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Event organized by Zeitgeist Movement

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Verona, November 19th, 2011

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Symposium "Sustainable Society"

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Then, the first speaker is Enrico Caldari

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marketing expert, new medias, independent researcher

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Since 2005 he has concerned with monetary systems

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and since 2010 he has also been popularizer, speaking to public

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with a series of lectures entitled "What is money?"

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and his facebook page "Kaldari Report".

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He graduated in Statistics in Bologna

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and in short, he does a lot of researches and interesting works.

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We're not to be here redundant, get him come on the stage

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and he will explain us what is the money. Thank you everyone.

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- Thank you very much, Federico.

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Thank you everyone.

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I say it's a particular emotion for me

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talking to all of you.

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but I'll say the truth: I think i'll enjoy myself a little

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and i will also entertain you a little.

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As Federico has already said, i have made so many things in my life

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As all of you, we say that, I had to engineer myself

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to gain some money to live.

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Indeed, i ask you a question.

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How many of you need money to live?

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Then I will change the question.

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How many of you do not need money to live?

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I don't see anyone!

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All right. In 2005, you can see the date written on a small scale there

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I have just started to deal myself not so much about money I was doing,

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about amount of money I was doing, but on quality of money

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i was using and that we all use.

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about the nature of money.

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So I started to explore the theme and some years later

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some people have asked me to talk about that.

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to talk about that around and therefore

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I have put together a series of topics

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that in the last 10-12 months i have brought around Italy

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and even England

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talking about a range of issues related to money.

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For example I talk about origins of the monetary system.

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on reason the nature of money is connected to current crisis

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that is a economic, social, environmental crisis

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and I would add spiritual crisis too.

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and then how to change the money could be a solution

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this is, in my opinion, the first solution.

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Since we suppose that

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all of us use money we know what it is

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I ask you a first simple question.

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Who creates the money?

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Then, i'm sure the guy in front of me

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has tried to print some money in his garage

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but surely the tobacconist on the corner has caught him immediately.

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Obviously the correct answer is: central banks.

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Who creates the money?

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[Central bank]

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Wrong!

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Now i think to understand that we need to deepen the theme for a moment.

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Then, what you can see here is an graphical exemplification

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of our amount of circulating money in our society

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what we all use and it is divided into two parts.

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look, there is a tiny green part and a larger dark green part . Ok?

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What are these two parts?

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Then, the tiny green part is money created by central banks

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instead the dark green part is credit.

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What is credit?

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credit created, we say, provided by commercial banks, by private banks.

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Then, I ask you a question.

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If me and the guy here

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who has had problems with tobacconist

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we have a business relationship.

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I have a credit on him, okay?

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What has he got on me?

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So if that 95% is credit, necessarily it corresponds to a debt.

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ok? But there is a "but" ...

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this debt will be repaid with interests.

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Then, this very easy mechanism to understand

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is the reason whole basis of circulating money has to grow

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because to repay the debt which it is composed

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as we should also repay all interests

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Now i don't want to bore you, but the basic concept is that

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today almost all the circulating money represents a debt

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that we have to repay with interests.

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This is, I quote a source of my assertion

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is the last book by Richard Werner and Josh Ryan-Collins.

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i also met him in London

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and the book is titled "Where does money come from"

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"Where does money come from", released in September of this year

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and it is one of the most complete pubblications

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released about this issue in the last years .

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Now, you will return to home tonight

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I take my fried here as example again

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he will return to home this evening, he will meet his father in law and he will say him "Dear...

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What is his name? There's no father in law, let's call him Mario.

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"Dear Mario, you know that today I have attended a conference

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in the centre of Verona, at the cinema, there was this guy is from Romagna.

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He has said us that most of the money

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is not created by central banks but by commercial banks

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as credit, as a loan and they get it out of nothing.

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What will Mario tell you?

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This is not true, is not possible. I have got bills in my pocket

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and there is written on central bank, it's not possible.

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Then, but the guy from Romagna has quoted us other sources

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for example he has quoted the chief editor of economics section

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of "Financial Time" , in 2011 he declared:

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"The essence of the contemporary monetary system is the creation of money, out of nothing

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by private banks' often unruly lending."

