Category Archives: Implementation Strategies

Revolutionary aid project set to spread in Kenya

On the heels of the successful Bangla-Pesa community currency project, the NGO, Koru Kenya has been asked by the government to create similar programs in other poor neighborhoods around Nairobi and Mumbasa. Unfortunately, no significant funding is being provided by the government, so private contributions are being solicited through a Crowdfunding campaign at Indiegogo: Fight Poverty in Africa by Redefining Community Development.

This is a revolutionary approach to aid, one that empowers people to sustainably provide for their own needs. I strongly endorse this project and encourage all to make a financial contribution. Even small amounts can make a big difference. –t.h.g.

Qoin launches B2B exchange

Community Currencies in Action (CCIA) has announced the launch of TradeQoin , a business-to-business trade exchange in the Netherlands.

As their website describes it, “TradeQoin is a trading network for SME entrepreneurs to do business with each other and pay with their own digital form of payment: the TradeQoin. Entrepreneurs can use TradeQoin to purchase and sell quality products and services. By selling products and/or services the entrepreneur can earn TradeQoin. These can then be spent on making purchases within the network, which reduces Euro expenditure.”

The video below features members describing the benefits of the exchange.

http://youtu.be/7VuIpFO7zZM

You can read more about it here, http://communitycurrenciesinaction.eu/sme-tradenetwork/

 

Everything’s connected: small changes can have big effects

What are the implications of this for transforming the system of exchange and finance?

Charges dropped, Bangla-Pesa prepares to re-launch in Kenya

In June, I reported the launch and abrupt shutdown of an exciting community development project in a poor suburb of Mombasa, Kenya. The Bangla-Pesa voucher system, conceived and organized by American aid worker Will Ruddick and several local micro-entrepreneurs, is intended to provide additional liquidity that makes it possible for unmet needs of local residents to be satisfied out of their own excess productive capacity.

After a mere two weeks of operation, the Government of Kenya arrested Ruddick and five local micro-entrepreneurs, charging them with forgery. Amidst an indignant outcry from the global development and complementary currency community, the case bounced around through the Kenyan bureaucracy and on Friday, the central bank finally dropped the charges.You can read about this latest development on the Koru Kenya website.

Now, the way appears to be clear for this project to move forward and to build upon its early success. The Bangla-Pesa project is in my opinion one of the most promising current developments in the realm of alternative exchange and community development and deserves wide support as other similar communities line up to replicate it.

Here are 6 short and inspiring videos that tell the whole story. I suggest that you view them all starting with the background of the Bangla-Pesa up through the State’s withdrawing the case. These videos are automatically played in sequence.–t.h.g.

Government of Kenya attacks self-help program in Mombasa slums

In an unbelievably heavy handed move, the Government of Kenya last week arrested an American aid worker and five local micro-entrepreneurs for operating a complementary exchange system in a poor suburb of Mombasa.

The recently launched Bangla-Pesa voucher system is intended to provide additional liquidity that makes it possible for unmet needs of local residents to be satisfied out of their own excess productive capacity. In just two weeks of operation, the amount of goods and services traded among the members of the Bangla-Pesa network increased substantially. Now, the program is shut down and six people are facing seven years in prison.  Why? Is this simply a case of ignorance on the part of government officials, or an attempt to keep poor people poor and dependent upon inadequate or even exploitative systems that are controlled by bankers and politicians ? The answer to that will become clear as this case develops. Your help is needed to get this matter resolved in favor of freedom, justice, and rationality. Here is the official appeal from American aid worker Will Ruddick.

Dear Friends, Family and Supporters,

End Africa’s dependence on Aid through Complementary Currencies. Eradicate poverty and keep six people from seven years in prison.

Click here to support this program and watch our videos.

Bangla-Pesa, a complementary currency program in one of Kenya’s poorest slums, needs your help. This innovative program gave participants the ability to create their own means of exchange so micro-business owners could trade what they have for what they need. In two weeks, the program already showed great success. But the Central Bank of Kenya has deemed the program illegal and is pursuing a legal battle against its organizers, despite enthusiastic community support.

