Consequences of interest free money?
>Date: Sun Feb 21 14:51:32 1999 >From: firstname.lastname@example.org ("Charles Michael") >Subject: [lets] Re: Consequences of interest free money? >Hi all, Some really stimulating debates lately. Here's a few ideas. >A standard and well proven aspect of the law of supply and demand is >that, when you make an important commodity (money) free of cost (o% >interest on loans) then demand for that commodity skyrockets. That is >why, for example, when a country establishes a national health care >system that appears to make all medical services "free" then you >quickly get waiting lists and queing because demand quickly outstrips >available supply. JCT: Actually, there will be a service charge associated with each transaction. And of course, all loans must be repaid so it's not as if we're just giving away money like we're giving away medical services so the analogy is not correct. As well, it's impossible to outstrip supply. Gambling casinos have been offering such interest- free loans of chips for decades if not centuries with none of the suggested problems.
>In the LETS banking system that is under discussion, creating new >credit for a loan requires a mere push of a button. So, no shortage >there. However, there are limits to the supply of goods that will be >demanded by the new money that will be created by all those loans. JCT: You're putting the cart before the horse. Rather than issue the money and then hope the goods will be there to be bought, once the goods have been ordered and produced, then the money is issued. Loans will never be created unless the product is actually there to be bought. It's a often-made economic assumption that with a zero interest rate, people will all borrow a billion dollars just so they can have a billion dollars. In reality, using their Visa cards then as they do today, the loan won't be created until they are purchasing the goods and if there are no goods to be purchased, no loans are forthcoming. But even if we allowed people to borrow a couple of suitcases of money because they chose to, who would it hurt if they walked around with their two suitcases of money until they realized that it's not doing the many good since they could use their credit cards when they need to so they're lugging all non-to-be-used money around for nothing.
>Given 0% interest, the cost of buying a house or car will drop >drastically. JCT: Actually, the cost of the house won't change, only the cost of buying it will and only drop by the amount of the interest. So instead of the cost of buying a $100,000 house being $300,000, the cost of buying the $100,000 house will be $100,000 plus a dollar per monthly payment for the banker's service charge. The men who built the house will still receive the same money they would have, it's only the men who created the loan who get dollars rather than hundreds of thousands of dollars.
>Avalanches of people will rush to take out loans that will be fully >collateralized by the houses and cars they purchase. JCT: Okay, this is true. Every person will try to buy their apartment, every person will try to buy their home, every person will try to buy their transportation, every person will try to buy their tools.
>Soon every carpenter, plumber, building materials supplier and car >maker will be working flat out to 110% of capacity. JCT: Operating at 110% of capacity is an economics notion, much like living beyond our means by eating next year's crop. Yes, they will all be working to full capacity though never beyond their means. No, they can't work beyond 100%. All I've ever promised is 100%. And of course, the boom will also generate unskilled labor jobs for all those people who owe for the houses they've purchased.
>Now we have a classic demand pull inflation with too many LETS >dollars chasing a limited supply of goods and services. JCT: This is jumping to a conclusion based on the fact that you've assumed that everyone is running around with suitcases of money and nothing to spend it on when they are really only running around with their interest-free credit cards looking for something to buy with it. No LETS dollars were ever created until the point of sale, until the point of capture, never during the chase. I don't doubt that after prices go down by the amount of interest manufacturers no longer have to pay, that prices will then be bid up by the law of supply and demand and that's okay as long as everyone realizes that they are bidding with hours of their own labor they'll have to pay back.
>The point here is that simply collateralizing loans will not ensure >0% inflation! JCT: Remember that no new loans are issued by cashier's cage until someone has a home or other asset to be collateralized. So there can be no inflation. You just have to remember that it's not a case of money being lent into circulation for no reason. The cashier only lends it into circulation when the buyer provides the sales slip for the collateral being bought. You must never forget that it operates exactly like a casino cashier using tokens worth Hours of labor. I keep stressing that you'll never see the simplicity of this stuff until you look at it like the casino cashier does. From the cashier's point of view, as long as he never issues loans until someone comes up with the deed to the property being bought, he really doesn't have to worry about any of the concerns that preoccupy those people who haven't worked the cage but think problems can still arise.
>There is an offset though. Firms will also be slurping up free money >to build new facilities to meet the skyrocketing demand for goods and >services. JCT: I wish you wouldn't call it "free money," because that evokes confusion. It's not free. There's a service charge for cashier's time and the printing or computer time. Still, as fast as new facilities can be built, that's as fast as new currency will be issued into circulation to pay for it and as fast as those facilities depreciate, that's as fast as the new currency will be retired from circulation by the person stewarding the facility.
>Yet, in an economy already operating at capacity, their demand for >capital goods will just contribute to the problem of excess demand. JCT: How can they be building new collateral if they're already operating at capacity? Being able to operated at 110% capacity is an idea you'll have to lose if you want to understand LETS banking. If you're operating at capacity, there's no one left to need any extra loans to pay for.
>So, at this point, will we need a LETS central bank to "tighten" up >the availability of new money in order to "cool down" the economy? JCT: You've jumped to the conclusion that people who are already operating at maximum capacity somehow manage to create even more. This is physically impossible and so is the problem that's is caused by this physical impossibility.
>Would they balance supply and demand, for example, by mandating that >LETS banks require a certain minimum down payment on consumer loans >while allowing unlimited expansion of commercial loans that serve to >finance new factories and facilities that increase the supply of >goods and services? JCT: We'll consider the problem of operating at over maximum capacity if it ever happens. I'd bet against 110% capacity ever.
>Also, those firms will try to produce goods and services using the >cheapest combination of land, labor and capital. JCT: Not anymore they won't. In the days where there was insufficient money for all manufacturers to sell their products, they all had to use the cheapest, dirtiest, combination possible. When exactly the right amount of money is issued to match the price tags on the products, then it won't matter if the better materials, cleaner fuels, etc. are used in their production. Non-polluting production will finally be affordable.
>With LETS capital now being free, will they not lean toward capital >intensive rather than labor intensive production? Does this not mean >that more and more robots will be hired in place of humans? JCT: Sure, except that the paychecks of the newly-hired robots will be confiscated and given as a dividend to all those people who were replaced by the robots. I don't mind the robots doing all the work as long as humans do all the consuming.
>If unemployment rises, wages will be pushed down (assuming the LETS >central bank does not permit continual demand pull inflation as >described above)? If wages are pushed down over time, will that not >start to erode the benefit of lower prices created by the >elimination of usury in the first place? JCT: First of all, it's not unemployment if you're getting the robot's paycheck, it's called leisure. You're assuming that laid-off workers wouldn't get the robot paychecks and remain the wage slaves they are today. And I'd think that with robots doing most of the work, we'll have to pay a premium to be served by a human or to purchase something made by a human. Sure you can go to the robot foodomat and eat very cheaply but to go to an expensive restaurant and be served by a staff of talented humans will really cost a premium. The same for a sweater knitted by a grandmother rather than one knitted by a robot. No one will care if you choose the eat cheap standardized fare at the foodomat in your standardized sweater though many will choose to pay the premium for the more highly-prized human element.
>Would a social credit type system be called for? JCT: LETS Green currencies are all social credits. Credits only become anti-social when interest is charged to create the deathgamble among the borrowers.
>A requirement that companies share some of their profits communally >so that unemployment does not do so much damage? Just some thoughts >to stimulate discussion. Cheers to everyone! Charles Michael JCT: All the problems raised just cannot occur if the currency is operated like poker chips based on time at labor. No matter how elementary that running poker chips sounds, you must master it or you'll be asking these kinds of questions forever and we're way beyond that point. Those of us who have mastered poker chip banking realize that our time is best spent discussing how to implement the system globally rather than handling the concerns that cannot and have never cropped up. You must get some poker chips and test the problems for yourself to fully accept how simple an inflation-free and involuntary- unemployment-free system is to operate.
>Date: Sun Feb 21 15:46:10 1999 >From: email@example.com ("Paul Dumais") >>The point here is that simply collateralizing loans will >>not ensure 0% inflation! >I fully agree. Good argument. JCT: If you think accept that any price rise is inflation, then I'll never be able to convince you that one-to-one collateralizing of loans ensures 0% Shift B inflation of the I/(P+I) kind. You see, if the tomato crop is damaged and I have to pay a few extra Hours labor for my share of the reduced tomato crop, I don't call that price rise inflation because I still got the same amount of farmer's time even if it was represented by less tomatoes. I call this a price rise for the farmer's time due to supply and demand forces, not inflation. I only call inflation that artificial price rise due to the interest component for which I have received no energy: I'll pay the time price for army and police to handle strife; I'll pay the time for doctors, nurses who protect my life; I'll pay the time for all engaged repairing road and sewer; I'll pay the time for social servants helping out the poor; I'll even pay the time for bureaucrats with no regret; But I refuse to pay the time for interest on debt. See the difference? In the first five cases, I'm paying for people's time, real engineering energy, power times Time. Only in the last case am I paying for money's time and money does not work. Though people might think their interest is money earned by their money, it's actually money earned by wage slaves from whom it is stolen. If you're getting something for no nothing, someone else is getting nothing for something. It's the reason the great Socred philosopher Adelard Turmel stated "Interest is theft." When you look at Rothschild with his billions, you know he didn't earn that money by working for it. Others worked for it and it was stolen for him by the system.