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The original adjective is "foolish" ...

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Mario will say " Irritating journalists, one who says one thing

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and one who says different things i don't trust, for heaven's sake

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i wonder who that boy is".

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So then I will quote another example.

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This is an official document instead

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is the quarterly bulletin of the Bank of England

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Third in 2007, there is written on:

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"The most important role to create circulating money is covered by the banking sector"

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"When banks make loans, they create additional deposits for those who get into debt."

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And Mario says

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But the world is based on dollars, not on pounds

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who cares if Bank of England said it.

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But, be careful, because if even we talk about dollars

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there's for example the document by Federal Reserve Bank of Chicago

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entitled "Modern Money Mechanics" of '61

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where is written:

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"The actual process of money creation takes place primarily in the private banks. "

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And Mario says: "But that's an old document, it's of '61"

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Then, let's carry on.

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However it was updated and republished in 1992

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so anyway ...

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"but we are in Europe, we use Euro. Who cares about dollars?"

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Then to conclude:

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"In the the 'Euro-system the currency is created primarily through the expansion of credit bank the commercial banks can create money themselves"

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That is a document by Bundesbank entitled "Geld und Geldpolitik"

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Does anyone know Geman? I don't, but i know what it means

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"Currency and money policy"

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Now, my friend's father in law here what will he say?

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"You're communist"

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Because then all arguments are finished

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or alternatively "you are fascist"

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"you are an anarcho-insurrectionist"

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"you are a conspiracy theorist"

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but what gives me more bother is..

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when people say ... i have now overcome the others

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but when people say "you are pessimist"

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As those are just quotes from books and documents

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let's look at some real things.

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For example, this is the Wikipedia page

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describes the economy of Greece.

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You know that Greek is bottom of the class.

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It has created many problems in the world economy

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many fears and concerns, and i would say

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in 2010 the greek government deficit was 26%

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that is the greek government made 100 and spent 126

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Obviously the rating agency's rating was the worst possible

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bottom of the class: CCC-

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But let's look at first of the class, United States.

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I have a looked at the same information again of 2010

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and i have verified it, the budget deficit in 2010.

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Then i have discovered what no one had never told me

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reading newspapers, listening television, books ...

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in 2010 the U.S. deficit was 59%

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The U.S. made 100 and spent 159

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more than double of Greece.

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Guess what the rating of U.S. government bonds was in 2010.

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AAA+ is not a laugh but it is precisely the best possible rating.

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Then, we are starting to understand somethings

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to begin with it is not clear how rating is got by rating agencies

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and this is a separate problem, however, what we begin to understand

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is the problem of budget deficit of the states i would say

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maybe it' s a "structural" fact, because a deficit like that is not usually done in one year

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is not that what was unlucky one year, okay?

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In fact, if we look at history a little

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this is here the trend of the total debt of United States

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not only as a government, because someone might say that

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governament gets debts, but the companies don't get debts.

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It is not true, this is the total aggregate debt of United States

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from 1955 to 2010.

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Do you see that red line? It's the structural trend of debt

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It rises, okay? From 5000 billion dollars has exceeded

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55.000 maybe 60.000 billion dollars

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So clearly, a structural trend.

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Now, returning to the origin of my talk, we have said that

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whole circulating money represents a debt

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It must continue to grow

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because to repay this debt with interests

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we need more and more money.

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So the economy using money must continue to grow

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We know that economy to grow , needs more and more money.

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Why does the GDP grow? How does the GDP
grow?

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Surely exchanging more money faster

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It's a way, but the quantity of money must increase.

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So clearly this kind of sistem faces

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a structural limit, that is, if we have seen

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the continuing growth of total debt

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the economy must grow continuously to repay the debt

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There is a problem i would call Planet Earth

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Planet Earth, where we live, is one and also limited.

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So think about doing a constant infinite growth like that

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on Planet Earth, perhaps it means to face with a structural limit.

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Which is the other limit? If we continue

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to increase the total debt with new deficit every year

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clearly the expenditure to pay the interests, what will it do?

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It will increase. Current expenditure, the salaries of politicians

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maybe we compress it a little

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but what is trend of investment spending? It falls.

