“CHANGE THE SYSTEM, NOT THE CLIMATE”

“Change the system, not the climate” is a common demand of the climate movement. But what does it mean? Which systems need to change?

Our energy needs to be cleaner to stop emitting CO₂, methane, and other pollutants into our atmosphere, causing the greenhouse gas effect, and global warming. Likewise, we need to adjust our economic systems so they work efficiently to provide for the needs of humanity while working within our planetary limits. We also need the systems of governance to be more equitable. The rights of capital must be balanced with workers’ and employees’ rights; personhood and civil rights must be limited only to people—not corporations; and the role of money in politics must be limited so democratic practices can thrive. Systems that provide us with food and water need to be restored to more sustainable practices for generations to come. Most important of all, our monetary system needs to be reformed. Let’s talk about why…

“CHANGE OUR MONEY, CHANGE OUR WORLD”

We all think we know about money. Money is a wonderful innovation, a social utility that circulates and allows us to exchange goods and services. Most of us assume that the coins and bills we handle are a small part of the trillions of dollars stored in bank vaults “backing” transactions we make through checks and e-transfers. 

Most people believe the government creates new money and spends it into the economy. However, very little of our money is cash or created by the government. Most of our money is created by banks in digital form through loans and bond purchases. The fact is that 97% of our money exists only as numbers on computers, created and extinguished in accounts by keyboard strokes, a money supply entirely managed and created by bankers. This is what many call bankmoney creation, and it shows us that, contrary to common perception, our government doesn’t create our money. The private commercial banks increase the money supply when they make loans. They decide who gets that money and for what. As the loans are repaid, the money supply decreases by the principal amount and on top of that bankers extract the fees and interest from the existing money supply. This reality regarding bankmoney creation is increasingly understood by monetary reformers and macroeconomists yet virtually unknown by the general public.

In a seminal 2014 article, the Bank of England acknowledged that banks create money: “…the majority of money in the modern economy is created by commercial banks making loans.”

The fact that private banks have been given free rein to legally create our money as interest-bearing debt makes this money management mechanism unstable, unjust, and unsustainable.

At the corporate level, on top of paying back any loans plus fees and interest corporations have a profit motive and shareholders to pay. These factors cause the systemic growth imperative built into our economy. The modern economy must grow in order to pay the interest that existing bankmoney bears, and to have money left in circulation as loan principals are paid back.

There are some ‘coping mechanisms’ companies use to survive in the real economy, where they must constantly grow and expand to meet the demands of the monetary system. They often extract wealth from the workers and the environment to achieve profits. They can cut corners or externalize as many production costs as they can get away with. This, along with the failed regulatory system that has been bought by corporate interests is why we have many environmental problems today (see also Move To Amend and Gaveling Down the Rabble). Companies could just be told to do better, but actually, they are still subject to the rules of debt-based money that we all have to put up with until we change the money system!

The result of exploiting, externalizing, cost-cutting, and unhindered growth into natural spaces is clear—climate chaos is upon us. 

According to a new study, over the past 20 years extreme global weather events, like hurricanes, floods, and heat waves, have cost an estimated $2.8 trillion equivalent to $16 million per hour in climate-related damage. Additionally, it is estimated a quarter million deaths are attributed to climate change each year.

The rational thing to do would be to spend on improvements, adaptation, and mitigation now so we stop accelerating the crisis and don’t have to spend even more later. One way or another, the money will be spent! The only reason we can’t spend less sooner is that we have a private, debt-based money system corrupted by profit motives at the expense of the people and planet. This system ignores proactive management decisions and is highly inefficient.

Most of us already know about the main solution, phasing out fossil fuels as a source of energy to help us reach drawdown, the point at which carbon emissions begin to decrease.

We’ve long known this has gotten out of hand. It has been in the news since 1912! But despite this, the industry has continued to grow and grow and grow. Why is that?

The fossil fuel industry has found a great need for their energy in society. They have made us dependent on fossil fuels and monopolized it as a cartel, externalizing as many costs as they can. Meanwhile, they’ve hooked into our politics to secure bank-created, debt money to fund their industry. All of this to de-regulate the circumstances surrounding its industrial enterprise, and bamboozled us into ignoring the red flags and possible alternatives. It’s a perfect parasite fueled by an extractive money system.

According to the IMF 2023 report explicit fossil fuel subsidies were $1.3 trillion globally, accounting for the undercharging of supply costs, such as building fossil fuel infrastructure. The implicit subsidies cost, the remainder of the gap between the real price—what economists call the efficient price—and the retail price of oil, come from the environmental costs, a whopping $6 trillion. This figure is estimated to rise as the accumulative environmental costs deliver even more climate catastrophes.

