Michael Linton & Ernie Yacub

The problems with money stem entirely from how conventional money is normally issued - it is created by central banks in limited supply. There are three things we know about this money. We know what it does - it comes and it goes. We know what it is - it's scarce and hard to get. And we know where it's from - it's from "them", not us.

These three characteristics, common to all national currencies, determine that we constantly have to compete for a share of the limited amount of the "stuff" that makes the world go round. This money can go anywhere, and so it inevitably does, leaving the community deprived of its means of exchange

The pattern of everyday social actions derives from the ways in which money flows through the community - the money comes into the community, it goes around maybe once, and then it leaves.

The consequence of these conditions is an economic context in which strategies of competition dominate. If you have to have money to live, and money is short so everyone competes for what little there is, then you too have to compete to get what you need, you have to compete to live. And it's the same at every level - nation shall compete with nation, region with region and community with community. The rhetoric of the marketplace, the political slogans, the cynical self interest all seem to make perfect sense, to reflect an apparently inescapable logic, that of the survival of the fittest - by which is meant those with the least scruples. But this "perfect" sense rests on very imperfect assumptions - that it's all due to human nature, or it's just the way society works. There is no recognition that the context in which the social behaviour arises is set by the nature of the money that drives it, nor that the money we use is only one particular form amongst several different possible forms.

Money - as a really imaginary thing, a promise - began to come about when political powers gradually reduced precious metal contents, and stamped coins from base metals, declaring their value to lie in the fact that they were issued by, and acceptable to, authority. It had value because it had the "right" marks on it. A purely imaginary, social valuation, money is merely a promise, a ticket that provides its carrier with the expectation of something real. But yet it still is thought of as real - by economists and bankers, by adults and children. We think it is real, because of our experience that it's scarce, that only so much of it exists. It has at least that attribute of reality.

MONEY IS INFORMATION. It is just a measuring device, which we use to measure the value of our real exchanges. Why should a community be short of measures? Imagine you go to build something, and you have the materials, the bricks and the wood, and the tools, and the time and the inclination, and planning permission and whatever - but ... NO INCHES! Damn, we used too many yesterday, and now all the inches in town are over at the big project on the south side. This is obviously absurd - but it is just exactly the way we talk about money. So, just as you would use a different way to measure if someone told you there were no inches, so you can use a money of your own when the one from "them" isn't coming to hand.

There have been many local money systems throughout history, which have merely been small scale versions of the larger national currencies. But these don't work better at the local level than they do at the national. Issued in scarce supply by some local or regional authority, such currencies, simply by their very nature, create a local context of competition, which in turn generates conditions for local unemployment, local rich and local poor. Furthermore, they are inherently even less stable than their national counterparts, and prone to embarrassing and irrecoverable collapse.

To paraphrase Einstein, the problems we face cannot be resolved using the tools that created them. There is nothing positive that can be done within the current context. The form of any design for a new money should avoid any of the faults of the old. The form of an open money should:

-exist in sufficient supply - - - - - - - - - - there's enough
-only be used within a community - - - - - - it recirculates
-be created by its users - - - - - - - - - - - - it comes from us

Open moneys are virtual, personal and free. Any community, network, business can create their own free money simply by providing a set of accounts through which members can record their trades. "Free" should be understood as in free speech, free radical, freely available - but NOT as in free lunch, or free ride. It's not something you get for nothing. Open money is money that must be earned to be respected. When you issue it, you are obliged to redeem it - your money is your word. It's a matter of your reputation in your community. Open money is flat money. It confers no power of one over another, only one with another. When you have your own money, you can't be bought and sold so easily. You can choose what you do to earn your money. And there's no monopoly - all money systems coexist in the same space. Exploitation is no longer a problem. This is because open money is virtual and not limited.

LETS, also know as Local Exchange Trading System, is a new form of economic organization applicable to any community. It is a self-regulating economic network which allows its members to generate and manage their own (completely legal) currency system independent of and parallel to the federal money system.
It offers communities everywhere the tools to stabilize and support their local economy without diminishing their participation in the whole. It allows members of the local community to exchange goods and services on a "green dollar" basis when federal dollars are scarce or unavailable.

Being a member of a LETSystem is as simple as having another bank account. Member accounts hold green dollars, a quasi-currency, equivalent in value to the federal dollar, but no money is ever deposited or issued. All accounts start at zero and members can use green dollars only with other members. If you provide some product or service to another member, your account is increased and his/hers is decreased by the value you agree on. The system is thus always exactly balanced with some of the members in credit and the others in debit.

There are several features of the LETSystem that distinguish it from conventional currencies, banks, and credit-card barter systems. Conventional money systems involve the issue of money to a population by some authority. In a LETSystem, it is the people and businesses themselves who create the currency, and do so at the time and place where it is needed. A negative balance means you have issued money to others, not borrowed it from them. No individual is waiting for you to "pay up" and nobody has a claim on you or your assets. It's not debt, it's commitment, and you honor it at your own rate usually some LETS and some normal money, enough to cover your cash costs. My commitment, in a debit position, is a general one, to the community as a whole, and a temporary or even permanent inability to recompense hardly restricts the rest of the community, who are still perfectly able to continue trading with each other, using my issued money. My inability to meet commitments in the cash economy is often a result of the scarcity of money. In the LETSystem the money I issue never leaves the community. It's always available for me to re-earn, and since it is not in short supply, it is less likely that competition for it will exclude me from earning.

As a meme, LETS has quickly developed a life of its own. Connecting mind to mind, it has become the best known and most widely used open money system in the world. In the most recent development of the LETS project, the open source software development model is being used to ensure the widest opportunity for programmers and system designers to contribute their skills and experience. With a project that can grow very quickly, it is absolutely essential to do it right. For modern money management in retail businesses, restaurants, transport services, "doing it right" means using smart cards - memory microchips on plastic cards. These are in some ways much like credit and direct debit cards, but in others, very much smarter. One smart card can carry many independent virtual community moneys, just as a normal wallet can hold several sorts of money bills - Yen, $, Francs - but the smart card doesn't get them mixed up. A network of on-line internet accounts and off-line smart cards creates a perpetual money machine - a friction free energy circuit for all the moneys needed for a fully functioning community economy.

We believe that the problems that come from conventional money can be resolved with open money systems. Where conventional money is scarce and expensive, the new money is sufficient and free. Where conventional money is created by central banks, the new open money is issued by us, as promises to redeem - our money is our word. And where conventional money flows erratically in and out of our communities, creating dependencies that are harmful to the economy, society and nature, the new complementary money re-circulates, enabling business and trade.

Imagine a perfect money system that simply enables people to trade equitably and efficiently; a form of money that only connects, people to people, business to business, each to the other. Imagine money that circulates in communities and networks so that what you spend always comes back. Imagine a perfectly open money that is available to all, created by us, sufficient to any and all needs so that there is never any shortage. Imagine a society and economy operating without any of the familiar monetary problems of poverty, exploitation, homelessness, unemployment, fear and stress. After all, money is just the symbol we give for something of real value.

about Michael Linton >>

about Ernie Yacub >>