Richard Kay wrote:
RK: Bernard Lietaer wrote:
BL: I just joined econ-lets. Thanks for
the info, I didn't know about
them. Lets talk there about it. LETS systems
are precisely currencies
to be used as a medium of exchange and
not store of value.
JCT: Nowhere
in the LETS engineering design is there the dictum
that LETS tokens can't be used as a store
of value. If they don't want
to use it them way, the problems solved
by using Green as a store of
value are their own fault.
BL: Whenever someone hoards the local currency
he or she deprives the
rest of the community.
JCT: People hoarding
chips has never been a problem to any casino
cashier. I don't see why it would be a
problem to a LETS cashier
unless he chooses to create his own problem.
How can a LETS run out of
local currency to point of deprivation?
RK: Which brings me to my thoughts about
your interesting article
about demurrage or how do you get people
who would otherwise sit on
big piles of money to spread this around
a bit more.
JCT: To some,
people using LETS to save for a rainy day is a
problem. To me, I see no problem at all.
RK: As with manure, big piles of money
get somewhat offensive if not
spread,
JCT: There is
nothing offensive with a society storing up lots
for a rainy day.
RK: though I think that money can also
have a useful secondary role in
accounting savings matched by investment
up to a point, in addition to
its more essential and primary roles as
exchange medium and measure of
value.
JCT: Call the
saving role secondary if you wish but it is still a
useful role for LETS tokens to play.
RK: In a LETSystem with the denomination
defined as equivalent to
the relevant national money, being itself
subject to inflation
and with the LETSystem money attracting
no interest, this loss
of value of the LETS unit will act a form
of demurrage in the
sense that there is a incentive for those
with positive
balances to spend them before inflation
reduces their value.
JCT: There can
be no inflationary loss of value of the LETS unit.
LETS Hours don't lose their value, why
should LETS Greendollars? But
if any system chooses to forgo connecting
currency to Time to connect
to elastic money, then of course, all
the problems of orthodox finance
will rightly bedevil your systems.
When federal
prices go up across the board in Ithaca with tires
now costing US$75 real dollars instead
of $50, people hand over three
2Hour, one 1Hour and one 1/2Hour notes
instead of the usual two 2Hour
and one 1Hour notes since they have decided
the price is right. And
since the federal prices in their own
commerce have probably risen as
well, the same thing goes slowly on as
it equals out over time. Yet
they've stayed connected to the federal
currency just for the
convenience.
RK: I therefore see the use of money involving
demurrage or negative
interest as being potentially a powerful
medicine for restoring the
well being of the most disadvantaged communities
but can see little
advantage in continued use of this medicine
after it has helped in
restoring the patient's health. Those
writing about the experiences
where this kind of money was used successfully
in the thirties report
that these currencies were closed down
by the actions of central
banks, governments and courts of appeal.
Even so I think these
negative interest currencies would have
fallen into disuse without
state coercion because once their job
was done other options would
have become more readily available and
would have been more readily
accepted.
JCT: All of a
sudden, paying positive interest as borrowers of
currency will be more readily accepted
than paying negative interest
as savers?
The whole issue
of demurrage and hoarding of tokens cannot exist
in a properly run token cashier cage.