How does LETS work?
>Date: Thu Jan 14 13:10:21 1999 >From: email@example.com ("Thomas Lunde") >Subject: [SystemPolitics] Re: TURMEL: Miscellaneous Topics >From: "Thomas Lunde" <firstname.lastname@example.org> >Could you imagine for us the scenario of the President of Brazil, >instead of appointing a new Central Banker from the one that just >quit because the promises of an World Bank bailout just did not >materialize, to his appointing a new financial LETS order immediately >with you appointed as the Czar to implement the new system? >Respectfully, Thomas Lunde JCT: Just look at how they did it in Argentina and that's how I'd do it too: http://turmelpress.com/np2.htm.
>Date: Thu Jan 14 14:35:52 1999 >From: email@example.com (Norman Samish) >Subject: [SystemPolitics] Re: How does LETS work? >To: SystemPolitics@onelist.com >Thomas, I guess I have to reluctantly include myself among those who >don't understand LETS. It doesn't make sense to me. I looked at the >LETS web site but it didn't get through to me- my attention span is >too short and the site is too long and convoluted. I need to >understand it or I am doomed to the ranks of the mad and the >financially insane, according to John Wrote. It appears that LETS >abolishes interest, on the premise that compound interest is the >primary evil besetting mankind. JCT: Here's your choice: A) Government gives a million dollar bond to the banks to get a million dollars which it uses to pay workers and then taxes back both the principal and the interest. B) Government prints a million in $10 bonds which it uses to pay workers and then taxes back only the principal. Situation A is called "orthodox finance" and is going on almost everywhere in the world. Situation B is called "unorthodox finance" and worked in six Argentinian Provinces in the mid 1980s, in Lincoln's administration, in the administrations of the American colonies, in Britain under Henry I with wooden Tallies and under Rome with copper Aes Grave. So what would you choose? A government that taxes you to pay interest to those they have given the privilege of creating money or a government prints it itself and doesn't not tax you for debt service. In under 150 words too.
>What I don't understand is why anybody would lend anything to >anybody else if the lender didn't receive some remuneration for his >act? The lender would soon find himself destitute. Can you explain >this to me in 150 words or less? Thanks, JCT: What I've explained over and over is that no one will want to borrow your savings and pay you interest when they can borrow what they need at the LETS central bank. So nobody cares whether you would lend your money or not.
>Date: Thu Jan 14 23:41:47 1999 >From: firstname.lastname@example.org ("Mary Therise Gleason") >Subject: [SystemPolitics] Re: How does LETS work? >Norman, for once we agree. Mr. Turmel has been going on and on about >LETS, and anything someone says he uses to try to explain why they >should be in favor of LETS, or he straight-out assumes that they >already agree... For the record, I don't. JCT: I wish I knew what you don't agree with. An interest-free system or just with the person promoting it?
>I agree with the Koran and the Bible that "usury is evil" and so is >"gambling", "games of chance", and "the consumption of pork and >alcohol". However, I don't think getting rid of interest makes Debt >any less of an immoral, unsustainable, completely WRONG-HEADED >system of human organization. JCT: So why do Isaiah, Christ and Mohammed suggest that when you lend money, you should not charge interest? Though you wish to condemn debt, they do not. There must be a good reason. Don't you think it's honorable that if someone helps you out, you repay the favor later? Why should such debt not be honored?
>And your point is indeed valid, Norman, that the current system >can't work without interest, but this is due to the driver of >Inflation/Depreciation, not due to there being anything superior >about usury (charging interest on loans). JCT: Perhaps you should communicate with many of the people using interest-free LETS systems and explain to them that it can't really be working no matter how it is?
>Jew Bankers and Financiers are the biggest hypocrites in the world. JCT: Catholic, Protestant, Muslim, Buddhist bankers and financiers are all the biggest hypocrites in the world. Jews don't have a monopoly on usury though they've pretty well monopolized the blame for it.
>That you disagree with the premise that "compound interest is the >primary evil besetting mankind" puts you at direct odds with a large >religious majority world-wide. In case you've never read the Bible, >the Torah, the Koran, or the Upanishads, no major religion has a very >high opinion of "money-changers" and "money-lenders". Jesus, for >example, threw them all out of the temple and cursed them. (Love the >sinner, not the sin.) Personally, I agree. JCT: You agree with all these religions which mandate that we operate our economies without any interest and you previously agreed with Norman that it couldn't be done.
