Few people have worked in and on the money system in as many
different capacities as Bernard Lietaer. He spent five years at the Central Bank in Belgium, where
his first project was the design and implementation of the single European currency system. He was
president of Belgium's Electronic Payment System, and has developed technologies for multinational
corporations to use in managing multiple currency environments.
He has helped developing countries improve their hard currency earnings and taught
international finance at the University of Louvain, in his native Belgium.
Bernard Lietaer was also the general manager and currency trader for one of the largest and
most successful offshore currency funds.
He is currently [as of Sept. 2005] a fellow at the Center for Sustainable Resources at the
University of California at Berkeley.
BERNARD: Money is like an iron ring we've put
through our noses. We've forgotten that we designed it, and it's now leading us around. I think
it's time to figure out where we want to go - in my opinion toward sustainability and community
- and then design a money system that gets us there.
SARAH: So you would say that the design of money is actually
at the root of much else that happens, or doesn't happen, in society?
BERNARD: That's right. While economic textbooks claim that
people and corporations are competing for markets and resources, I claim that in reality they
are competing for money - using markets and resources to do so. So designing new money systems
really amounts to redesigning the target that orients much human effort.
Furthermore, I believe that greed and competition are not a
result of immutable human temperament; I have come to the conclusion that greed and fear of
scarcity are in fact being continuously created and amplified as a direct result of the kind of
money we are using.
For example, we can produce more than enough food to feed
everybody, and there is definitely enough work for everybody in the world, but there is clearly
not enough money to pay for it all. The scarcity is in our national currencies. In fact, the
job of central banks is to create and maintain that currency scarcity. The direct consequence
is that we have to fight with each other in order to survive.
Money is created when banks lend it into existence (see
article by Thomas Greco on page 19). When a bank provides you with a $100,000 mortgage, it
creates only the principal, which you spend and which then circulates in the economy. The bank
expects you to pay back $200,000 over the next 20 years, but it doesn't create the second
$100,000 - the interest. Instead, the bank sends you out into the tough world to battle against
everybody else to bring back the second $100,000.
SARAH: So some people have to lose in order for others to win?
Some have to default on their loan in order for others to get the money needed to pay off that
BERNARD: That's right. All the banks are doing the same thing
when they lend money into existence. That is why the decisions made by central banks, like the
Federal Reserve in the US, are so important - increased interest costs automatically determine
a larger proportion of necessary bankruptcies.
So when the bank verifies your "creditworthiness," it is
really checking whether you are capable of competing and winning against other players - able
to extract the second $100,000 that was never created. And if you fail in that game, you lose
your house or whatever other collateral you had to put up.