Thoughts on the use of local currencies as an alternative to a debt virus currency.

Date:   3/8/2009 4:50:23 AM ( 15 y ago)

The present "economic crisis" is finally common knowledge. Not surprisingly, the "knee jerk" reaction appears to be government intervention. Somewhat fortunately - we are beginning to hear that this intervention may not be enough to change the course of the downward spiral. (As if government really had the power to cure the economic disease that is in part known as "debt virus"!) Those with ears to hear may finally begin to realize that another way of doing business is needed now.

Some communities have already thought about this and have begun using local currencies to keep their goods and services circulating within their local community. There are over a dozen examples of this across the country. I just read an article this evening in the Communities quarterly on this subject: "(Re)localization: An Exploration in Local Currencies" by Alison Rosenblatt. Here's what I wrote Alison just moments ago:

"...
Thank You for your very important article on "Local Currencies" in this current issue of Communities! It was the very first article I read! I am delighted to hear that you intend to share more in the "Community Economics" column. (BTW, how long has that column been published? I may want to read back issues.)

You and I as well as many others agree that there is an urgent need for economic "alternative/s" to the dominate system that is driving the global economy! I personally think it is the number one urgency and not just because of the current "economic crisis". I have thought this way for a number of years. I have sought and participated in alternative exchanges since the late '70's. I may have some ideas to offer in this regards. Before I would offer my thoughts on the alternatives I would very much appreciate hearing what you know about the origins of the present system and why that doesn't work. (I think having a shared understanding of the "problem" will better equip us for creating remedies.) In fact I have a new idea that just came to me this afternoon after reading your article that I would like to share with you after I receive your reply. In any case I agree that there are answers possible with local currencies.

Have you heard of "Associative Economics"?[1]

I just discovered a paper this association published on LETS[2] ..."

Any one who knows the history of banks knows that they evolved out of the goldsmith's trade. Several centuries ago local communities would keep their gold in the safe keeping of the local goldsmith and people would receive a receipt of their gold (money) deposit. People essentially used the receipts as a form of currency. That was the origin of a gold-backed currency that carried forward in time into the early part of the 1900s. However, not too long after the creation of the "Federal Reserve Bank" the gold backing was removed and then all that remained was a (fiat) paper currency with no real money to back it! Essentially that meant that real money had disappeared. To make matters worse all the currency in circulation was lent to the people with interest! That meant there was an inherent debt virus in all financial transactions! No one using this currency was dealing with real money, whatever anyone had of it or based on it was only evidence of debt! Not a pretty picture! Some people began waking up to the ugly truth over the last couple decades and some of them began creating alternative currencies and financial systems. Many of these are successfully operating today!

Now there is more conversations about local currencies and in fact I myself am being invited into a local conversation! Personally I think having gold backing is worth considering in a local currency. In a sense it could be a return to the local goldsmith keeping gold deposits. The local goldsmith could issue receipts of deposit and those receipts could be circulated as if they were real money (because they would be redeemable for the gold!) The receipts would not be loans or evidence of debt (as is now the case with the current currency). Therefor there would be no interest and also no "income tax" needed to be paid against that interest on a bank-loaned currency (and you thought that these taxes were paying for government services. Read the Grace Report!). Imagine - real money, no loaned currency with no interest! Can you bare it!

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August 15, 2015 -

In addition to the "debt virus" in the "Federal Reserve's" monetary system is a second financial systemic disease called fractional reserve banking.

"Any proponent of a fractional reserve banking system is an economic predator. -

From the time of the charter of The First Bank of the United States and "[d]uring the next twenty years the country would fall prey to contrived financial havoc as a result of the bankers policies of creating cycles of inflation and tight money. During times of inflation the economy would boom, there would be high employment, and people would borrow money to buy houses and farms. At that point the bankers would raise interest rates and incite a depression which would, obviously, cause unemployment. People who could not pay their mortgages would have their homes and farms repossessed by the bank for a fraction of their true value. ..."[3]

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Notes:

[1] http://www.ae-institute.com/

[2] http://cfae.biz/catalog/product_info.php?cPath=22&products_id=55

[3] http://www.redicecreations.com/specialreports/2005/08aug/redshield.html

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Keywords:
economic crisis, debt virus, local currencies, Communities journal, Relocalization, Alison Rosenblatt, Associative Economics, LETS, money, gold-backed currency, Federal Reserve Bank, fiat, real money, debt virus, evidence of debt, alternative currencies, fractional reserve, First Bank of the United States

 

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