[P2P-F] Fwd: Submission: A money system for the people - if we want it

Wed Feb 1 03:09:22 CET 2017

Awesome -- thanks for the info, Kevin!

On Tue, Jan 31, 2017 at 3:24 PM, Holy Mountain <kev.flanagan at gmail.com> wrote:
> "LETS systems where you have to take conventional currency you earned in the
> capitalist system, and then buy alternative currency with it to use
> with participating merchants, is a feelgood measure that may keep more
> local dollars in established downtown businesses. But that's about
> all."
>
> Hey Kevin,
>
> Those kinds of currencies where you use fiat to purchase local currency do
> exist such as the Bristol Pound and I agree there is not much to it. I'm not
> going to defend LETS either, Matt is more likely referring to it for it's
> familiarity rather than efficacy. While not explicit in the text he usually
> advocates for Mutual Credit systems which do create credit and liquidity
> backed by real assets. There is no requirement to  purchase credits with
> fiat currency. To participate in the Mutual Credit system you just need to
> prove that you have some assets or regular turn over. Credit limits are
> based on this and set by agreement among particpants in the network. It can
> start with businesses and then they can later issue currency into
> circulation, for example through payment to employees.
>
> Tom Greco has written about Sardex which is a successful example.
>
> https://beyondmoney.net/2015/08/20/sardex-an-emerging-model-for-credit-clearing-exchanges/
>
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> On 31 January 2017 at 01:18, Kevin Carson
> <free.market.anticapitalist at gmail.com> wrote:
>>
>> The problem with many LETS systems is that they're not credit systems
>> at all for creating liquidity where there was none before in the
>> capitalist economy, but rather just glorified green stamps. The most
>> important function of an alternative currency is to create liquidity
>> by advancing credit to those who currently lack purchasing power. LETS
>> systems where you have to take conventional currency you earned in the
>> capitalist system, and then buy alternative currency with it to use
>> with participating merchants, is a feelgood measure that may keep more
>> local dollars in established downtown businesses. But that's about
>> all.
>>
>> On Mon, Jan 30, 2017 at 2:53 AM, Michel Bauwens
>> <michel at p2pfoundation.net> wrote:
>> >
>> >
>> >
>> > A money system for the people - if we want it
>> >
>> > Money creation, like alchemy, is shrouded in ambiguous language and
>> > yields
>> > eternal wealth! For most of history these secrets have been used to
>> > empower
>> > sovereigns to spend money without the painful business of taxing or
>> > borrowing. Those foolish enough to try to grasp it with their rational
>> > minds
>> > are beffuddled by unexpected politics, propaganda and paradoxes. In
>> > modern
>> > times this power now resides almost absolutely with banks, who lend
>> > money
>> > which doesn't exist, and reap the interest as if it did! Are the
>> > alchemic
>> > fumes making your head spin?
>> >
>> > What if those proto-chemists were found to be not 'making gold' but
>> > merely
>> > charlatans 'taking gold'? Some sovereigns managed money better than
>> > others,
>> > but now that power resides with private corporations. The languge of
>> > 'wealth
>> > creation' masks the real intention which is extract money from society
>> > as
>> > fast as possible, to lock it up in tax havens, and to drive the masses,
>> > deprived of a medium of exchange, back to the bank to borrow more! The
>> > social conseqences are increasingly acknowledged (although not by banks)
>> > to
>> > include the rich-poor divide, short-termism, erosion of democracy, the
>> > military industrial complex and, via the growth imperative, climate
>> > change
>> > itself.
>> >
>> > Users of money and financial services seem to have very little influence
>> > in
>> > the matter. However much we disapprove of banks, boycotting them (as I
>> > do)
>> > makes normal life impossible. Banks are part of our social DNA, that's
>> > what
>> > Too Big To Fail means.
>> >
>> > The problem is not that saving and lending are critical functions which
>> > only
>> > banks can do. Indeed the idea that money is some kind of stuff which we
>> > rent
>> > is merely a misleading metaphor. The problem is that only a bank can
>> > underwrite your IOU so that everyone else will accept it. If all the
>> > banks
>> > and bank accounts were taken down in some Mr Robot scenario, the only
>> > money
>> > left would be a tiny volume of notes and coins. We wouldn't be able to
>> > pay
>> > each other and the economy would stop dead.
>> >
>> > Only by understanding the real function of banks, can we consider
>> > alternatives that might work for society. You might think the alchemical
>> > fumes are affecting me when I say the way forward is in the collective
>> > relocating our trust. But it is worth considering just how much trust we
>> > place in banks, not only to guard our savings from theft and bail-ins,
>> > but
>> > to invest responsibly without the need for taxpayer bailouts, to set
>> > interest rates such as LIBOR fairly, not to launder money for
>> > international
>> > drug cartels, and indeed to manage the quantity of money in the economy.
>> > And
>> > compare that trust with the trust we place in our friends, family and
>> > business associates.
>> >
>> > So the essence of bypassing banks, at least to the extent that we don't
>> > use
>> > money to pay interest and taxes, is understanding how IOUs work. In the
>> > <a
>> > href="https://hbr.org/2010/11/the-irish-banking-crisis-a-par">Irish
>> > banking
>> > strikes</a> of 1970s, the whole economy ran on IOUs in the form of
>> > cheques.
>> > Allegedly pub landlords took the role of judging creditworthiness. It
>> > wasn't
>> > the most efficient system but it worked. Similarly in Greece before the
>> > Euro, it was common practice for strong local businesses to pay their
>> > bills
>> > by cheque, and for that cheque to circulate as money before returning to
>> > the
>> > business.  Both of these are examples of interest free money creation,
>> > and
>> > taken to scale, they create stable economies (no more boom and bust) in