These six people face charges that could put them in prison for as much as seven years:
·         Alfred Sigo a youth activist.
·         Emma Onyango a grandmother and community business owner.
·         Rose Oloo a grandmother and community business owner.
·         Paul Mwololo a grandfather and community business owner.
·         Caroline Dama a mother and volunteer.
·         Will Ruddick a new father and program founder.
We need help raising funds for legal fees and to bring this program back to life so it can help people throughout Africa in expanded form via mobile phones.
Our goal is to raise 47,000 Euros over the next 47 days.

Click here to read more and donate:
http://igg.me/p/bangla-pesa/x/31801
Spread the word!
Sincerely,
Will Ruddick, Bangla-Pesa Program Founder

Crowdfunding Update – February 2013

Compiled by Thomas H. Greco, Jr.

There are two fundamentally different but related aspects of the “money problem” that urgently need to be addressed. One is exchange problem, the other is the finance problem. Recent history has made it clear that in both realms, existing structures and institutions are serious flawed.

The exchange problem stems from the monopolization and misallocation of credit by the banking cartel and the perverse and improper issuance of political currencies (dollars, euros, pounds, yen, etc.). Solutions to the exchange problem are intended to provide liquidity, i.e., a means of payment, wherever it is needed so that markets can continue to function, so that producers can continue to sell and consumers can continue to buy despite the shortage or abusive issuance of conventional money.

The finance problem is the shortage of investment capital to small and medium sized and locally-owned business. That shortage stems from bank investment policies and preferences and government regulations that favor the channeling of everyone’s savings into corporate and government securities. Solutions to the finance problem seek to enable savers to directly allocate their savings to enterprises and projects that enhance the resilience and sustainability of their communities, provide real security, and contribute to the common good.

Decentralization, relocalization, and disintermediation are the emerging trends leading to a new economic paradigm. “Crowdfunding” is raising investment capital from large numbers of small investors. This may be in the form of donations, loans, or equity shares.

This is needed today because,

1. People (justifiably) do not trust banks and Wall Street,
2. People are looking for better returns than can be had from banks and the stock market,
3. People are looking for ways to protect their savings from inflation,
4. People are looking for ways to assure their access to basic necessities through direct ownership of enterprises that produce them.
5. People are seeking security by making their local community economies more resilient and sustainable.

Unfortunately, there are legal obstacles that currently limit those possibilities. The Jobs Act that was passed into law in April of 2012 is intended to remove some of those obstacles, but the Securities and Exchange Commission (SEC) has yet to act on its mandate to come up with new regulations that relax those restrictions.

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Among the leading organizations in the field, and one of the best sources of information about funding options, is Cutting Edge Capital. Their mission is “to develop tools that will make it easier and more affordable for businesses and nonprofits to do legally-compliant community capital raising.” Their website is http://www.cuttingedgecapital.com. /

A very useful article from their website, authored by Nathan Hyun, is titled, The Direct Public Offering – The Original Securities-Based Crowdfunding Model. Here is the concluding paragraph.

Ultimately, the new crowdfunding exemption (when it becomes legal) will provide companies with another option for accessing securities-based capital from the crowd and it could prove even more exciting for those wishing to build platforms and tools to offer issuers. In the meantime, the original crowdfunding model, the DPO, continues to provide companies with an effective way to conduct a self-underwritten and self-administered public securities offering. If you are a small or medium sized business, startup or nonprofit and are looking to immediately raise capital from the crowd through a public securities offering, a DPO is presently your only option and may be the best option even when the new crowdfunding law goes into effect.

Several informational resources related to crowdfunding are listed below.

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What is Crowdfunding and JOB’s Act?

http://www.rysalisbury.com/announcements/what-is-crowdfunding-and-jobs-act

This site provides a thorough overview of the present regulatory situation. It specifically states that, “Crowdfunding, or to be more specific, ‘equity-based crowdfunding’ is not yet legal.”

