Page 1:
It should now
be clear that the global economy must inevitably
marginalise and render largely destitute
a very large section of the
population of both the industrial world
and the so-called developing
countries. For this reason alone everything
must be done to prevent
the further implementation of the NAFTA,
Maastricht, and other large
scale free trade agreements that are designed
to advance the
globalisation of the world's economy.
At the same time,
we must revitalise local economies on which the
vast bulk of humanity must always depend
for its livelihood. Helena
Norberg Hodge has outlined some strategies
required to achieve this
goal. In this chapter, we shall examine
two of the devices she
mentions for achieving it: - the setting
up of LETS and of the Time
Dollar schemes.
LETS stands for
Local Exchange (sometimes `employment') Trading
Systems. The role of LETS is to revitalise
a local economy and thereby
a local community by providing an alternative
method of supplying
people with the goods and services that
they can no longer obtain via
the formal (globalised) economy. The principle
involved is simple. If
the formal economy no longer provides
people with the goods and
services that they require then people
must provide them for each
other, payment being made in an informal
local currency that is only
valid within the local area.
Page 2:
The second strategy
consists in creating Time Dollar schemes
which are basically alternative "welfare"
systems. Industrial
countries that have developed elaborate
and very costly welfare
services are now systematically dismantling
them - as part of a
strategy for reducing costs - so that
their corporations may hope to
compete with those operating in countries
where labour costs are
twenty to forty times lower. Once again,
if the state can no longer
provide these services, then people must
provide them for each other.
Under a Time Dollar scheme, they do so
without payment in the national
currency, but instead they earn credits
in a local currency to obtain
similar services which can be used when
they in their turn are old or
sick.
These are not
fantasies. There are already, for instance, at
least two hundred LETS in England, with
about 20,000 people involved,
as well as a considerable number in Australia,
Canada and New Zealand,
and a few in the U.S.A. Time Dollar schemes
are so far confined to the
U.S.A.; one hundred and fifty of them,
with a membership of from a few
dozen to several thousand members are
now operating throughout thirty
states (New Economic Foundation Notes)
Both LETS and
Time Dollar schemes do more than merely deputise
for the formal economy once it ceases
to be capable of catering for
peoples' more obvious needs. Access to
the goods and services provided
via the formal economy is via money, but
Edgar Cahn and Jonathan Rowe,
co-authors of an excellent book entitled
"Time Dollars," point out
that people need a lot of things that
money can't buy, those benefits
provided by the "kitchen-table world"
of family and close friends
where everybody helped each other without
any thought of remuneration.
However the functions that were once fulfilled
by families and
communities for free have been "taken
apart, function by function, and
sold back to people, who missed the things
that these once provided.
As a result, for most people in the industrial
world, the kitchen
table world is no more, and the things
it represented -
"companionship, entertainment, security,
intimacy, even gossip, must
now be bought for money". Increasingly,
it is the TV and the computer
that will replace the "kitchen table world."
Page 3:
Very much the
same thing has happened to the benefits that were
once provided free by the local community.
Thus security from crime
"no longer means the watchfulness of neighbours.
Rather it means
insurance policies, burglar alarms and
other devices... as well as
greater demands for police." Inevitably
"massive social problems
ensued, as the glue that held people together
no longer seemed to be
there" and governments "have been forced
to try and patch up the
damage with programs and services bought
for money."
People have "become
"purchasers" of community and care, rather
than "participants" in it" and inevitably
they are rapidly losing the
capacity to produce the goods and fulfil
the functions it once did.
"When lawyers settle all disputes, teachers
do all the teaching,
doctors do all the curing," as Illich
puts it, "then people lose their
capacity to do things and the result is
an ever enlarging circle of
dependency and need." This is not a mere
side-effect of the process of
economic development, but its very essence.
Indeed, the monetisation
of functions previously fulfilled for
free by the now largely defunct
family and community, accounts for much
of the economic growth that we
identify with progress.
As Cahn and Rowe
put it, the economy grows "by eating the flesh
and sinew that hold society together."
Of course as this
"cannibalising process" takes place ever
more money is required to
buy the services that the family and the
community used to provide for
nothing. Eventually, as is increasingly
the case today, to earn its
keep now requires a two worker family
sometimes holding down three or
more jobs between them. But this in itself
increases the requirement
for more money, among other things, to
pay the cost of the day-care
centres where the children of working
mothers will be looked after,
and the old people's homes to which the
grandparents will be
consigned.
It is not surprising
that government expenditure on social
services has literally escalated in the
last decades in an obviously
unsustainable way. By creating a global
economy, however, matters have
now been brought to a head. If industrial
countries are to compete
with Third World countries, which now
have almost equal access to
capital, technology and management, while
benefitting from
incomparably cheaper labour costs, they
can no longer afford a welfare
state and not surprisingly, it is being
systematically dismantled.
This creates
a state of emergency with the corporations providing
ever fewer jobs and thereby producing
goods and services that ever
less people can afford, and with the State
incapable of caring for the
growing number of those whose basic needs
the market can no longer
satisfy.