>Government creates inflation and so on, because Growth is assumed to >be the greatest good. Where does inflation come from? JCT: Inflation Shift B, the same money chasing less collateral after foreclosure, NOT more money chasing the same goods, is explained in http://turmelpress.com/bankmath.htm
>Where does usury come from? JCT: Usury comes mankind's insecurity. How it came about is the main topic of our discussions in the Babylonian Woe and Tragedy and Hope.
>Who else has the power to enforce the paradigm of endless economic >growth-for-growth's-sake? JCT: Only the bankers enforce the paradigm of endless economic growth for the same of paying your growing debts.
>Who has the power to spend more money than they take in. JCT: That's not the problem. It's paying interest on that loan that causes the imbalance, not the loan itself.
>Is there any possible way that we can completely abolish inflation >and usury? I believe the two are connected. How about it, Norman? JCT: My analysis proves that usury generates inflation. Get rid of the usury and the tokens cannot inflate just as casino chips which are backed up one-to-one cannot inflate. Casino chips are a perfect interest-free model which prove that tokens do not inflate when there is no interest just as they be used to show that they can me made to inflate if you charge interest on them.
>Date: Thu Jan 14 23:55:44 1999 >From: email@example.com ("Mary Therise Gleason") >Subject: [SystemPolitics] Re: TURMEL: Miscellaneous Topics >To: SystemPolitics@onelist.com >John, I agree that profit and usury (charging interest on loans) are >evil, and that they create the ridiculous disparities of >actually-existing capitalism. But I am unwilling to agree that LETS >debt is good. It MAY, however, be the lesser of two evils - that I >would be willing to agree. To my eye, LETS is a system of money based >on man-hours of labor, which employs a form of delayed barter (debt) >and facilitates other forms of complex barter transactions without >introducing a subjective monetary scale which allows a few to >benefit excessively at the expense and privation of others... JCT: There are too many examples in the Bible that indicate that lending your abundance in the hope of being repaid or having access to loans yourself is okay. Just because debts which grow by themselves are bad doesn't mean that debts which do not grow by themselves but represent exactly what you've received and should put back are also bad. Let's not throw out the baby with the bath water.
>You can certainly make a good case that the system of >money-for-money's-sake and growth-for-growth's-sake and profit and >debt and interest and mortgages is a sick system that is full of >inherent contradictions and guaranteed to induce worldwide suffering >of the great majority. JCT: I think I have already made good case that the "mort-gage" "death-gamble" is the genocidal evil afflicting humankind.
>LETS corrects the fictitious accounting scheme employed by >financialists and fiscalists, but it maintains the fundamentally >flawed debt system as a driver for progress. JCT: It does maintain the debt system as an unflawed driver for progress. People will inevitably hustle their buns more when they'll get to keep what they earn and know that what they lend out will be repaid just as people will hustle their buns just as industriously in trying to repay an honorable debt.
>This, to me, is unacceptable. Red Ink accounting is obsolete no >matter how it's dressed up and disguised. It should have went out >with kerosene and horse-drawn carriages. JCT: I pointed out that Isaiah 55 was clear when he said: You who are hungry and have no money, come, buy and eat." He didn't' say "Come and eat for free." How do you buy when you have no money? On credit. So credit's okay. It's only when the debt grows by itself beyond the food you received that it becomes anti-social and evil.
>We need a new system based on steady-state, one-way transactions >mimmicking nature. In such transactions, the entropy-producing idea >of reciprocity is forever banished. JCT: If you do not repay what you have borrowed from the harder workers, they soon lose their incentive to work. From each according to their ability and to each according to his need did not work in the Soviet Union for good reason. LETS helps the poor while maintaining the incentive to work. Reciprocity does not produce entropy.
>Accounting is done in terms of energy and resources, based >on the amount of energy degraded to produce goods and services. JCT: That's how LETS works.
>Energy is devoted to specific tasks based on a true democratic >process. Energy is represented in a neural net system and each person >gets an equal share of the total produced each year. JCT: So there's no incentive to work really hard since you're not going to get to keep the extra you produce. It's far better that he who gathers much has much but not too much and he who gathers little has little but not too little as LETS permits and Christ advocated in Paul Corr II: 8:14.