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So which is the other structural limit of this system?

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Clearly it is if the debt continues to rise

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and we have to pay the interests

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sooner or later we'll pay only the interests.

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Now very fast question: what do you think is

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our economic system name?

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Monetarism, market economy, free market.

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Honestly I don't very interested your thought

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what i think is in my opinion

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the system name is "debt based economy"

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Now i ask you, What is the end of this kind of system ?

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I don't think about it just me, surely there is also someone else

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but surely it won't make a good demise.

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Now the question is: do we want to make his own demise?

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to be buried under that mountain of debts

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or we want to choose ourselves, maybe to bury it

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and to invent ourselves something new.

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Now to do that, let's look back on logo that i use on my blog

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is pronunced Kaldàri

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I left this little writing on it

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on the 1 penny coin "We trust".

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Whole our monetary economic system

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and then our lives are based on trust about money.

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Today that confidence is used a little surreptitiously

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but it can also be used in a more useful and sustenable way.

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That is Island of Guernsey between England and France

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At the beginning of 1800 Island of Guernsey had a serious problem.

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A total debt of 20.000 pounds.

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on which it had state public revenues

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we can say it was a small town, of 3000 annual pounds.

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that had interests on debt of 2.400 pound a year

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That means there was 600 pounds

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to make investments and pay salaries.

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They didn't pay salaries, they had a serious problem.

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moreover they had decadent public structures

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the sea eroded the coast

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so they had a serious problem.

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They had to invent a way to resolve it

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without asking to borrow more money

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becouse otherwise they wouldn't be able even to pay interests

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and without charging other taxes to the popolation

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that already was at the limit.

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What did the people from Island Guernsey do in 1816?

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A very simple thing, they took small pieces of paper

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they wrote on "One Pound"

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and "State of Island of Guernsey"

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and they spent them.

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Without borriowing or otherwise.

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They took small pieces of paper and they wrote on them "One Pound"

254
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and why did they take them? To pay the people

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00:16:27,800 --> 00:16:30,888
who were unemployed to get them to go and to cut the trees

256
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reconstructing the structure of the market, the barriers to the port

257
00:16:34,720 --> 00:16:37,947
and the economy restarted, okay?

258
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This is defined The Guernsey Experiment

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00:16:43,659 --> 00:16:48,837
it is mentioned in several documents in the following years

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also in 1900, so i quote for example 3

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00:16:51,415 --> 00:16:54,039
and it is remembered as the story of Island of

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00:16:54,039 --> 00:16:57,568
Guernsey that just created his own currency

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no cost to the taxpayers and establishing a prosperous community

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free community from debt.

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indeed thriving community, prosperous means another thing.

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Free community from debt.

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Then, the people in Island of Guernsey understood

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a very very simple thing

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the currency that all of us know

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as a way to exchange value and to save value.

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Actually it has another function very much more important

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that is the stimulus to the social development

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that we measure as economic growth.

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Now, because this thing here ...

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Here there are economists, sure. How many economists are there?

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One. Good, worse for you.

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Then, Which is the speech?

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That they did this operation

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00:17:54,341 --> 00:17:56,407
they printed tens of thousands of pounds

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they threw them on the market, they bought the work

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00:17:58,915 --> 00:18:01,794
and there was no inflation on the island. But how?

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If one prints currency, prints more currency out of nothing this creates inflation

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Why was there no inflation, for a very simple reason

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Because they invested to make useful things, productive activities

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but what happens if you print money and use it for example

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00:18:18,675 --> 00:18:21,717
to mop up all the gold there is on the island?

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00:18:21,717 --> 00:18:24,945
So as everyone seek it, and no one find it and they are willing to pay more

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00:18:24,945 --> 00:18:27,035
and the next day they will sell it at a higher price.

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What is this name?

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Clearly they didn't use that money to do things like that

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not for speculative activities.

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Now i ask you a question, the quiz of the morning

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just to wake up who already has signs of slowing

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Can you imagine at 7 tonight. Then, question:

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What is percentage of loans provided by banks for productive activities today?

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Swich on it?

