Reagan Did It

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Paul Krugman
June 1, 2009 - The New York Times

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"This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot." So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation's significance. And as for that jackpot - well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.

For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn - the turn that made crisis inevitable - took place in the early 1980s, during the Reagan years.

Attacks on Reaganomics usually focus on rising inequality and fiscal irresponsibility. Indeed, Reagan ushered in an era in which a small minority grew vastly rich, while working families saw only meager gains. He also broke with longstanding rules of fiscal prudence.

On the latter point: traditionally, the U.S. government ran significant budget deficits only in times of war or economic emergency. Federal debt as a percentage of G.D.P. fell steadily from the end of World War II until 1980. But indebtedness began rising under Reagan; it fell again in the Clinton years, but resumed its rise under the Bush administration, leaving us ill prepared for the emergency now upon us.

The increase in public debt was, however, dwarfed by the rise in private debt, made possible by financial deregulation. The change in America's financial rules was Reagan's biggest legacy. And it's the gift that keeps on taking.

The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry - whose deposits were federally insured - a license to gamble with taxpayers' money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money.

But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending - restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped.

Together with looser lending standards for other kinds of consumer credit, this led to a radical change in American behavior.

We weren't always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis. Household debt was only 60 percent of income when Reagan took office, about the same as it was during the Kennedy administration. By 2007 it was up to 119 percent.

All this, we were assured, was a good thing: sure, Americans were piling up debt, and they weren't putting aside any of their income, but their finances looked fine once you took into account the rising values of their houses and their stock portfolios. Oops.

Now, the proximate causes of today's economic crisis lie in events that took place long after Reagan left office - in the global savings glut created by surpluses in China and elsewhere, and in the giant housing bubble that savings glut helped inflate.

But it was the explosion of debt over the previous quarter-century that made the U.S. economy so vulnerable. Overstretched borrowers were bound to start defaulting in large numbers once the housing bubble burst and unemployment began to rise.

These defaults in turn wreaked havoc with a financial system that - also mainly thanks to Reagan-era deregulation - took on too much risk with too little capital.

There's plenty of blame to go around these days. But the prime villains behind the mess we're in were Reagan and his circle of advisers - men who forgot the lessons of America's last great financial crisis, and condemned the rest of us to repeat it.

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Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics.

Goodbye, GM

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Michael Moore
June 1st, 2009 - MichaelMoore.com

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I write this on the morning of the end of the once-mighty General Motors. By high noon, the President of the United States will have made it official: General Motors, as we know it, has been totaled.

As I sit here in GM's birthplace, Flint, Michigan, I am surrounded by friends and family who are filled with anxiety about what will happen to them and to the town. Forty percent of the homes and businesses in the city have been abandoned. Imagine what it would be like if you lived in a city where almost every other house is empty. What would be your state of mind?

It is with sad irony that the company which invented "planned obsolescence" -- the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one -- has now made itself obsolete. It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh -- and that wouldn't start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the "inferior" Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the
lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars? History will record this blunder in the same way it now writes about the French building the Maginot Line or how the Romans cluelessly poisoned their own water system with lethal lead in its pipes.

So here we are at the deathbed of General Motors. The company's body not yet cold, and I find myself filled with -- dare I say it -- joy. It is not the joy of revenge against a corporation that ruined my hometown and brought misery, divorce, alcoholism, homelessness, physical and mental debilitation, and drug addiction to the people I grew up with. Nor do I, obviously, claim any joy in knowing that 21,000 more GM workers will be told that they, too, are without a job.

But you and I and the rest of America now own a car company! I know, I know -- who on earth wants to run a car company? Who among us wants $50 billion of our tax dollars thrown down the rat hole of still trying to save GM? Let's be clear about this: The only way to save GM is to kill GM. Saving our precious industrial infrastructure, though, is another matter and must be a top priority. If we allow the shutting down and tearing down of our auto plants, we will sorely wish we still had them when we realize that those factories could have built the alternative energy systems we now desperately need. And when we realize that the best way to transport ourselves is on light rail and bullet trains and cleaner buses, how will we do this if we've allowed our industrial capacity and its skilled workforce to disappear?