>> > which credit is always available.
>> >
>> > So how could this be instituted today? Its not enough to hope that all
>> > the
>> > banks fail at once, (and wish for the calamity that would cause). It
>> > can't
>> > be expected that a whole culture would participate while banks are still
>> > omnipresent, But there are thousands of groups worldwide who practice
>> > forms
>> > of collaborative credit - the most numerous are business barter networks
>> > and
>> > LETS (Local Exchange Trading Systems). If only we had the collective
>> > sense
>> > to use them, not only would the economy's liquidity problems be solved,
>> > but
>> > economic policy would devolve much closer to us, the people who actually
>> > back the money!
>> >
>> > A key difference between these systems, which I call 'collaborative
>> > credit'
>> > systems and the mainstream economy is the principle of exchange.
>> > Conventional money is designed for saving, which means NOT exchanging.
>> > In
>> > fact by making debts more and more unpayable it can be shown even to
>> > prevent
>> > exchange. Many things can be used as a store of value, but a good medium
>> > of
>> > exchange requires that social consensus which is unique to money. Money
>> > which really facilitates exchange must be always <em>available</em> to
>> > be
>> > earned or borrowed, and it should be less valuable than real things to
>> > prevent its hoarding. The principle of exchange says that we should give
>> > and
>> > receive the same amount of value; that money isn't valuable in itself,
>> > it is
>> > just a way of tracking the balance of my giving and receiving. By
>> > committing
>> > to give and receive favours in equal measure, we acknowledge that being
>> > owed
>> > favours doesn't put one in a position of power, but brings with it an
>> > obligation to spend back. Taking responsibility for our own finances
>> > takes
>> > effort yes, but probably less than feeding a parasite! With money no
>> > longer
>> > scarce, competition (for money) gives way to collaboration.
>> > Collaborative
>> > credit implies that everybody's promise has equivalent value, which in
>> > economics is called fungibility, an important property of money. Because
>> > every credit is balanced by an equal and opposite debit, aggregate
>> > supply
>> > and demand in the system are perfectly balanced <em>by design</em>. The
>> > simplicity and elegance of the exchange paradigm makes neoliberal
>> > economics
>> > look like the blind leading the blind up an alley without a paddle!
>> >
>> > By forming what the Germans call 'exchange circles', narrow fields of
>> > reciprocation, we reduce our personal (and aggregate) demands for money;
>> > and
>> > within our own economic circles, we reclaim a measure of power of credit
>> > issuance and even monetary policy.
>> >
>> > So why isn't everybody doing it already? Even in Greece where the need
>> > is
>> > dire, the move to alternatives forms of production and exchange is
>> > almost
>> > imperceptible. I could list reasons all day about financial illiteracy,
>> > breakdown of trust, atomisation of society, but instead we should look
>> > to
>> > those who ARE doing it.
>> >
>> > Fortunately collaborative credit does not require that 'the masses'
>> > participate, only that the circles have sufficient density. The bigger,
>> > and
>> > more connected exchange circles become, and the more goods and services
>> > move
>> > within them, the more they look and behave like money systems, spreading
>> > more risk more evenly, and allowing credit of greater quantities for
>> > longer
>> > durations.
>> >
>> > If we use legal money, we do so for better or for worse, under the law.
>> > But
>> > the sentiment "I'll scratch your back if you scratch mine" needs no law,
>> > no
>> > regulation, no taxation, and no money. Those who are serious about a
>> > fairer
>> > economy, are the ones finding, trusting and working for each other.
>> > There is
>> > no alchemy for creating wealth, but the obscuration of money creation is
>> > about appropriating wealth created by others.
>> >
>> > Matthew Slater co-authored the Money & Society massive online open
>> > course
>> > with Professor Jem Bendell. Participation is free and it starts again on
>> > Feb
>> > 19th. See http://ho.io/mooc
>> >
>> >
>> >
>> >
>> >
>> >
>> >
>> >
>> > --
>> > Check out the Commons Transition Plan here at:
>> > http://commonstransition.org
>> >
>> > P2P Foundation: http://p2pfoundation.net  -
>> > http://blog.p2pfoundation.net
>> >
>> > Updates: http://twitter.com/mbauwens; http://www.facebook.com/mbauwens
>> >
>> > #82 on the (En)Rich list: http://enrichlist.org/the-complete-list/
>> >
>> > _______________________________________________
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>> >
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>> >
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>> >
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>> >
>>
>>
>>
>> --
>> Kevin Carson
>> Senior Fellow, Karl Hess Scholar in Social Theory
>> Center for a Stateless Society http://c4ss.org
>>
>> "You have no authority that we are bound to respect" -- John Perry Barlow
>> "We are legion. We never forgive. We never forget. Expect us" -- Anonymous
>>
>> Homebrew Industrial Revolution:  A Low-Overhead Manifesto
>> http://homebrewindustrialrevolution.wordpress.com
>> Desktop Regulatory State http://desktopregulatorystate.wordpress.com
>>
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>
>
>
> --
> Skype: kev.flanagan
> Phone: +353 87 743 5660
>
> _______________________________________________
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> Show some love and help us maintain and update our knowledge commons by
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-- 
Kevin Carson
Senior Fellow, Karl Hess Scholar in Social Theory
Center for a Stateless Society http://c4ss.org

"You have no authority that we are bound to respect" -- John Perry Barlow
"We are legion. We never forgive. We never forget. Expect us" -- Anonymous

Homebrew Industrial Revolution:  A Low-Overhead Manifesto
http://homebrewindustrialrevolution.wordpress.com
Desktop Regulatory State http://desktopregulatorystate.wordpress.com