03/18/2010 05:12 am ET Updated May 25, 2011

Toward a New Economy

I had the good fortune to travel to Sonoma, California late October to attend "The Economics of Peace" sponsored by Praxis Peace Institute and RSF Social Finance.

This mind-blowing conference shattered any illusions I had about having a handle on my personal investment situation and taught me more than I really wanted to know about the U.S. and world economies.

If you've ever felt like our economy is all smoke and mirrors, you can take some consolation in the fact that many prominent economists agree. Speaker after speaker explained concepts that weren't taught during college Econ 101.

Basically our financial system is a shell game run by banks and other Wall Street financial institutions. The Federal Deposit Insurance Corporation, better known as the FDIC, is neither a government institution nor an insurance company. Money is created out of thin air by banks.

David Korten, self-billed "author, lecturer and engaged citizen," didn't mince words when he talked about changing our failed economic system. He said, "It is time to rethink and restructure in the most basic ways." The current design is "by and for Wall Street interests" and a new design can build a shared economy.

According to Korten, markets do have a role in a healthy economy, but market extremism does not. We need to return to a sensible market economy which means "bringing down Wall Street and liberating Main Street," said Korten. Power always gravitates toward those who create, allocate and control money.

A new functional economy will be based on a foundation of three principals. Ecological balance will align economies with local ecosystems and naturally reduce the GDP or gross domestic product. Shared prosperity will build a more resilient economy and promote greater physical and emotional health. Lastly, a living democracy will encourage the daily practice of civic engagement and local decision making.

In order to make needed changes we must alter prevailing cultural stories about economy and wealth, create a new economic reality from the ground up and change the rules, including laws and public policies, Korten explained.

We should measure what we want, like the health and vitality of people and communities, instead of GDP. We can create a "real wealth" financial system that is direct, transparent and good for the long haul.

Korten thinks it is time for us to "grow up as a species" and stop favoring money over life and global over local. We can reward businesses that serve the community and tip the scales toward local control. Progressive taxation and compact development will be part of the equation.

Ellen Hodgson Brown, author of "Web of Debt," is an expert on financial literacy. She echoed Korten's assessment and explained all money comes into existence as debt. We have a functional reserve system which means only 10 percent reserve is required to make loans.

Her solution includes nationalizing our banking system and turning the banks into public institutions. State-owned banks are an option and North Dakota has already taken this step successfully.

One of the more enlightening events at the conference was a screening of "The Money Fix," a movie written, produced and directed by Alan Rosenblith. The film does a great job of breaking down the basics of our current economic system and revealing alternatives.

In the movie, noted community and monetary economist Tom Greco compared our financial system to the elephant in a room that everyone refuses to acknowledge. He stated, "Unfortunately, most people who are active in the sustainability movement and the environmental movement don't understand the nature of this problem." He added we cannot achieve sustainability without solving the money problem.

We also had a chance to see Michael Moore's latest film "Capitalism: A Love Story." In his uniquely flamboyant style, Moore highlighted many inequities of our current financial system and the inhumanity pervading large corporations and financial institutions.

The goal is to shift the foundation of our economic system so money can revert to its original purpose as a medium of exchange and serve us as a tool instead of acting as a driving force. I will share some strategies I learned at Economics of Peace for doing just that in my next few blogs.

A version of this piece originally appeared in the Grand Junction Daily Sentinel and on at