Winter Patriot Community Blog

The outlook for most people on this planet regarding economic, political and social freedom and expression is bleak, indeed. And getting bleaker. State militarism in foreign countries and domestically is increasingly being accepted as 'normal'. The only thing that is prospering is violence. Everything good seems to be in decay. But what else could we expect with psychopaths in charge of our institutions and through them our societies, our persons and livelihoods.

It seems impossible to change this because the corruption has got to the point that our institutions are now criminal organisations and are far beyond reforming. The appeals mechanisms (courts) and the reform processes (elections) are in the hands of the same criminals. But all is not what it seems. We have been taught to think in terms of the structure and organisation of our institutions and society as it has been provided for us. The ruling clique in our society rules through our acquiescence to this model (including its appeal processes) that has been provided for us. We have never been taught about providing our own model; our own institutions. This is what this essay is about.

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We saw in my last article on economics how classic or laissez-faire economics led to chronic levels of high unemployment through a restricted supply of money needed to buy the full production of a working nation. We also saw how the answer to that problem, Keynesian economics with it's government deficit budgets, was brought to it's knees eventually by the compounding interest owed to privately owned banks charged on the loans that the governments took out to finance these deficit budgets. This crippling interest could have been avoided if the various governments around the world financed these deficit budgets through their own government owned banks. But they didn't because these governments were, and still are, captive to these same private banks. Our societies could have been economically free if we had access to an adequate supply of cost free and interest free money.

As it turns out, our communities have the ability to provide this cost free, interest free money in exactly the amount needed if people know how to go about providing it. Imagine our societies having well paid jobs for everyone and also access to housing and loans without interest for everyone. Just those two readily achievable things would transform our societies beyond recognition. The answers start with LETS systems.

LETS systems have been in operation in various forms over many years. They are a way for a community to provide its own credit to facilitate trade between people (members) without using government printed money or bank created credit, both of which are often kept in short supply regardless of the need. These LETS systems, though, are often seen as having limited success. There are three ingredients that are crucial to them having wide scale success; the sort of success that will bring about major social change.

They are –
One, the currency needs to be denominated in the nation's currency; to be exactly equivalent to it and to be exchanged for it under certain circumstances.
Two, the LETS system needs to be located in a geographical area and be supported by that area's municipal government. And,
Three, it needs the involvement of the personnel from the major community groups and charitable agencies in that area to get the municipal government onboard and also to provide the driving energy to promote and establish the LETS system and the spin-offs from it. It is no small task and it will need a lot of people but the costs are small compared to the cost of not doing anything to change the present situation.

LETS systems allow members to buy goods and services through offering the seller an IOU (which is what a cheque is). The seller then has a credit balance to use to purchase whatever they want from within the system. The buyer has a debit balance and is expected to trade their way out of that debt in time. The total of all the debit balances equals the total of all the credit balances. No interest is charged on debts nor is interest given on credit balances. People are expected to trade back and forth. The 'money' or credit is issued in exactly the right amount to cover the production created within the system. This money is created at the same time as an article or service (wealth) is sold. Therefore it cannot be inflationary.

It is necessary for this credit to be denominated in the nation's currency to make it easy for businesses to incorporate trading in the LETS system without having to run two sets of books. LETS units are treated exactly like ordinary currency for bookkeeping, management accounting and taxation purposes. There's no difference and this is exactly what we want; to expand the nation's money supply, legally! Money, in the form of credit, is legally created by the members of the system when they give IOU's to each other for goods or services. IOU's are entirely legal. IOU's are created, exchanged and cancelled in a multi-member double entry bookkeeping system just the same as happens with a bank. The result is added wealth production and trade for the community without the costs and control imposed by the banks.

LETS systems have operated in the past without the involvement of municipal governments but the horizons are so much wider with their involvement. A municipal government can give ultimate value and credit convertibility to the system. Ultimate value comes about through accepting LETS units as payment for municipal rates. With this option, LETS money will always be of value. A national government does the same thing for the national currency by accepting it exclusively as payment of taxes. So there is a perennial demand for it which equals perennial value.

The municipal government can offer convertibility for members who may have a credit balance but need 'national' dollars to pay for urgent expenses outside the LETS system; hospital expenses or even taxes, for instance. With these two common objections to LETS systems eliminated (the lack of guaranteed value and the lack of convertibility), the system and the community can prosper

A municipal government can start to finance projects in the community using LETS dollars. This use of LETS money can provide services and infrastructure for the community and at no cost to the municipality. This LETS money which is spent into the community by the local council, then further stimulates demand for goods that can be bought with it. By effectively increasing the 'money supply', the community begins to expand economically beyond what it would otherwise.

However, municipal governments are not generally known for their enthusiasm for innovation, especially economic innovation. This is where the community groups and agencies come in. They are staffed in part by innovative people some of whom are very aware of the limits of finance that are placed on them. They know what is needed as far as services are concerned. Some of them, at least, have an interest in this area and are generally proactive people. As a group, they can make life easy or difficult for sitting council members. They can offer their support by campaigning for council members who are due for re-election if they commit to dropping any political party affiliations and support the LETS system. Alternatively, and probably better, community leaders and organisers can run for council themselves and bring the municipal council onboard that way.

