Your thoughts: Helping sustainable currencies to scale

Matthew Slater writes:

For the forthcoming International Social Transformation Conference on energy currenciesCommunity Forge is preparing a paper on grass roots strategies for sustainable currency implementation.

We wish to solicit opinions from readers of this blog on this draft version (9 pages). It explains the why and the how of Community Forge’s striving for impact by offering free accounting software to communities.

Please add your comments below!

Helping Sustainable Currencies to Scale

6 Comments Your thoughts: Helping sustainable currencies to scale

  1. Stephen DeMeulenare

    I’m pleased and proud to be one of the first to comment on this excellent article by Jem Bendell and Matthew Slater which provides a concise overview of Community Forge’s philosophy, motivation and activities to date.

    I think it is brave and important of them to mention that there is little institutional, investor or donor support for most of these initiatives, however I am quite sure the powers-that-be are looking at ways to corner even this market for their private gain, and we may well see private capitalistic currencies masquerading as complementary currencies emerging.

    I wish I could also attend the Tesla Conference, which has an impressive list of speakers. Unfortunately, without any financial support for the 10-year old Complementary Currency Resource Center at http://www.complementarycurrency.org, my ability to engage in international collaboration is severely limited, and only happens occasionally with the generosity of my fellow colleagues.

    I look forward to this situation changing in the near future, and I am very confident that it will.

    –Stephen DeMeulenaere, Complementary Currency Resource Center

  2. Sepp Hasslberger

    I was going to say that what you are missing is a simple exchange system that works internationally, but I see that you are networking the various local currencies that you stimulate. It works the other way around, but in some way it will come to the same result.

    Lots of local LETS type initiatives combined with B2B exchanges, that are compatible with each other, and that have an exchange rate and a mechanism to send value without regard for distance, can bootstrap the kind of economic renovation we need to get away from the debt-and-interest money the banks have been selling us (and that governments have imposed on us) for quite some time now.

  3. Kevin Parcell

    You write:

    “We recommend that anyone starting a new initiative, or deciding what to support, needs to reflect first on their theory of change, in particular: i) what is the ‘problem set’ that your proposals are solving, ii)what are the grounds for the method you propose to employ to address it iii) how does this method compare to other potential methods, and iv) what empirical evidence and what learning process is there to evaluate your problem definition and method.”

    I think your paper needs to follow the same format. Your topic is “helping sustainable currencies to scale”, so begin with the problem: why they need help. Your “Introduction” does not do this but instead describes what CF is up to. Please tell us that last, where the context makes it most meaningful.

    The next section, “Awakening”, implies that the problem is lack of awareness, such that alternative currencies have not worked because people have not known their value, such as possibly avoiding interest on loans. But in “Disruptive Technology” you present the hypothesis that alt currencies might come into their own now that the internet “enables new technologies of money”, but doesn’t that mean that the problem with alt currencies has been their uselessness, not lack of awareness? You might think that it is both, but what use is awareness of useless currencies, much less efforts to promote them?

    Finally, you come to the problem statement, the core of which you state is that “the current mainstream monetary systems are unstable, unfair and unsustainable.” But this is not why there is a problem with bringing alt currencies to scale.

    You go on to assert that “At Community Forge we seek to solve the dual problem that i) there are not enough sustainable currencies widely available for daily exchange, and that ii) there has been minimal support from institutionalised [sic] powers in government, business or civil society, for creating sustainable currency systems.” Well, if a population lacks access to sustainable currency then of course they have a problem (i), but if the problem is equitable distribution, which is clearly the case, then (i) is not the problem, or in other words, it is not availability of currencies but availability of currency. And if there has been “minimal support”, then why? And why is minimal not enough? You offer the WIR as an example of alt currency that does well because of “appropriate support”, whatever that is, but in fact the WIR does well first because it solves an intermittent problem of shortage of global currencies to the businesses of an entire nation. All the institutional nodding in the world for the WIR would not matter if there was not demand for the alt currency by the powerful due to this intermittent inequitable distribution to them. The reason for little institutional support, imo, is mostly that he strategies do not potentially supply demand.