The most obvious
contribution that LETS and Time Dollar schemes
can make is to give people access to a
local currency with which to
acquire the goods, services and care that
they require. The local
currency can either take the form of special
banknotes or merely of
entries in a book, or blips on a computer,
as is usually the case. If
this is possible, it is because the people
who use this local currency
for buying goods and services are at the
same time those who provide
them. What in fact we are seeing is the
development of a local economy
based on an emerging community of people
who are willing to cooperate
with each other in order to provide benefits
that, in recent decades,
have been provided (less satisfactorily)
by the state and the market.
page 5:
One of the advantages
of LETS and Time Dollar schemes is that for
two reasons there can be no shortage of
the local currency as there is
of the national currency in poor communities.
The first reason is that
people actually create their own currency
themselves by the simple
expedient of providing goods and services
for each other. The second
is that there is no incentive to hoard
it, as offered with the
national currency during the depression
years, for as local solidarity
builds up a new and more reliable form
of security comes to replace
that provided by money. Also, no interest
is paid on credit balances
just as no interest is charged on debit
balances.
Equally important
is that the local "currency" is not convertible
into any other local currency, let alone
the national one, and can
thereby only be spent on goods and services
provided by other members.
This means that rather than serve to fund
the production of for
instance cash crops, that would be exported
to satisfy the needs of
distant populations - often at the price
of creating local shortages -
it is far more likely to fund the production
of food for local
consumption. This also provides a means
of ensuring that purchasing
power stays within the community; in sharp
contrast to the situation
today when money is sucked out of poor
communities into the rich urban
areas - where, among other things, the
headquarters of the large
corporations that control most of today's
commerce, are situated.
Thus in the case
of a predominantly black district in Baltimore
where the inhabitants are largely unemployed
as the result of the
closure of a steel works and of the local
railway station, the shops,
according to Cahn and Rowe, have closed
down so that there is now
almost nowhere to spend the money locally.
Shopping is almost entirely
in an out of town supermarket. This means
that all the money that
flows into the area, mainly in the form
of social security payments,
almost immediately flows out again. In
the case of Indian
reservations, it has been calculated that
it only takes 48 hours for
75% of every dollar the Federal Government
provides, to flow out to
border towns.
Page 6
PRICING DIFFERENT SERVICES
Some LETS have
a standard hourly rate for whatever the services
rendered might be, but most LETS attribute
a different value to
different services, and in our view this
certainly seems preferable.
We well that
one of the reasons why Robert Owen's Equitable
Labour Exchange of 1832 to 1834 foundered
was that people were paid a
standard rate of sixpence an hour, regardless
of what particular
function they fulfilled, and, as a result,
those who were earning more
on the open market tended to stay away.
Most LETS seemed
to have adopted this view. The price of the
different goods and services provided
by members, however, is
evaluated by the local community, rather
than being determined by the
market. As a result the price differential
tends to be must lower than
it would be within the formal economy.
To take an example, a dentist,
in a Vancouver Island LETS, started off
by charging his normal fees,
and then expected to hire other members
to do unskilled work for him
at a minute fraction of his own hourly
rate. They refused. The
differential still exists, but it has
been drastically reduced. This
change of attitude can be attributed to
the ability of LETS to bring
people together and negotiate as members
of the community rather than
as complete strangers. With Time Dollar
schemes the situation is
different. Payment for services provided
in these schemes is not that
important. Members see themselves as volunteers
who are acquiring Time
Dollars for doing work which many of them
would be quite willing to do
for free. Cahn considers that "people
who are asked for help will get
it even if they don't have any Time Dollars
to pay for it." "Yet the
fact that they receive something for their
efforts is important too,
because it validates their contribution
and encourages people to do
things which they would never do for cash.
"A retired bank president
would never mow a sick person's yard for
money, but he'll do it for
Time Dollars" Cahn says. Price is not
the issue, it is status. To
accept money for such a task implies one
has accepted the market
status defined by the wage. "Not entirely
surprising only 15% of
dollars are ever spent, and no one is
refused care because of a
shortfall in their account. (NEF notes)
BUILDING UP COMMUNITY
This brings us
to one of the most important functions of LETS and
Time Dollar schemes - their role in building
up the local community.
This occurs because the people involved
rapidly get to know each other
by working, and above all by caring for
each other. As a participant
in an early Canadian scheme put it "just
about every time I trade
through the LETS system, I get to meet
someone personally. I have got
to know an extra 100 -150 people in this
way. To me, that wealth of
relationships is synonymous with economic
well-being" (Dauncey).