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Crowdfunding Predictions for 2013

2012 was quite a year for the crowdfunding industry. In April, President Obama signed the JOBS Act into law, which will open up equity-based crowdfunding for unaccredited investors. In May, the Pebble E-Paper Watch set a crowdfunding record and gained national media headlines, raising over $10 million on donation-based crowdfunding site Kickstarter. Research firm Massolution estimates the crowdfunding industry (equity + donation + lending +reward crowdfunding) will grow from $1.5 billion in 2011 to $2.8 billion in 2012.

Complete article at:

http://www.forbes.com/sites/ryancaldbeck/2012/12/11/crowdfunding-predictions-for-2013/

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4 Signs A Company Is NOT A Good Candidate For Equity Crowdfunding

1. The company is a tech company.

2. The company will need multiple rounds of financing.

3. The company is built on Intellectual Property, not brand.

4. The company is difficult to understand.

Read the entire article here: http://www.forbes.com/sites/ryancaldbeck/2012/10/16/4-signs-a-company-is-not-a-good-candidate-for-equity-crowdfunding/

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http://www.kicktraq.com/

Why 84% of Kickstarter’s top projects shipped late

http://money.cnn.com/2012/12/18/technology/innovation/kickstarter-ship-delay/

http://money.cnn.com/2012/12/18/technology/innovation/kickstarter-ship-delay/

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More About Legal Issues

U.S. Securities and Exchange Commission (SEC)

The SEC updated its home page (http://www.sec.gov/), with info re: JOBS act (http://www.sec.gov/spotlight/jobs-act.shtml)

with a specific reminder

“On April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The Act requires the Commission to adopt rules to implement a new exemption that will allow crowdfunding. Until then, we are reminding issuers that any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws.”

http://www.sec.gov/spotlight/jobsact/crowdfundingexemption.htm

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Selected sites

Indiegogo

http://www.indiegogo.com/

Kickstarter

http://www.kickstarter.com/

Propel Arizona

http://www.propelarizona.com/

Propel Arizona is on the front page of the Arizona Republic business section on February 14, 2013. They did a good job of explaining what crowdfunding is, too.

Online version:  http://www.azcentral.com/business/arizonaeconomy/articles/20130213arizona-crowdfunding-propel-arizona.html

Gofundme

http://www.gofundme.com/crowdfunding-websites/

http://www.gofundme.com/

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Other related articles

SEC uses JOBS Act to set up new roadblocks to crowdfunding

Read more at http://venturebeat.com/2012/08/31/sec-uses-jobs-act-to-set-up-new-roadblocks-to-crowdfunding/#xOwOvdrWaKqW3Ysi.99

‘Rich Man’s Crowd Funding’

http://www.forbes.com/sites/groupthink/2013/01/15/rich-mans-crowd-funding/

Complimentary Currency Systems: Richard Logie at TEDxLeeds

Richard Logie has been for a long time one of the leaders in the commercial  barter industry. As owner and operator of The Business Exchange in Scotland and developer of GETS, a moneyless trading platform, Richard has a wealth of knowledge about moneyless exchange in general. His presentation below provides a valuable learning tool for anyone, either in the entrepreneurial realm or at the grassroots level, who is starting or operating a currency or exchange system.

Please pay particular attention to the way in which Richard determines the credit lines to be provided to members’ accounts, the list of advantages that membership in a credit clearing exchange provides, and the elements that need to be standardized in order for exchanges to be effectively networked together.–t.h.g.

What and whom do we really depend upon?

 Tom Atlee’s recent article (excerpted below) is a BRILLIANT statement of both truth and necessity. I believe that sharing, cooperation, and restructuring are now gaining speed. The impending disintegration of the money/banking/finance sector will force us to “take off” soon. Let’s hope that we can generate enough “lift” before we run out of runway.–t.h.g.

Emerging EcoNomics #3: The New Sharing Economy

One of the key features of “the new economy” is sharing.  More and more people are sharing housing, cars, bikes, tools, meals, skills, money, books, ideas, music, energy, recreation, projects, transportation, knowledge, problem-solving, visions, jobs, ownership, clothes, stories, time…

Sharing is a resource in hard times as well as a source of intrinsic meaning and satisfaction any time.  To an increasing number of people, sharing offers compelling alternatives to the corporate-dominated money-saturated whole-society bustle we normally think of as “the economy”.