    The core problem, imo, is the inequitable distribution of all commodities, including money, that is intrinsic to the free marketplace, which is simply a market failure. Alt currencies have failed to correct this because their value is too low to generate sustainable demand: the problem with alt currencies is low value and thus scaling alt currencies requires sustained bonus value to produce sustained demand.

    Bitcoin’s ponzi structure is an example of a bonus value, but that is an unstable currency of the worst variety – not only intermittent in availability and inequitably distributed, but unstable in value. Compare this to the USD, which rules because it is the petrodollar – a bonus value. The value of oil tends to increase, creating increasing demand for USD, so here instability is in favor of its dominance, not to say good for the poor, and the instability is cushioned in other ways.

    Thus, communities with something comparable to a local petrodollar ought to witness it scale. No kind of backing can accomplish this, not gold, nothing. If the USD was merely backed by a promise of exchange for oil, for example, it would not be the reserve currency of the world because no one would need USD to buy oil. It is because OPEC demands USD for oil that there is demand for dollars – buyers seek to avoid loss in exchanging their currency for dollars to buy oil by accumulating dollars in less expensive ways and one of the best bets is to pile them up in exchange for purchase of their own goods because then they have the advantageous exchange rate. (This is to be distinguished from a bonus value that is incorrectly described as backing, such as the bonus through redemption in a fixed quantify of a commodity that is likely to appreciate rather than mere redemption at current market value.)

    Indeed, if the people of the world were to agree to discount electricity when purchased with leaves, then leaves would become the reserve currency of the world. The US has the largest military on the planet to forestall that. In lieu of global change, most communities can produce their own energy and offer a stable discount on that energy when purchased with local currency. This would produce demand that brings their currencies to scale, the stable discount relative to national money confers relative stability on the currency’s value, the production of local energy and money empowers communities to develop all their local resources for local consumption, the employment created by such development largely addresses the problems of inequitable distribution of essential commodities that is growing in the global marketplace, and genuine local marketplaces are impelled to sustainably develop their resources. A world filled with such communities would be a sustainable world, with little hunger or poverty, and perhaps nothing else short of a global totalitarian green party could accomplish that, and only then if the party leaders were saints.

    It is worth briefly noting here, imo, that I describe this energy-money discount strategy in detail at http://sunmoney.org, and I describe our tactics for implementing this strategy in detail at http://reconomy.net. We are at step 1 in implementation – seeking institutional support for demonstration projects. But any community could do this right now by discounting local taxes, fees, etc when paid with local money, and their currency would scale overnight (This is assuming that they have a functional local government, and that local money is not illegal). Not to say they wouldn’t need to address a number of consequent issues, such as compensating for lost revenue until the boon to local business fills that gap.

    Finally, imo, it’s a mistake to pin the blame for inequitable distribution on the interest charged on loans. In the first place, profit is what impels the free market to produce, so remove the profit gained through interest and lending will plummet unless the money is printed like toilet paper. And more to the point, “zero interest” is not a solution to inequitable distribution because yes the poor could afford the money but the affluent would borrow proportionally more. In the end, the value of the currency would plummet, creating crisis.

    If my business needs money and I can’t get a bank loan, and so I turn to a peer whom does not charge interest, and then he uses my IOU as money, there we have the beginnings of mutual credit. But what makes that IOU good? Mutual credit? No, it is my find’s IOU, so it is my friend’s credit at his bank, which I have effectively borrowed at his expense. If a network of businesses that collectively supply all of the goods and services that those businesses need somehow agree to a mutual credit system, well then and perhaps only then is mainstream money not the foundation. This might require a global mutual credit system that includes pretty much everybody. But free global money means plunging value. Indeed, the value of money is determined by the interest charged because that controls the relationship between supply and demand. Zero-interest lending does not solve the inequitable distribution market failure.

