Money creation

I will try to keep this simple. Perhaps some of you are aware of the critique of bank loans as nothing more than empty ledger entry are made which make money out of a thin air. While i agree such a system needs some serious questioning in terms of why banks should be given such a power. but at the same time i rarely here it acknowledged that there is another logic which needs mention. In the best scenario money is lent and then in theory something real is created with these bank ledger entries. In other words some money or credits must be created with any new productive capacity. The lack of this flexibility is what many felt was the limiting factor when economies were held to the gold standard where regardless of initiative and the capability to produce more was actually stifled by the limitations of the gold supply\.

So what i would like to tie in here is in regard to community currency. The printing of community currency is not simply a frivolity or only a substitute medium of some sort. Instead the script or credit that serves to create a operational medium to animate a system foir the exchange of local production or other productive capacity in the local economy which no other institutions are interested in creating a financial medium to activate



I hope the question here are not just seen as an attempt by me to get help for the project here in napa, since i am more interested in finding the strategies which should apply to all communities and not those peculiar to this community.


Thanks

Not 100% sure I follow you but it sounds a bit like microfinance http://en.wikipedia.org/wiki/Microfinance

I have come across a few community currencies where the banked legal tender is loaned or gifted to local community projects.

I think something like 80% of community currencices last less than a year. Getting people to swap 'real' fiat currency that they can spend anywhere in the country or put in a bank for your local currency which can't be banked, can't earn any interest and can only be exchanged in a limited area for a limited range of goods is hard.

If people know they are unable to redeem their community currency for legal tender because it has been lent out to a good cause they might not be so keen to buy it.

The only other way I know of community currencies helping projects is when they are used in part payment for volunteer staff. They are not backed by legal tender and have to be spent in the local community in order for them to be of any use. This does lead to an inflation of the money supply and is often seen as tax dodging by the authorities (They don't like competition)

But...

Community currencies are quite popular with collectors, often they can be sold as sets for a massive mark up, the seigniorage alone is a good way to provide income for running costs and to use as small loans. Most of the long running community currencies sell collector packs, they sell them at face value or more.

Here's an excerpt of a conversation between Dwight and Stanley on the T.V. show, The Office -----

Dwight: Very good. You have earned one Schrute buck.
Stanley: I don't want it.
Dwight: Then you have been deducted 50 Schrute bucks.
Stanley: Make it a hundred.
Dwight: Wh...don't you wanna earn Schrute bucks?
Stanley: No. In fact, I'll give you a billion Stanley nickels if you never talk to me again.
Dwight: What's the ratio of Stanley nickels to Schrute bucks?
Stanley: The same as the ratio of unicorns to leprechauns.

Dale- Hard to see your transcript as anything less than ridicule. I would suggest the work and services that can be done at the community level are in fact quite real, and if if there is problem in seeing the medium of exchange as real, it comes from the convention of the minds of those involved as opposed to something inherently unreal in any objective sense. If we want to create humor, or ridicule, we might as well poke fun at the mass hallucination of our current money supply as the real measure of wealth. The real point here is that when people do work, as in creating goods and services, some medium needs to be created that represents the wealth creation of said production. Whether it is good old god trusted U.S dollars, or community currency is in some ways a secondary consideration. It is fair to question to ask as to whether what is created has value for others, but lets not pretend that only the real economy has some connection to this since it would be easy to point to a million examples where people are paid real dollars for things have no tangible connection to wealth creation. So again, part of the point is the critique of banks simply entering ledger accounts as loans and many on the left discounting this as making money out of thin air when in fact the process is basically correct that money is being created to represent a good or service which is being created. How the banks earn the special privilege of extracting interest from the process is a different question however.

So yes community currencies have had limited lifespans and success. In response I would suggest two things. One they often function as a temporary measure to inable local production into the larger economic system and then fade away or the world is a place which seems on the brink of some radical change. i am a believer in the latter, but of change will begin , with ah, something new and different. So pardon me if the fact that it has not worked before is not seen as definitive proof in it's ultimate inapplicability

I just came across this "local currency" idea a couple days ago, and it looks interesting: Mountain Hours

They call it "organic money". It is specific to Summit County, Colorado, but they seem to have many other counties around the country copying them. Who knows, maybe it will spread?