As you build
up community people learn to trust each other. We
are used to a central bank having the
responsibility for maintaining
confidence in the national currency -
which is an increasingly
difficult task - since the value of a
currency is increasingly
determined by giant international banks
and even more so by currency
dealers such as George Soros. But is is
not only a central bank that
can create trust. Until the Scottish Bank
Act of 1845, banks in
Scotland were free to issue their own
notes and there was no central
bank. An authority on the subject,
Laurence H White (Free banking in
Britain, Cambridge University Press 1987)
concludes that: bad money
did not drive out good; banks did not
tend to issue too many notes;
and that loss of confidence in banks was
not an endemic problem.
Page 8:
LETS is clearly
yet more decentralised, and so far, there have
been remarkably few defaults. This is
mainly because members of the
system trust and develop a sense of responsibility
towards each other.
It is also due to the openness of the
system. One party to a
transaction can always ask to know the
balance of the other party's
debit accounts, and he may decline to
trade if the other party's debit
balance is too great. Finally, some systems
also have limits on how
far people can get into debt or "in commitment"
- to use the language
of LETS.
THE LETS EXPERIENCE SO FAR
The first LETS
was started by Michael Linton in Jan 1983 in the
Comox Valley, British Columbia, Canada.
The unit of currency was the
green dollar, tied to the Canadian dollar.
In its first twenty months,
about 250,000 green dollars worth of trade
was carried out.
LETS was introduced
to the U.K. in 1985, after Michael Linton
described it at TOES (The Other Economic
Summit). By the end of 1994,
there were about 250 systems with membership
varying from 14 to 500.
Today, roughly a fifth of these are growing
and developing
dynamically.
The largest UK
LETS have a turnover of about #70,000 a year. The
biggest, and arguably the most successful
LETS, is in Australia - in
the Blue Mountains of New South Wales,
centered on the town of
Katoomba, about an hour east of Sydney.
The Blue Mountains LETS was
started in Feb 1991 with the help of a
committee of five people. Since
then it has grown to be the world's biggest
LETS with a current
membership of about 1800 people, who between
them have 1,100 household
accounts. In all, locally provided goods
and services, worth an
equivalent of US $270,000 are traded every
year. Among the more
interesting services so far provided has
been the organization of a
wedding. This involved arranging for the
design and production of the
bridal gown, the food and entertainments,
and, when it was over, the
cleaning up of the mess. It has also dealt
with the extension of
another member's home, all the building
work being paid for in the
local LETS currency.
Page 9:
EXPERIENCE OF TIME DOLLAR SCHEMES
The idea of Time
Dollar is the brain child of Edgar and Jean
Cahn. They met when students at the Yale
Law School, and started their
first Time dollar scheme in Miami, Florida,
providing services for the
elderly, which is still today the main
accent of many Time Dollar
schemes. Tragically, Jean Cahn has since
died and Edgar Cahn has moved
to Washington, where he works up to 80
hour a week with students and
volunteers to spread the Time Dollar idea
as a memorial to her (NEF
notes)
The Miami Time
Dollar scheme remains one of the most successful.
It now has 900 participants, most of them
elderly, retired people with
time on their hands, and they are putting
in more than 8000 hours of
work a month at 32 different sites in
different parts of the city. The
scheme can be seen as a community welfare
scheme, also as a vernacular
insurance system. Retired people provide
help for other retired
people, as do younger volunteers. They
are known as "respite workers"
and they are paid in Time Dollars, which
they can use to obtain help
for themselves or for their elderly relatives
whenever either of them
need it.
Page 10:
Similar schemes
have been set up in Boston, St. Louis, Brooklyn
and San Francisco. In Michigan and Missouri,
Time Dollar programs have
been launched, with the help of local
state authorities. Several are
already evolving into mini-economies,
linking together people from
different generations. Young people are
mowing lawns and painting
houses for elderly neighbours. Some, rather
than keeping the credits
they have earned for themselves, actually
contribute them to other
elderly people who need them more than
they do. IN some programs, Time
Dollars have been "woven" into conventional
medical care systems that
provide services that normal dollars alone
cannot buy. In this way, as
Cahn and Rowe note, the elderly -among
others - are becoming
"providers" rather than simply "consumers"
of care.
A particularly
impressive Time Dollar scheme is in El Paso,
Texas, a very poor town known as the poverty
capital of the United
States, where almost two out of every
four residents live below the
poverty line and 80% of the children are
born to teen-age mothers.
Lower Valley, directly outside the city,
is even more poverty
stricken. There are few jobs and hence
no tax base to finance public
schemes such as schools, water, sewage,
public transport and medical
care. Recently, Phylis Armijo, of the
Daughters of Charity, started a
Time dollar service based on the San Vincente
Health Clinic run by
members of her Religious Order. Her idea
was that under the Time
Dollar scheme, people would themselves
"participate" in the provision
of the health services. Although they
obviously could not replace the
doctors, they could provide other very
important services, transport
for instance. People had to get to the
hospital for treatment, so
other patients could earn Time Dollars
by driving them there. They
could also provide counselling and prenatal
care, and help mothers
once their babies were born, which turned
out to be very effective in
reducing infant mortality.