>>Would they balance supply and demand, for example, by mandating that >>LETS banks require a certain minimum down payment on consumer loans >>while allowing unlimited expansion of commercial loans that serve to >>finance new factories and facilities that increase the supply of >>goods and services? >The inflation problem you speak of would probably be just at the >initial phases of the introduction interest free loans. JCT: Again, you've assumed that the cashier would issue interest- free loans with no collateral pledged for purchase just because people want them. This is not how it would be done. Sure, they could borrow some currency based on promised future labor like most LETS permit now but the cashiers would be empowered to issue the bulk of loans only when the collateral deed had been produced.
>The economy would eventually reach a steady state where the money's >value would remain stable (as long as loan issuing policy remains >stable). Knowing this, a smart person would save rather than spend >during times when his money is becoming undervalued (inflation). JCT: At no time will his Hour of labor become undervalued. An Hour will always be worth an Hour. I think this issue of our currency inflating can be eliminated if we stay on the time standard in our discussions.
>With all the demand for services, he could make big bucks providing >these goods and services and then resume spending when his dollars >are worth more. JCT: He could make big Hours by providing big Hours, not the normal 40 Hours a week but perhaps even 80 Hours and then resume spending when his hours are worth more but they will be worth more only due to increased technology, for no other reason.
>I suggest that this knowledge would moderate the effect of the >process you described above. JCT: While it is true that saved Hours will buy more and more due to this this increment-of-technology, that will be true for everyone and there will be no real reason for foregoing your present spending since you'll never be able to spend all your savings anyway. We'll all be too rich; if anyone can conceive of the notion of everyone in the family being rich.
>I would wait and see if the unemployment you describe actually does >occur. JCT: I too would be interested in how unemployment could arise after expecting not only 100% capacity, but 110% capacity,
>I'm optimistic that with with interest free currency issued >via a policy which doesn't artificially restrict the availability of >money, we'll see people spending more money to employ more people. >Let me give you an optimistic example. Suppose we have a >democratically controlled interest free currency. JCT: How the currency is controlled will not be a democratic issue. It will be done pursuant to the rule of one-to-one with collateral. How people choose to spend their currency, especially large civic projects, etc, may be democratically decided, but not the bank cashier's function. That will be rigorously systematized.
>The demand for traditional forms of human labour will always >decrease because of technology. This is a good thing. This means >many of the things we buy will be cheaper and we won't need to spend >as many hours in a factory to produce them. So where do we get our >income? As always we will get it from each other! People will >realize that money is not scarce with an interest free system. It is >exactly as scarce as the democratically controlled currency body >wants it to be. JCT: If you had looked at your bank of poker chips, you'd realize that they are valuable not because of their scarcity but because of their pledged collateral backing them up. Considering there is an infinite supply ready to go, the question of scarcity is moot.
>So even if the currency started to become too scarce or not scarce >enough, people would vote to slightly alter the currency issuing >policy to ensure just the right scarcity or value. JCT: If the bank cashier has ensured that every token issued was backed up by collateral, why would people have to vote to change its currency or value? And of course, since the value is "set" at the start of the game by the cashier, it's a given that no one is allowed to change its value. Ever.
>This would prevent the rich from hoarding too much money since >hoarding by the few generates a sense by the vast majority that >money is too scarce and they would vote to increase the money's >availability. This might cause a bit of inflation which would really >only hurt those few who have decided to hoard their money. JCT: Since there are always enough chips for anyone who needs more, why would anyone sense that money is too scarce because someone wants to hoard of this plentiful supply? Whether the players want to hoard their chips or not is of absolutely no concern to the cashier who issued them.
>So it is my theory that unemployment is caused by the artificial >scarcity of money caused by the autocratic issuing policies of banks >and by interest charges. JCT: Let's be precise that "involuntary" unemployment is caused by the artificial scarcity of money caused by the banks' interest charges.
>If we institute an interest free currency who's issuing is stable >but democratically controlled, there will always be enough money to >employ everyone! With no incentive to hoard money, the rich and >needy alike will want to spend. Spending and employment go hand in >hand. So unemployment is caused by not enough money in circulation. >This scarcity is caused by a combination of the banks' loan >policies, interest charges and hoarding of money. JCT: Hoarding is only a problem in a system where money is kept short. The cashier in a system where there is an abundant supply ready to be issued when needed has no concerns about hoarding.
>I think we'll start seeing people employing each other for leisure >activities. There will be far more leisure services (clubs, interest >groups, bird watching, scuba diving). People will start doing work >which doesn't involve much in the way of natural resources (tree, >minerals). We'll have the ability to reduce our ecological footprint >while employing ourselves in leisurely pursuits. It's difficult to >imagine what our world would be like so I'm going to just go ahead >and give it a try. Do you want to help me? Paul Dumais JCT: Go right ahead. There's nothing more pleasant than visualizing what our future heaven will be like. Actually, it's not all that hard. It's the same life as the rich enjoy today with the incentive to offer some service to the community in return but without any poor people begging for alms or trying to mug you. My Bible poem at http://turmelpress.com/pombible.htm has my view of a life on Earth without interest which I called "Heaven":
WHAT HEAVEN IS If you were to be asked what for you would be heavenly? There'd be no executions and no alleys, certainly. There would be lots of food and drink, some clothing and a home, A razor and some shaving cream, a toothbrush and a comb. If you had also trappings of a great technology, All of the tools and gadgets that use electricity. Communications, education, entertainment, wealth, A staff of competent physicians watching over health. Most labor that is tedious is done by robots who, Release you to explore the universe God made for you. And best of all you'd want your friends to share in your success, That's why all of us will end up in heaven, I profess. In Heaven, all will have their friends and family by their side. Though evil ones are silenced by a guilt they cannot hide. Within Acts 24:15, he says it's understood, There will be resurrection of both wicked and the good. But John 5:28 points out the day those in their graves, Will rise up for the judgment of the Lord on who he saves, "The good will be rewarded with a life's eternity, But wicked ones will stand condemned for their iniquity." And so our Earth, this little speck of blue dust in the sky, Can be a Heaven here on Earth, we do not have to die.
Even Christ said that Heaven is just like our usurious Hell, the only thing producing the hellish alleys where men weep and gnash their teeth being interest. So if you force borrowers to fight to the death in a death-gamble, you've made a Hell out of what could have been a Heaven. It's the main reason Christ told us not to lend money at interest. So go ahead an contemplate how heavenly life on earth would be without the debt slavery of usurious debt. I've been doing it for 20 years and it's a view I would wish on everyone. Actually, when it came to contemplating the heaven of an interest-free world, Christ did say: "For I tell you that many prophets and righteous men longed to see what you see but did not see it, and to hear what you hear and did not hear it." So go ahead, see and hear about our future interest-free Heaven. -------------------------------
Consequences of interest-free money #2
>Date: Tue Feb 23 12:15:14 1999 >From: firstname.lastname@example.org (Paul Dumais) >Subject: [lets] Re: TURMEL: Consequences of interest-free money > >>JCT: If you think accept that any price rise is inflation, then >>I'll never be able to convince you that one-to-one collateralizing >>of loans ensures 0% Shift B inflation of the I/(P+I) kind. >Let's agree on the definition of inflation first. I'm not sure how >to define it, but I think it could be defined as a rise in prices >caused by a fundamental change in the availability of a currency. JCT: Sorry but I'm not going to get into the basics of inflation. It's been shown in the bankmath and you must master Shift B inflation, before we can have common ground for discussion.
>>JCT: At no time will his Hour of labor become undervalued. >Only if you make it illegal for a doctor to charge more than one >hour for his one hour of services. JCT: If you had checked, you'd realize that I have never argued this. In fact I've always argued for the doctor's right to charge more than the basic Hour wage. Timedollar systems operate on the basis of every hour being worth every other hour and I've always stated my preference that people with rarer talents should be able to command more Hours per hour than standard unskilled labor.
>>JCT: How the currency is controlled will not be a democratic issue >>It will be done pursuant to the rule of one-to-one with collateral. >Sounds like this is an issue to be decided. JCT: I have never run my bank democratically. The cashiers followed the proper algorithm or they didn't get the job. Besides, there's nothing that needs to be democratically decided anyway.
>If it is not done democratically then control will be out of the >people's hands, just like it has always been with respect to the >issue of money creation. JCT: You seem to confuse the issue of how the money is created with how the money is spent. The great Social Credit engineer, Major Douglas, said that democracy is fine in the decision of where you want to have your bridge built but how the bridge is to be built must be left to the dictatorial judgment of the civil engineer. You just can't have the people voting on how many support beams they'd like to have on a particular floor no matter how much you want to be democratic. Some things are better left to the experts and running the banking system is also one of them. Vote on how you want to spend the money all you want but forget about telling the banking systems engineer how to operate the banking system.