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8%

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Obviously this refers to the UK market

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The european figure is a little difficult to assess

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but it was mentioned by Ben Dyson at the conference in London

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where i was time ago, where

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he is Ben Dyson of Positive Money

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00:19:18,560 --> 00:19:21,429
who i met him, really a smart boy.

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He also mentioned the governor of the Bank of England on 25th October 2010 he said:

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"Of the many ways in which to organize the banking system what we have today is the worst"

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I didn't say that. I'm pessimist/conspirator

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Now, the question is

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00:19:44,102 --> 00:19:47,051
but how can we resolve this problem we have today

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that is, the debt which is literally overflowing and flooding us?

310
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Then, the first part of solution i descrive summarily

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in my lectures sure is to do like the island of Guernsey

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breaking the link between the money emission and debt

313
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You'll say "but it's a very simple thing, maybe too simple"

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So you say " let's make a monetary reform

315
00:20:16,284 --> 00:20:19,512
we report the money emission to the state

316
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or to a public body, we say.

317
00:20:22,171 --> 00:20:24,134
Sorry, but at the beginning you have said that ...

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Who creates the money? The Central Bank.

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What is the Central Bank? A public body.

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So i..

321
00:20:31,286 --> 00:20:33,817
but in theory you should to think it's a public body

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I have learned so.

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Then i'm just saying :

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we do as all of us believe

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we report the money emission to the hand of a public body

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in order to break the link with debt.

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And you'll say ...

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00:20:48,777 --> 00:20:53,111
you say all these things but someone else has thought about it, right?

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00:20:53,111 --> 00:20:57,453
In fact in '80 years when the 500 Lire note was circulating yet

330
00:20:57,453 --> 00:21:01,912
you could see a substantial difference compared to 1000 Lire notes

331
00:21:01,912 --> 00:21:07,670
on 500 notes was written "Italian Republic State ticket legal tender"

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while on 1000 Lire notes was written "Bank of Italy"

333
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Where is the difference?

334
00:21:14,210 --> 00:21:18,119
Then, the 500 Lire notes with on written "Italian Republic"

335
00:21:18,119 --> 00:21:23,460
were printed by state and were expended, they did not represent any debt.

336
00:21:23,460 --> 00:21:26,223
while if you read "bank" ...

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00:21:26,223 --> 00:21:27,882
What do banks do?

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00:21:27,882 --> 00:21:29,822
Question to guy here below:

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00:21:29,822 --> 00:21:37,938
what does the tabacconist on the corner do, what does he sell?

340
00:21:38,923 --> 00:21:42,361
What does tabacconist sell? What does a grocer sell?

341
00:21:42,361 --> 00:21:44,590
No, that one is a pusher.

342
00:21:44,590 --> 00:21:47,444
What does the tabacconist sell? The cigarettes.

343
00:21:47,690 --> 00:21:50,377
Then, what i ask you is: What does the bank sell?

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00:21:51,823 --> 00:21:55,109
The credit, that is debt. Then if you read "bank"

345
00:21:55,109 --> 00:21:57,709
it means that someone has sold a debt to someone else.

346
00:21:57,709 --> 00:22:00,031
So this thing was done

347
00:22:00,031 --> 00:22:02,562
it's not invented by me, i will tell you more.

348
00:22:03,839 --> 00:22:08,390
In England the guy of Postive Money, Ben Dyson

349
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collected some documents, he wrote a good book

350
00:22:11,270 --> 00:22:14,242
and he managed to convince two british parliamentarians

351
00:22:14,242 --> 00:22:18,468
Labour Michael Meacherand and Conservative Steve Baker

352
00:22:18,468 --> 00:22:22,392
respectively to the left and right, because they are the left and right

353
00:22:22,392 --> 00:22:29,660
both to support the currency reform proposed by Positive Money.

354
00:22:29,660 --> 00:22:32,075
What does it propose as a first step?