Thus, as GM is "reorganized" by the federal government and the bankruptcy court, here is the plan I am asking President Obama to implement for the good of the workers, the GM communities, and the nation as a whole. Twenty years ago when I made "Roger & Me," I tried to warn people about what was ahead for General Motors. Had the power structure and the punditocracy listened, maybe much of this could have been avoided. Based on my track record, I request an honest and sincere consideration of the following suggestions:

1. Just as President Roosevelt did after the attack on Pearl Harbor, the President must tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices. Within months in Flint in 1942, GM halted all car production and immediately used the assembly lines to build planes, tanks and machine guns. The conversion took no time at all. Everyone pitched in. The fascists were defeated.

We are now in a different kind of war -- a war that we have conducted against the ecosystem and has been conducted by our very own corporate leaders. This current war has two fronts. One is headquartered in Detroit. The products built in the factories of GM, Ford and Chrysler are some of the greatest weapons of mass destruction responsible for global warming and the melting of our polar icecaps. The things we call "cars" may have been fun to drive, but they are like a million daggers into the heart of Mother Nature. To continue to build them would only lead to the ruin of our species and much of the planet.

The other front in this war is being waged by the oil companies against you and me. They are committed to fleecing us whenever they can, and they have been reckless stewards of the finite amount of oil that is located under the surface of the earth. They know they are sucking it bone dry. And like the lumber tycoons of the early 20th century who didn't give a damn about future generations as they tore down every forest they could get their hands on, these oil barons are not telling the public what they know to be true -- that there are only a few more decades of useable oil on this planet. And as the end days of oil approach us, get ready for some very desperate people willing to kill and be killed just to get their hands on a gallon can of gasoline.

President Obama, now that he has taken control of GM, needs to convert the factories to new and needed uses immediately.

2. Don't put another $30 billion into the coffers of GM to build cars. Instead, use that money to keep the current workforce -- and most of those who have been laid off -- employed so that they can build the new modes of 21st century transportation. Let them start the conversion work now.

3. Announce that we will have bullet trains criss-crossing this country in the next five years. Japan is celebrating the 45th anniversary of its first bullet train this year. Now they have dozens of them. Average speed: 165 mph. Average time a train is late: under 30 seconds. They have had these high speed trains for nearly five decades -- and we don't even have one! The fact that the technology already exists for us to go from New York to L.A. in 17 hours by train, and that we haven't used it, is criminal. Let's hire the unemployed to build the new high speed lines all over the country. Chicago to Detroit in less than two hours. Miami to DC in under 7 hours. Denver to Dallas in five and a half. This can be done and done now.

4. Initiate a program to put light rail mass transit lines in all our large and medium-sized cities. Build those trains in the GM factories. And hire local people everywhere to install and run this system.

5. For people in rural areas not served by the train lines, have the GM plants produce energy efficient clean buses.

6. For the time being, have some factories build hybrid or all-electric cars (and batteries). It will take a few years for people to get used to the new ways to transport ourselves, so if we're going to have automobiles, let's have kinder, gentler ones. We can be building these next month (do not believe anyone who tells you it will take years to retool the factories -- that simply isn't true).

7. Transform some of the empty GM factories to facilities that build windmills, solar panels and other means of alternate forms of energy. We need tens of millions of solar panels right now. And there is an eager and skilled workforce who can build them.

8. Provide tax incentives for those who travel by hybrid car or bus or train. Also, credits for those who convert their home to alternative energy.

9. To help pay for this, impose a two-dollar tax on every gallon of gasoline. This will get people to switch to more energy saving cars or to use the new rail lines and rail cars the former autoworkers have built for them.

Well, that's a start. Please, please, please don't save GM so that a smaller version of it will simply do nothing more than build Chevys or Cadillacs. This is not a long-term solution. Don't throw bad money into a company whose tailpipe is malfunctioning, causing a strange odor to fill the car.

100 years ago this year, the founders of General Motors convinced the world to give up their horses and saddles and buggy whips to try a new form of transportation. Now it is time for us to say goodbye to the internal combustion engine. It seemed to serve us well for so long. We enjoyed the car hops at the A&W. We made out in the front -- and the back -- seat. We watched movies on large outdoor screens, went to the races at NASCAR tracks across the country, and saw the Pacific Ocean for the first time through the window down Hwy. 1. And now it's over. It's a new day and a new century. The President -- and the UAW -- must seize this moment and create a big batch of lemonade from this very sour and sad lemon.

Yesterday, the last surviving person from the Titanic disaster passed away. She escaped certain death that night and went on to live another 97 years.