Hugh McKay, an Australian sociologist and economic historian, has claimed that all national economies that have prospered after wars or prolonged economic hardship have done so by a government sponsored housing industry. It would make sense for community leaders to take special note of this and to sponsor local building. Materials should be sourced from within the municipality. If they are not available locally, studies could be done as to the feasibility of manufacturing whatever is needed. The aim is to vertically integrate the whole housing industry within the community.

This opens up business opportunities which could be funded through the LETS system either by outright loan funding or partial equity funding. Businesses would be encouraged to use the LETS system whenever dealing amongst themselves, of course. A Business Incubator could be established to identify opportunities and train business owners and to provide ongoing services such as accounting, taxation and legal services and, of course, finance. With increasing employment, military enlistment and the horrors that come from it would fall. The community wins again and is an active move against supporting war and killing people for profit.

Next, attention could be focussed on State and National politics. With a municipal council onboard with the LETS system and its offshoot business services, an increased understanding of economic and political realities will come to many, many people. This could be further enhanced with a public education campaign about the truth of banking and its subsequent control of economies and politics. The time then would be to have the council nominate from its own ranks, councillors to run for state and federal governments and represent the municipality through their council. These candidates would have the active support of not only the council but all the community and business leaders who are active in the LETS system come campaign time.

There are two big provisos, though. The elected members would not be able to vote freely. They would be required to vote according to the council vote as a whole and would be independent of any “two-party system” and its attendant corruption. It would be a collegiate system. The second proviso is that the elected members can only serve one term before being replaced; the position being rotated amongst the councillors. Again, this is a move to severely limit any corruption getting embedded. Yet a body of continuing knowledge would be built up by the council through these rotated members for the benefit of the newly nominated and elected member.

Centralised systems are tailor made for corruption and hidden, unaccountable control. The collegiate system with control at the lower levels rather than the upper levels becomes much harder to corrupt and control by outside parties.

With this proposed system, you have an elected member whose first loyalty is to those that elected her or him. With the 'two-party' system, the elected member owes their first loyalty to the party that endorses them and, secondly, to the people who provide the funds. These people generally have interests opposite to the electors. This is not representation. This is NOT democracy. No wonder it doesn't work for the electorate. The point is not to waste time trying to reform this 'two-party' undemocratic system; we just go around it and form our own system while remaining within the existing legal framework of the country.

In time, other municipalities will come to see the advantages and want to emulate the economic and political self control of our first municipality. It is not impossible that enough municipal council controlled members of parliament or government would eventually become a majority, at which point a truly representative state government could be formed. All sorts of meaningful reforms would be possible then including a state government owned and run bank resulting in an even more prosperous and humane environment. Who knows where it might end?

If the current system is to be replaced without violence and chaos, then it needs to be achieved by something that can grow alongside the existing corrupt system in relative harmony. The above is a thumbnail outline of one way to go about doing that.

I put this forward as an alternative to going along with the present system either as a supporter or even as a protester and as a way of doing something different. Protesters are still controlled by the system. People who do something different are not.

Complete change won't happen overnight with this system, but nothing else will achieve it quickly, either, though the benefits will start to flow fairly early in the process. Thinking about the time involved, you might look back and ask yourself, “What if we got started 4, 8, 12 yrs ago?” The opportunity cost of being mesmerised by the 'two-party' scam and participating in it one way or another over and over is bleakly evident.

My thinking and reading has extended beyond the minimal details provided in this overview, so questions are very welcome.

UPDATE - Some further reading for those interested-

James Taris at lets-linkup (h/t APea) expresses very well one way of approaching lets and social/economic interaction. It is similar to Timebanking. It points the way to how a humane society could work in the future. Indeed, the ultimate is a society that operates without money or any recording system at all and where peoples needs are simply organised and fulfilled. Ironically, this would, no doubt, ease pressure on our natural resources. As traditional native societies have shown, when everyone's material needs are met (without money!), people turn to spiritual and cultural pursuits.

But I don't think the system and thinking that James Taris advocates would work on our present society with its present thinking and organisations on a large enough scale to effect change at the level we are aiming for. There is a need to engage and interact with the existing business world and its (our) existing money system while enhancing the freedom for everyone to prosper. There is a need for a transition system. Something that can compliment what we already have and then move on to replacing the corrupt control of it together with some of its more nasty attributes.

Here is another resource for information and even turn-key systems with all the needed software if you want to start a Lets system tomorrow! -
Community Exchange System

Here is a site that specifically advocates using LETS units denominated in the national currency as I do-
LETSystems

There are commercial bartering systems catering for businesses that are similar but charge fees and margins (some large) that a community run organisation doesn't need to. They show what's possible, though-
Barter of America
Bartercard

Wikipedia on LETS