The monetary system in crisis

The-monetary-system-in-Crisis

Abstract

This paper provides a summary of the current challenges our monetary system is facing and offers an overview of the different ideas for reform, discussing their practical feasibility. It will also demonstrate how a simpler monetary policy tool could facilitate the implementation of many of the ideas that reformers advocate, without a complex restructuring of the banking system. The implementation of this monetary policy tool will enable central banks to regain their ability to act effectively.

Full Report

Costs of Austerity – Squandering our Productive Resources

Cost_of_austerity

Abstract

Austerity policies are not only practiced since the 2008 global financial crisis, but have been implemented for over 30 years. Many countries are living below their potential because they do not use their existing production capacities, creating idle real capital and large-scale unemployment. Methodologically, neoclassical economic theory can neither explain mass unemployment nor unused production capacities. In this study a heterodox approach has been selected to explain the under-utilisation of productive capacities in a real world market model. It indicates that additional demand frequently results in additional production rather than increased prices. Absurdly, while living below our economic potential we are living above the means of our finite raw materials and produce excessive CO2 emissions. The win-win response is to reduce our CO2 emissions and our over-consumption of finite raw materials by utilising our free productive capacities to expand renewable energies and redesign our production, as far as possible, according to the “Cradle to Cradle” principle of closed loops.1 In this study we calculate the global costs of under-using our productive resources, i.e. the economic losses caused by austerity policies, to be at least US $2.3 trillion a year. In the Eurozone the annual costs of austerity are estimated at 580 billion Euros. These amounts show the extent to which we live below our potential by not using available productive resources. A gradual closing of this production gap would neither overtax the existing production potential nor cause dangerous inflation.

Full Report

The Monetary Cost of the Non-Use of Renewable Energies (Update 2017)

The_Monetary_Cost_of_the_Non-Use_of_Renewable_Energies

Abstract

It is often claimed that renewables are still too costly and not yet competitive with conventional energy sources. But what costs are incurred when renewable energies are not used? Every day during which potential renewable energy sources are not utilised but exhaustible fossil fuels burnt instead speeds up the depletion of these non-renewable fuels. Using burnt fossil fuels for nonenergy related purposes (e.g. in the petro-chemical industry) in the future is obviously impossible. Thus, their burning – whenever they could have been replaced by renewables – is costly capital destruction. This study concludes that, estimated conservatively, the future usage loss resulting from our current oil, gas and coal consumption is between 3.2 and 3.4 trillion US Dollars per year.

English

Financing climate protection with newly created SDRs

future-policy-award-2013_brochure_ENG_v08_preview-pages

Abstract

The centrepiece of the WFC proposal is the establishment of a financing tool that uses the ability of the IMF to create new international reserve money in the shape of Special Drawing Rights (SDRs). The intention is to support financing facilities such as the new Green Climate Fund established at the COP 16 in Cancun. The IMF member states can decide on the issuance of new SDRs. These are usually distributed to them proportionate to their quota shares. Pursuant to the agreement on the formation of the new Green Climate Fund, member states should agree in advance to commit all or most of the new SDRs to this Fund. A small portion (e.g. 10% – 20%) could be claimed by the member states for the financing of specific climate protection projects.

Full Report

IMF takes up World Future Council suggestion

Press Release – for immediate release

Financing the fight against climate change

Hamburg 1.2.2010. The IMF Managing Director, Dominique Strauss-Kahn, has taken up a suggestion by the World Future Council (WFC) on how to finance climate security and climate justice in developing countries. A new multi-billion dollar “Green Fund” that could provide up to $100 billion a year was suggested by Strauss-Kahn at the World Economic Forum in Davos. Part of this fund should be financed through the issuance of additional Special Drawing Rights (SDRs), a reserve asset created by the IMF. The World Future Council proposed funding the development of renewable energies through new, interest-free SDRs at the World Climate Summit in Copenhagen last December and discussed this proposal with the IMF.

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