So can we survive our own Titanic in all the Flint Michigans of this country. 60% of GM is ours. I think we can do a better job.

Yours,
Michael Moore

"Weird" Sex Fantasies, And Why They're Good For You

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Brie Cadman
June 1, 2009 - Divine Caroline

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Having sexual fantasies is an absolutely normal, if not necessary, part of being a sexual being. It's not having them that is aberrant.

If you want to enliven your next dinner party, bring out this question: what was the subject of your last sexual fantasy?

Forks and jaws might drop, but only because almost everyone in attendance will be recreating the scene last played in their head, or claiming that they don't fantasize, or claiming to only fantasize about their partner. However, chances are everyone at the table (assuming you're not dining at a senior center) has erotic and illicit fantasies, and does so on a normal basis. But rarely, if ever, do we want to talk about it.

Titillating Taboo

Sexually fantasies are something we rarely discuss, even among good friends. Our deepest sexual thoughts are often considered too weird, perverse, or just plain wrong to be shared amongst polite company; fantasizing might indicate there is something wrong with our relationships, or worse, ourselves. But research indicates that having sexual fantasies is an absolutely normal, if not necessary, part of being a sexual being. It's not having them that is aberrant.

Large research studies indicate that almost everyone fantasizes and almost none of us talk about it. While researching his book, Who's Been Sleeping in Your Head: The Secret World of Sexual Fantasies, Brett Kahr, a psychologist based in the UK, anonymously surveyed 18,000 people in Britain and America. He asked them questions about the frequency and content of their fantasies and found that nine out of ten people have sexual fantasies. What's more, he believes the remaining tenth person has them too, but is too embarrassed to admit it.

Even those of us that admit to fantasizing are reluctant to discuss what it is that gets us going. Ninety-five percent of the research subjects had never detailed their fantasies to another person. While some fantasies might be better left undisclosed -- such as revealing to a new partner that you think about an ex while having sex with him -- we don't even talk about our imaginative sexual escapades with friends. Erotic fantasy is taboo.

Wine Me, Dine Me, 69 Me

Many people suffer shame and guilt about the perverse nature of their fantasies, even though what we think of as "perverse" may actually be quite common. Though a typical and unremarkable fantasy for both men and women is dreaming about sex with their current partner, Kahr also found that bondage, incest, sadomasochism, and voyeurism are also part of the varied fantasy life of "normal" people.

Shame regarding sexual fantasies may stem from earlier notions about the role of fantasy in our lives. In the 1900s, some psychoanalysts interpreted "kinky" sexual fantasies as being caused by "kinky" desires or wishes. Strange fantasies were often treated as pathology.

But we now know that fantasies are no more pathologic than masturbation. They allow us to think about doing something we would never actually do, or about things we've done before and would like to do again. (An ex-flame, for instance.) They allow us to sleep with celebrities. (You and me, Robert Downey Jr., just you and me.) Furthermore, fantasy may help our sex lives by increasing desire and arousal; those who fantasize frequently also tend to have more sex. And cerebral foreplay has certainly helped millions (billions? trillions?) of masturbations end in success.

Safe Sex

Kahr also found that sometimes fantasy is a way of putting a positive spin on a negative childhood memory. For instance, he describes a happily married woman whose fantasies help turn memories of sexual abuse by an older brother into an arousing experience. In this way, fantasy can be a coping mechanism. However, even if you fantasize about abuse, it doesn't necessarily mean you're a survivor of abuse or want it to happen. Women may fantasize about being dominated by a stranger, but we are able to control every one of their actions. Our minds are a safe place to try new and risky deeds without ever getting hurt. In the book, Arousal: The Secret Logic of Sexual Fantasies, Michael Bader writes, "Safety is the concept that functions as the key to unlocking the meaning of our fantasies." Being bound and gagged by a dominating partner may not seem safe, but somewhere in the unconscious, submission is desired.

All this is somewhat reassuring. Rather than feeling guilty about thinking about another person while having sex with your partner, we can see it as a way to help spice up the sex, without committing any transgressions. Just keep it in your head.

Contractors Vie for Plum Work, Hacking for the United States

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Christopher Drew and John Markoff
May 31, 2009 - The New York Times

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The government's urgent push into cyberwarfare has set off a rush among the biggest military companies for billions of dollars in new defense contracts.