….

The existing economy is designed to get us to look out for ourselves so that we’ll consume, compete and work at paying jobs.  It nurtures the illusion that we are independent, building lives for ourselves in a world where everyone else is out for themselves, too.  Closer examination, however, suggests that such independence is largely a myth, a well-promoted appearance obscuring our profound dependence on the competitive buy-and-sell economy which, in turn, conceals our dependence on nature, culture, and each other.

….

In the existing economy we experience obligations not primarily to our neighbors, our communities or the natural world that supports everything we do.  We experience obligation to our employers, to governments, and to banks, credit card companies, and other institutions of higher lending.

This entrenched economic dependence hides the fact that we are fundamentally INTERDEPENDENT:  We need each other.  We are intimately connected to intricately interdependent natural world.  And we are co-creating the conditions of our lives and the prospects for our future, whether we know it or not.

….

…. Once we become grounded in quality of life rather than quantities of stuff or money, the possibilities for sharing expand exponentially, creating a sense of abundance even in the presence of some physical scarcity.

Whether or not we are inclined to share more with each other, one thing we all share nowadays is destiny.

Read the rest of the article…

The Language of Money and Accountancy

One of E. C. Riegel’s most important published articles is, Money Is the Language of Accountancy, which was published in The Journal of Accountancy, the official publication of the American Institute of Accountants, in November 1945 (pp. 358-360).

In this article, Riegel outlines the benefits of a proposed “Private Enterprise Money” system (which I have highlighted), explains its elegant simplicity, and shows how it can be the key to solving myriad economic, social, and political problems.

The article achieves Riegel’s usual high standards of incisive reasoning and eloquent expression, but there are a few points on which I disagree. I therefore find it necessary to write and publish my critique along with it. While Riegel’s explanation of the nature of money is superb, I have some serious disagreements with him regarding the measure of value and the requirements for implementation of the mutual credit system. We now have the advantage of six decades of actual experience with clearing systems of the sort that Riegel envisioned. I also find it necessary to clarify a few of Riegel’s points. I urge the reader therefore to read both the article, which appears below, and my critique which follows it.

Anyone who truly wishes to understand money and to discover the way forward toward justice, freedom, and economic democracy should study Riegel’s works starting with his book, Fight From Inflation. These can be found at http://www.newapproachtofreedom.info/—t.h.g.

Money Is the Language of Accountancy

By E. C. Riegel

Proceeding from the assumption that the study and comprehension of money is an integral part of accountancy, this author explains his own conception of the function of money and credit, proposes the establishment of a “private-enterprise money” system, outlines it’s operation, and lists some of the advantages which he believes would result from the point of view of accountants, in particular, and the national welfare. Mr. Riegel, who is president of the Valun Institute in New York, describes himself as “a non-academic student of credit and money.” He is the author of several books, including a recent volume entitled “Private Enterprise Money,” which develops the proposal outlined in this article.

SINCE money is the language of accountancy, an unstable unit plagues the accountant with a confusion of tongues. This year’s statement is written in a tongue different from last year’s and perhaps even last month’s. Figures are not merely black and red; they are also gray and pink. Taxes are impossible of estimation because when the government runs a deficit there is a hidden tax that manifests itself in inflation. Depreciation cannot be gauged because property may show appreciation in terms of the changing dollar. Profit-and-loss figures are deceptive. Reserves may depreciate or appreciate in terms of the unit. All is confusion. Is accountancy futile?

The problem is serious enough to challenge the profession. If it is not solved accountancy must suffer. If accountants master the problem the profession will be raised to new levels of prestige in the business world. The study and comprehension of money is an integral part of accountancy and must not be left to the voodooism of monetary economics.

