Proutist Economic Development Community and Currency

1. Proutist Economic DevelopmentCommunity and Currency Dr. Michael Towsey  2004 Proutist Universal

2. Monetary Decentralisation • The Future of Money – Bernard Lietaer • http://www.transaction.net/money/book/ • Economic decentalisation requires monetary decentralisation. • Each community should control its own money system. Proutist Universal

3. Central bank Community bank Money - Central versus Local Community money system Proutist Universal

4. Different Kinds of Money (1) • Money is a community tool to catalyse community trading. • There are many different kinds of money systems. • Different money systems suit different purposes. Proutist Universal

5. Different Kinds of Money (2) • Traditional money: • 90% of money issued as interest-bearing debt; • created using the fractional reserve system. • Producer currency. • Stamp currency. • Mutual credit. Proutist Universal

6. Producer Currencies (1) • Form of commodity money. • Workers are paid in money backed by output. • Example 1 - 1920s Germany: • Hyper-inflation - a postage stamp cost billions of marks; • Miners were paid in money (wara) backed by coal; • Mine manager arranged for import of food that could be purchased with wara. Proutist Universal

7. Producer Currencies (2) • Example 2 - 1960s Ireland: • Problem: a banking strike – no money to pay workers; • Dublin brewery paid its workers in beer vouchers; • Vouchers could be redeemed at local pubs for beer, money or other goods. Proutist Universal

8. Velocity of Money • $1 can catalyse $10 worth of transactions. • The velocity of money: • velocity = total transactions  volume of money. • Prout Principle: keep money rolling, i.e. increase velocity! • How? Proutist Universal

9. Stamp Currency • Community currency scheme started in Wörgl, Austria, in 1932. • A small amount of money can exchange a lot of goods if it circulates rapidly (high velocity of money). • Holder of a note had to buy a stamp each month. • Therefore money spent quickly – no hoarding. • Wörgl was first Austrian town to overcome unemployment. Proutist Universal

10. Unemployment and the Nazi Vote Proutist Universal

11. Local Enterprise Trading SystemLETS • Founded in Canada – spread throughout world. • LETS – an accounting system. • For every credit there is a debit – zero sum. • Mutual credit. • Unit of money decided locally – bunya, reeky. • Value tied to local currency – 1 bunya = $1 AUD. • Facilitates multilateral exchange when bank money not available. Proutist Universal

12. Community Currency Taking Off ! Proutist Universal

13. LETS, Maleny, Australia http://www.mena.org.au/lets/ Proutist Universal

14. International Versions of LETS • www.bartercard.com • www.ebanctrade.com Proutist Universal

15. International trade: barter, mutual credit, Keynes plan National trade: traditional debt money, producer currencies Local trade: producer currencies, LETS currencies A Hierarchy of Currencies • A hierarchy of communities requires a hierarchy of money systems. Proutist Universal

16. The South America Experience • Curitiba bus tokens – favelas waste exchanged for public transport. • Favela is a term commonly used in Brazil to describe areas such as shanty towns or slums. Proutist Universal

17. A South American Currency (1) • Good or bad? • Depends on what kind of currency and what for ... • A South American currency like the Euro? • A new currency for a South American trade zone? Proutist Universal

18. A South American Currency (2) • A South American currency like the Euro? • Sweden rejected idea because ... • shifts power from democratically elected governments to non-elected institutions such as the Central Bank; • erodes ability of member States to implement local solutions to their economic problems; • makes it easier for TNCs to accumulate wealth. • One year after adopting the euro, Portugal was forced to make massive cuts in public services and wages. • Unemployment rose in Germany and France every month after adoption of the euro. Proutist Universal

19. A South American Currency (3) • New mutual credit currency for a South American trade zone? • If similar to Keynes Plan - good idea. • Operates independently of member country currencies. • Removes Venezuela from dependence on US $ and Euro. • Does not erode ability of member states to implement local solutions to their economic problems. • Requires an independent money standard such as terra – based on representative basket of traded commodities. • The Terra project is the launch of a commodity-backed Trade Reference Currency (TRC), a supra-national currency that works in parallel with national money systems. It is uniquely designed to provide a stable international mechanism for planning, contractual and payment purposes worldwide. • http://www.futureofmoneysummit.com/terra-project.php Proutist Universal