>Absolute power corrupts absolutely unless we are vigilant. JCT: Why don't you go to your nearest new bridge and explain to the workers how the absolute power of the project engineer corrupts and they should have a vote on how much cement should be poured in the different pylons.
>The power to issue or deny loans is the power to control the world >and must be decided by the people and not by John Turmel or Paul >Dumais. We can only influence the outcome via informed debate. It is >our duty to install a democratic process which is incorruptable, >otherwise we will always have banking dictators. JCT: Of course, this is exactly the power that private banks have that I have decried for years. But do not confuse this decision with the decision of how the money will be created once the loan has been approved by the proper authorities. I refer you to the example of Louis Even's stationary engineer to realize that it is not the decision of the stationary engineer on how much steam he will deliver to industry but his function to deliver the steam on demand of industry. See: http://turmelpress.com/watch80.htm.
>Some issues to decide: Who will be ultimately responsible? Who will >decide how much to pay employees? JCT: The free market will do that quite well even though we have never had one as long as there was a major usury rake-off. Remember the example of how the electronic agora offers jobs to be done until someone accepts the offered pay so that he who shovels the worse dung gets the most pay.
>Must loans be fully collateralized? JCT: Yes, either with actual asset energy or promised labor energy. See Technocracy's Energy Certificates for a great explanation or LETS for an explanation of how labor energy currency works. Just imagine a LETS which also accepts collateral energy as well as labor energy to see how the system of the future collateralizes all loans.
>How will collateral be assessed? JCT: Free market, again.
>Will there be an unsecured debt limit? JCT: Makes sense on luxury goods which are in short supply but not on basis necessities.
>What will be the repayment plans/schedules? JCT: I keep explaining that since all earnings go into your one and only account, just do your best and don't worry about any repayment schedule.
>What depreciation calculation method will be used if any? JCT: Same one accountants use today.
>Who will hire and fire employees? JCT: Same bosses and project engineers who do it today.
>What legal instruments will be used? JCT: Won't be necessary as no one can run away from their debts.
>King John appears to have the answers for all of these questions and >will benevolently rule us for our own good. JCT: It was King Henry who had all the answers and benevolently ruled England for their own good in the days when one man did rule. There's no reason elected councils can't rule just as well King John once they have sufficient money to do their jobs right.
>Thank-you for the offer, but I'll use my one vote among millions to >decide these issues via elected representatives or referendum. It is >quite common for dictators to believe that they are infalable human >beings with divine goodness and inspiration. Are you such a person? JCT: Yes, just like any competent project engineer when it comes to his specialization, I am infallible when it comes to how to engineer a banking system and I have over 30 years of flawless experience in inflation-free and shortage-free banking to boot. I have no qualms at all in claiming that I know more about banking than anyone in the world and my financing the LETS banking software will be the proof that The Engineer bet on the perfect model before anyone else did.
>>How people choose to spend their currency, especially >>large civic projects, etc, may be democratically decided, but not >>the bank cashier's function. That will be rigorously systematized. >There are still several issues to be decided in a democratic fashion. >There will never be a system that will reveal itself to be the >ultimately correct choice. JCT: This is a silly statement coming from an engineer. Of course, there can be optimal systems, especially in mental and not physical systems. A banking system free of positive-feedback is such an optimal system which permits me to speak with such authority.
>So it doesn't matter how you think the system "will" work. You would >have to install yourself as the currency's dictator first. I get the >feeling that a democratically controlled currency will be more >popular. Keep me posted on how popular your global dictatorial >currency becomes. JCT: Again, you confuse the decision of where to put the bridge with the decision of how to build the bridge. If you want to call project engineers dictators and start voting on blueprint modifications, they'll probably take your iron ring away from you.
>>JCT: If the bank cashier has ensured that every token issued was >>backed up by collateral, why would people have to vote to change its >>currency or value? And of course, since the value is "set" at the >>start of the game by the cashier, it's a given that no one is >>allowed to change its value. Ever. >We must allow for potential changes in social and political changes >in society. We must allow people to move from a society based on >ownership to a society which values individual contribution if the >people so decide. JCT: So allow for it. Just don't screw up my receipt system.
>If you unalaterally install a currency which requires 100% >collateral for all time, with no mechanism for change, we won't have >the ability to move to a society where ownership of material is less >important. JCT: Insisting that the value of our tokens remain constant does not prevent you from moving to a society where ownership is less important. It even allows you to do at all something you could never do if you didn't have a stable token system.
>By this I mean, that many people already agree everything on this >planet should not be owned. Our environment belongs to the people. >Ownership may also represent a problem with accumulation of wealth >that the people may vote to rectify. This type of socio-economic >atmosphere would require that people have the ability to prosper >with little or no collateral. Collateral would have to include social >contracts or legalized promises. These promises could be valued based >on the person's income, and employability and not by the amount of >"stuff" (collateral) that they have accumulated over the years. JCT: As the banking cashier, I want nothing to do with these kinds of decisions. My storehouse is going to issue receipts in exchange for collateral and let you politicians and theoreticians deal with those kinds of questions. Yet, once the money system if fixed and there's no more theft by usury from the poor to give to the rich, I really don't think there are going to be too many social problems left for you to deal with.
>>JCT: Since there are always enough chips for anyone who needs >>more, why would anyone sense that money is too scarce because >>someone wants to hoard of this plentiful supply? Whether the players >>want to hoard their chips or not is of absolutely no concern to the >>cashier who issued them. >What do you mean there's always enough chips? You're saying that >collateral is required 100%. People with no collateral would be >destitute and penniless. That sounds like scarcity to me according to >anyone's definition. Both collateral and money can be hoarded. Such >people would be owned by whoever operates your dictatorial currency. JCT: You obviously have no idea how a LETS works. People with no collateral are not destitute under a LETS. As long as someone's not dead, they are source of manpower upon which LETS will allocate them credit. It may sound like scarcity to you but there is no scarcity of tokens in a LETS.
>If unlimited loans were granted, inflation would occur since more >money is issued as compared to the services provided. JCT: Again, you seem to have missed that an Hour of general unskilled labor won't change its value over time. Talk inflation all you want but it must can't happen.
>You appear to have decided everything quite a long time ago and have >rarely changed your ideas since. JCT: That's right. Once I got it right, I never bothered with the problems faced be people who've got it wrong.
>This doesn't matter though. No one will allow a dictator to control >their currency when a democratically controlled one is available. JCT: Who would prefer a democracy voting on the value of their chips when they could have dictatorial control over their cashiers who provide a stable money? Again, you confuse the role of the voters and the engineer.
>Anyone wishing to install a democratically controlled interst free >global currency can e-mail to this list to show your support and >perhaps volunteer to work on the board of directors. I would also >like John to participate. John has been my inspiration, but appears >to be too inflexable to go along with the will of the majority if it >does not conform to his beliefs. JCT: Excuse me if I'm automatically leery of people who want to form ruling councils when they still don't fully understand the system to they want their council to rule. Sure everybody rushed to support your idea of a global LETS council to get things going but in their desire to see something good done, they've failed to realize that you know far more about forming democratic ruling councils than you do about operating a LETS. I've got nothing against democratically deciding things that should be decided upon democratically. That I will not tolerate a democratic decision to vary the value of my tokens, that I will not tolerate a democratic decision on how the bank will be run, that is my prerogative as the world's first and only qualified banking systems engineer. Vote all your want on where you want your bridge but keep your nose out of my blueprints once your democratic decision has been made. If being as dictatorial as a project engineer offends you, that's tough. I will not compromise my scientific integrity. When I received my iron ring, I swore an oath to technical integrity and any banking system I run will be run optimally with no democratic input to screw it up.
>I am building a comprehensive web site, web-based discussion forum >and the GIFCG board of directors should be holding on-line (chat >room) public meetings within a month. I sympathise with John's >efforts, but if we are to accomplish anything lasting we will have to >rely on our abilty influence people via a democratic process and a >free media (not corporate or banker controlled/owned) rather than >assume that our ideas are the only way. JCT: You might see that the LETS blueprint is the only way if you understood how LETS worked. I'm shocked that as an engineer, you have not grasped the fundamentals explained in the Advanced Engineering Analysis of the Banking System. And if my LETS blueprint is not the only optimal way, what other blueprint would you suggest?
>>JCT: Let's be precise that "involuntary" unemployment is caused >>by the artificial scarcity of money caused by the banks' interest >>charges. >I agree that interest charges are the principle cause of scarcity, >but if the same people issued the same currency interest free, they >would still have the abilty to cause artificial scarcity via their >autocratic issuing policies. JCT: The cashiers don't have any autocratic issuing policies. Provide collateral energy or promised labor energy and you get chips for them. My cashiers do not have the autocratic power that today's bankers have and they never will so please don't confuse the areas where I am engineeringly rigid and those areas where I am democratically liberal.