The exotic nature of the work, coupled with the deep recession, is enabling the companies to attract top young talent that once would have gone to Silicon Valley. And the race to develop weapons that defend against, or initiate, computer attacks has given rise to thousands of "hacker soldiers" within the Pentagon who can blend the new capabilities into the nation's war planning.

Nearly all of the largest military companies - including Northrop Grumman, General Dynamics, Lockheed Martin and Raytheon - have major cyber contracts with the military and intelligence agencies.

The companies have been moving quickly to lock up the relatively small number of experts with the training and creativity to block the attacks and design countermeasures. They have been buying smaller firms, financing academic research and running advertisements for "cyberninjas" at a time when other industries are shedding workers.

The changes are manifesting themselves in highly classified laboratories, where computer geeks in their 20s like to joke that they are hackers with security clearances.

At a Raytheon facility here south of the Kennedy Space Center, a hub of innovation in an earlier era, rock music blares and empty cans of Mountain Dew pile up as engineers create tools to protect the Pentagon's computers and crack into the networks of countries that could become adversaries. Prizes like cappuccino machines and stacks of cash spur them on, and a gong heralds each major breakthrough.

The young engineers represent the new face of a war that President Obama described Friday as "one of the most serious economic and national security challenges we face as a nation." The president said he would appoint a senior White House official to oversee the nation's cybersecurity strategies.

Computer experts say the government is behind the curve in sealing off its networks from threats that are growing more persistent and sophisticated, with thousands of intrusions each day from organized criminals and legions of hackers for nations including Russia and China.

"Everybody's attacking everybody," said Scott Chase, a 30-year-old computer engineer who helps run the Raytheon unit here.

Mr. Chase, who wears his hair in a ponytail, and Terry Gillette, a 53-year-old former rocket engineer, ran SI Government Solutions before selling the company to Raytheon last year as the boom in the military's cyberoperations accelerated.

The operation - tucked into several unmarked buildings behind an insurance office and a dentist's office - is doing some of the most cutting-edge work, both in identifying weaknesses in Pentagon networks and in creating weapons for potential attacks.

Daniel D. Allen, who oversees work on intelligence systems for Northrop Grumman, estimated that federal spending on computer security now totals $10 billion each year, including classified programs. That is just a fraction of the government's spending on weapons systems. But industry officials expect it to rise rapidly.

The military contractors are now in the enviable position of turning what they learned out of necessity - protecting the sensitive Pentagon data that sits on their own computers - into a lucrative business that could replace some of the revenue lost from cancellations of conventional weapons systems.

Executives at Lockheed Martin, which has long been the government's largest information-technology contractor, also see the demand for greater computer security spreading to energy and health care agencies and the rest of the nation's critical infrastructure. But for now, most companies remain focused on the national-security arena, where the hottest efforts involve anticipating how an enemy might attack and developing the resources to strike back.

Though even the existence of research on cyberweapons was once highly classified, the Air Force plans this year to award the first publicly announced contract for developing tools to break into enemy computers. The companies are also teaming up to build a National Cyber Range, a model of the Internet for testing advanced techniques.

Military experts said Northrop Grumman and General Dynamics, which have long been major players in the Pentagon's security efforts, are leading the push into offensive cyberwarfare, along with the Raytheon unit. This involves finding vulnerabilities in other countries' computer systems and developing software tools to exploit them, either to steal sensitive information or disable the networks.

Mr. Chase and Mr. Gillette said the Raytheon unit, which has about 100 employees, grew out of a company they started with friends at Florida Institute of Technology that concentrated on helping software makers find flaws in their own products. Over the last several years, their focus shifted to the military and intelligence agencies, which wanted to use their analytic tools to detect vulnerabilities and intrusions previously unnoticed.

Like other contractors, the Raytheon teams set up "honey pots," the equivalent of sting operations, to lure hackers into digital cul-de-sacs that mimic Pentagon Web sites. They then capture the attackers' codes and create defenses for them.

And since most of the world's computers run on the Windows or the Linux systems, their work has also provided a growing window into how to attack foreign networks in any cyberwar.

"It takes a nonconformist to excel at what we do," said Mr. Gillette, a tanned surfing aficionado who looks like a 1950s hipster in his T-shirts with rolled-up sleeves.