They could also
provide baby-sitting for the sick children of
working parents, and companionship for
the elderly, whom they could
also help with their shopping. There seemed
to be no end to the
services that patients could fulfil for
other patients, all of which
would reduce their hospital bill and in
this way giving them access to
medical services which would otherwise
never be available to them.
This is exactly what is happening, for
instance, the Time Dollar
scheme has reduced the charge for prenatal
care from $250 to $75.
Page 11
However, Phyllis
Armijo is even more ambitious. Conventional
medicine is largely concerned with treating
those who are already
sick, and little is done about prevention,
hence about reducing the
actual incidence of diseases, which in
the long run must be a far more
effective strategy, than treating the
victims, which is expensive and
not always successful. So she extended
the services that could be paid
for by Time Dollars to such things as
digging wells, removing lead-
based paint and undertaking a survey of
all possible sources of water
pollution in the area, of which, she identified
thousands.
WILL LETS AND TIME DOLLARS BE TAXES?
Fiscal authorities
are unlikely to be too concerned about LETS
and Time Dollar schemes while they are
still small, but as they grown
bigger they may well begin to feel that
they are being done out of a
lot of tax revenue. What then can we expect?
In the U.K. the general
position seems to be that if LETS workers
are doing the sort of work
they would normally do to earn their living,
their LETS earnings are
taxable. If on the other hand people are
using skills they do not use
in their normal work, their transactions
are classified as social
favours and are not taxable. This seems
to be a position with which
LETS can live. There have been attempts,
particularly in Australia, to
secure agreement that taxes, at the state
level if not the national
level, be paid in LETS. So far it does
not seem that the Government
has accepted this.
Page 12
In the U.S.,
the experience with Time Dollar schemes in the State
of Missouri has been significant. In the
mid 1980's the State passed a
law to provide tax relief for members
of Time Dollar schemes who took
care of elderly family members at home.
If no Time Dollar member was
available to help the person who has earned
a credit in the local
currency, the State actually committed
itself to providing this help
at its own expense. In 1985 the state
authorities went further and
actually asked the Internal Revenue Service
(IRS) to declare money
earned in the form of Time Dollars to
be exempt from Federal Income
Tax. To everyone's surprise the IRS accepted
to do so. However, since
then, the IRS has enacted new regulations
expanding the definition of
barter, requiring full disclosure of all
such transactions on people's
annual tax returns. Credits received through
a barter network are now
deemed to be taxable when received rather
than when spent.
Fortunately,
Time Dollars were made an exception to this rule. In
March 1985, as Cahn and Rowe note, the
regional IRS office in St.
Louis ruled that volunteers in the State
program who earned service
credits would not be taxed on their value.
The reason is that such
transactions are deemed to be of a charitable
nature, which serve the
public purpose and would otherwise have
been provided by the State.
For these reasons a Time Dollar transaction
is seen as fundamentally
different from a transaction based on
commercial barter, which could
easily have been undertaken for cash.
In commercial barter, it is
pointed out, the parties are bound by
contract, and credits earned are
a "cash substitute." In Time Dollar schemes,
on the other hand,
members who "receive" a service have no
contractual and hence no legal
obligation to pay for it, while people
who "render" a service acquire
"no contractual right to compensation,
the credits merely providing a
means of motivating the volunteers to
continue their community
service."
Page 13:
What is seen
to be particularly important is that Time Dollar
members do not have access to the courts
to settle their disputes.
Resorting to the courts "means you are
asserting the rights of a
stranger against strangers, and that you
are operating in a context of
monetary values." The IRS, as Cahn and
Rowe put it, see Time Dollar
systems as being very similar to the sort
of transactions that once
occurred among members of traditional
families and communities in the
pre-industrial age. "Families and communities"
they note "operate on a
standard of reciprocity. That is a moral
norm, "not a legal one;" The
mechanism of enforcement is not the courts,
but the sanctions that
operate naturally between people", - people,
they should have
specified, living in a real community
- of the sort that Time Dollar
schemes are helping to reconstitute.
FUTURE DEVELOPMENTS
How then are
LETS and Time Dollar schemes likely to develop?
Firstly, it seems but a question of time
before people start regarding
as a hindrance the restriction that a
LETS currency can only be spent
in a specific locality. For example, within
Perry Walker's own small
scheme in London he has no access to organic
vegetables, nor to much
food of any sort.
There will therefore
be pressure to link systems so that they can
trade with each other. There are two ways
in which this could happen.
A centralised register could handle the
accounts for several different
systems. they could then trade with each
other either if they shared a
currency or if their currency could be
converted into the national
currency.
However, this
could destroy the essence of LETS because trading
would no longer be so local. Hence, proponents
of this view are likely
to favour setting up additional systems
to cover larger geographic
areas each with their own non-convertible
currency that leave in place
the original, highly localised, systems.
Page 14:
Outside LETS
itself there are plenty of ways to extend the range
of services available to the membership.
For instance, Michael Linton
has suggested a LETS fund. This is a sort
of community bank that only
deals in the local currency. Unlike an
ordinary bank it would not
charge interest on loans or for that matter
pay interest on deposits.