>Transactions are one-way, not circulatory, because this is the way the >principle of thermodynamics suggests. More on this later. Carleton had a wonderful engineering program. Where most universities have students take all three disciplines, civil, mechanical, electrical in their first year and then three in the specialization, Carleton had students take courses in all three disciplines for the first three years and specialize only in the fourth. So I have the advantage of having studied both civil and mechanical engineering with Third Year Math and having studied mechanical engineering for three years, I don't see how the principles of thermodynamics suggest that transactions can't be circulatory. Besides, LETS accounting and banking in general are not physical systems but are intellectual systems. It's almost like saying that arithmetic changes with the weather. Banking is not and cannot be influenced by thermodynamic considerations. -------------------------------
TURMEL: How does LETS work? #2
>Date: Mon Jan 18 00:31:57 1999 >From: firstname.lastname@example.org (Norman Samish) >Subject: [SystemPolitics] Re: TURMEL: How does LETS work? >Hi Mr. Turmel,
>> JCT: Here's your choice: >>A) Government gives a million dollar bond to the banks to get a >>million dollars which it uses to pay workers and then taxes back >>both the principal and the interest. >>B) Government prints a million in $10 bonds which it uses to pay >>workers and then taxes back only the principal. >> Situation A is called "orthodox finance" and is going on >>almost everywhere in the world. >> Situation B is called "unorthodox finance" and worked in six >>Argentinian Provinces in the mid 1980s, in Lincoln's administration, >>in the administrations of the American colonies, in Britain under >>Henry I with wooden Tallies and under Rome with copper Aes Grave. >> So what would you choose? A government that taxes you to pay >>interest to those they have given the privilege of creating money >>or a government which prints it itself and doesn't not tax you for >>debt service.
>Thanks for addressing my question in under 150 words. However, I >fear that I still fail to comprehend your point. It seems to me >the alternatives you describe are the same zero-sum game. The two >alternatives look about the same to me- presumably the government >could adjust the interest rates in either case so it could realize >the same amount of return and the taxpayer plus bank stockholders >would be out the same amount of payment. JCT: I don't see how a tax-payer can see these as two similar zero-sum games. In situation A, the government has spent the principal into your community and then exacts it and the interest back in taxes. In situation B, the government has spent the principal and exacts only the principal back in taxes. Don't you see that citizens in situation B don't have to pay any taxes for debt service as do citizens in situation A? I would think that with one situation saving you this money and the other not saving it, that you would be better of in saving it and that there is an obvious difference.
>In A the government issues a $10 million bond to get cash from the >bank to pay its workers. Then it taxes the workers on the cash it >gives them. In this case the bank is able to pay this interest it >receives on the bond to the bank shareholders. These people thus have >their income augmented, which is subsequently also taxed by the >government, JCT: Let's continue with the numbers. The government spends the $10 million and at 10%, levies taxes of $11 million. You've assumed that the bank got the $11 back and then spends the extra million with which the people now pay the extra taxes. First of all, it's putting the cart before the horse. Secondly, the money the people receive is taxed at the income tax rate so that the government does not tax back the full amount they have received in income. So where will that money come from?
>In B the government issues bonds to the workers then taxes the >workers on income. The tax rate in B would have to be higher than >that in A to in order for the government to receive the same income. JCT: I find it hard to understand why the government would have to tax more when it owes the bank less.
>But the tax base in B is smaller than that in A by the number of bank >stockholders. >My conclusion is that if the government receives the same taxes in A >and B, then the payers of the taxes in A and B are out the same >amount. JCT: But the whole premise is that the government in B does not need to receive the same tax as in A because the government in B only has to repay the principal while the government in A has to pay the principal and the interest.