    My post here is a tiny bit technical but mostly written in plain language. If we can’t explain stuff in plain language then we don’t know what we are talking about, right? For my money (pun intended), the use of bullshit jargon is why we have been long stuck. People invest their egos in their big ideas and they defend them with nonsense/jargon. So, why have community currencies failed to scale? Ultimately, imo, bullshit in our eyes. Gold won’t solve this scaling problem, neither will raising consciousness about weak alt currencies. The only thing that will work, imo, is answering the question “what’s in alt currency for me?” with “immediate profit”. Matt and Jem are among the clearer thinkers and more selfless people in the movement, imo, and their plain-language paper is an example of that, so I’m glad to take the morning to answer Matt’s email request for feedback (and to share my work a little more in-house). I apologize for the length of this post, my arrogance, etc, but i don’t have time right now to be more concise and contrite. So please rip me a new one if you want, or be kinder if you will, it’s all good, but use plain English if you want my rejoinder.

  4. Matthew Slater

    Thanks for your attentive reading Kevin. We have only a 20 min slot to present this paper and we’re attempting to bundle a lot of ideas in. Your feedback will help.

  5. John Rogers

    Only a few weeks late.

    I admire Community Forge’s work in constantly improving the technological backup for mutual credit systems. When we started a LETS in 1993, we had to work with an old DOS based programme, slowly moving into Windows programmes like Excel and Access. People had to post cheques to the administrator! Now we have the Web and people can adminstrate their own accounts! We have come a long way in 20 years.

    The most useful contribution I can make here in response to the proposed frame “Helping Sustainable Currencies to Scale” is a bit of shameless promotion of our soon to be published book “People Money – the Promise of Regional Currencies”. I have completely edited, revised and updated Margrit Kennedy’s and Bernard Lietaer’s 2004 book on regional currencies published in German as “Regionalwaehrungen” (since in French and Spanish too). The first English edition includes a completely new second part that presents portraits of 17 leading local currency systems worldwide and 5 leading agencies that promote them, all based on interviews with the practitioners themselves. They are the ones we need to learn from as they articulate the real world challenges they have faced in creating sustainable systems.

    Link to Triarchy Press:
    http://www.triarchypress.com/pages/Regional-Currencies-People-Money.htm

    Reviews by Hazel Henderson, Charles Eisenstein and others:
    http://www.triarchypress.com/pages/People-Money_reviews.htm

    People Money on P2P Foundation:
    http://p2pfoundation.net/Promise_of_Regional_Currencies

    Like us on Facebook:
    http://www.facebook.com/PeopleMoney

    Follow my Local Currency blog:
    http://localcurrency.wordpress.com/

    Buy the book, tell your friends, start a local currency system!

  6. April Rinne

    Hi Jem & Matt — I read this with great interest. My comments are pretty straightforward:

    – It would be very helpful to include hyperlinks to as many of the CC initiatives/pilots/etc. as possible. This would include Transition Pounds, Chiemgauer, TEM, STRO, NEF, etc. (just do a thorough scrub of the paper). Assume that the reader isn’t more than basically familiar with these initiatives, and make it easy for them to learn more.

    – Similarly, providing a brief 1-2 sentence description about how each [TEM, Bitcoin, etc.] is actually arranged and WORKS in its context would be great. I’m familiar with them, but the people I’d love to share this with are not. Don’t make me have to attempt an explanation; rather, do this directly and capture their interest more seamlessly (and make sure the rest of us have defined it correctly in the process)!

    – p. 4 “we are deploying mutual credit systems…” again, brief 1-3 sentence description of what this MEANS, what you’re actually DOING (examples, how it works, and so forth) for the non-expert who’s interested in learning more.

    – p. 6 “transition towns”… “national timebanking organizations” — are there lists of these? Could you include a representative (or even better, comprehensive) sample of these as an appendix? Would be a fantastic resource.

    Thank you for this excellent contribution. Jem, eager to see where these ideas might resonate within the WEF community.

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