Money can best be understood by inquiring into the purpose of it. In simple or whole barter there is no need of money. When barter is to be split into halves, i.e., one trader is to receive full satisfaction in value, and the other is to receive only a promise of value, there arises the need of an accounting system and money is a system of split-barter accounting. It is essential to remember that in the process of trading by means of money, there is no departure from barter, but merely a facilitation of barter by splitting it into two parts, one half finished and the other half prospective. Values still continue to exchange for values with money acting as an interim device, but itself having no value.

Perhaps the easiest way to comprehend money is to imagine ourselves in a position where we had to initiate a system that would enable us to escape from the rigidity of whole barter to the flexibility of split barter. Let us approach the problem as one purely of accountancy, completely divorced from politics.

The problem would be one of providing the means whereby trader No. 1 could receive value from trader No. 2 by the former giving the latter an order for an equal value which order would be acceptable to any trader at any time. An IOU would not be sufficient; it must be converted into a WeOU. In other words there must be a conversion from private credit to composite credit underwritten by all the participants in the trading circle. Obviously, this calls for a pact of all the traders agreeing to honor the promises of each as if issued by all. Mutual or social or composite credit is, therefore, the foundation of a money system and the device that liberates traders from the limitations of whole barter.

Before such common agreement can be obtained two questions must be determined: (a) what is the promise of each that is to be credited by all? (b) what is the limit of such promises? In other words we must define the meaning of the credit and the limit of it. Since the purpose of money is to split barter in two parts with one trader receiving value and the other “holding the bag,” it is obvious that the money must issue from the former (the buyer) and must pledge not money but value and the buyer-issuer promises to deliver value when any money is tendered to him from whatever quarter. Thus we see that the essence of credit under a true money system is not to promise to pay money but a promise to receive money. To comprehend this is to liberate private enterprise from the control of finance.

As to the limit of the credit of each participant, this can be agreed upon on the basis of the needs of various trades, and industries, and professions rather than passing upon the applications of each member thereof. This being done, each participant would be authorized to draw checks against his assigned credit without giving any note or other instrument. The credit would have no term but would be in the nature of a call credit since the pledge is to deliver value on demand by tender of money.

Realizing that we have a mutual credit agreement whereunder the credit can be offset only by delivering value (selling goods or services), it is obvious that we cannot afford to admit to our money exchange as a money issuer any factor [entity, ed.] that is not engaged in the business of buying and selling. Ipso facto governments are excluded since they have no way of making good their promise which is implicit in the issue power. This explodes the delusion that governments back money. It is only private enterprisers that back money; governments merely depreciate it by freely issuing it but never backing it by over-the-counter transactions.

Establishing a Monetary Unit

Before we can give meaning to our agreements we must determine the size or power of the money unit. This may seem formidable but is quite simple. Few people realize that our dollar was given its meaning by merely making it par with the Spanish dollar already current in the colonies and the states. Thus we can agree that our unit (I suggest the name “valun” from VALue UNit) shall be equal to the current dollar or some multiple thereof and set our prices in valuns accordingly.

Having agreed upon the three essentials: (a) the definition of the credit, (b) the extent of the credit, (c) the size of the unit, we are ready to set up a clearing house through which our bookkeeping can operate and to provide the means of covering its expenses. This latter can be accomplished by the simple device of a check-clearing charge. No investment is needed, the
Exchange being able to equip itself on credit based upon its prospective income from check-clearance charges. The Exchange itself would have no money-issuing power but could draw only upon accrued income. To provide currency in bills and coins would be very simple. The Exchange would purchase the bills and coins and they would be subject to requisition by members by cashing a check. Such requisition would bring a debit to the account of the check writer and a credit to the account of “the currency controller.”

A deposit of currency would, of course, bring the reverse action. The cost of printing the currency and minting the coins could be charged to each drawer or thrown into overhead and covered by the check-clearing charge just like the cost of printing check books.

