep basically happy we need really an ecosystem of currencies that account for all the different needs that we have in community we need to be having carbon currency that can both train and bring down global carbon emissions we need wellness tokens and arts tokens and participation in government tokens I'm running for office I know that the challenge I have of raising the money to keep putting out the ads and the signs is a real challenge but if there was a government participation currency that you could earn and spend at times like this it would be great I've written a lot about this in a book that is also available for free online on my website called creating wealth growing local economies with local currencies you can get that again at ww-who Smith org forward slash writing now beyond survival there's the question of how we thrive and how we make our communities and our lives more resilient into the future sustainable and resilient systems meet human needs without eroding the capacity to produce more in the future and regenerate the kind of assets that we have that meet our needs they also maintain their critical functions structures and identity and feedbacks while changing even during shocks and disruptions like the Cova 19 crisis there's a lot of written about how to develop more resilient communities I've done a lot of work on this I'd be happy to talk to you offline on your particular community or what your particular challenges are goals that we need to set for sustainable and resilient communities include to maximize health and happiness instead of maximizing profit and the kind of Bank tat money that we've been hoarding we need to look at how we make how we provide for individual and collective well-being and when we're fostering sustainable communities we need to look at building social cohesion good governance economic security and efficient service efficient services in the infrastructure and of course ecological integrity I developed a methodology for cities to use if they're very interested in doing this that methodology has been used by cities all over the world and most notably in the City of Calgary Alberta with their imagine Calgary project in Newburgh New York with planet Newburgh the month in Montpelier Vermont with the envision Hillyer project and in Burlington Vermont with a legacy project so you can go and look up those plans and those processes if you're interested in doing more in your local community to help build a resilient future now that's the end of my prepared remarks this is an example of a paper local currency from Ukiah California that I particularly like I don't necessarily recommend issuing these paper notes because they tend to be hard to manage and there's a lot of mutual credit systems like commercial barter systems and time banks that are fairly easy to operate without these notes and I'd recommend you look into the community currency resources on my website for more information about that anyway thanks very much this will end the presentation and I hope to talk to you when the class is given