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Actions to address climate change must be financed by interest free loans along with local currencies backed by the improvements.



The money on which we all depend is now created by banks when someone "borrows money" from the bank under an agreement to pay it back with interest. The money then disappears when the borrower either pays it back, or defaults on the loan (see reference #1).  The interest that is paid also disappears from the community, along with the jobs, only to wind up in the hands of the wealthy who deny climate change.  

Because the banks never create the money to pay back the interest, our banking system has become a classical Ponzi scheme that requires the money supply to increase exponentially to prevent the banks from failing. Like all Ponzi schemes the function is to transfer wealth, from those who produce it with their labor, to those who game the system.

Current desperation to expand the money supply, to prevent another economic crises, has even led banks to sink so low as to loan our kids money for ever more expensive educations that they can't repay because all the jobs have disappeared from our communities along with the interest payments. But don't worry, unlike the housing bubble, the money students can't repay is not going to disappear from the economy until after the students are dead, because it's the law that student debt can't be discharged in bankruptcy.  

The only way we can address climate change is to create local interest free currencies that are fully backed by the value of our investments in our homes, farms and communities, that address climate change.  

This is the only way we can expand the interest free non-bank money supply sufficiently to be able to address climate change at the local level.  A community that addresses climate change locally is a resilient community.

Think globally and act locally and eventually the resilient communities we create, acting in concert, can transform our entire global economic system into an economy that is backed by our efforts to address climate change.

Category of the Action

Integrated action plan for the world as a whole

What actions do you propose?

The underlying problem that prevents us from addressing climate change, and all of the other ills we have created by industrialization, is the cost of the bank created money on which virtually every person on the planet depends.  If this sounds like a bit of an overstatement just read Confession of an Economic Hit Man by John Perkins.

The cost of bank money that I am talking about is the interest banks charge for loaning the money into existence.  These costs are the interest we pay directly for the money we borrow and the increased costs of consumer goods and taxes to pay the interest paid by the producers and government entities for the money they borrow.

Shockingly the costs of the bank money we rely on is around half of our income, and exceeds the externalized environmental costs of the products we consume, which is often considered to be the biggest driver of climate change.

So we simply can not afford to eliminate the externalization of environmental costs unless we also eliminate the costs we as individuals pay for money.  To do otherwise would collapse our already faltering economy.

So the issue is how can we finance the actions we need to address climate change without paying the direct interest costs we normally pay?

This proposal deals with how we can invest our resources in a non-profit corporation or trust formed for the specific purpose of loaning those resources to individuals to finance actions to address climate change locally, without charging the borrowers interest or paying dividends to the investors.

The actions we need to take on the local level are:

  1. My favorite, which is the area I work in, is restoring depleted soils by the distributed production of biochar from locally available biomass, in peoples homes and businesses where they can use the excess heat produced, and  then return the biochar to the soil. 

  2. All proven forms of sustainable local agriculture and gardening that is appropriate.

  3. Sustainable forestry and biomass production as is appropriate for the area.

The big question is why would anyone invest in any of the above mentioned actions to address climate change when they are not going to receive any dividends or interest for their investments?

​There are essentially two classes of investors.  The first are those that invest labor and the other are those that invest dollars, land and any other resources they have, that are needed.

Some of the advantages that would persuade potential investors of dollars, land and other resources to invest, are: 

  1. All such investments would be documented by equities that have a value equal to the proportional current value of the improvements financed by the non-profit.

  2. The share value would be driven up faster than ordinary investments because the savings in energy costs and the costs of borrowing.

  3. Labor investments would be primarily documented by local currency, thereby stimulating rapid economic development which would further increase property values.

  4. The savings in interest and non-renewable energy would give the greatest boost to economic development, and therefore, developed property values.

  5. Interest free financing would be available to finance the resale of developed property, once again increasing value. 

Approximately half of the resources needed to address climate change in local communities will be locally available labor. 

Labor will be paid in local currency up to the prevailing wages for the area, and additional wages will be paid in equities.  The reasons labor will agree to work for this arrangement are:

  1. Because jobs are scarce.

  2. Because labor will be paid for the full proportional value of the work they perform in local currency and shares, without any deductions for interest, dividends, or profits.

  3. The currency can be used to buy any locally available goods or services, or redeemed for its current value, for a small fee, with cash investments before new projects are funded with the cash.  This would be like a local quantitative easing to stimulate the local economy.