355
00:22:32,075 --> 00:22:33,723
Exactly what we have said

356
00:22:33,723 --> 00:22:37,021
to bring again the money emission to the hand of the state, to public body

357
00:22:37,021 --> 00:22:40,347
not to Berlusconi or Bersani, clearly

358
00:22:40,347 --> 00:22:44,637
to a public body which is able to value the impact and to do that

359
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So this proposal is in the hands of two parliamentarians

360
00:22:49,118 --> 00:22:53,042
Last Wednesday Ben and Josh Dyson

361
00:22:53,042 --> 00:22:55,179
the writer of the book I have just mentioned

362
00:22:55,179 --> 00:22:58,290
they also met other parlamentarians behind close doors

363
00:22:58,290 --> 00:23:01,587
at the British Parliament, to propose it.

364
00:23:01,587 --> 00:23:05,790
So this is not something invented by me, I come from Romagna.

365
00:23:06,821 --> 00:23:12,036
Then obviously there are other points for a proposal of monetary reform

366
00:23:12,036 --> 00:23:15,566
i propose at the lectures such as point for reflection

367
00:23:15,566 --> 00:23:19,304
today there is no time, i have already breached the 2 minutes and 30 seconds

368
00:23:19,304 --> 00:23:25,968
and then tomorrow if there is time at the meeting that will continue tomorrow

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00:23:29,537 --> 00:23:35,001
but now to conclude i quote a saying i really like

370
00:23:35,001 --> 00:23:36,649
"think global act local".

371
00:23:36,649 --> 00:23:38,762
We have talked about this issue of debt

372
00:23:38,762 --> 00:23:40,829
of monetary system at the global level

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But what can we do now?

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00:23:43,197 --> 00:23:46,402
Then, i and my friend Lore Prod

375
00:23:46,402 --> 00:23:50,140
he is an artist and graphic designer from Romagna

376
00:23:50,140 --> 00:23:52,207
we do great drinking

377
00:23:52,207 --> 00:23:59,660
we have created a manifest. This manifest tries to do

378
00:23:59,660 --> 00:24:03,074
what i think it is necessary to do now.

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00:24:03,074 --> 00:24:06,789
that is to focus the attention on issue and solution

380
00:24:06,789 --> 00:24:08,972
on a possible solution.

381
00:24:08,972 --> 00:24:10,876
What is the problem today?

382
00:24:10,876 --> 00:24:14,637
All currency is debt today, it is emitted by private banks

383
00:24:14,637 --> 00:24:17,679
is encumbered by interests and can only grow.

384
00:24:17,679 --> 00:24:21,023
What, money or debt? They're the same thing.

385
00:24:23,408 --> 00:24:26,247
What is right asking? Correct is asking

386
00:24:26,247 --> 00:24:31,007
to bring again the money emission that we all use to the public hand.

387
00:24:31,007 --> 00:24:33,027
The money is a tool not the purpose.

388
00:24:34,489 --> 00:24:37,277
Then you can see archetype combination

389
00:24:37,277 --> 00:24:40,597
dead and life, disorder-order, gray-color

390
00:24:40,597 --> 00:24:42,106
In short we have worked a little

391
00:24:42,106 --> 00:24:43,662
if someone here does communication sciences

392
00:24:43,662 --> 00:24:47,026
He can write an article.

393
00:24:47,026 --> 00:24:51,952
I'll also tell you, finally what is meaning of that hummingbird up there at the top corner.

394
00:24:53,706 --> 00:24:55,992
I tell you a little story about hummingbird

395
00:24:55,992 --> 00:24:59,707
Then, there is a bug large forest fire

396
00:24:59,707 --> 00:25:02,586
all animals are fleeing included the lion

397
00:25:02,586 --> 00:25:07,347
is running away from the forest and crosses a hummingbird

398
00:25:07,347 --> 00:25:10,992
that is flying in opposite direction with a drop of water in its beak.

399
00:25:10,992 --> 00:25:14,080
Lion looks at it and says:

400
00:25:14,080 --> 00:25:17,238
"Hummingbird, where are you going with that drop of water?"

401
00:25:17,238 --> 00:25:20,536
hummingbird looks at it again seriously and says:

402
00:25:20,536 --> 00:25:24,204
"I don't know you, but i do my part"

403
00:25:24,896 --> 00:25:27,405
Thank you and i have finished with this.

404
00:25:27,405 --> 00:25:34,724
applause

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