JCT: Next week's Time Magazine dated Monday, Jul. 13, 2009

http://205.188.238.181/time/magazine/article/0,9171,1908421,00.html

Monday, Jul. 13, 2009
Local Currencies
By Judith D. Schwartz

JDS: With local economies flailing, communities across the U.S. are
trying to drum up more action on Main Street. "Buy Local"
campaigns are one way to go. But many towns--from Ojai, Calif.,
to Greensboro, N.C.--are considering going a step further and
printing money that can only be spent locally.

JCT: It's like saying that because Ceasar's Palace chips can only
be spent in Ceasar's Palace, they can't be used anywhere else. Of
course, lots of people would accept them without living in Las
Vegas. So too, Ithaca Hours may only be "spent" in Ithaca stores
but they're still useful money to all their neighbors. So people
who say that local currencies can only be used locally have no
understanding of valuable negotiable IOUs.

JDS: Issuing an alternative currency is perfectly legal, as long
as it is treated as taxable income and consists of paper bills
rather than coins.

JCT: Don't make your coins look like US currency and it's okay. I
see nothing wrong with a copper dollar chip, even a plastic
dollar chip from your local casino supply house. Besides, the US
doesn't even have a dollar coin.

JDS: In the U.S., where local currencies were popular during the
Depression, the biggest alterna-cash system is in Massachusetts'
Berkshire County. Go to one of several banks there, hand a teller
$95 and get back $100 worth of BerkShares, a nice little discount
designed to reel in users.

JCT: Berkshares are the cash-buy-in community currency model,
like a casino bank. No chips issued if no one has any cash.

JDS: BerkShares are printed on special paper (by a local
business, naturally--a subsidiary of Crane Paper Co., which has
been printing U.S. greenbacks since 1879). And since the
program's inception in 2006, more than $2.5 million in BerkShares
have circulated through bakeries, vets' offices and some 400
other businesses that choose to accept the colorful bills, which
feature famous former Berkshire residents, including W.E.B. Du
Bois and Norman Rockwell.

JCT: The point is that though they can cash their chips out at
the 5% cash-out loss, they can also spend their chips locally
without incurring any 5% cash-out fee.

JDS: What's the point of all this pretty, community-printed
currency?

JCT: The benefit is quite obvious to people who have no credit.

JDS: Money spent at locally owned companies tends to create more
business for local suppliers, accountants, etc. The New Economics
Foundation (NEF), a London think tank, compared the effects of
purchasing produce at a supermarket and at a farmer's market and
found that twice the money stayed in a community when folks
bought locally. A study of Grand Rapids, Mich., released last
fall by consulting firm Civic Economics, concluded that a 10%
shift in market share from chain stores to independents would
yield 1,600 new jobs and pump $137 million into the area. "Money
is like blood," says NEF researcher David Boyle. Local purchases
recirculate it, but patronize mega-chains or online retailers, he
says, and "it flows out like a wound."

JCT: It's true that it raises market share for local stores as
long as big chain stores do not accept them. But what happens
when WalMart wises up? Actually, there'll be enough for all
because no one's paying any interest.

JDS: Interest in cash alternatives has skyrocketed in recent
months (BerkShares.org logged nearly 42,000 hits a day in April)
as the recession has encouraged more innovation. For example, a
Vermont business association is getting ready to launch a
statewide cashless trading network.

JCT: Good stuff. Means we'll be able to trade accommodations
throughout the state. Wait until they find out what they can do
with a state-wide time-trading network.

JDS: Ithaca, N.Y., which has the nation's longest-running
independent currency, agreed in June to let people start using
the 18-year-old bills to buy transit passes.

JCT: This is the time-buy-in model which allows people with no
money to use. Just like a casino bank accepts both assets (cash,
cars, checks, etc.) or markers (IOUs owed), so too, Ithaca could
also offer to take in cash buy-ins too. And Berkshares could
start lending them out to people too. If a casino can issue chips
based on both asset and IOU, why can't community currency banks
too?

JDS: But how hard is it to manage and maintain these trade
boosters? Ed Collom, an associate professor of sociology at the
University of Southern Maine, has studied volunteer-run programs
like Ithaca's and found that about 80% failed, chiefly because of
administrative burnout.

