Commentator Hazel Henderson of Ethical Markets Media thinks the outline of a new, moral financial system is beginning to rise from the ashes of the old. Its being ushered in by what she calls “the new financiers”…
A venture capitalist friend of mine asked me in a recent discussion about the financial meltdown, “who will be the new financiers?” I answered immediately, “the new financiers will be the high-level information brokers. They’ll also be the dealmakers in creating the growing green economy.” Media and information drive markets. But the new financiers are largely invisible to the traditional Wall Streeters and asset managers. That’s because information, not money, is the new financiers’ prime currency.
Not that the new deal-makers don’t value money. But they have a different approach to it than the high flyers on Wall Street. They value the role of honest, well-managed currencies that remain tied to the real economy of goods and services.Money is a special kind of information. When backed by real-world goods and services, money can accurately track and score human ingenuity, productivity and transactions interacting with the natural wealth of resources of our home: Planet Earth.
The problem with money is keeping it honest. From the kings who shaved of the edges of coins to today’s bankers who create our money out of thin air, we humans have found many ways to debase our currencies.
Money was invented back around 3,000 BC. It evolved from clay tablets, shells and cows to metal tokens, gold, silver, and today’s paper money and electronic currencies that are blips on millions of financial trading screens.
With the Industrial Revolution in Europe, our need to trade and exchange grew exponentially. Our money systems of exchange had to grow, too. Gold became too constricting – there just wasn’t enough of it. Soon, the lack of gold led governments to issue paper “fiat” currencies backed only by promises and a fraction of actual gold. Some countries went off the gold stadard entirely, including the USA in 1971.Our current financial crisis goes way beyond earlier recessions and panics caused by the lack of gold or sufficient supplies of credible paper money. Today, the globalization of finance and technology caused money-creation to go wild, leading to a credit bubble and mountains of debt. The money supply surpassed real economic growth. Risk-analysis took a back seat, as bankers ignored real-world conditions. For example, the bets on who might default — those infamous credit default swaps — grew to some $680 trillion dollars of contracts — while real global production measures only the $62 trillion of global GDP. Today, central banks are in a frenzy of printing money. But no amount of ink and paper can print enough new money to close the hole between that $683 trillion of false promises and the world’s real GDP.
The only issue is, who will take the hit. Up to now, the political clout of financial sectors has forced taxpayers to bail out financiers. The blatant unfairness of this has caused huge outcries from outraged citizens. Those billions given to irresponsible bankers could have financed universal healthcare and college education.
I predict this is the end of finance based only on money and fiat currencies, not on the real economy of goods and services.
Enter the new financiers and their bringing a new hybrid economic model with them: half the old money-based competition and half information-based sharing, cooperation and exchange. The rise of Google, e-Bay, Microplace, Amazon, Facebook and Wikipedia show the way.
Money may never again be the dominant medium of exchange. It will be superseded by all the new digital currencies already circulating from local exchange trading systems and complementary currencies like “Berkshares” in Massachusetts and “WIRs” in Switzerland to Freecycle, Craigslist, Time Banking and many other barter sites. The new financiers are operating these new digital trading platforms in many countries. Many designs for global digital currencies are on the way.
The old-style financiers will try to put government brakes on these upstart competitors. The SEC shut-down will soon be lifted from the website Prosper.com, which boomed by facilitating local residents and businesses in lending to each other. But information-based currencies and trading platforms will operate wherever necessary to match needs with resources and create jobs – from local and regional to national and international exchange.
Today’s financial “crisis” is facilitating the evolutionary jump to the next stage of human development – shifting from faulty, money-measured GDP growth to the cleaner, greener sustainable economies. Welcome to the Information Age.
For the Sea Change ViewPoint , I’m Hazel Henderson of Ethical Markets Media.