Borrowers would periodically repay the loans, without interest, at a rate based on their ability to pay.  The payments on a loan paid back over the same period of time as the average bank mortgage, would only be half as much.  Another advantage is that every payment to the non-profit would be applied to equity in the developed property.  It normally takes about 7 years of payments on a bank mortgage before the closing costs are paid for and equity starts to accumulate.  If all loans were paid back there would no longer be any equities or local currency, but this will not happen because of continued investments and financing of development.

It will require input from qualified accountants to determine whether payments made by borrowers will be used to redeem the equities on a predetermined schedule, like bonds, or to use the payments for new loans and leave the equities to trade like common stock. 


Where will these actions be taken?

A good starting place would poorer isolated communities in the US simply because any success would be more apparent.  Knowledge of benefits and market forces could then lead to rapid expansion of of interest free local currencies and financing of actions that address climate change, globally.  

As such communities proliferate they could link together to have regional and eventually a global currency that was fully backed by the local currencies. 

Who will take these actions?

Initially, at lease, a small group of committed individuals within a community will introduce the idea and implement interest free financing and local currency.  One can only hope that eventually local governments, chambers of commerce and other civic organizations would promote the idea.

What are key benefits?

 The key benefits are that we can afford to address climate change and will have the opportunity to establish truly democratic governments not influenced by the ponzi scheme players.  

Furthermore, it is possible that eventually we could have a one world economy where all money, be it local, national or international where all money could be based on local efforts to preserve and restore the environment upon which we all depend.  We could call this a democratic economy movement. 

What are the proposal’s costs?

The organizational and administrative costs would be miniscule compared to the true wealth created by this proposal and shared by all who invest in creating it.

For those who acquire their wealth by their ponzi scheme gaming of the banking system the costs will be proportional to the gains of those that create the environmental wealth.

Time line

Five to fifteen years may be too late.  If within the next couple of years we can demonstrate the effectiveness of this proposal the accelerating failure of our economic system and increased costs of climate change can create a viral adaption of our proposal.


A proposal that I made under buildings is essentially the same as this proposal except that it is limited to making energy efficient homes affordable An alternative to bank mortgages can make energy efficient homes affordable.

A related proposal focuses on carbon negative local activity funded by new local money supply, with the primary difference being that the local money is not backed by the value of development that addresses climate change. .

Carbon-negative biochar economies is my favorite proposal on Climate Colab because of biochar's potential to provide clean energy, sequester CO2, and restore the fertility of depleted.  My commitment to biochar is reflected by the fact that for the last four years I have been working on the distribute production of biochar from local biomass in the local homes and businesses where all the excess heat can be used.  Carbon-negative biochar economies

My proposal is aimed specifically at providing the financing needed to get a global circular economy affordably.   Fix the system - get a global 'circular economy'

How do these sub-proposals fit together?

The proposals mentioned above, along with all the other proposals that have merit have the same flaw i.e. how can we affordably finance these proposals in an economy that is self destructing because of the high cost of the bank money we depend on.  Therefore, the purpose of this proposal is to make it affordable to address climate change, with all proposals that have merit, before our economy completely collapses.   

Explanation of model inputs

When the average person thinks of money his mind goes back to the time when money was commodity money minted out of precious metals.  Even though the serious flaw with commodity money was the fact the money supply could not be readily expanded by human labor, or any other means, to meet the need, and paper money was adopted to cure that flaw, the concept that paper money is backed by something of value still persists.

The myth that money is backed by something of value, perpetuated by the ponzi scheme players, is the seemingly unsurmountable roadblock to reforming our banking system.  However, if we can demonstrate the advantages of interest free financing of actions to address climate change and local currencies that are backed by the current value of efforts to address climate change, our banking system will be forced to reform or the banking system will completely collapse.





  1. Fractional Reserve Banking: How to Create and Destroy Money
  2. Seven Policy Switches For Global Security Presented At Nato Advanced Research Workshop, Split, Croatia 17th-18th June
  4. Richard D Wolff - Leading Marxian economist with analysis of why we can not fix our capitalist economic system.  
  5. Seven Policy Switches For Global Security Presented At Nato Advanced Research Workshop, Split, Croatia 17th-18th June
  6. Progress and Poverty by Henry George, 1880, abridged by Bob Drake, 2006.  Describes the role of land speculation in our economic system.