>They may still chose to deny loans for any reason they choose JCT: If you want to assume that they, like the usurper stationary engineer, can still choose to deny loans for any reason they choose, then the fact that they are not allowed to may not register. But it's clear that this kind of abuse has been one of my main complaints all along and to assume that I would continue such abuses I've always led the complaints about seems quite unfair.
>(ie political uncertainty, risk of loss off collateral for unensured >equipment, etc). An interest free currency does not in itself free >us from the autocratic rulers of such currencies. JCT: If it's issued based upon fixed rules as in a casino cage, it does free us from such autocratic rulers of such currencies.
>Are you sure you're not working for a banker? Perhaps an >international banker has felt the winds of change and realizes an >interest free currency is innevitable. Seeing this, he realizes that >he is at risk of losing his power over all the world. So what he does >is that he pays advocates of interest free currency to help install >an interest free currency that is undemocratic and can be controlled >by him. In this way he remains ruler of the world simply by >controlling the interest free currency. It is intereting to note that >you have not shown any interest in democracy. >Perhaps you have something to lose by it? JCT: I'm the only person in the world who has taken the argument that bankers' usury is committing genocide against the poor all the way to the Supreme Court of Canada. Six times. I think to hint I'm working for the bankers is one of the silliest things ever suggested about me. And you keep confusing the fact that my lack of democracy is only with respect to doing technical things right. Again, I repeat that if you can convince the project engineer building the local bridge to have a vote on how much cement he's going to use in his bridge system, I might be willing to take your criticisms of my similar dictatorial attitude more seriously. And if you find that civil engineer laughing you out of his office, then you'll have to appreciate my restraint when it came to your suggestions to have people vote on how to run my banking system.
>>>This scarcity is caused by a combination of the banks' loan >>>policies, interest charges and hoarding of money. >>JCT: Hoarding is only a problem in a system where money is kept >>short. The cashier in a system where there is an abundant supply >>ready to be issued when needed has no concerns about hoarding. >Hoarding of collateral=money will remain a problem in your system. JCT: Walk into your neighborhood casino, go up to the bank cashier and ask him if hoarding of the chips has been a problem. I'd expect he'd look at his infinite supply of chips ready to go, give you a funny look and ask if he's on candid camera.
>Date: Thu Feb 25 05:31:51 1999 >From: email@example.com ("Charles Michael") >>JCT: Actually, there will be a service charge associated with >>each transaction. And of course, all loans must be repaid so it's >>not as if we're just giving away money like we're giving away >>medical services so the analogy is not correct. As well, it's >>impossible to outstrip supply. >As I indicated in the paragraph above, when I say "free" money I mean >free in the sense that there is no usury charge for its use. I do not >consider service charges as usury. JCT: Good. Unfortunately, because 10% interest on $1000 loan is $100 and a 10% service charge on a $1000 loan is also $100, this confuses many people into thinking that there's no difference between a $100 service charge and a $100 interest charge. The qualitative difference between a service charge and an interest charge is demonstrated in my Service Charge Island and Interest Island at the end of my mathematical analysis at http://turmelpress.com/bankmath.htm. If anyone doesn't know the difference, they really should go reread that portion or they'll never grasp why service-charge LETS currencies do not exhibit the poverty generated by an interest-charge orthodox currencies.
>>JCT: You're putting the cart before the horse. Rather than issue the >>money and then hope the goods will be there to be bought, once the >>goods have been ordered and produced, then the money is issued. >I do not believe people will borrow huge amounts of money just so >they have a big bank account or a mattress full of cash. I DO >believe, that many will borrow lots of money in order to go on a >glutanous orgy of spending. JCT: Remember that they are spending "Hours" they are going to have pay back by working. With average work-year earnings of about 2000 Hours, no one is going to offer to pay 500,000 Hours ($5,000,000) for a palace that depreciates over 50 years at 10,000 Hours ($100,000) per year unless it's a rock star or sports athlete who commands high Hourly earning rates. Assuming that other borrowers are as responsible as you are, when you offer to pay the depreciation on an auto or your home or your tool, keep in mind that the hours you promise to pay, you will have to work.
>Imagine that I and all my neighbors realize the possibilities >inherent in an interest free mortgage (yes, there will be service >charges to contend with). We all know that we can purchase a bigger, >more luxurious house and still have much smaller payments. So we all >go up to a great house on the hill which had been completely out of >our reach during the days of usury mortgages and we all are going to >bid on it. JCT: You are working on the basis that no one has any link to the value of the money to labor. Would you bid 100,000 Hours of your labor against Elton John who also wants the same palace but whose musical performances earn him thousands of Hours per hour? Or would you choose to bid on a home that would cost you a couple of hundred Hours per year? See my point? If you think in terms of dollars, you see conundrums of irrational problems that just do not occur when you think in terms of Hours of currency.
>We all prequalified for our usury free loans and we commence bidding >up the price at auction to much higher levels than it had ever seen >before in the days of usury. JCT: I doubt that you'll be one of those bidding up the price that much and I doubt many others will bid much more than they're willing to pay. Though it's true that all prices will go down due to the lack of interest, and it's true that many prices may go up due to market forces, the point is that the bidding will always remain within reasonable "Hour" limits.
>Finally, one of us wins, gets his loan finalized and buys the house >at a highly inflated price using the house itself as collateral for >the loan. The losers move on and, in turn, bid up the price of other >houses as well, while also using their new homes as collateral. JCT: And notice that all the bids will be made in Hours that the bidders understand they must be capable of supporting with their labor at the rate of the asset's depreciation. No one who earns 2000 Hours per year will bid to pay 10,000 Hours depreciation per year so that the bidding will naturally be restricted to those high earners whose Hours command great value.
>Please note that each loan was fully collateralized and an actual >loan was issued only when an actual house was purchased and put up as >collateral. Yet, when this scene is duplicated in millions of >transactions in the post usury era, the result is still housing >inflation! Yes, I know that an increase in the prices in one sector >due to strong demand is not the definition of "inflation". Bear with >me as I continue the story below. JCT: I don't want to guess how much up or down prices will go but I will point out that no matter what the prices do settle at, they will be all be linked to an Hourly base that they can afford to pay. So it's not like they're given an unlimited amount of dollars of which no one has any idea of the worth, they're given credit in Hours of which everyone has a good idea of the worth. The end result will be that no one will be homeless because even my mentally retarded cousin Herbie will be able to bid on any empty house, go negative for its depreciation, and if he dies in the negative, I and his other cousins will kick in a share to pay off his Hours owed for having lived in that nice house he couldn't really afford but which was available for his pleasure. After all, I keep pointing out that this is going to be Heaven for all and that means that all have to enjoy the benefits of our LETS heaven.
>>JCT: Actually, the cost of the house won't change, only the cost >>of buying it will and only drop by the amount of the interest. >Actually, its my understanding that interest costs are embedded in >the cost of everything, so that, in addition to saving on formal >mortgage interest charges, the cost of the house itself WILL go down >on a one-off basis as interest costs are bled out of prices. So, over >time the $100K house might fall by fall 30% or 40% IF all other >things remain equal. The rest of this debate centers on challenging >that premise, of course. JCT: That's right. In 1994, the Fraser Institute estimated that total government debt service was $180 billion dollars while total personal and corporate debt service was another $140 billion. Dividing that total $340 billion by our 30 million people, we get per capita debt service of almost $12,000 per year. That's the $6 per hour minimum times 2000 hours. A family of 5 would get back $60,000. The debt service slavery rip-off staggers the imagination. Gross National Product at the time was under $500 billion so that it can be said that more than half of the GNP is being stolen from the poor to give to the rich who can't spend it all. Then it's fair to say that abolishing interest would double most people's lifestyle while the rich would still be able to spend as much and not have their lifestyle changed at all. They just wouldn't have as much hoarded away from the poor as they used to.
>>JCT: Operating at 110% of capacity is an economics notion, much >>like living beyond our means by eating next year's crop. >The term "110%" was just some artistic license on my part. Lets look >at the wages side of the inflation equation. Say I am a carpenter and >I prefer working about 30 hours a week. Suddenly the post-usury era >dawns and everyone and their grandmother is out buying bigger houses >and inflating prices for same. This leads to an explosion in >construction activity to meet the demand from all these liberated >borrowers. Soon I am working 35 and then forty hours per week. I am >becoming disgruntled at lost leisure time so I jack up my rates. >Demand still floods in so soon I am at 45 and 50 hours of work per >week. Each time my hours get ratcheted up I charge buyers a higher >and higher premium for each additional hour of leisure they take from >me. Sooner or later I reach the level of workload beyond which I >cannot sustain my health or sanity (yes, this is my 100% capacity >limit, not 110%). JCT: Why push it to the level where you threaten your health and sanity? Why not push it to a comfortable rate until you've built up sufficient savings on which you'd like to retire. And don't forget that your Hours will buy you more and move over time due to the increment of technology. But yes, you'll have the opportunity while there is such great demand to earn a lot of Hours, especially while the Third World is in such need. Of course, once the great demand of the needy has been slaked, you won't have such great demand for your houses and won't be able to work all those hours. So why not strike while the need is hot? I know most people will grab the chance to work while the chance it there and that's why I bet that we'll be able to save the Third World in record time.
