Group: Credit Exchange
Thanks to Jane Woodward for these notes: CREDIT EXCHANGE/ ZONE C w/ Ken Young at www.mattoleselfhelp.org
CONCEPT: Create a credit exchange system for a community where the value exchanged is credits rather than dollars. E.g., Mr. Smith sells a pair of shoes to Ms. Jones for 15 credits. Mr. Smith’s account is credited with 15 credits and Ms. Jones’ account is debited 15 credits. All transactions are maintained on a secure computer database. Mr. Smith can then take his credits and purchase goods or services that he needs (e.g., food, gas, etc.)
Rationale for creating exchange: a. avoid the problem of inflation by creating a precious metal-based currency at the community level, b. provide incentive and basis for community to trade with each other (using community resources) rather than sending monies and investment outside, and c. protect the community from external economic collapse (e.g., major dollar devaluation) and avoid loss of local economic wealth from such a collapse.
For this to work, a. a large number of community members have to “buy in” to the system at the outset so that the credits earned can be spent easily to obtained needed goods and services (the “Penguin concept” that they all jump in at the same time to avoid the predator seal), and b. credits need to be convertible to dollars if a participant needs to purchase goods or services outside the community. This can be done by tying the value of the credits to a precious metal value such as a silver or gold coin or medallion. Since the worth of the coin (e.g., in ounces of silver) goes up with the anticipated inflation (while the value of the dollar goes down), the value of the credits rises with inflation rather than falling with the dollar.
A number of communities have experimented with this or a related concept, i.e. Mendi Futures is using this process with apparent success. Another community trades in labor hours. More research needs to be done. Ken Young has had silver medallions minted at the Northwest Territorial Mint which are called “petols” in 1, 5, 10 and 20-petol sizes, with a 10 petol medallion containing 1 oz of silver at .999 purity, and to date has sold over 140,000 of them. There is no reason why this concept couldn’t be realized using minted US government coins. Laurel Brown is conducting a workshop called the Moneywise Fair on January 31, 2010 beginning at 10 a.m. at the Mattole Community Center in Redway where Young will be speaking at 3pm. Ken Young can be reached at 629-3430.
On Local Self-Reliance
ECONOMIC SELF-SUFFICIENCY AND DISASTER PLANNING/ ZONE C w/ Jane Woodward CONCEPT: Given the current economic crisis and deflating dollar, how to protect ourselves as a community and as individuals from current and anticipated financial/economic problems. NATURE OF PROBLEM: a. Deflating dollar b. Rising foreclosures c. Job loss and government funding cutbacks d. Declining credit availability to small business and individuals
POSSIBLE FIXES a. Promote banking with local credit unions to keep capital local b. Investigate extent of community foreclosure problem and how to alleviate locally c. Set up/promote local credit exchange or currency that is silver-backed. d. Promote neighborhood/community investment groups to provide private capital via personal (non-bank) loans e. Set up programs to teach students the basics of managing money, checkbooks, investing, etc. f. Investigate setting up local credit cards to keep capital local g. Set up neighborhood groups to plan for providing basic needs in case of local disaster (e.g., earthquake, tsunami) h. Promote investment in hard/tangible assets (food, emergency medical kits, precious metals, equipment, etc.) that will inflate in value over time i. Investigate “gifting” programs as way of helping neighbors and changing community ethic (e.g. where community members contribute their expertise freely to others in need, such as the old house-raising concept)………extended volunteering