NEW LOCAL "CURRENCY" SYSTEMS by Edward Goldsmith and Perry Walker
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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.
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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."
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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.
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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.
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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.
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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.
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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.
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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."
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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.