Private-Enterprise Money

These are the general outlines of the establishment and operation of a private-enterprise money system. For details I must refer the reader to my book, Private Enterprise Money. Since the substance of the whole plan is mutual credit there is no occasion for anybody to pay interest to anybody and, of course, there is no place for the promissory note. Check drafts and deposits are the only instruments of record and the “money-makes-money” principle is absent. Money is made the instrumentality of the private profit system but of itself is valueless and profitless. This revolution has tremendous significance in the issue between private enterprise and collectivism because the criticism of the former is due entirely to financism.

The reason a private-enterprise money system assures stability of the unit and gives definite meaning to accountancy is that no units will be issued except for value received since each trader in self-defense must restrict his issue to selfish purposes. There could be no issues for boondoggling, or relief, or subsidy, or war, because the government would have no issue power. There could be no inflation or its reflex, deflation. This does not imply that the government could not carry out any project that the taxpayer approved, but it does mean that such approval would be necessary since the taxpayer would be the sole source of money and the government would be powerless to tax by the deficit process of changing the power of the unit through inflation. In brief, we would have government of government—democracy at last. The private-enterprise money system would accomplish the following:

Provide a stable price level.

End the debt-money system. Credit would be extended solely on the promise to pay with goods and services.

Abolish interest within the system.

Take the money-creating power out of the hands of government and banks and place it in the hands of private enterprisers.

Make government operate on a cash basis; prevent deferred and delusive taxes through inflation.

Assure distribution of goods by distributing money power.

Prevent inflation and deflation.

Defeat bureaucracy, fascism, and communism by taking the money power from government

Defeat hidden money control from any quarter.

Assure full employment and a high standard of living.

Give the people the veto power over war and all government extravagances.

Supply the perfecting element in democracy and private enterprise.

If the accounting profession will interest itself in the establishment of a true money system it will render an incomparable service to business and the public. The study of the subject is not extra-curricular; it is part and parcel of accountancy. No profession can gain so much from its solution; none must suffer so much from its non-solution.

Money and Reconversion

The reconversion problem with which the nation is now engaged is basically a problem of dollar-power conversion from the prewar power to the current power. By rationing and restraints upon spending, the action of demand upon supply has been cushioned. This cushion must be removed and since there are now about eighteen available dollars for each dollar of consumer goods (at 1939 prices) we face a tremendous potential inflationary price rise. If through the self-restraint of the people, or by artificial restraints imposed by government, the accumulated dollars are not permitted to come into the market, industry will stagnate and relief and public-works payments will increase the unbalance between a dollars and goods. When the flood breaks prices will skyrocket into runaway inflation. The dollar must be converted, sooner or later, from its prewar power to its natural current power which will grow progressively smaller and I believe will not be arrested short of complete fade-out.

The creation of a private-enterprise money unit is, therefore, imperative if we are to escape chaos and bloodshed. The subject is one of greatest urgency and I hope that the accountants will actively participate in the project.

This article was published in The Journal of Accountancy, November 1945, pp. 358-360. (Official Publication of the American Institute of Accountants).

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A Brief Critique of E. C. Riegel’s article, Money Is the Language of Accountancy

By Thomas H. Greco, Jr.

Riegel says,

“Having agreed upon the three essentials: (a) the definition of the credit, (b) the extent of the credit, (c) the size of the unit, we are ready to set up a clearing house through which our bookkeeping can operate and to provide the means of covering its expenses.”

I agree that “the essence of credit under a true money system is not to promise to pay money but a promise to receive money,” but I cannot fully agree with his proposals for b) and c).

Regarding b), he says:

“As to the limit of the credit of each participant, this can be agreed upon on the basis of the needs of various trades, and industries, and professions rather than passing upon the applications of each member thereof. This being done, each participant would be authorized to draw checks against his assigned credit without giving any note or other instrument.”

Surely, the nature of the member’s particular business must be considered, but it cannot be the sole criterion for determining credit limits. I would want each account limit to be based, at least, upon their historical volume of business, plus perhaps one or two additional factors, like their reputation and overall contribution to the welfare of the community. Also, he does not make clear that there must be some formal underlying agreement defining rights and responsibilities of membership in the clearing exchange.