The company, which would allow interviews with other employees only on the condition that their last names not be used because of security concerns, hired one of its top young workers, Dustin, after he won two major hacking contests and dropped out of college. "I always approach it like a game, and it's been fun," said Dustin, now 22.

Another engineer, known as Jolly, joined Raytheon in April after earning a master's degree in computer security at DePaul University in Chicago. "You think defense contractors, and you think bureaucracy, and not necessarily a lot of interesting and challenging projects," he said.

The Pentagon's interest in cyberwarfare has reached "religious intensity," said Daniel T. Kuehl, a military historian at the National Defense University. And the changes carry through to soldiers being trained to defend and attack computer and wireless networks out on the battlefield.

That shift can be seen in the remaking of organizations like the Association of Old Crows, a professional group that includes contractors and military personnel.

The Old Crows have deep roots in what has long been known as electronic warfare - the use of radar and radio technologies for jamming and deception.

But the financing for electronic warfare had slowed recently, prompting the Old Crows to set up a broader information-operations branch last year and establish a new trade journal to focus on cyberwarfare.

The career of Joel Harding, the director of the group's Information Operations Institute, exemplifies the increasing role that computing and the Internet are playing in the military.

A 20-year veteran of military intelligence, Mr. Harding shifted in 1996 into one of the earliest commands that studied government-sponsored computer hacker programs. After leaving the military, he took a job as an analyst at SAIC, a large contractor developing computer applications for military and intelligence agencies.

Mr. Harding estimates that there are now 3,000 to 5,000 information operations specialists in the military and 50,000 to 70,000 soldiers involved in general computer operations. Adding specialists in electronic warfare, deception and other areas could bring the total number of information operations personnel to as many as 88,700, he said.

Confirmed: Unreleased Torture Photos Did Show Rape and Sexual Assault

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The Pentagon lied when it said "None of the photos in question depict the images that are described in that article."

May 30, 2009 - Think Progress

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This week, the Daily Telegraph reported that the torture photos President Obama recently decided to withhold from the public depict "rape and sexual abuse." The Pentagon denied the report, saying, "None of the photos in question depict the images that are described in that article." But yesterday, Scott Horton reported that he has confirmed that the photos do, in fact, "depict sexually explicit acts," including "a government contractor engaged in an act of sodomy with a male prisoner and scenes of forced masturbation," as well as "penetration involving phosphorous sticks and brooms." Horton writes further:

A senior military officer familiar with the photos told me that they would likely provoke a storm of outrage if released. … Some show U.S. personnel engaged in sexual acts with prisoners and each other. In one, a female prisoner appears to have been forced to expose her breasts to be photographed. In another, a prisoner is suspended naked upside down from the top bunk of a bed in a stress position.

Still other withheld photographs have been circulating among U.S. soldiers who served in Iraq. One soldier showed them to me, including a photograph in which a male in a U.S. military uniform receives oral sex from a female prisoner.

Horton also obtained what he characterizes as "rarely seen Abu Ghraib torture photos," which can be viewed here:

Warning: They are graphic and disturbing!

http://www.thedailybeast.com/blogs-and-stories/2009-05-29/torture-photos-depict-sex-rape/#gallery=298;page=1

Local Currencies Really Can Buy Happiness

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Matthew Cardinale
June 1, 2009 - Inter Press Service

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In the face of an economic system which seems to be premised on environmental harm and profit-driven growth, a handful of communities across the U.S. and the globe have begun experimenting with alternative forms of local currency as a pathway to sustainability.

Local currencies existing today in the U.S. include the Humboldt Community Currency in Eureka, California; Berkshares in the Massachusetts Berkshire region; Bay Bucks in Traverse City, Michigan; Ithaca Hours in Ithaca, New York; Cascadia Hours, Corvalis Hours, and RiverHours in Oregon; Equal Dollars in Philadelphia, Pennsylvania; and Madison Hours in Madison, Wisconsin, according to the E. F. Schumacher Society, which runs Berkshares.

Canadian community currencies are located in Calgary, Alberta; Salt Spring Island, British Columbia; Tamworth, Toronto and the Madawaska Valley, both in Ontario, which is promoting a "usury-free dollar".

There are also community currencies in Tlaxpana, Mexico; and East Sussex and Devon, England; as well as a regional currency based in Basel, Switzerland, which can also be exchanged in parts of Germany and France.

What these currencies have in common is that they represent an effort to respond to the pressures of globalisation, like the advent of massive chain stores competing with local merchants.