The laws that allow these costs to end up on societies’ checkbooks, rather than those of the oil corporations, have been so entrenched that even President Biden is struggling to keep his promise of eliminating these subsidies. The laws by which oil industries abide are about as old as the Federal Reserve Act of 1913; they keep evolving as lobbying by big oil has come up with new tricks and loopholes (energy companies spent more than $30 million lobbying the government since 2020).

Some of the absurd laws “allow companies to write off as much as 80 percent of the costs of drilling, things like employee wages and survey work, in the first year of operation, even before producing a drop of oil”, and another “initially let oil companies deduct their taxable income by 27.5 percent.” The fossil fuel industry has secured political deals to advance its financial power and also rallied support from banks, utilizing bank-created, debt money to fund the initial costs of operations.

One answer to this challenge is to divest from fossil fuels. The divestment campaign has been great, allowing people more consciously to connect the dots among fossil fuels, CO₂ emissions and pollution, and the money at the root of the problem.

It has also provided a direct ask for people to rally behind. Universities, banks, retailers, and individuals should all remove fossil fuel investments from their portfolios. Fossil fuel investments from the world’s 60 biggest banks have added up to $6.9 trillion in the past 8 years. (Banking on Climate Chaos, Fossil Fuel Finance Report 2024)

However, in doing a deep dive into the topic, the Alliance For Just Money 2022 Design Sprint found that many environmentalist campaigns include in their divestment messaging that we need to divest our personal bank deposits so they are not loaned out to fund the fossil fuel industry. Divestment is needed, but we also need to understand that our deposits never were loaned out. It’s BRAND NEW MONEY, bankmoney, and there is no limit to how much a bank can create so long as they see a profitable business model that can pay the principal, interest and fees. This is the systemic driver of the growth imperative built into our political economy. Without reforming our monetary system, divestment campaigns will never be able to achieve their stated goals.

Divestment has had a good run, but it’s time to expand environmental campaign messaging to call for the end of bank money creation (McMillan, 2014; 2024) and demand Just Money for the Just Transition. This talk by expert Dr. Peter Dietsch, endorsed by over a dozen monetary reform and climate action organizations including Greenpeace Sweden, evinces this point.

THE JUST MONEY SOLUTION:

• Require Congress to be the sole creator of all U.S. money;
• End the privilege of commercial banks to create U.S. money; and
• Transfer control of the U.S. money supply from the banks to the U.S. government.

What is Just Money? Just Money—often and historically called sovereign money—exists by law and is created as a public asset or utility to serve as a medium of exchange and to facilitate transactions. It is not a liability, as modern money is, so it doesn’t go “poof” as loans are paid off. It’s a long-lasting if not perpetual economic unit of account that facilitates a sovereign People’s commensurable exchange of goods and services. As AFJM members Hammon and Pash (2019) put it, we call it “Just Money because it is money that is fair and privileges no one. It is also just money, not debt carrying interest.” 

The Lincoln administration’s creation of the Greenbacks to pay for the Civil War is one of US history’s best examples of how we all think our money system works (AFJM, n.d., p. 3). Just Money reform, as advocated in the American Monetary Reform Act, AFJM’s 2024 update of the 2010-11 NEED Act, would achieve that kind of government money creation today, where 100% of our money supply would be publicly created legal tender or fiat money. That would reduce the debt burden on us and our federal, state, and local governments. This reform would enable the money supply to be more stable than it is now.  Just Money is money for the people and by the people. The money supply would fluctuate only in terms of how many people are using the money—correlating with population size—and their productivity.

JUST TRANSITION TO A BETTER AND SUSTAINABLE ECONOMY FOR WE THE PEOPLE

Just Money will provide a pathway to a Just Transition away from our precarious, extractive economy, to one that ensures everyone can afford life’s essentials including housing, energy, food, healthcare, and education. This 100% sovereign or public money can ensure everyone has the opportunity to flourish in life with a living-wage job no matter their family’s circumstances or heritage. It will mean we can make the necessary public and private investments to provide a sustainable planet for future generations.

Monetary reformers see our ecological and economic problems and their solutions, and we believe that only with Just Money reform can we achieve a Just Transition. We don’t use the term “Just” lightly. Transition is upon us, “transition is imperative; but justice is not,” as the Climate Justice Alliance states.

Leaders of social justice movements coined the term “Just Transition” such as the Climate Justice Alliance, Tom Goldtooth and José Bravo of the Just Transition Alliance, and Connie Tucker leading the Southern Organizing Committee for Social and Economic Justice. The principles of environmental justice they declared include “the right of everyone to safe and healthy work environments, to quality health care, and to freedom from the need to choose between unsafe jobs and unemployment.”