The final development,
which is already starting to happen, is
the greater involvement of business. LETS,
at least in Britain,
started with a slightly New Age flavour.
It was thus not surprising
that businesses were initially suspicious.
Furthermore, many
individuals use skills to earn LETS that
they would not other use to
earn national currency, which means that
the LETS currency they earn
is thereby additional to the money they
earn in their normal
occupation. Businesses, on the other hand,
are likely to feel that the
LETS currency they earn will be at the
expense of earnings in the
national currency. Nevertheless, in many
areas small local businesses
start joining after a while. One reason
may be that charging partly in
LETS can bring them new customers who
could not afford to pay entirely
in the national currency. Furthermore,
their ability to pay in LETS
reduces their expenditure in the national
currency.
Again, the Australian
experience illustrates how business can
become involved. Already twenty one businesses
have joined the Blue
Mountain LETS system, together with twenty
five self-employed traders.
The businesses involved include cafes,
healing and medical centres,
schools, hardware and fresh fruit and
vegetable stores, together with
a legal partnership, a few accountants,
a book store, nursery, a food
cooperative and a local community newspaper
called "The Weekender"
(Lets-link, 1994)
Page 15
As it happens,
what appears to be little more than a relatively
marginal self-help system becomes in effect
an almost mainstream local
economy, though one that is partly, at
least, insulated from the
global economy that would otherwise swallow
it up. This partial
insulation is critical. That is why LETS
cannot be allowed to expand
indefinitely by allowing supermarkets
and other large enterprises that
are integral parts of the economy to join,
which they may well want to
do if these schemes continue to grow.
This would clearly be totally
self-defeating, and LETS must be very
vigilant to assure that,
whatever the temptations, this is not
allowed to occur."
Cahn and Rowe
make a number of interesting suggestions regarding
the future development of Time Dollar
schemes. One is the creation of
a new government tax to meet basic social
needs, and that can be paid
either in dollars or in Time Dollars.
Another is to
introduce Time Dollar schemes into the field of
education. A portion of the financial
aid to students, whether it
takes the form of guaranteed student loans,
tuition grants, work-study
money and other benefits, would be set
aside for students working in
Time dollar schemes. Students would thereby
become participants in
their own education by doing such things
as maintaining their college
buildings, tending the gardens, growing
and cooking their own food,
and looking after the library. Some of
these things are already done a
at Berea College in Kentucky and also
at Schumacher College in Devon,
England.
The question
of State involvement in Time Dollar schemes is
clearly delicate. Clearly it is in the
interests of the authorities to
stimulate both LETS and Time Dollar schemes.
Both seek to assure the
livelihood of people who otherwise might
be seeking unemployment
benefits and other welfare payments that
the state, operating under
the constraints of the global economy,
must be ever less capable of
providing. For this reason, it should
welcome these initiatives, even
if they marginally reduce its tax receipts.
this has been
one of the objections levelled against these
schemes. It is argued that they are just
providing benefits that the
State and the corporations should themselves
provide, and that, in
this way, it is discouraged from providing
them. There is a certain
element of truth in that, but the objection
is not entirely fair. By
building up local economies LETS and Time
Dollar schemes reduce our
dependence on the State and corporations,
making it far easier for
citizens to oppose the latter's socially
and environmentally
destructive development policies.
Finally, it could
be argued that the formal world economy is
already tottering on the edge of collapse.
The Mexican crisis we have
just experience (see Heredia and Purcell)
is by no means over and it
might be but a foretaste of what will
soon occur elsewhere, probably
on a bigger scale and with more permanent
consequences. Since today, a
vast proportion of people depend for their
sustenance on the
functioning of the global economy, this
would have the direst possible
consequences, but they would be incomparably
less dire for those who
have organized their own local community-based
economies and have
thereby partly, at least, insulated themselves
from the consequences
of such an eventuality.
In any case,
as already noted, the formal economy, dominated by
the corporations and the State, cannot
even in the most propitious
conditions provide all the benefits that
were once provided by the
"kitchen-table" world that it has so effectively
supplanted.
Ralph Nader,
in the prologue to Cahn and Rowe's excellent book
notes how "the serious problems our society
faces come from the
erosion of..... the economy., of the family
and neighbourhood", and
"the Time Dollar is a currency designed
to reward time spent on
rebuilding that economy" - and so, of
course, are the LETS. That is
why both these schemes are a source of
great hope to us all.
-------------------------------
FJrom my letter to Mr. Edward Goldsmith about his LETS essay:
Wednesday Oct 01 1997
Mr. Edward Goldsmith,
46 The Vineyard,
Richmond, surrey, TW10 6AN, UK
Tel: 0181-332-6963/0295 Fax: 0181-948-6787
Dear Mr. Goldsmith:
In your July 16
1997 letter to Pauline was included a copy of the
July 17, 1995 paper "New Local Currency
Systems" by you and Perry
Walker. I hope you expected that I would,
as Pauline's mentor, give it
a LETS engineer's critical appraisal.