>Now my portion of the supply "pie" can no longer expand. Liberated >borrowers can prequalify for a house loan in a few weeks and thus be >empowered to bid up the prices of houses and carpenter's wages even >before they actually buy or take out the actual loan itself. On the >supply side, however, it takes years to train a good carpenter. So, >now demand is making my wages to skyrocket just as it is skyrocketing >the costs of houses themselves. >This repeats in every sector as people load up on cars, stereos, etc. >Again, this demand can blossom very quickly and easily while training >new carpenters or building new auto or stereo factories takes years. >Even though every loan is collaterized, and no loan is actually made >until a product or service is provided, prices are still bid up >because there are so many people empowered to bid for for those >products or services. JCT: But they will be bid up to a reasonable value based on the Hours of time promised in return. There is always that logical natural limit on prices relative to the Hours of the person providing the goods or services.
>(At an auction, for example, only one person actually gets the item >up for bids but, if there are lots of bidders with $1 millin dollar >checkbooks the bidding will go higher than if everyone only has $100 >thousand to spend). This is classic demand-pull inflation which leads >to a wage-price spiral. In monetary terms, it is too much money >chasing too few goods. JCT: You've assumed that there will be lots of bidders with 100,000 Hours credit. I doubt it. Remember that people are bidding with Hours they promise to work. Everyone will be bidding within logical physical constraints, something unheard of in most money systems of today.
>The absence of usury brings out many more borrowers who borrow much >more money than previously. JCT: What it does is give them full value for their money. Whereas people buying a $100,000 (10,000 Hour) home in the old days ended up paying $200,000 (20,000 Hours) including the interest, they were only getting half the value by paying twice as many hours as the home was worth, the second half being paid in debt service for which they received no erg value since money does not work. When people bid their Hours in a LETS world, they know that they will be getting the full value for their purchase so it's easier to bid reasonably with one's hours of promised labor.
>(I operate here under the simplifying assumption that usury and LETS >housing loans are both newly created money). This seems to me to meet >the definition of a demand-pull inflationary spiral because its not >just tomatoes or one sector being pushed to the limit. Its going to >hit just about everywhere in the economy and therefore it will be a >generalized inflation. I don't even know that one can assume that, >once the initial demand surge is over, things would cool off and the >wage-price spiral subside. Many (though not all)modern consumers tend >to have an infinite capacity to increase their consumption. The more >they have, the more they want. The spiral may not stop for quite some >while. JCT: There will be a price rise due to bidding though the bidding will take place within logical limits of Hours of labor to be repaid. I don't call supply and demand price changes inflation. I call them price changes. Inflation is an illegitimate price rise which robs the users of a fair value of their purchasing power. I consider inflation evil. I consider market price changes natural logical. If the tomato grower loses half his crop and charges his 2000 Hours labor on half the usual crop so that tomatoes cost twice as many Hours per tomato, I see nothing wrong with that. I don't call that an evil loss due to inflation, I call that a natural loss due to the weather. Of course, in an effort to hide the evil loss, economists have been trained to consider all losses in purchasing power as inflationary and it's certainly worked. It has them confused into condemning both natural and unnatural price rises. And since they consider only Inflation Shift A, the increase in money chasing the goods, which is fought by restraining money growth by raising interest, and are not even aware of inflation shift B, the loss of purchase power due to interest, since it is not taught in Economics, then natural buying power losses prompt them to raise interest which then generates inflation shift B losses.
>>>Now we have a classic demand pull inflation with too many LETS >>>dollars chasing a limited supply of goods and services. >>JCT: No LETS dollars were ever created until the point of sale, >>until the point of capture, never during the chase. >Again, just the fact that they have interest free credit credit cards >and the ability to use them gives consumers the ability to bid up >prices for goods that are bound to become more scarce than all the >usury usury-free digital credits sloshing around. JCT: And those price rises are due to new valuation estimates within logical hour-based parameters.
>>JCT: I wish you wouldn't call it "free money," because that >>evokes confusion. It's not free. There's a service charge for >>cashier's time and the printing or computer time. Still, as fast as >>new facilities can be built, that's as fast as new currency will be >>issued into circulation to pay for it and as fast as those >>facilities depreciate, that's as fast as the new currency will be >>retired from circulation by the person stewarding the facility. >Actually, John, I think you also "evoke confusion" on the "free >money" issue. Sometimes you are at pains to point out the 100% >collateral requirements and the demand for repayment based upon a >depreciation schedule. Other times, however, you are very blase' >about saying that people should be given loans and no big deal should >be made if they don't repay because some how or other their kids or >"the community" will make it up later. This strikes me as somewhat >risky since, over time, a growing minority will also become blase' >about repayment. JCT: Yes, it is true that I have not treated many of their concerns as seriously as they might be treated. I must admit that you have elicited many answers I've never had to provide before. Yet, they have reassured me even more in my determination that the invisible hand the market economy can operate without guidance as long as the value of the money is firmly established, such as with Hours of labor. I am truly thrilled at the new explanations you have elicited by your questions and I'm sure that many of my regular readers may have found them as enlightening as I have. A lot of these free-market Hour ideas are new to me too. I had always just operated on the assumption that like in my casino where I didn't have to worry about what action went on on the casino floor, what people chose to do with their chip, I didn't have to worry about what people would do with their money in the economy as long as the bank provided stable tokens.
>Soon, you have a social problem on your hands. Not everyone is as >sincere, honest or well intentioned as yourself and the true >believers who subscribe to this list. JCT: Actually, there are many thousands of sincere, honest and well-intentioned people around the world. The problem is getting them to admit that LETS is the ultimate optimal currency software and getting it on the largest databases is the optimal way to go at this point. I think the historians will judge the greatest impediment to Global financial salvation were those who insisted that LETS remain small without any large corporations or governments allowed. So even though many people agree that LETS is the right software, getting them to agree that one big one is best still remains the greatest problem we face in getting its benefits to the needy of the whole world.
>Just some thoughts to provoke further debate. JCT: That you did. You've given us a glimpse of how the free market under and Hours currency would work and I thank you for it.
>Date: Tue Feb 23 16:34:48 1999 >From: firstname.lastname@example.org (Paul Dumais) >Subject: [lets] Re: TURMEL: The LETS Transaction Booklet #2 >John Turmel wrote: >>JCT: The collateral valuation will remain fixed to an Hour of labor. >What does that mean? If I tell the cashier I have a farm tractor >worth $150000 "hours", does she take my word for it? Or does she >require an inspection report from a reputable person? When such >people inspect a piece of equipment they compare it to the market at >that time. JCT: Sure, the same people who valuate collateral today may continue to valuate collateral in the future so that the cashier doesn't have to take your word for it.
>If the market changes so does the "hours" that the equipment is >worth. The willingness to borrow will effect the scarcity of hours >which will effect what the market valuation is for my tractor. JCT: There is no unnatural scarcity of hours and the value of your hours will not change though the value of your tractor in the eyes of potential purchasers may.
>This variation of price caused via a change the availability of the >currency is defined as inflation/deflation. JCT: I just don't understand where you get the impression that Hours systems run out of Hours. I'll find it tough to vote for you for the council of directors if you can't get these elementary things right.
>>The loan issuing policy will remain fixed to each Hour of >>labor. Sure I'll recognize that if you want to change these fixed >>policies, then you can generate inflation. But I'll also recognize >>that there's no logical reason to want to generate inflation by >>changing them. The whole point of not changing them is that we do not >>want to generate inflation. If you want to generate inflation, then >>sure, change the cashier's policies. If you don't want inflation. >>leave them alone. Accepting that changing the policies responsible for >>no inflation would cause inflation is not a great step forward. >So what you call "fixed" will depend on the mood of the person making >the valuation on my collateral. I agree with you in the sense that >whatever policy we choose we must keep it as fixed as possible. This >might riquire a standardization of collateral valuation via a permit >granting body to give permits to those who will do valuations of >collateral for the democraticly controlled currency group. JCT: If banks can insist on the three valuations of your home before giving you the loan, I don't see why those kinds of policies can't be continued. If necessary. Somehow, I doubt they will be once they become valued in Hours of promised labor.