JCT: Guys like Ed Collom are useful in scaring people away from
these local currency lifeboats since 80% of them fail. Hearing
him say that the local Guelph LETS failed leaves people with the
impression that someone lost something, right? But a LETS can't
"fail" in that way. It's not like a tractor that can break down,
it's a set of accounts that stay undead forever.
Let's say our very small Local Employment Trading System is very
small, say 5 of us. After an initial spurt of activity, trade
falls off and our books show that Adam owes 1 Hour, Bob owes 2
Hours, Charlie owes 3 Hours while David is owed 4 Hours and Ed is
owed 2 Hours. Now try to explain how that system of accounts can
fail? It can't. Sure, nothing may happen to change those IOUs but
that doesn't mean anyone has lost anything. Ed could still call
on another and try to spend his IOUs, giving one of the
"Committed" a chance to redeem his debt of honor. (No interest)
And finally, someday, the UNILETS Resolution will be engineered
and those accounts IOUs will be spendable globally when everyone
is connected. So those accounts can never die, until one of them
dies, and in that case, the amount can be shared over the whole
database.
So whenever you hear a so-called "community currency supporter"
focusing on how these dinky (sabotaged) systems have failed, you
know they're playing right into the bankers' hands by raising
doubt over joining an only-20% successful lifeboat.

JDS: That's why many newer models, like BerkShares, are now set
up as nonprofits, complete with administrative support.

JCT: So dinky LETSystems don't fail, they idle, but having cash
(through interest on buy-ins deposited) has to help which is why
I advocate running both cash and time buy-ins for tokens.

JDS: Beyond spurring local trade, alternative currencies build
awareness about the effect of consumers' choices. "It has started
a conversation: Why local currency? Why buy local?" says Oliver
Dudok van Heel, who last fall helped launch the Lewes pound to
help a British town become more self-sustainable.

JCT: Why spend gas shipping our tomatoes to them and shipping
their tomatoes to us? Wood, wine, beef, etc.

JDS: Local currency can generate customer loyalty, but not every
business feels as though it can offer a discount like the one
built into BerkShares.

JCT: If you can't afford to lose the discount by cashing out,
I've already explained you can just spend it at full value. I
guess the businesses who don't see how to avoid the discount
won't be able to participate and should be the first ones to go
under, as the dummies should be.

JDS: "They just aren't viable for us," says Beth Parsons, whose
family owns a grocery store in Lenox, Mass. But as a consumer,
she likes the idea. Parsons recently drove to a nearby town to
buy some shoes instead of getting them online. Afterward, she
says, she passed a BerkShares sign "at the bank and thought, 'Oh,
I should've bought BerkShare bucks to save money on these.'"

JCT: Of she could have been smart enough to accept some in her
store! Har har har har.

Isn't it incredible how much disinformation is being peddled by
these community currency representatives?

And it's not as if they haven't heard John The Banking Systems
Engineer railing against the failings they keep in their systems.
Actually, Ithaca Hours use using their chips optimally, except
for being a dinky toy by only trusting their members with with a
paltry 4 Hours each, hardly enough currency to do anything big at
all.

And the third model, Timedollars, is the worst. Even though I
demonstrated that people could and should be able to command
different earning rates, especially when physical tokens let
people determine those rates themselves in a free marker, Edgar
Cahn's crew decided to keep their credits computerized so they
could impose an egalitarian wage independent of skill and demand
which has proven to be the downfall of all previous such "dog-
walkers earn the same as dentists" networks that have no
dentists. Ithaca, with a paper currency and free market, has
dentists, Timedollars probably not.

So they covered the three basic chip models, Berkshares cash buy-
in, Ithaca Hours dinky time-buy-in and the Timedollars Wages
Police making sure that no one better gets what they're worth.

Now keep in mind that the controllers of these systems have all
been told by the Banking Systems Engineer how to remedy the
malfunctions in their models and that they've chosen to continue
operating with the flaws leaves the only conclusion that they're
morons or they're bankster moles.
And you can bet I believe that while there were few LETS
experiments going on, the banksters would have had them
infiltrated with people to cause dissension and disinterest so Ed
Collom can tell the world that 80% of these account books "fail."