43% of U.S. foreign debt is controlled by China and Japan. That's pretty alarming, especially upon reading this interview with Bernard Lietaer, who "co-designed and implemented the convergence mechanism to the single European currency system (the Euro), and served as president of the Electronic Payment System in his native Belgium. He also co-founded one of the largest and most successful currency funds." In this interview, he is impressively candid, cogent, and, curiously, hopeful, particularly about "private monetary systems." There is a small system in place in Berkeley, for example, and the founder of Visa is working with others to set up a larger-scale alternate currency, as well.
Lietaer:
It's a chicken and egg story: unstable currency equals unstable government. There is practically no way today for a developing country to have a reasonable monetary policy within the current rules of the game. Joseph Stiglitz, Nobel laureate in economics and formerly head economist at the World Bank, makes the same claims in his book Globalization and Its Discontents (Penguin, 2002). Whether you fix your currency to the dollar or let it float, you end up with an unmanageable monetary problem, like Brazil, Russia or Argentina have experienced. Eighty-seven countries have gone through a major currency crisis in the last 25 years. Their fiscal policies are imposed by an International Monetary Fund (IMF). I am afraid that if the United States had to live by the rules that are imposed on, say, Brazil, the United States of America would become a developing country in one generation. It's the system that is currently unstable, unfair and not working.
The majority of humanity has gone through a recent monetary crisis at least once already. We'e living here, in America, in an island of perceived stability. And even that is an illusion. We could have a run on the dollar under the current rules.
We are dealing with an unstable system, an ailing system. Back in 1975, I had come to the conclusion that there would be a systemic series of monetary crashes, starting with Latin America. And that's why I wrote my book on how the money system was not working and its impact on Latin American development, Europe, Latin America and the Multinationals (Praeger, 1979). I predicted that the first crash in Latin America would be in the early 1980s. It actually happened in 1981 in Mexico. Since then we have had more than 80 other countries undergoing similar monetary crises.
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Now the point is: there are many new agreements being made within communities as to the kind of medium of exchange they are willing to accept. As I said, in Britain, you can use frequent flier miles as currency. It's not a universal currency, it's not legal tender, but you can go to the supermarket and buy stuff. And in the United States, it's just a question of time before privately issued currencies will be used to make purchases. Even Alan Greenspan, the governor of the Federal Reserve and the official guardian of the conventional money system, says, "we will see a return of private currencies in the 21st century."
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