As financial angel and
consulting Banking Systems Engineer on
Michael Linton's Local
Employment-Trading System project, I was
truly thrilled at your
conclusion that Time dollars and LETS
Greendollars are a source of
hope to us all and was moved many times
by your sympathetic prose in
praise of LETS.
I judge my interest
in what I read by the amount of yellow high-
lighter and exclamation points I use.
With the exception of the few
paragraphs on "leakage" concerns which
I hope to later thoroughly
reassure you can be dispelled, I'm happy
to find that it was loaded
with great points, whether on content
or on style of phrase.
I would suggest
you present it to the TOES 98 Summit in London
next year. I've already invited the Bishop
of Worcester, Peter Selby,
to join me in making a presentation on
the Local Currency Panels and
Workshops. Another interesting speaker
might be the Labour MP from
Falmouth who belongs to his Falmouth LETS.
Don't forget that LETS is
already endorsed by many Jewish, Christian,
Muslim, Bhuddist, Sihk
ministries. Next year's TOES 98 conference
could provide a stunning
array of LETS support.
Frankly, you are
the first person with a likely association to
Team Rich who I've ever heard speak of
LETS in such a positive way
though I'm sure you have accepted that
all personal fortunes will end
up more or less stabilized with only earnings
and spendings affecting
new score. I have a hard enough time getting
poor people to accept
that LETS won't charge them any interest
let alone getting rich people
to accept that with LETS, they won't need
to get any interest. Your
support of LETS in such an eloquent way
is a great step in preparing
people for that eventuality. "If a rich
guy like him doesn't think
LETS is going to hurt, why should I?"
I hope you don't mind my citing
some of the best quotes and facts in my
internet and political LETS
debates without attribution until you
indicate otherwise.
I was pleased
you noted that it operates as if by "no contractual
rights" other than a neighbor's word to
try to return that which was
borrowed. Any abundance supplied at the
present time for neighbors'
want is later expected to supply our want.
The essence of "Lend
expecting nothing in return but what they
can."
Having argued
for years that LETS Time Dollar employment
opportunities would be effective in reducing
teen suicides, the most
thrilling result you found was in El Paso
Texas which reported:
"Time dollars
are effective in reducing infant mortality. They
could also provide baby-sitting for the
sick children of working
parents, and companionship for the elderly,
whom they could also help
with their shopping. There seemed to be
no end to the services that
patients could fulfil for other patients,
all of which would reduce
their hospital bill and in this way giving
them access to medical
services which would otherwise never been
available to them. This is
exactly what is happening."
JCT: I only wish
they had done statistics on teen suicides which
might have confirmed the fact that less
teens commit suicides when
local employment-trading is available.
What is really
amazing is that all the plaudits you report are
for mere drops of interest-free medium
of exchange in the overall
planetary pool. Just try to imagine life
where 100% of what we need is
available on Time Dollars. I want the
large barter corporations to
standardize to an Hour value and I'll
connect them to a market of
people with Hours to spend.
LEAKAGE:
Of course, I
discern my co-LETS engineer Michael Linton's
concerns about "leakage from our money
barrels" in a few paragraphs.
Page 1 Par. 3
argues for "Currency that is only valid within the
local area" to prevent leakage;
Page 5 Par. 2
points out leakage concerns:
"funding cash crops creates local shortages;"
"purchasing power leaving the community;"
"money sucked out of poor communities
to corporation headquarters."
Page 15 Par.
1 are more concerns on "leakage:"
"swallow it up;"
"critical multi-nationals can't join."
Page 13 Par.
3 mentions
"pressure to link systems.. could destroy
the essence of local."
JCT: To reassure
you about such currency flows, I have placed
responses to each point raised in those
paragraphs on leakage to
Appendix: Parsed Paragraphs.
Overall, my lack
of concern about leakage will be based upon the
major advantage which you cited on page
5 Par. 1:
"Advantages of
LETS and Time Dollars schemes:
#1) there can
be no shortage of local currency because people
create their own currency themselves;
#2) there is
no incentive to hoard with no interest."
TOWN FATHER'S CASINO CHECKS
I think that
the Scottish banks you cited in your paper could put
leakage concerns to rest but since they
relied on gold backing and a
little usury rather than collateral backing
with a little service
charge, it still left their banking system
needing a little balancing.
So I prefer to
use my Casino Turmel "checks" as the best model of
reference. Having since 1978 and many
times since then been invited by
Ottawa's B'nai B'rith to provide the Blackjack,
Craps and Poker games
at their fund-raising Millionaire's Nights,
I'll assume you've been to
a few Millionaire's Nights and could help
oversee the cashier's cage
with me.