>Could the Government in B not just as well print money and issue the >printed notes? JCT: That's what printing and spending bonds has done. As Edison once stated:
>"The only dynamite that works in this country is the dynamite >of a sound idea. I think we are getting a sound idea on the money >question. The people have an instinct which tells them that something >is wrong and that the wrong somehow centers in money. >Don't allow them to confuse you with the cry "paper money." The danger >of paper money is precisely the danger of gold... if you get too much, >it is no good. There is just one rule for money and that is to have >enough to carry all the legitimate trade that is waiting to move. Too >and too much are both bad. But enough to move trade, enough to >prevent stagnation on the one hand, not enough to permit speculation >on the other hand, is the proper ratio. >If our Nation can issue a dollar bond, it can issue a dollar bill. The >element that makes the bond good makes the bill good also. The >difference between the bond and the bill is that the bond lets money- >brokers collect the amount of the bond and an additional 20 percent >interest whereas the currency pays nobody but those who contribute >directly in some useful way. >It is absurd to say that our country can issue $30,000,000 in bonds >and not $30,000,000 in currency. Both are promises to pay but one >promise fattens the owner and the other helps the people. >It is the people who constitute the basis of government credit. Why >then cannot the people have benefit of their own gilt-edged credit by >receiving non-interest-bearing currency instead of bankers receiving >the benefit of the people's credit in interest-bearing bonds? If the >United States Government will adopt this policy of increasing its >national wealth without contributing to the interest-collector, then >you will see an era of progress and prosperity in this country such as >could never have come otherwise." > JCT: So it's obvious that Edison saw the difference between using bonds as the currency and using bonds to get money from middlemen. If you think about it some more, I'm sure you'll realize the savings that Edison mentions are the same ones I have mentioned.
>I recall you saying that inflation is NOT too much money chasing too >few goods. Nevertheless, it seems to me that printing money would >increase the supply of money, resulting in higher prices and inflation. JCT: I once told the story of playing Poker at the Taj Mahal with Edgie the Economist who cried "inflation" every time someone got into the game with new chips. You see, in Economics, they do not teach the link between tokens and collateral pledged in the cage. All gamblers know that when the new player shows up with new chips, that they are backed up in the casino cage so there can't be any inflation. Yet, Edgie the Economist has been conditioned to think that all new issues of new tokens cause inflation whereas smart gamblers know that inflation can't occur if they keep an wise eye on the cashier. Unfortunately, economists don't even realize there's a cage or a cashier and simply see all new money as inflationary. Sad isn't it?
>Date: Sun Jan 17 09:42:09 1999 >From: email@example.com ("Attillio Castellucci") >Subject: [lets] Specialized Products >To: firstname.lastname@example.org >Hello, Another question: In a LETS system, how does one, for example, >purchase an automobile if auto manufacturing is not part of the >local economy? Will there always be a need for the current system to >co-exists, or can there be trading between groups, or....????? >Thanks, Attillio > >Date: Sun Jan 17 14:36:45 1999 >From: email@example.com ("Alan Sloan") >See: http://www.letslinkuk.demon.co.uk/lets6.htm >and sister pages, LETSLINK UK for basic information. >If you want to buy a car with LETS, then you must find someone >willing to sell you a whole one, trading off the conventional cash >that they bought it with for the LETS that you would pay them with. >If you want to build a car with LETS, you will need a system >involving thousands of people, if not whole nations. It would be >easier to imagine a pair of shoes, or a guitar being made within a >LETS of a few hundred people. JCT: And even though you can't find an automobile to buy, finding anyone with whom you trade your labor for their labor saves you cash for use with other bills. If you can even trade a couple of hours a week babysitting your mechanic's children, then instead of paying cash for car repair, you have paid with your extra employment and saved that cash for other uses. Obviously, the more places where you can use Green which you can later earn, the more cash you save by not spending it. When everyone is on the LETS database, you can work to your heart's content and thus unemployment is eliminated.
>With the state of technology it is impossible to imagine LETS of that >scale in the short term, unless the solution to conventional economic >problems became perceived as adopting a zero (or even negative) >interest rate shifted the required numbers simultaneously. >A whole bridge was built using local currency, as in the Austrian >town of Worgl in the thirties. This was a municipal scheme, which was >becoming successful and being copied. It was made illegal by the >official bank which was presumably afraid of being superseeded. JCT: And though the people of Worgl were quickly pulling themselves out of depression, they sank back into unemployment at the bidding of the central bank. In Carroll Quigley's "Tragedy and Hope," we see how the bankers kill any reform which benefits the poor. Over and over, whenever there seemed to be some hope, the bankers forced government to kill that hope and push people into greater and greater desperation always resulting in strikes and riots aimed at the governments while the bankers who engendered it sat back and enjoyed their riches while everyone else starved. You'll notice how I treat parasites bankers, even of the Royal parasitic families like the Rothschilds and the Rockefellers with the disdain and contempt they deserve. Once you've read Astle and Quigley, stories about bankers killing helpful initiatives like Worgl local currency. Of course, the majority of readers aren't even aware of examples helpful local currencies like Worgl being outlawed with the resulting poverty and misery unto death inflicted on the poor.
