Our Short Response

Changing

the Cash : Credit Ratio

of the Money Supply

to Ameliorate Climate Change

Executive Summary:

 

1. This submission undertakes a systemic analysis of money and public funding whilst proposing ‘green credit’ as a new economic instrument. It identifies ‘state money’, ‘Government money’ or ‘cash’ as not-interest bearing (NIB) and ‘credit’ as interest-bearing ‘bank money’. We illustrate the parallels between the exponential growth of CO2 emissions, the national debt and credit as part of the money supply as a whole. Long-term parallels illustrate how global warming cannot be curbed without curbing the growth of lending at interest. For exponential growth is unlimited and an indicator for unsustainable, unnatural and cancerous growth.

2. Using the public statistics of the Bank of England1, the submission identifies the cash : credit ratio as a measure for changing the direction of current trends. An increase in the Government share of the money supply could fund environmental activities, lower personal, corporate and governmental indebtedness and allow Westminster to leverage budgetary control over the City.

3. As formulated in Early Day Motion 4082, the submitters recommend adding public or ‘green credit’ to available policy means so that a maximum of activities to ameliorate global warming can be funded by Government. So far, there has always been enough money for war, but never enough for the environment. Green credit would increase the Government’s budget and fuel the level of environmental activities at the speed required by climate change. As an ethical and green measure, the cash : credit ratio would indicate the balance between spending money for the common good and making money out of money through interest.

4. In relation to the Stern review, the submitters invite the Committee to consider evaluating 3D Metrics prototype software for complex systems. Having proved rather successful for financial forecasting over daily and weekly intervals, this software has the capability of multi-scale modelling while handling multi-dimensional parameters and multi-variant data.

5. Since this ‘3dM’ software is independent of scale, it can handle short and long time intervals. As it is also independent of application, it can process data from financial, monetary and economic sources as well as climate change. Thus it is likely to prove more effective for future modelling and monitoring than the PAGE system used for the Stern report.

6. In conclusion, this submission finds environmental taxation as unsuitable as borrowing to raise revenue. With a view to social impact and changing behaviour, our recommendation is the use of money not as a ‘green stick’ but as a ‘green carrot’: by using green credit, energy efficient buildings, a carbon neutral transport system and the use of renewable energies can become commonplace at the speed that is desirable and necessary.

We are learning by bitter experience that the organism which destroys its environment destroys itself.

Gregory Bateson (1904 – 1980), British anthropologist, social scientist, linguist and cyberneticist.