If we go with money is just an easy way to store/transfer labour/produce.
Why do we need/have so much wealth compared to everyone else in the community.
Do we just have 100x more land than the next guy. Why is this so to begin with.
And if we have 100x more "land" than every1 else. why dont we at least take money from outside the ommunity.
By selling the produce of the 100x more land to the big city. Or is it that everyone else in the community just serfs.

Maybe we all started out equal but due to natural disaster, and division of labour.
All the metal roofs got destroyed and as the only miner/roof making I am making a kiling.
Now should I really be taking advantage of these people. Are we not a helping community.

Or maybe I am the "doctor" and my 40hrs of work is worth 100x more money than your 40hrs of work.
Whats that both the doctor and farmer hours are worth the same its just that the doctor has 4+4+2 years of college to pay for.
So 10 years at 50,000 plus interest is 1,000,000 if paid for in 20 years or 50,000/yr.
So, you would have to make at least that plus living expenses.
The way how I see it if the doctor is going to be dealing with outside school, outside loan and out side repayment he should just be paid in outside money.
the doctor would have to find some way to exchange the internal and external money at some point so why not just let each farmer get the money when they sell good.

We should not lend instead we should invest.
We should not borrow instead we should sell shares, maybe with a right to buy back at anytime.

And if we create our own money, what is it going to backed by.
Who is going to set the exchange rate.

Is money just a tool for control. At best a way for the rich/old/successful/good dictator to allocate money to project they like.
At worst, a monopoly to make taxing/stealing money easier.

S Bengi wrote:And if we create our own money, what is it going to backed by.
Who is going to set the exchange rate.

In last chapter of Designers Manual, Mollison advocates a local currency backed by managed forestland products such as wood. The region invests through itself this way, and the currency grows over time with the forest.

An acre of mature timber normally sells for only $2,500. So if each person/family has $5,000 on them at all times.
They would need 2 acres/person and if by any chance they have some money saved up say. $25,000.
They would then need 12 acres/person.
And this figure is for a mature acres that is at least 10 years. So if it is going to be a manage/harvest forest. then you would need need at least 5 times that.
So 60 acres/person. That is alot of land wasted just to support our money/abstraction system.

At that point it might makes more sense for each person to take the monopoly away from bob and farm their own 60 acres + what they already own and farm for money/food.
And sell shares of that 60 acres for services/good that they don't already provide, if they no longer have good to barter with the community.

Plus everytime this 12(60) acres is harvested/managed who is going to get the money for it. The banker.

Who is going to buy more forest every time someone is born. Or how are we going to keep a stable population.

What to link money to so that it promotes a regenerative ecology that supports human needs?

I think we need something that incentivizes improving and managing ecosystem services while stacking functions with resource production. a stacked function of value baseline.

carbon and water seem to be some reasonable options. and perhaps relative fluxes rather than absolute value to balance the climate contexts of the world.

quite a conundrum for sure, and who's going to back that sort of shift?

well carbon is being traded as futures...
http://en.wikipedia.org/wiki/Chicago_Climate_Exchange

and carbon farming is becoming more relevant as an enterprise

Soil Carbon Coalition
http://soilcarboncoalition.org/

Abe collins
http://www.youtube.com/watch?v=-uXJeEVrc-A
http://www.youtube.com/watch?v=v-AWnWHkDeU
USGS research plots in California
http://ca.water.usgs.gov/Carbon_Farm/

from the Auz. govt.
http://www.climatechange.gov.au/cfi

someone with a business to promote CF
http://carbonfarminghandbook.blogspot.com/

If the "national" government was going to do it then yes.
But if we are just going to print "intentional commune" money then I just see it as a King making thing.
We would all just be serf to the "king/banker/good dictator". Are some people ok with this yes, are they ok with there KIDS being born into this yes.