>The value of a LETS cheque is in the skills of the members of the >system. A system which included all the skills needed for the >maintenance of human life at a comfortable level would be far >cheaper to run than a usury economy, with a banking system >restricted to circulating the money required to produce things, >perhaps a two thirds or even a third of the size of our current >financial establishment. Comments anyone? JCT: You are absolutely right though I'm sure some economists will certainly express doubt having been trained to believe that there are no workable solutions.
>Inter group trading systems do exist, but there is little need for >them. LETS is local, and where people are members of two or more >groups then they are a natural point of connection. Alan JCT: Intergroup trading is necessary to create larger and larger databases of goods and services and larger and larger industrial concerns. Coca Cola will need to be able to spend any Green it earns in as many places as it can earn it and without having to join each and every little system.
>Date: Mon Jan 18 10:58:58 1999 >From: firstname.lastname@example.org ("Attillio Castellucci") >Subject: [lets] Retirement >Another question to the list. It seems like LETS can work for the >working, but what happens if you become disabled or elderly? In the >current economy, one saves, with interest hopefully building a nest >egg for when one is no longer able to work. Who will trade with you >when they know you are only a draw on the system? Cheers, Attillio > >Date: Mon Jan 18 18:30:01 1999 >From: email@example.com ("Alan Sloan") >a) Savings are possible on LETS, though not always desirable. It is >better to invest in a vibrant social system and ecological support >systems than in an abstract economic record of transactions past. JCT: LETS that discourage savings do so because they do not have accounts like consignment stores or elderly people to hold large negative numbers. Systems which deter savings are those in which half the members are in the negative so the other half are in the positive. My post on my 1998 UK TOES tour explain the advantages of having a LETS collateral consignment stores and elderly members hold most negative allowing more younger members to hold positive accounts and build up savings. http://turmelpress.com/lp.htm
>b) There is such a thing as social security. This is a far better way >to ensure the welfare of the old, and far more successful than you >probably realise. By the sound of it you live in the US. In Britain >since 1945 we ran a pension scheme in which the people working paid >into a fund to support the old and the sick. Because the system is >large enough to average out local discrepancies, the whole thing can >run on a shoestring compared with a commercial operation. Operating >costs of the welfare state are far lower, basically because of the >compulsory and comprehensive nature of the system, than can be found >in privatised systems. If you want an example of this look at our >Health System. JCT: Social security is nice but it's still charity. Much better to simply let them overdraw their LETS accounts and if by the end of their lives, barring a lottery win, their negative accounts can be shared by the whole database at that time.
>c) The children, the old and the sick and the otherwise "useless" can >be left to starve, or can be helped out under any economic regime. It >is up to you to decide on this one. Don't fall into the trap of >thinking that the "profits" of industry can provide for all. There >will always be losers.....the trick is to include those people into >the system so that they can feel a valued part of the community. JCT: That's why you'll notice I always advocate simply giving them their own interest-free credit cards and hope that they'll end up positive at the end of their lives. It isn't charity but those who gather little and are hungry with no money may "buy and eat" and not have too little as commanded in Paul Corr.II: 8:14.
>For example an ex secretary can take minutes occasionally at out >steering group committee meetings despite her debilitating MS. She >can also write for the newsletter. The only real alternative to her >putting in her little bit to repay the services she "buys" for lets >is to give her a handout. We don't let the sick starve in this >country, yet. JCT: Sure you do. It's a slow starvation by malnutrition and illness but it kills the poor nevertheless.
>d) The problem of people not trading is a very real one, not just for >the old and sick. The problems of social security, and >administrative cost reduction are related to volume of activity. JCT: And I've provided four ways in my UK LETS TOES Tour message with which to increase such trade such as use of notes for higher velocity and use of stores and elderly accounts for greater savings and volume and finally the use of Green accounts by Governments who then accept Green in taxes to maximize the number of people and stores that take Green.
>You are probably right if you feel that small LETS cannot support >heavy social security programs. However, small LETS bring people into >contact who would not otherwise. Informal caring activity arises in >these circumstances which is beneficial to both the giver and the >receiver. I don't wish to sound too pious, but there are benefits to >being a small community just as there are for being a large one. >Alan Sloan JCT: Again, I can only refer you to the explanation of the kitchen economy by Edward Goldsmith and Perry Walker at http://turmelpress.com/gold.htm. Even small LETS serve to bind the community into a caring entity. -------------------------------
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