Regarding c), the size of the unit, it is not enough to set its initial value equal to the dollar at the time of commencement, as Riegel suggests. That is only a logical starting point, considering that dollar valuation is what we are all accustomed to. Dollars is the value “language” we understand. But unless the system unit is defined in physical terms, it will simply depreciate along with the dollar as debasement of the dollar by the monetary authorities continues. I’ve written about that before in my books. In order to maintain its value over time, the credit unit (Riegel calls it a valun) must be defined in terms of something other than the dollar. My choice of definition has long been a “market basket” of basic commodities, because that will be the most stable measure over time and is impossible for any group of entities to manipulate.

Further, I think it is naive and inconsistent for Riegel to say that, “No investment is needed, the Exchange being able to equip itself on credit based upon its prospective income from check-clearance charges. The Exchange itself would have no money-issuing power but could draw only upon accrued income.”

I agree that the system should support itself through transaction fees, i.e., what he calls “check-clearance charges,” but if the Exchange itself has no money issuing power, how is it to cover its start-up costs? Either some up-front investment will be needed, or the exchange must be given a credit line. I favor the former as a safer alternative, but if the exchange is given a line of credit it must be strictly limited on the basis of its anticipated near-term revenues.

Regarding Private-Enterprise Money, Riegel is quite correct in saying, “Since the substance of the whole plan is mutual credit there is no occasion for anybody to pay interest to anybody and, of course, there is no place for the promissory note.”

By way of clarification, what he means is that mutual credit does not require that anyone borrow money into circulation. Thus, there is no need for the issuer of credit to sign a promissory note to a bank or anyone else, or to pay interest on negative account balances. There is however the need for each member of a mutual credit exchange to sign a general agreement that outlines the rights and responsibilities of their participation. I have provide a draft of such an agreement in my book, The End of Money and the Future of Civilization.

The key provision, as Riegel states, is that “no units will be issued except for value received.” That means no monetization of government debts or the inflation of credits on the basis of valueless or non-marketable assets. It is Riegel’s objective and mine to deprive government of the power to exceed its budget by debasing the currency, but Riegel’s insistence that “the government would have no issue power,” may be both impractical and overly restrictive, especially with regard to lower levels of government, like counties and municipalities. Nonetheless, government spending at all levels must be strictly limited to their legitimate tax revenues as approved by the people. Their participation in a mutual credit system must limit their credit issuing power to some small fraction of their annual anticipated tax revenues.

Finally, I wish to make a point about one of Riegel’s predictions. In the final section of the article titled, Money and Reconversion, Riegel says, “The dollar must be converted, sooner or later, from its prewar power to its natural current power which will grow progressively smaller and I believe will not be arrested short of complete fade-out.” Obviously, he was wrong about the “complete fade-out” of the dollar in the post World War II era. There was, indeed, a significant increase in prices at that time, but the tremendous increase in productive capacity that America achieved during the war enabled an unprecedented flood of consumer goods to reach the market rather quickly and absorb the very large savings that people had accumulated. While dollar debasement has continued up to the present day, and the purchasing power of the dollar has continued to decline, the monetary authorities have found many ways to forestall an acute crisis—until recently. Now, concerted action can no longer be deferred. The usury-debt-money system must be transcended, the credit commons must be reclaimed, and a decentralized and democratic network of mutual credit clearing circles is within our power to create. Riegel has provided us a torch to light our way.—t.h.g.

Public Banking Institute gains momentum; announces April conference

Since its founding little more than a year ago, the Public Banking Institute has become a significant force that is helping to turn banking and finance away from fraud and predation back toward their intended objectives of promoting general prosperity and the common good. According to the PBI website,

PBI’s vision is to establish a distributed network of state and local publicly-owned banks that create affordable credit, while providing a sustainable alternative to the current high-risk centralized private banking system.

The current PBI newsletter features important news items and impressive articles by Ellen Brown and yours truly. It also announces PBI’s inaugural conference on, Public Banking in America, to be held in April in Philadelphia. I”m proud to be among the group of distinguished speakers slated to give presentations at this event.

You won’t want to miss it.–t.h.g.