Proutist Economic Development

Community and Currency

Dr. Michael Towsey

2004 Proutist Universal

Monetary Decentralisation

The Future of Money Bernard Lietaer

Economic decentalisation requires monetary decentralisation.
Each community should control its own money system.

Dr. Michael

Proutist Universal

Money - Central versus Local

Central
bank

Community
money system
Dr. Michael

Community
bank

Proutist Universal

Different Kinds of Money (1)

Money is a community tool to catalyse community trading.

There are many different kinds of money system.

Different money systems suit different purposes.

Dr. Michael

Proutist Universal

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

Dr. Michael

Proutist Universal

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.

Dr. Michael

Proutist Universal

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.

Dr. Michael

Proutist Universal

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?

Dr. Michael

Proutist Universal

Stamp Currency

Community currency scheme started in Wrgl, 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.

Wrgl was first Austrian town to overcome unemployment.

Dr. Michael

Proutist Universal

Unemployment and the Nazi Vote

Dr. Michael

Proutist Universal

10

Local Enterprise Trading System

LETS
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.

Dr. Michael

Proutist Universal

11

Community Currency
Taking Off !

Dr. Michael

Proutist Universal

12

LETS, Maleny, Australia

Dr. Michael

Proutist Universal

13

International Versions of LETS

www.bartercard.com
www.ebanctrade.com

Dr. Michael

Proutist Universal

14

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

Dr. Michael

Proutist Universal

15

The South America

Experience
Curitiba bus tokens favelas waste for public transport

Dr. Michael

Proutist Universal

16

A South American Currency?

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?

Dr. Michael

Proutist Universal

17

A South American Currency (2)

A South American currency like the Euro?
Bad idea
Sweden rejected idea because .......
Shifts power from democratically elected governments to nonelected 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 has risen in Germany and France every month
since they adopted the euro.

Dr. Michael

Proutist Universal

18

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.

Dr. Michael

Proutist Universal

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