The Financial Industry & Impact Economics
Today’s financial industry consists of thousands different and multi-dimensional organizations. Their values, motivations and agendas are not at all as homogeneous as many seem to believe.
Our financial system relies on banks to distribute money issued by the central banks. This part of the economy is totally unproductive, however the system is producing increasing transaction costs, and it keeps whole states hostage, gaining unprecedented political power. We have long reached “peak banking”, the point where more debt service claims are held by the financial system than the economies are able to produce. As the productivity increases in the real economy does not catch up with the financial markets, speculative bubbles are the result, pure gambling. These bubbles can explode at any time.
For the general public, interest rates are at an all-time low. Therefore, we are observing a democratization of investment. Crowd-fundind, crowd investment and virtual currencies are avenues beyond the traditional banking system. It looks like a parallel world economy is developing. We live in exciting times!
In the face of increasing economic instability, building a resilient, enduring and equitable local economy is crucial. To achieve this, we need to understand the current economic system, how it affects our communities and ways to transform it. We also need to understand how the monetary, banking and financial systems work and their central role in the functioning of the economy. Essential Knowledge for Transition is a three-part curriculum providing the essential understanding of these systems, their impact on our communities, intervention points and alternatives being followed around the country to shift them for the benefit of communities and ecosystems. We can no longer afford any industry to be a threat to us or our nature.
The current economic crisis is a recurring phenomenon of a structurally unstable economic system. This part of the curriculum looks at the current economic crisis in its historical context, how we dealt with the last extreme crisis in the 1930s and regularly thereafter occurring steadily towards at the same destructive level, and how we are (counter-productively) dealing with it now. It also explains the structure and behaviour of the economic system, intervention points and alternative ways of structuring it so that it democratizes and localizes economic activity and anchors wealth and capital formation in the community to avoid similar destruction to civil life.
The ideas around are Impact Capital, Impact Investments, Social and Responsible Investments and Impact Economics are about becoming a new way of helping each other instead of using each others vulnerabilities for self-gain. The Blue Economy is about respecting this planet’s nature with all its resources and only allow responsible use of them at a time and let renewable resources re-grow and never harvest more than the nature is capable of growing back over the same period. Impact Economics are in great need of us all changing our habits and take personal and corporate responsibilities for this planet’s wellbeing as well as for all human life by showing real humanity. Impact Economics is about ecological, social and corporate capital where they all must show prosperity, security and growth to keep money owners of all sizes making their Impact capital stay in the market as Impact Tools.
Money and Banking system
Currently, the money and banking systems are conflated (money is mostly created as debt by the banking system) and by their very design demand continuous economic growth and an ever expanding level of debt (public and private). There is very little understanding in the general public about what money is, how it is created and how the banking system operates. Only a fundamental shift in the design of the monetary and banking systems will allow for a viable way of addressing the mounting problem of public and private debt and make possible a shift towards a steady-state economy that works for everybody and is compatible with environmental stewardship.
This part of the curriculum looks at how investments and flow of capital impact our economic system and create increasing disparity in wealth and power. Financial capital has been transformed over time from an instrument to facilitate economic production to a self-perpetuating pool of capital growing through trading activities which are progressively divorced from productive economic activities. We will look at ways communities around the country are attempting to re-localize and democratize types of investments and capital formation through Impact Economics and Impact Investments.
Every movement starts with a spark – an idea, a belief that change makes us do more good than of doing less bad and a few bold actors who are willing to take the lead and inspire to.