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

Tue Jan 31 22:24:41 CET 2017

"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/

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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> >
>
>
>
> --
> 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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