This too is in the purview of what we mean by a Just Transition, we need justice not only in our systems that deal directly with people like employment and health, but also in our systems of transaction and reciprocity in and with nature. Defined holistically, the Just Transition transforms our economy from extraction and exploitation to cooperation and regeneration.  

Just Money is Climate Action because it works on the problem in several ways. 

First, Just Money winds down the spending for fossil fuel at its systemic source by ENDING bank-created, debt money. This adds to the work of the divestment movement, which advocates stopping money from going to fossil fuels, by taking it deeper to establish our trust in a system we all interact with—money. Just Money assures investments will be considered on a people-first basis: New money won’t be created for profit-driven projects, speculation, etc. but rather with its first use going to the commons and public good, defined through our democratic processes, after which it circulates to facilitate our commerce stably in perpetuity.

Second, Just Money cancels the growth imperative because money shall not be created as private, interest-bearing debt that must be repaid and extinguished over time, but rather as a permanent asset to the nation. The removal of this exploitive feature will subsequently help alleviate some of the social and psychological effects of the growth and greed imperatives built into our current political economy.

It is important to note that Just Money alone will not alleviate consumerism culture, and the desire to accumulate more. For this we need awareness of planetary limits, the vitality of other species, alternative economies, and social needs. Just Money reform is necessary, though not sufficient without a Just Transition.

Although opposition says there is no way to spend into the public domain for these services and societal transformations to renewable energy, there is evidence that this opposition is mainly engineered by the fossil fuel industry who want no change to the status quo, and their pockets. Historically, we have been able to rally in the face of challenges, such as the unprecedented reallocation of resources during World War II. The more serious scenarios for climate change would require even more and for much longer. US Treasury Secretary Janet Yellen calls the climate challenge “the gap is the biggest economic opportunity of the 21st century.”

Third, Just Money provides a means for the Just Transition away from our exploitative economy to a sustainable and balanced one by investing in public infrastructure so basic needs for energy, food, and healthcare can be met. This direct investment into projects will come from the government spending on human productivity for the public good. This means that Just Money reform opens the doors to HONEST discussions about a Just Transition.

Just Money reform is an evolving conversation about and legislative plan for how money can be designed to fulfill our needs, as a unit of exchange and a store of value.

HOW WOULD JUST MONEY WORK?

Most importantly, it turns off the systematic tap of money to fossil fuels—it meets the demands of divestment and more! This extends to divestment from extractive forestry and animal agriculture, and anything that we can collectively (and democratically) agree damages our economy’s sustainability, the planet’s future, or human health.

Establishing Just Money ends the growth imperative to pay the interest that bankmoney bears—and it therefore can end the systematic profit motive. Profit-seeking can and will still occur in a market economy with Just Money. The price of everything—including the intermediation of money among savers, lenders, borrowers, and investors of money—will revolve around the cost of producing those goods or services.

Just Money facilitates us moving from a financial scarcity mindset to a more generous playing field, where companies exist to provide a good or service—not just to make a business profitable. It can make the higher-ups decide we don’t need to cut corners to repay this debt. We can pay our employees a living wage, stop polluting, shift to renewable energy, and pay our fair share of taxes for the public good all while paying off our no-longer compounding debts.

In this case, Just Money would work similarly to grant programs, but our democratic government would create money that could provide services to meet the needs of society.

Just Money can be implemented into law in several ways. When we envision this reform, the possibilities are endless—only limited by our cooperation, collaboration, and imagination. Just Money opens the door to honest discussions on how to pay for social goods and necessities.

Concerning the topic of the looming climate crisis, Just Money allows us to pay for the Just Transition on a national level but also lays the foundation for more locations to pay for their community needs. Communities can learn more about and establish trust for community vouchers they create that can assist in on-the-ground sustainability work such as planting trees and urban gardens, green jobs, recycling, water, and major infrastructure projects. There’s no more asking, “How will we pay?” when we refuse to play the limiting game capitalism has put us in. Let’s “Outgrow the System,” and grow into an age of collaboration and post-growth. Let’s live within what Kate Raworth calls “the doughnut,” the “safe and just space for humanity” and other living species, and avoid both falling short of securing the social foundations for human life for all and overextending the planetary boundaries of our earth.

 “Just Money for The Just Transition” was featured in our topics covered for “Mayday for Money!” in Chicago, May 17-19, 2024.  We watched and discussed how to get involved in the movement to change economic systems for human and planetary well-being at the Climate Action Museum. Read “Reporting Back from Mayday for Money” to learn about and see images from the three-day event. Join AFJM or subscribe to our mailing list to stay informed about future news, articles, and events about Just Money for the Just Transition.