>Just to pound my point home regarding democratic control - the Soviet >Union wanted to give benefit to the worker via centralized control of >the means of production. Millions of people died as a result. Lets >not let something as important as currency issuing fall under the >control of any "benevolent" dictator. Surely we won't be voting to >kill ourselves by the millions via a well-run democratic process >which determines how we run the most important thing to us all - our >system of exchange for goods and services. JCT: Just what kind of control would this currency dictator exert that you find so problematic? I think I've given you as rigid a target as possible. What kind of problem do you see that would need democratic decision-making? Or are we back to the idea that the absolute power of the project engineer corrupts absolutely again? -------------------------------
Consequence of interest-free money #3
>Date: Wed Mar 3 02:59:33 1999 >From: email@example.com ("Charles Michael") >Subject: [lets] Re: Thank you John! >Thank you, John, for the interesting exchange. Glad I could >contribute to the debate. I was not aware that you envisioned your >LETS concept as an "hours" currency. I will look forward to future >exchanges. Charles Michael JCT: When you think about it, hours are the only real currency possible. Without knowing how much labor you can hire with it, what's an ounce of gold worth? All money has to be linked to time-labor in order to have any worth at all. All production is rated in time-labor, whether it be crops, products, services (of course), everything. That's what bugs me about watching historical shows where they way that "the dam cost $30 million to build." In 1932. What does that mean? They'll always tell us that it's worth $300,000,000 in today's dollars. How do they do the conversion? How does anyone make the link? The best way is always to find out what the standard hour of labor cost. Tell me that men were paid 50 cents an hour then and they're paid $5 an hour today and I'll realize that 60 million hours of time- labor then is worth $300 million of time-labor now. Whenever you hear any kind of cost for something in the past, you have no idea what it means. It is almost valueless information. The only way for me to find out what a million was worth in such a year is to find out what a standard hour of labor cost in that year. Without that link, the historic number means nothing. They say the total cost of the Vietnam war was $200 billion. What does that mean? Today, it costs that much for 100 F-22 Raptor warplanes. It might be the deficit for one year. It's not accidental that the money system is designed so that people never understand what anything's worth and it's paid off for the guys ripping off the general population. So thinking in terms of Hours of time is the only way to think in terms of a stable unit. Anything else leads to confusion.
>Date: Wed Mar 3 04:03:51 1999 >From: firstname.lastname@example.org ("Charles Michael") >Subject: [lets] Re: LETS go Mainstream? >A few ideas for those interested in making LETS a more widespread or >universal currency. >Someone recently urged list subscribers to write to their elected >representatives regarding the evils of usury. I would like to suggest >a specific variation on this theme. I believe that writing to your >President, Prime Minister, Congressperson or MP would largely be a >fruitless gesture. These folks have been "in bed" with the powers >that be, far too long and their constituency is too numerous and >widespread for a few letters from "anti-usury oddballs" to have much >effect. JCT: I also thought this for most of the 20 years I've been on the Abolish Interest Rates project and I gave up on these kinds of politicians years ago. But the Australian Parliament endorsed the interest-free LETS, so did the New Zealand government and the UK government last year. So approaching politicians is not totally useless. The fact that they have the power to get government to use LETS and once LETS currency is accepted for taxes, achieving 100% acceptability is a good reason to continue to approach them. Though the most powerful politicians are probably the ones most influenced by the big money that put them there, it's clear that they all aren't.
>Instead, since existing LETS are widespread but small in scale, focus >upon the smallest institution of government - the city government. JCT: Though the smallest levels of government have proven most amenable to LETS, it doesn't mean that the other levels shouldn't also be approached. Optimal strategy would suggest that they all be approached and the success on the local level would help influence the those on the higher levels.
>The ultimate goal being to get the city to accept even a small >percentage of its tax payments in the form of the LETS currency. >This opens the door to many businesses to accept LETS as well, since >they have a guaranteed way to use them. JCT: Though this might make sense to you and me, I've been trying to explain this to LETSers for years and it just doesn't seem to get through. Most LETSers are firm believers that the (L) in (L)ETS means local and have sought to exclude government and large businesses on purpose. Is it any wonder that with these heroic efforts to keep LETS small, that they've been successful. Yet, it only takes one government to accept local currency for taxes and the whole city would accept the local currency, no matter how LETSers who want it to remain small would object. Remember that LETS has not remained small because it operates better that way. Actually it would operate better with a large database. It has only remained insignificant because that's what most LETSers now in control have sought.
>Mayors and city councilpersons have very small neighborhood-sized >electoral districts and, since most municipal elections have very low >turnouts, a relatively small number of "single issue" voters can sway >the candidates' views on a topic. Local candidates, furthermore, >sometimes tend to be in the race more for the good of their >communities rather than for the crasser motives of their senior >colleagues at regional or national levels. JCT: Also, they're much less likely to be bought by big money which would explain why so many local councils in the UK have supported LETS before the federal government finally did too.
>A LETS group with several hundred, or as much as a thousand members, >could mobilize into an effective popular force. JCT: I've always predicted that LETS databases would eventually evolve into political forces once they realized that they'd be better off with government accepting local currency for taxes. I wrote an article a few years ago called "Pick a LETS disk and run" arguing that if Social Services obstruct, run candidates and put in people who will help.
>It may be important to remember though, that the anti-usury ideals >espoused on this list may not carry as much weight and may even scare >off many LETS members as well as outsiders initially. JCT: It depends purely on whether they understand how their interest-free savings would buy them more food over time so they won't need more money via interest for their food.
>When motivating LETS members to become active, I would make appeals >to their obvious self interest in being able to use their alternative >currency to pay very conventional tax bills as well as having more >businesses accept payment as well. JCT: Good luck but how do you answer people who say: LETS stands for Local Employment Trading System and letting government and large businesses participate would defeat the purpose. I've been arguing the advantages of government membership in LETS and have been opposed almost every step of the way. But though you're certainly right too, how do you get it across to the slower LETSers?
>When approaching city council members, a similar practical appeal >will definitely be called for. Talk of banking conspiracies and >interest free currency will bewilder or alienate them. JCT: Sure we don't have to talk about how the bankers' conspiracy won't like government not paying them any more debt service. This kind of talk is purely for the initiated and is far too esoteric. That's why I've always supported LETS as the solution rather than condemn the bankers as the problem. Check my election campaign speeches and you'll notice that I spend 99% of my time promoting LETS rather than condemning usurers though I do assuage the retirees by explaining how increased technology will make their savings more valuable so that they won't need interest to keep up with inflation making their savings less valuable.
>I would, instead, focus on LETS' obvious merits in poverty relief and >its wide endorsement by many local and national governments for that >purpose. JCT: Agreed. See: http://turmelpress.com/elections.htm.
>This will carry especial weight with city governments if they think >that LETS can displace some of their existing anti-poverty >expenditures. JCT: That's why my favorite news report headline shouts: CAN COUNCILS HELP TACKLE POVERTY? STOCKPORT THINKS IT CAN AND HAS LAUNCHED AN ANTI-POVERTY STRATEGY - INCLUDING A LETS LOCAL CURRENCY SCHEME.
>Once you get them to accept LETS for (say) 5% of their tax payments, >you can open a free LETS account for all city employees who will then >lobby the city for 5% of their wages to be paid in LETS. You can also >open LETS accounts for those on the dole and get them into the >alternative money economy. The LETS organization could, either by >itself or in conjunction with a credit union or co-op bank, start >offering interest free micro-credit loans to the poor (or others) to >help start small scale enterprises etc. If every LETS tries to go >mainstream like this, only a few will succeed the first time, but >they will start the snowball rolling downhill for the rest. Then you >can move toward more regional efforts and so on. JCT: Yes, yes, yes, yes, you have seen the potential of government involvement. But no, no, no, no is the response you'll get from most LETSers around the world. It's not the politicians who are the problem but the original "LETS-must-be-small" advocates who can't see its larger potential.
>This seems to me to be one attainable goal that can lead to LETS >getting a foot in the door in the struggle to get mainstream >acceptance. None of this is particularly new thinking but it is >perhaps useful to discuss more practical and doable grassroots >strategies rather than just discussing alternative monetary theories >and proclaiming our verbal support for the notion of a universal LETS >currency. JCT: It may not be new thinking but it's certainly rare. I'd say that there aren't more than handful of the hundreds of thousands of LETSers around the world who have seen the bigger picture. The problem is that when you start discussing the bigger picture, you run up against the guys who are running the bigger currency system and their economic arguments. It's the reason I've always published the answers I've developed to counter their objections. It's an interesting situation. All it takes is one large database to install LETS, for instance, AOL or Microsoft Network offering LETS services to their members for its large scale potential to explode. Once that happens, all LETSers will see it, even those who don't now.
>Anyone out there who is actually a member of a real LETS (as opposed >to an email list) who had tried this at the local level? JCT: There was some talk of local councils joining their LETS but only on the smallest scales. For example, accepting local currency for swimming pool fees or park fees or even photocopying fees. The idea of using LETS to finance more parks workers or police hasn't yet occurred to them. Just go read my poem to the Queen where I explain every easy step in how local government to use LETS to appreciate the mental block that must be preventing them from seeing it. See: http://turmelpress.com/pomlizas.htm
>Thought I'd throw out these thoughts before I go back to lurking for >a while. Thanks, Charles Michael JCT: The fact you've seen the potential of government use of LETS makes you a rare bird in our flock.
