JOURNAL PAPERWORLD MONETARY UNIONWINNING PLANNEW ECONOMIC SYSTEMPRESENTATION 2015

JOURNAL PAPER

Risk Cost of Carbon

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WORLD MONETARY UNION

Institutions for Sustainability

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WINNING PLAN

MIT Climate CoLab 2015

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NEW ECONOMIC SYSTEM

Global Rewards for Climate Mitigation

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PRESENTATION 2015

Paper and Interview

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Carbon Monetary Standard

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Please cite this page as:
Chen, Cloud, and van der Beek (2016). Global 4C – Monetary and Market Policy for Climate Change Mitigation. www.global4c.org

Carbon Standard

The ‘Solar Dollar’ currency and the ‘World Tree’ administrative system are the proposed ‘tools’ for optimising a global mitigation economy. The primary agreement of this mitigation economy is called the Carbon Monetary Standard, or the Carbon Exchange Standard, or simply the Carbon Standard. The Carbon Standard will define how the price of the Solar Dollar will be adaptively coupled to national (fiat) currencies, and how the supply of the Solar Dollar will be pegged to recorded greenhouse mitigation.
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Show Transcript. Discussion of the Carbon Standard.
Updated March 18, 2016

At the conclusion of World War II, political leaders and economists met at the 1944 Bretton Woods conference to negotiate a new monetary and financial system for encouraging international trade, prosperity, and peace. The proposed Carbon Standard may be compared with the Gold Exchange Standard of the 1944 Bretton Woods agreement. The Gold Exchange Standard was used to tie the value and supply of U.S. Dollars to gold held by the U.S. treasury. This was an attempt to give the U.S. Dollar and the world financial system stability and certainty. Its main weakness was the absence of mechanisms to prevent trade imbalances. From a technical point of view, the Carbon Standard is a much more sophisticated standard, because the Carbon Standard is a multi-disciplinary agreement to monetise greenhouse mitigation in all economic sectors and all geographic locations. The Carbon Standard will give the world economy greater stability and certainty with macro-economic controls to incentivise greenhouse mitigation. This will involve a transfer of purchasing power from a large basket of national (fiat) currencies into the Solar Dollar. The cost of the Carbon Standard will be carried by the world economy as globalised inflation (i.e. an inflation tax).

Since the end of World War II, the major existential risks to nation states have changed. Prior to World War II, the existential risks were conventional wars and economic vulnerability, today the risks are abrupt climate change, ecosystem overshoot, and nuclear war. Ironically, climate change is the result of the economic activity that was encouraged at Bretton Woods and beginning with the industrial revolution. After the Nixon Shock of 1971, the Gold Exchange Standard was abandoned in favour of a floating exchange rate system however the new system was even more expansionary and ignored climate change.

Under the Carbon Standard, the new Solar Dollar will operate differently to fiat currencies. Firstly, the Solar Dollar is a new class of currency termed a ’service currency’ and is not a fiat currency. Secondly, the Solar Dollar can be used to create a powerful socio-economic feedback, called the Solar Dollar bull market. The Solar Dollar bull market will have (1) high liquidity, (2) steady rising floor prices, (3) prices telegraphed decades in advance, and (4) price appreciation that could outperform most other asset classes. Bull markets are sometimes called Ponzi schemes. The new worldview is to classify previous economic growth as a Ponzi scheme because of its high greenhouse emissions intensity. A major problem is that most of the existing ’carbon debt’ is kept off the balance sheet of the world economy. The Carbon Standard will rectify this situation with adaptive Solar Dollar pricing in foreign exchange currency markets.

Since the 2008-9 Global Financial Crisis, it was found that central banks have had trouble stimulating economic growth with monetary policy. In Europe, for example, it appears that the use of Quantitative Easing (QE) tends to inflate equity and property markets and does not create enough real economic activity and new jobs. This problem can be addressed with the Carbon Standard because it will create green jobs with Green Quantitative Easing (GQE). Solar Dollars can also be used by citizens and firms as an alternative currency for protecting wealth, especially if national economies begin to struggle under worsening climate change and rising debt. The Solar Dollar will create a common narrative for scientists, economists, society, and politicians, and this will demonstrate that the Carbon Standard is effective. The Carbon Standard is needed because it can address three seemingly intractable problems at once: (1) man-made global warming, (2) dirty economic growth, and (3) debt-based economics.


Carbon Monetary Standard

Carbon Monetary Standard

REFERENCES

[1]

Chen D., J. Cloud and J. van der Beek (2015). ‘Global 4C: World Monetary Union for Climate Change Mitigation’. 2015 Canberra Conference on Earth System Governance: ’Democracy and Resilience in the Anthropocene’. Delton B. Chen, Jonathan Cloud, Joel van der Beek (November 20, 2015).

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