Now back to the national government moving our dollar from gold>silver>GDP/IOU>"food forest".
With the food forest being used to create houses, heating, lumber/furniture, food, hobby/entertainment(hunting), biofuel, plastics, medicine, chemicals.
I think it would very practical/concrete foundation for an economy. However most of that is being fulfilled by fossil forest (oil).
Maybe when fossil forest is gone we might get money backed by food forest.

Until then, lets say we invested $2million in tools. http://opensourceecology.org/wiki-gvcs.php
And another $3million in land(10,000 acres) to build a close loop town of 1,000 persons/family ($5,000/each).
If after that initial investment we where to hardly ever import anything else. (fuel, services/college, computers. etc)
Then maybe it would be ok to print our own money.
We could send our extra "food forest" goods and trade with the outside to get some things in exchange.
Do we combine everything by "selling to a local co-op/distributor or does each family trade with the outside world.
I would mainly see us trading with the outside for electronics, medical supply/services, and metals/chemicals.
How much do you think we would have to import each year?
How much do food forest good would we have to export each year?
How much land would we need for our food forest to provide our local needs and export/import needs.
How much surplus export do we want to have on hand for the rainy days.
Does anyone think this is MOSTLY possible?

Currently 40% of USA GDP is from the government (mostly just printing IOU). So we should be careful with our money printing gov. http://www.usgovernmentspending.com/spending_chart_1900_2016USp_XXs1li111mcn_F0sF0lF0f_Federal_State_and_Local_Spending_in_20th_Century


How would our permies help the wealth of the people
Housing:>18% of GDP. So by building our own we would be 18% richer every year. http://www.nahb.org/generic.aspx?genericContentID=66226
Food: 10%. We would be producing all our food.
Electrical/Fuel: 6% We would be creating our own with solar, bio-fuel, bio plastic, firewood, etc.
Transportation: If we transition to a bicycle/moped mode we would save cost on fuel, insurance, maintenance/repair and replacement
Healthcare: 17.4% hopefully we would be healthier + eating natural medicine http://www.nbcnews.com/business/countries-spend-most-health-care-618241
More data to play with. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1

The so by creating our village to be as self-sufficient as possible at the individual level.
We import less labor/goods/service from the local community or the larger outside world.
How can we make each individual more sel-sufficient so as to keep the money local in your pocket/community.
We empower everyone to build there own. We could use 3D printers (bio-plastic/clay), 3D cutting machine, multitool, http://opensourceecology.org/wiki-gvcs.php
The only place we would really need to use local money is for massages, and other service.

If we where to be successful at this small scale would it be sustainable at the county/state/national level.
What would be some of the limiting factors. I look forward to your comments.

I'm not sure if I tend to under think things or some of you are over thinking this. This sounds a whole lot like Berkshares. Its a good way to keep "money" with in the community. And it also helps to sustain and grown local businesses. http://youtu.be/rYc1u8eqhiM

If I get Berkshare and the only thing I buy is "outside" electronics and metals, vs local apple/milk which everyone is already producing.
I watched the vid,I am pretty sure they use the Bershare to buy imported wine/liquor. If only they had made their own.
How is that keeping the money in the community.

Heather Spegal wrote:I'm not sure if I tend to under think things or some of you are over thinking this. This sounds a whole lot like Berkshares. Its a good way to keep "money" with in the community. And it also helps to sustain and grown local businesses. http://youtu.be/rYc1u8eqhiM

Sorry S. Bengi... I'm new to the forum. My reply is in the "quote". I didnt mean for it to be all in one. Whoops

The problem still stands that if I can buy oil at walmart for $1(10minutes of work) and if I go to a local berkshare store and they are selling it more expensive 2 berkshare or USD3(30 minutes of work). Which one am I going to buy from. We would 1st have to bring the price down or illegall jack up the USD price with illegal price fixing/taxes/tariffs. It just makes more sense to empower people to make it at home or to bring the local price down by using nature to do the work. Or we could take away the peoples freedom and ban any importation/sale/possession of any "devil" product. Amish

It would have to be more of a community effort. And I think they make the exchange rate for federal dollars into berkshares worth the small effort. I'm not sure how successful it would be in a large city. But I think smaller communities could have great success with a local currency if its well planned. And the commitment of its citizens was there.