>Date: Wed Mar 3 07:09:40 1999 >From: email@example.com ("Tom J. Kennedy") >Subject: [lets] A Common Sense Solution >"Charles Michael" <firstname.lastname@example.org> wrote: >>A few ideas for those interested in making LETS a more widespread or >>universal currency. snip...... >Bravo Charles Michael. I welcome your support to this idea. >I have been writing Letters to Municipal Government politicians here >in Ottawa, Ontario, Canada since the late 1980's. You can read a >sample of a such a letter at http://www.cyberclass.net/bartable.htm. >Click on the article titled "A Common Sense Solution". I forwarded >this letter to Ottawa Municipal politicians in January 1998. I have >been criticized by fellow LETSers for writing such letters to local >politicians. >I have received a few phone calls over the years and in fact have even >met with some of the municipal councillors but no great effort has >ever been made to implement ideas contained in my Letters. >Anyone is invited to adapt the ideas from my letter and submit a >similar communication to their respective local municipal government >politicians. Tom J. Kennedy JCT: The fact that Tom promoted LETS as a candidate in the 1993 Canadian Federal General election and the 1994 Nepean municipal elections makes these criticisms of his activities even more odious. When Tom was attacked by Ottawa LETSers who could not see the big picture as he could, I did publish a defence which I reproduce now just because I think it was so unfair:
TURMEL: Ottawa LETS banning Tom Kennedy for "advocacy"
*Date: Wed Jan 15 08:23:21 1997 *From: email@example.com (Terry Cottam) *Subject: Draft MLM proposal *To: firstname.lastname@example.org, email@example.com, *Cc: firstname.lastname@example.org, email@example.com jct: Notice there was no copy to send to Tom Kennedy, firstname.lastname@example.org, the victim of the upcoming smear campaign.
*Tom Kennedy, who wants to re-join the current Ottawa LETS, has *backed off his wish to sell products by his "School House *Enterprises." *However, he is now again sending long-winded promotional letters *on LETS to city politicians(10). This again casts his membership *in doubt, since we will want to distance ourselves from that. jct: I am posting Tom's "long-winded promotional letter on LETS to city politicians" and leave it up to you whether it's an effort that should cast his membership in doubt and which we will want to distance ourselves from.
*From: Tom Kennedy, email@example.com *I invite you to read this letter below which was sent to Peter Clark. *If you understand the power of our municipal government operating a *LETSYSTEM as a pilot project then email a letter of support to Peter *Clark and each of the Regional Councillors and invite them to *participate now. * *Peter Clark firstname.lastname@example.org *Herb Kreling email@example.com *Richard Cantin firstname.lastname@example.org *David Pratt email@example.com *Alex Munter firstname.lastname@example.org *Betty Hill email@example.com *Robert van den Hamvandenharo firstname.lastname@example.org *Alex Cullen email@example.com *Al Loney firstname.lastname@example.org *Gord Hunter email@example.com *Dan Beamish firstname.lastname@example.org *Michel Bellemare email@example.com *Madeleine Meilleur firstname.lastname@example.org *Jacques Legendre Legendreja@rmoc.on.ca *Diane Holmes email@example.com *Linda Davis firstname.lastname@example.org *Wendy Stewart email@example.com *Brian McGarry firstname.lastname@example.org *Peter Hume email@example.com *Thank you for supporting the expansion of the new LETS economy. * *January 7,1997 *Peter Clark, Regional Chair, Ottawa-Carleton: * *To Limit Tax Increases While Improving Current Levels Of *Government Services" * *In recent years, the local media has been bombarding us with grim *financial forecasts for the entire country and particularly for the *Ottawa Community. Until now, all concerned partners in government *have been worrying about sharing the "scarcity" unjustly, rather than *addressing the obvious growing problem of traditional debt-financing *at both the individual and government level - "interest" - which *ought to be correctly labelled "USURY". *It is time to consider a pilot project employing the concept of *"interest-free" financing, which is now possible given the ease of *modern technology. Interest-free financing will solve the "scarcity" *that faces every single citizen in the Ottawa community. *The critical challenge is to not only avoid further labour strife *within both the public and private sectors while saving face with the *taxpayers, but also to implement the optimal solution which will *benefit the entire Ottawa community. Yourself, local mayors and *councillors, private and public sector employers and members of the *Ottawa community are encouraged to thoroughly research the details *of this timely proposal to determine if it can be launched as a *worthy pilot project with the co-operation of local employers, *employees, unions and municipal politicians. *This optimal solution be pursued, we would probably hear you, Peter, *address in the media saying something like: "And now, turning to ONLY *COMMON SENSE SOLUTION, I am forwarding a creative proposal endorsed *by the Greater Ottawa community to Premier Mike Harris and to all *Mayors and Councillors in the Regional Municipality of *Ottawa-Carleton to request that they offer experienced LETSYSTEM *users, with the support of qualified economic advisors,opportunities *to make a series of formal presentations so that municipal *politicians everywhere will become familiar with the working *prototype of the LETSYSTEM and how this innovative system of *"interest-free" prototype of the finance can be implemented with *ease as a pilot project to benefit every citizen in the Ottawa area." *I am confident the result of such meetings will solve our current *problems of sharing the "scarcity" and guarantee an "abundance" to *our community. Frankly, a pilot project to implement the political *application of the LETSYSTEM at the municipal level of government is *THE ONLY COMMON SENSE ALTERNATIVE in this dismal Depression of 1997. *No one has yet heard these words of wisdom from any politician yet: *so in the meantime,ponder some significant points from myself as a *keen student of the LETSYSTEM for fourteen years and a satisfied *participant for nine years. The LETSYSTEM (Local Employment Trading *System) is a community exchange system which generates abundance and *moves economic transactions into the modern age of high-tech. The *LETSYSTEM offers participating members an "interest-free" local *medium of exchange commonly called "greendollars" or "ecodollars", *which function independently of "interest-bearing" federal dollars. *A magazine familiar to municipal politicians called MUNICIPAL WORLD, *published an article in March 1986 which describes how "greendollars" *are created: **The "greendollar",by mutual agreement roughly equivalent to the **federal dollar, is created not by chartered banks in the process of **lending, by individual members of each LETSYSTEM - on the strength **of an implicit pledge to reciprocate with an equivalent contribution **in goods or services. The "greendollar" is created in the act of **spending it...."Greendollars" are in reality debits and credits in **the LETS computer, for all intents and purposes like bank entries **in a bank ledger. In small communities like Powell River, B.C., the **computer is replaced by a hand written ledger. The system works. It **permits a multitude of transactions which would be impossible were **members exclusively dependent upon money coming in from the depressed **world market for their resource-based products... * *According to Don Hawthorne, an Edmonton consultant with a background *in economics, lending and research for Credit Unions in Western *Canada: **LETSYSTEMS, like other co-operatives in the past, defy conventional **ideas about what motivates economic and social behaviour. In **LET-SYSTEMS, goods and services are provided not only in **anticipation of market rewards, but also to honour obligations **undertaken by individual members. And like other co-operatives, **LETSYSTEMS might well represent another breakthrough in economics **thought and practice. *The Ottawa-Carleton Credit Unions must have leaders similarly as *insightful as Don Havthorne who will recognize the LETSYSTEM as a *pioneering idea whose time has come. Perhaps the Ottawa-Carleton *Education Credit Union, the Ottawa Community Credit Union and/or *other local Credit Unions will see the benefits of arranging for *LETSYSTEM accounts to be opened for the selected groups of Ottawa *citizens each serves. With an initial pilot project and the eventual *implementation and growth of the LETSYSTEM, local taxpayers could *look forward to paying absolutely no "interest" on future, local *education debt or otherwise. The current system of debt-financing *which extracts "interest",forces taxpayers to pay for two or three *capital projects while getting only one. *Implementation of the LETSYSTEM at the municipal level will vastly *reduce the "interest" charges of capital projects and increase the *likelihood that they will be undertaken even during this current *depression. *The LETSYSTEM can be identified as a job-creation scheme in these *trying times of significant downsizing and unemployment. Private *contractors will be encouraged to build and renovate public and *private buildings and their payrolls (which will operate with a *portion of "greendollars" otherwise known as "circulating receipts" *or "tax credits") will boost the spending power of not only of their *employees, but also their sub-contractors and other businesses in the *Ottawa community. In fact, the function of any LETSYSTEM is to induce *a local community to spend itself into unprecedented economic healthy *local economy based on concepts similar to the LETSYSTEM is the *GUERNSEY EXPERIMENT, which was introduced in the Islands of Guernsey *about 180 years ago. It still operates successfully, having restored *that island's frail economy where their unemployment rate is zero, *their standard of living is high and they have absolutely NO *"interest-bearing" debt-financing. Currently, there are about 60,000 *permanent residents in Guernsey. This address on the World Wide Web *(u-net.com/gmlets) and the local newsgroup (ncf.ca.lets) adequately *explains how the function of the LETSYSTEM is the only common sense *solution in these times of rising costs and shrinking revenues. A *working LETSYSTEM can easily fund with ease a percentage of the *necessary and legitimate needs of our local community without *incurring "interest", which accompanies traditional forms of *debt-financing. *A municipally operated LETSYSTEM will not only solve the immediate *threats of service cuts and raising taxes, but will also establish *the Ottawa community as a respected leader in the 21st Century for *proposing such a timely and creative plan to restrict tax increases, *while maintaining current levels of public services. Local public and *private employers,in co-operation with unions might even jointly *market a "proven, workable plan" to other cities and towns for cash, *"greendollars" or a combination thereof. *If I can be of help in aiding yourself, the mayors, councillors, *Ottawa public and private sector employers or anyone else to better *understand how a functioning LETSYSTEM of alternative, *"interest-free" finance can redeem jobs during this deepening *Depression of the 1990's please write, telephone, fax or email me at *the respective numbers on the letterhead. *Sincerely Yours, *Tom J. Kennedy jct: If this Tom Kennedy advocacy is LETS if found to be grounds for refusal of membership, I think Ottawa LETS has a problem. Though Terry might want to distance himself from such a letter, I think it's a fine piece of political pressure well before the upcoming municipal elections and I am shocked that Terry would suggest that it's reason to cast Tom Kennedy's membership into doubt. It does expose something telling about the inquisitive attitude of people like Terry though. Tom sent me a copy of Terry's his latest message:
