Micro-credit
>Date: Mon Jan 25 20:58:38 1999
>From: attillio@hotmail.com ("Attillio Castellucci")
>Subject: [lets] Micro-credit
>To: lets@onelist.com
>What do you think of the integration idea? In India, there's a scheme,
>thought up by Muhammad Yunnus for "micro-credit" for the very poor,
>that at least gets them on the economic ladder, whereas before they
>were outside it.
>
>Date: Thu Jan 28 05:25:10 1999
>From: alansloan@maccas.globalnet.co.uk ("Alan Sloan")
>I heard about something like this called the Grameen bank. On the
>face of it it is a really good idea. It would perhaps be even better
>if there were no interest charges at all, but this could involve a
>heavy political price as the big boys were driven out of the market.
JCT: Right. It does provide loans to groups of five poor people
but they do charge an interest rate. So they will have some failure
and will have to foreclose on some though there won't be very many. If
they could just create their own currency for inter-borrower
transactions and only use the national currency for foreign
transactions, they'd be much better off. It's only a matter of time
until they see the advantage of offering LETS accounts from their
banks and it's actually quite sad that they haven't seen the potential
yet. But someday soon, I'm sure.
>Governments tend to not let this kind of thing happen, because of
>association of the rich with the politically powerful. Grameen is
>allowed to succeed because is caters for a market which is beneath
>the scope of the larger organisations, though the smaller local
>moneylenders have likely lost out.
JCT: While it is true that in the past, central banks have
crushed any interest-free banking systems that helped out the poor, as
in Worgl Austria during the Great Depression, it is also interesting
that they have tried to squelch either micro-credit banks or LETS
credit banks. Governments such Australia's, New Zealand's, Britain's,
even U.S. state governments have even supported LETS Timedollar
systems.
>I like the idea of a zero or negative interest rate as in LETS
>because it implies separation from a system which I regard as
>corrupted toward the interests of the wealthy.
JCT: Negative interest is an accounting complexity that is
unnecessary. Just as the banking function in a casino is a purely
auxiliary function, so too, the banking function in the economy will
soon be a purely auxiliary function. How it got out of control was
best explained by Louis Even, the great Quebec Social Crediter in his
Stationary Engineer example which I reproduced in my 1980 Wachitsuh
Hussle at http://turmelpress.com/watch80.htm which is so
lovely that I reproduce it here:
>By Louis Even
>One need only study the function of a stationary engineer to see how
>a properly run industry should work. When the machines produce a lot
>and the steam pressure goes down on his meter, he adds coal to the
>furnace. If the machines produced less, he would put in less coal.
>The amount of steam delivered is decided by the industrial demand.
>The banker delivers the financial credit that enables industry to
>obtain the real credit, the materials, tools and people needed for
>work. The banker, like the engineer, should deliver that credit
>energy too maintain industrial activity and leave up to the
>competent authorities the care of guiding the consumers in their
>choice. If either the banker or the engineer doesn't deliver credit
>or steam energy according to demand, if either raised or lowered the
>delivery according to their wish, they could regulate industrial
>activity. If, as in the boom of the twenties, they delivered lots of
>credit power, the machines would work. If, as in the depression, they
>restricted delivery, the machines would slow down, even stop. They
>would make of steam or credit a power that dominates and not that
>serves.
>The engineer has learned to make the steam serve, the banker has
>learned to make the credit dominate. All it takes is the good sense
>of the engineer to understand that the industrial demand should
>regulate the delivery of power and not the delivery of power regulate
>the industrial demand. The problem exists because keeping the less
>fortunate short of funds assures bankers their jobs and profits.
>The solution is at hand. Once computers start to accurately keep
>track of the wealth in the system, the misrepresentations will be
>impossible. Yet, we need not wait. Any monetary system that does not
>use interest is necessarily linear and trivial to implement. They
>could have easily avoided the depression by having every manufacturer
>who owned collateral issue receipts for that wealth, verified by an
>accepted official. As that asset depreciates, the receipts must be
>retired out of circulation. Those receipts are just as good as money
>while the asset is there to back them up. Better. They won't inflate.
>A banana grower in Brazil would readily accept those receipts because
>he knows that with enough of them, he can collect the wealth backing
>them them up. Just like a properly banked casino game. So the
>essential question is "Why represent our wealth with their receipts
>for a fee when we can represent our wealth with our receipts for
>free?" When that banana grower buys our wealth, he is paying for the
>energy cost of the man, the energy cost of the materials and the
>energy cost of the tool. No more will he have to pay for the
>non-energy cost of interest.
JCT: What an elegant way to explain how the banker has gained
control over the all industry, just as the stationary engineer could
should he choose to restrict the flow of steam. Just a beautiful
example which explains why Socreds who have exposed this illicit
control have been excoriated throughout much of recent history by
economists and bankers' toadies. Yet, even though Social Credit has
now been rendered obsolete by LETS interest-free currency software,
history will still someday vindicate them as having come up with an
eminently workable solution.
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