People in Berkshire can go to one of five participating local banks to trade 95 cents for one Berkshare, at a five percent discount to the dollar. Then, they can spend Berkshares at over 400 participating local stores as a direct replacement for dollars, and thus save 5 cents with every Berkshare they spend.

Even though store owners lose the 5 cents whenever they trade Berkshares back for dollars at a bank - which they have to do to buy something that can't be produced locally - they are still typically happy with the loyal, local customers they keep instead of losing them to chains like Wal-Mart, Starbucks, and Barnes & Noble.

"Local currencies are part of what educate people about the importance of their small, independent businesses. It's bringing people off the Internet, back to Main Street, for the face-to-face exchanges. Once they're there, they like it," Susan Witt, founder of Berkshares, told IPS.

There are many ways having a local currency can help create a more sustainable economy, say leaders in the local currency movement.

First, because using a community currency forces people to buy locally, fewer goods have to be imported.

"By having economic transactions be so focused locally, that's definitely, for one thing, reducing use of fossil fuel. If it's a local farmer's market... food [is] produced 30 miles away instead of 3,000 miles away," said Steve Burke, executive director of Ithaca Hours, said.

Trade theorists might object that it is less efficient, or less productive, for diverse goods to be produced in many communities than it is for each community to specialise in producing one product for export, even factoring in transportation costs.

"Is it the real cost of transportation?" asked Susan Witt, founder of Berkshares. "Is the real cost and consequences of our dependence on fossil fuels to transport goods really factored into the cost? Is climate deterioration factored in? Is engaging in conflicts for limited supplies of fossil fuels?"

"Nor all the costs of unemployment in our local communities? Nor the hollowness of our life experiences? Nor the human costs in [other countries]... for maybe manufacturing practices that we would not ourselves allow in this country?" she wondered.

A second way in which community currencies support environmental sustainability is that they can lead to reduced consumption, Witt argues. Witt believes that people purchase more and more "stuff", not because they need it, but to fill a void that community currency can satisfy.

"You know the full story about the goods you purchase. You know how they were produced. You know the carpenter who made the table. You know who her children are. You realise buying the table is supporting that family," Witt said.

The products bought with local currency "link you to your neighbourhood, your place, the people of your place. They're not just stuff... they enrich your life the way that stuff would not. So you need less."

"One hand-knit wool sweater, coming from wool from sheep that graze on the hillside on the way to work, that satisfies you in a way four sweaters from unknown sources fails to do. You care for it in a different way," Witt said.

A third way in which community currency can lead to sustainable economy is communities can print the currency they need to issue interest-free, or non-profit loans. Allowing credit to be issued interest-free eliminates the need to service growing debts. High-interest debt owed by individuals, businesses, and governments to private banks is one of the main factors pushing economies to constantly grow at an exponential rate. As these entities struggle to service the interest on their debts with a total money supply that was mostly created through issuance of credit, more and more new debt must be created in order for the system to be stable.

Thus, because high-interest debt pushes the economy to constantly grow, it also pushes industrialisation into new markets, new products, and new technologies, which often lead to deforestation, air pollution, and the like.

By communities printing and issuing their own currency, in part through productive non-profit loans, the economy can function without the constant growth that is imperiling the environment.

There are at least two different models for how to organise and operate a local currency that local communities are using. One is used by Berkshares; the other was pioneered by the Ithaca Hour.

Founded in 1991, the Ithaca Hour is the oldest local currency to exist in the U.S. since local currencies disappeared in the 1900s. Numerous local currencies have since based their model on the Ithaca Hour.

Businesses become members in Ithaca Hours by purchasing a listing in the Ithaca Hours directory, and they receive two "hours" every year as part of their membership fee. Employees at these businesses then can accept hours instead of dollars for some of their wages. People can accept hours instead of dollars for services, like mowing a lawn, that they provide.

This, in addition to low-cost loans, is the primary way Ithaca Hours enter Ithaca's economy.

"There's a pretty fundamental difference between our model and the Berkshares model," Burke said. "They sell them. With ours, you can't buy them; you can only earn them."

They are called hours "to make a statement", Burke said. The founders "wanted to emphasise the relationship between time and money".

*This story is part of a series of features on sustainable development by IPS and IFEJ - International Federation of Environmental Journalists -­ for Communicators for Sustainable Development (www.complusalliance.org)