*From: firstname.lastname@example.org (Terry Cottam) *Subject: LETS meeting! *To: al707 *You're invited to come and speak for 15 minutes on your interest *in MLM's at 7:30, Bethany's at 197 Cambridge N. This will help *us decide on your membership. HomemakerLETS people will also be *there. We'll also return your S.H.E. materials then. jct: As for the denigrating inquisition into Tom's membership because his MLM suggestions and letters to politicians for reason that we should distance ourselves from him, as far as I know, Tom Kennedy was supporting LETS in 1983 before the LETS software was even encoded. No one, not even me, has done more to support LETS in the Ottawa area all these years than Tom Kennedy. And now this staunch LETS supporter is going to have 15 minutes to defend his membership at the next Ottawa LETS meeting before Terry's irate inquisitors into his improper LETS advocacy. I hope he's smart enough to take along a tape recorder for this perhaps first-of-a-kind event. Are there any other LETSers' memberships which has been cast in doubt for improper LETS advocacy? Or is Terry's inquisition into Tom's advocacy a first for LETS? Let us remember that multi-level commission sharing is totally legal activity in Canada. If anyone can provide just one reason how having access to millions of MLM distributors and their products for Green could in any way harm the LETS movement, I'd like to hear it. We actually want these products and services. If it's legal to do it in cash, it's none of Terry's business to comment on their doing it for Green. After having trusted Tom with the management of my casino cages and with the hundreds of thousands of dollars that went through his hands, I am appalled that one of the most honest and faithful men I have ever met should be have his motives and integrity so besmirched. Further, his vast experience as the Casino Turmel cage manager makes him uniquely qualified to understand how LETS 1/s chips work, the same as Casino Turmel 1/s chips, and how to explain it to people. I would further point out that as a small gang of outsiders have organized to shut down ncf.ca.lets, Tom Kennedy was the only Ottawa LETS who spoke up in defence of keeping ncf.ca.lets. Russell McOrmond says he will be discussing the advantages of the removal of ncf.ca.lets with Terry and the originators of the ncf lets newsgroup at their next meeting. I hope Terry doesn't fall the line that all Russell needs to shut down ncf.lets is Terry's approval. Terry's opinion that Turmel was abusing ncf.ca.lets and necessitated a new newsgroup without Turmel, won't be much help. I further suggest that if Terry wants to make such innuendoes about Tom, he should at least have the courtesy to include Tom in the list of people who get to read his innuendoes.
JCT: So this is the kind of people we have to deal with. I can categorically state that Terry Cottam has single-handedly managed to keep Ottawa LETS as small and dysfunctional as possible by deterring the use of paper tokens and deterring members by his inquisition into members' activities. These are the people who can take credit for having obstructed the growth of LETS and I'm glad their words are coming back to haunt them. -------------------------------
\conse04.ws4 Article #838 (843 is last): From: David Collier-Brown <email@example.com> Newsgroups: can.politics,sci.econ,sci.engr,ncf.ca.lets, alt.politics.greens,alt.fan.john-turmel,alt.conspiracy Subject: Sidebar re currencies Date: Fri Mar 12 12:23:40 1999 John Turmel wrote: >JCT: When you think about it, hours are the only real currency >possible. Without knowing how much labor you can hire with it, >what's an ounce of gold worth? You have to abstract slightly: one hour of a colleague's time is worth about two of mine. In principle, any level of abstraction will work, so you get former real products (gold) being used as a placeholder for more complex conceptions of worth. People used to use it as a universal measure, until inflation hit. Psychologically, very small degrees of abstraction are best. Hours are a good currency, but can suffer deflation: the worth of one hour building a dam in the 1920s is slightly less than it is now, and the worth of one hour building a pyramid is worth **much** less now! David Collier-Brown, | Always do right. This will gratify some people 185 Ellerslie Ave., | and astonish the rest. -- Mark Twain Willowdale, Ontario | http://java.science.yorku.ca/~davecb Work: (905) 477-0437 Home: (416) 223-8968 Email: firstname.lastname@example.org -------------------------------
> >Date: Sat Apr 3 02:42:22 1999 >From: email@example.com ("Charles Michael") >Subject: [lets] Re: Consequences of interest-free money - Again >To: firstname.lastname@example.org, email@example.com >Hello All, >Its too quiet on this list now. Aside from JCT's campaign updates, >most of the debate and discussion has evaporated. Should I compose a >poem praising usury just to get everyone pissed off and debating >again? :) Anyway, here are a few more thoughts to stir the pot. For >all the rhetoric about banks creating money out of nothing everytime >they make a loan, I believe that many loans may well be pure piggy >bank types of loans. As I understand it, only commercial banks making >commercial loans get to wave the magic money wand and create new >money. That means that your car loan, your mortgage etc. are NOT >newly created money but rather other peoples savings loaned out to >you. Correct me if I am wrong, but I think this is so. Indeed, many >of these types of loans do not even come to us from banks but rather >from finance companies! Likewise, many corporations finance their >endeavors through bond issuance rather than bank loans. Thus, only a >portion of all loans issued in the economy are new money. If there >were, say, 1 million new loans every year with an average principal >of $100,000, perhaps 600,000 of them would be newly created money >(most of those loans are collateralized) and the rest would be just >piggy-bank loans (also mostly collateralized). If you assume the >economy runs near full employment as at present in the US, those >600,000 loans of new money "fuel" the economy pretty much at its full >operating capacity >Now, if a national LETS is constructed as per earlier discussions, I >believe that ALL loans would originate as newly created money (and >also be collateralized). Even if the flow of all new loan amounts >were to remain the same as in the previous usury era, there would be >a significant increase in the GROWTH RATE of the money supply. Using >the same example, you would have ALL 1 million loans issued with >newly created money. This is the same as flooring the accelorator in >a car already traveling near the speed limit. >Furthermore, in the real world, the amounts of all post-usury loans >would actually be much bigger than before. By ending usury and >extending loans maturities out to the lifetime of the collateral, you >reduce motgage and all other types of loan payments by 50% or more, >thus many people can, and likely will, budget for bigger purchases >and the loans that finance them. Returning to the example, that means >you will have 1 million new-money loans perhaps averaging $200,000 >each vs only 600,000 new-money loans averaging $100,000 each in the >first example. Thus a huge ballooning of the money supply, a dramatic >increase in the amount of dollars chasing collateral that is already >being produced just about as fast as the economy is able to produce >it. That means inflation, not just price increases - for a while. >Eventually the economy would adjust to the higher level of demand as >interest free loans were procured to build many new factories. Then >price stability would likely return. One argument seemingly made by >JCT is that, since his proposed LETS currency would be in HOURS, that >this fact alone may mitigate the inflation or at least excesses of >consumer borrowing that lead to inflation. >I do not think this will make a big difference. Whether you call it >HOURS or dollars or Ardvark teeth, people know they have only so much >income and thus cannot (sustainably) incur loan payments that exceed >their income. That is what is meant by "living beyond your means" >which is a term that has been derided in the past when linked to a >usury based currency. >Actually, calling a national currency an HOUR may be a misleading >misnomer. In a small area like Ithaca, community convention as well >as a very restrictive control of new HOUR issuance can keep each >currrency unit roughly valued at the same level as an (average)hour >of work. In a national currency, however, you can't get the community >spirit that allows Ithaca citizens to recognize an HOUR as being >equal to an hour of labor (on average). Furthermore, as ilustrated >above, the national LETs currency, even if originally issued in >amounts such that there is one HOUR unit of currency for each hour of >actual labor in the economy, will not be able to keep anywhere near >that same value in the post-usury burst of general inflation that is >likely to flare up initially. Anyway, hopefully these ideas will stir >up some debate. It is late and my thinking is likely muddled enough >that you all can find plenty of weak spots. Happy Easter / Passover >to everyone, Charles Michael In Denver, Colorado >-------------------------------
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