Better, say that
as Patriarchs of our town, we partnered the
hotel, general store, mule train and gambling
casino. And even though
we took gold, we also accepted our own
casino checks in our own
businesses until towns-people started
buying in for checks at our
casino cage with not only their gold but
also their assets because our
casino checks were accepted by everyone
in town. Of course, our casino
cashiers would be very busy issuing more
checks for more new pledged
collateral, including pledged labor backed
by personal credit lines;
and redeeming checks for collateral and
credits paid out.
It is inevitable
that everyone realizes that our casino tokens
are redeemable for the collateral pledged
to our cashier's cage and
everyone, even outsiders, will value our
checks and accept them. They
are valid receipts for value and acceptance
by all cannot be
prevented. On some evenings when we close
shop, there are many
outstanding checks and on other evenings,
there might have been none.
But usually, it was between lots and lots
more outstanding.
Under the conditions
that we continue to run our casino
accounting using a 1/s LETS software engine,
wouldn't you still sleep
easy because you know that the cardinal
rule of casino accounting is
"collateral held must equal checks out."
I know I did. Casino Turmel
Topaz LETS cage was handling hundreds
of thousands in cage
transactions and millions in gaming transactions
every night and not
once did I worry about what people were
doing with my checks as long
as "collateral held equals checks out."
I hope this overview
has assured you that worrying about whether
our local tokens get sucked out of town
is unnecessary. I am pleased
that even with these concerns, you still
picked LETS as "a source of
hope to us all."
With a government
LETS account, I have no trepidation at the
advance of the globalisation of the world's
economy through various
nefarious trade agreements. As your paper
points out, people tethered
to their community by a LETS connection
start to move towards fairer
pricing. Once these transnational corporations
are also leashed with
the same LETS tether, they will also moderate
and justify their
prices. I do not dissuade but seek to
encourage the world's largest
potential trading partners to accept my
IOU as readily as my LETS
neighbor does.
Michael and I
have publicly dickered for years about the merits
of having LETS government-financed social
service with government as
an equal trading partner. I have always
contended that government
acceptance of LETS in taxes would cause
all my neighbors to also want
a LETS account, a 100% saturation of the
currency market.
At our recent
TOES97 LETS Workshop on June 20, 1997, Michael
Linton stated that he was looking for
10% of the population to be
doing 10% of their livelihood on LETS
by 2005, a 1% market
penetration. I consider that the hard
as well as slow way. I keep
trying for a 100% market penetration with
government and industry
accounts luring the personal ones. I consider
a 1% penetration by 2005
to be way too low considering the International
Barter currencies are
already Green and just lack a standard
common denominator to time
prevents all LETS seeming as viable link-ups.
Get Coca Cola to accept
Green and all LETS become more viable
markets world-wide.
All notions designing
a LETSystem to stifle trading with the
world's biggest trading partners is self-destructive.
Still, who
LETSers trade with a decision with respect
to the steering of the
mechanism with no bearing on the optimal
operation by professional
banking networks.
Which brings us
to the crux of the issue: How to best get life-
saving LETS credit to most people the
fastest. I have always stated
that if only the Rothschild and Rockefeller
families of banks decided
to install the LETS on their networks'
computers and offer LETS Green
credit accounts side-by-side with their
usury-credit accounts, the
interesting historical twist would be
that the scions of the guys who
in all likelihood are to blame for the
financial mismanagement of the
world's currency into this ecological
disaster might very well be the
scions who atone for their fathers' errors
and save our world by the
simple expedient of leading the way in
upgrading the software on their
banking networks to LETS. Maybe there's
a role you can play?
Given Michael's
projections, I don't think interest-free currency
can be installed in time to help much
without the direct intervention
of the guys who now own the banking hardware.
I don't know about you
but with 100% Green account down at my
local bank branch, I see even
more of a paradise than you have described
in your paper. If they're
cheering for mere drops in the desert,
imagine when a large oasis
springs up right before their eyes.
I don't know the
status of your paper as it is yet unpublished
but if you could drop the parts about
leakage concerns which are
short-circuited by LETS Advantage #1,
"no shortage of local currency,"
I would rate it a perfect piece.
Just the mention
of your paper in Pauline's TOES97 report posted
on the Internet and Michael Linton expressed
interest in getting a
copy. I think he'd love it. It's an articulate
approbation of a
project we've both put years into and
it would thrill him as an
original LETS engineer as much as it did
me. Dropping those leakage
concerns might not make him so happy but
you'll have to decide which
LETS engineer is right.
I'm sure everyone
in the LETS world has now heard of your paper
on LETS and will want to know more. It
might be time to publish it in
your Ecology Magazine as a solution to
the underfunded prevention of
ecological disaster. Should you wish to
send him a copy, his email
lcs@mars.ark.com. But I'll not key in
or post the whole thing without
your permission. (JCT: Had to change my
mind.)
My Advanced Engineering
Analysis of the Banking System on pages
77-85 of my Adventures was just cited
in Peter Selby's, Bishop of
Worcester's new book Grace And Mortgage
to refute quotes by John K.
Galbraith. Almost two decades ago, I predicted
the LETS "Miracle
Equation" would win three Nobel Prizes
and it's good to hear the
Bishop tell the world's economists that
The Engineer proves them
wrong. Maybe your magazine might like
to be the first to publish what
the bishop judged winning economic thought.
Hoping you enjoy
future good health and prosperity, I am,
Yours truly John C. Turmel.
-------------------------------
APPENDIX: Parsed Paragraphs
Addressing concerns
about the stability and value of our local
currency due to having them sucked out
to the global economy:
Parsing Page 5 Par. 2:
*"Equally important is that the local "currency"
is not convertible
*into any other local currency, let alone
the national one,
JCT: It says right
above our cashier's cage "Casino checks
convertible for cash, assets, time." It's
pretty hard to stop
convertibility when they can convert from
local currency into a
national one just by changing the mix
of currencies they accept in
trade or by merely saying "Give me 10
in cash, I'll use my Green
account to get your sink fixed." Trying
to stamping out convertibility
is trying to stamp out a medium of exchange's
most useful function.
*and can thereby only be spent on goods
and services provided by
*other members.
JCT: Are you,
as the casino owner, to worry because many non-
members would provide goods and services
to our casino members in
exchange for our casino checks? I never
did. It never bothered me when
I ran my casino that the owner of the
nearby Chinese restaurant would
come in every few days to cash out some
chips. It never bothered me
that my chips had been traded to and by
outsiders. Leakage was no
concern as long as the cashiers obeyed
the cardinal rule of casino
accounting: "collateral held equals checks
out."
*This means that rather than serve to fund
the production of for
*instance cash crops, that would be exported
to satisfy the needs of
*distant populations -
JCT: I see nothing
wrong with LETS funding cash crops for export
to satisfy the needs of distant populations
if they are in abundance
since this brings in more scarce goods
or artificially-scarce cash.
*often at the price of creating local shortages -
JCT: This is contradicted
by advantage #1. There can be no
shortage of local currency because people
create their own IOUs. Let's
say that many of our casino IOUs really
are being hoarded by outsiders
because they trust our cashier for its
store of value. New liquidity
can always be bought in for with new pledges
perfectly sufficient to
facilitate all local exchanges.
*it is far more likely to fund the production
of food for local
*consumption.
JCT: Again, concerns
about funding either crops for cash export
or for local consumption is based on the
premise of insufficient funds
to do both. This is again contradicted
by Advantage #1.
*This also provides a means of ensuring
that purchasing power stays
*within the community;
JCT: Again, as
casino bank owners, whether our purchasing power
tokens stay within your community is of
no concern and any time we
would spend on such control would be superfluous
effort.
*in sharp contrast to the situation today
when money is sucked out of
*poor communities into the rich urban
areas
JCT: More worries
about money being sucked out of the community's
barrel like usury-based money while there
is a shower in the cashier's
cage ready to always satisfy just local
currency demand.
*- where, among other things, the headquarters
of the large
*corporations that control most of today's
commerce, are situated.
JCT: Do we, as
casino owners, mind that large corporations decide
to accept our local casino checks to pay
their agents in and around
our town? Seems like another superfluous
expenditure of time to try to
control something which would be of benefit
to our city's people.
Parsing Page 15 Par. 1:
*"As it happens, what appears to be little
more than a relatively
*marginal self-help system becomes in
effect an almost mainstream
*local economy, though one that is partly,
at least, insulated from
*the global economy that would otherwise
swallow it up. This partial
*insulation is critical. That is why LETS
cannot be allowed to expand
*indefinitely by allowing supermarkets
and other large enterprises
*that are integral parts of the economy
to join, which they may well
*want to do if these schemes continue
to grow.
JCT: Sure, though
our casino tokens might appear to be little
more than a relatively marginal self-help
system, they are in effect
an almost mainstream local economy which
is insulated from the global
economy ever swallowing up all our local
currency by our infinite
source of casino checks.
Therefore, it
is not critical and not even productive, to, in the
name of fighting leakage, say that LETS
cannot allow supermarkets and
other large enterprises which are integral
parts of the economy to
join. This LETS engineer thinks it's critical
that they, and their
already existing international barter
systems, do merge once the
Global Hour standard of value is adopted.
*This would clearly be totally self-defeating,
and LETS must be very
*vigilant to assure that, whatever the
temptations, this is not
*allowed to occur."
JCT: I think the
concerns about such leakage have been
counterproductive to the availability
of LETS to the general
population in general. It is inevitable
that once the International
barter companies that effect trades for
transnational corporations
adopt the Hour standard of value, the
trading between the large
networks of commercial partnerships with
small markets of LETS
networks of personal proprietorships will
be the next step.
Parsing Page 13 Par. 3
*There will therefore be pressure to link
systems so that they can
*trade with each other... However, this
could destroy the essence of
*LETS because trading would no longer
be so local.
JCT: We can choose
to spend from my LETS account as locally as we
wish and as nationally and internationally
as we wish without
destroying the essence or interfering
with any the other spendings.