Book: Thomas Greco. The End of Money and the Future of Civilization. Chelsea Green, 2009

Description

From the publisher:

"The End of Money and the Future of Civilization considers the money problem within the broad historical and political context that has made the control of money and banking the primary mechanism for concentrating power and wealth and the nullification of democratic governance.

It provides the necessary understanding for entrepreneurs, activists, and civic leaders to implement approaches toward monetary liberation, approaches that empower communities to restore their environments and democratic institutions, and begin to build economies that are sustainable, equitable, and insulated from the financial crises that plague the dominant systems of money, banking and finance.

It provides specific design proposals and exchange-system architectures for local, regional, national, and global financial systems, and offers strategies for their implementation prescribing actions that grassroots organizations, businesses, and governments will need to take to achieve success."

By the author:

"The End of Money and the Future of Civilization is my fourth book in which I address what I refer to as “the money problem.” My intensive focus on the particular realm of money, banking and finance, which spans a period of more than three decades, has been motivated by an early realization of the crucial role it plays in determining the world order and the course of human events.

The simple facts are that money and banking have been politicized and structured to achieve the centralization of power and the concentration of wealth, to circumvent democratic processes, and to manipulate the populace. The substance of modern money is simply credit and we have allowed our credit to be privatized and monopolized. Money makes the material world go round, and whoever controls money/credit are in a position to control everything else—our economy, our politics, our technologies, our entertainment and news media, and our culture.

I strongly believe that if we are to achieve peace, justice, personal freedom, environmental regeneration, a sustainable economy, and a dignified life for all, it is essential that we reclaim “the credit commons” from the money monopoly. That is the key to empowerment of communities and the way toward government of the people, by the people and for the people.

My choice of title for this book is not at all based on wishful thinking. It expresses what is actually happening NOW. The recent emergence of commercial “barter” exchanges, mutual credit clearing associations, private voucher systems and community currencies represent the early stages of a process of power devolution that will inevitably lead to the end of POLITICAL moneyand the emergence of economic democracy. But the end of money does not refer ONLY to the end of political money. It refers also to the evolutionary process by which the essential nature of money has changed over the past two or three centuries—from commodity money, to symbolic (redeemable paper) money, to credit money. Of course, the reciprocal exchange process will continue, but in a different way from before, a way that does not require the use of conventional money or banks. The ultimate stage in the evolution of money and the exchange process is the offset of purchases against sales, i.e., direct credit clearing amongst buyers and sellers, and the widespread application of this process does indeed mean, in a very real sense, the end of money.

The word evolution may connote passivity, but in the realm of human-contrived systems, it involves the application of creativity, intelligence, and will. This particular evolution depends upon responsible ACTION on our part to assert our own credit power by organizing and promoting the rapid deployment of distributed (non-monopoly) credit clearing circles in ways that maintain local control within globally useful networks."

Interview

Interviewer is Michel Bauwens.

Thomas Greco:

1. There seems to be a fast-growing monetary reform and transformation but there are also a confusing number of different approaches being proposed. How can one find one's way in these various proposals and how do you specifically position yourself in this field.

TG: That is precisely the kind of question my book answers in detail. First of all, one needs to clearly distinguish between two basic approaches to solving what I broadly term “the money problem,” then secondly to consider the architecture of the various exchange systems and currencies that have been tried or proposed.

The dysfunctional nature of the dominant global system of money and banking has for a long time been apparent to anyone who has cared to look at it. Now, in light of the present financial meltdown, it has become painfully obvious to virtually everyone.

Monetary reformers have always been around. They have been warning that the system needs to be fixed, and some of them have even had some good ideas about how to fix it, but their voices have mostly been ignored or drowned out by the vested interests who have promoted an orthodox doctrine that works to their advantage. During periods of severe financial or economic distress, such as the present one, some reformers are able to get space in the media, so today we are hearing calls for a variety of political solutions—abolition of the Fed, direct issuance of money by the government (the “greenback” solution), a return to the gold standard, tighter regulation of banks and financial institutions, etc.

Some of these might have a short-run salutary effect, if they could be achieved. But in my view, statist and political approaches are at best futile and at worst inclined to take us further in the wrong direction toward more centralized control and still greater concentration of wealth. They are futile in that the political process in most countries of the world has long since been removed beyond our grasp. If the people are to regain political control, we will need to first assert our economic power, especially our “money power” by organizing ourselves to mediate the exchange process apart from the banking cartel and without the use of politicized national currencies. Putting the money monopoly under new management will not solve the fundamental dysfunctions that are inherent in it. The “greenback solution," for instance, does nothing to eliminate deficit spending and inflation, which are enabled by legal tender laws. So long as political currencies, however issued, are legally forced to circulate at face value, the abusive issuance of money, the debasement of national currencies, and the centralization of power will continue, and the empowerment of communities, relocalization, and the shift to a steady-state economy will be thwarted.

People need to disengage from the systems and structures that disempower communities and enable a small elite to use the present centralized control mechanisms to their own advantage and purpose. Primary among these is the global monetary and financial regime (the structures of money, banking and finance). I favor an approach that is based on voluntary, free market and community-based initiatives which enable people to transcend the money monopoly and the “war machine.” Socially responsible businesses and social entrepreneurs have a crucial role to play in organizing these parallel systems that can shift enough power to achieve greater measures of independence and self-determination and bring enormous benefits across the board—social, political, economic, environmental, and cultural.

With regard to the various alternative exchange systems and community currencies that have been tried, almost all have been designed to solve secondary problems, or have been lacking in scalability. I devote several entire chapters to exploring those deficiencies as well as highlighting the specific characteristics necessary in a truly empowering exchange system. The primary objective of an exchange alternative should be to utilize the credit of local producers to mediate the exchange of goods and services locally. The bottom line is that non-bank exchange system credits and community currencies must be issued in ways that monetize the value inherent in goods and services being exchanged. This means they must be “spent” into circulation, not “sold” into circulation.

2. Your book's title suggests the end of money, yet you also advocate a 'credit commons', which most people would associate with lending money to each other. So, could you specify: do you advocate the abolition of money, or not, and if a credit commons is not about lending money, what is it?

TG: My choice of title for this book is not at all based on wishful thinking. It expresses what is actually happening NOW. The recent emergence of commercial “barter” exchanges, mutual credit clearing associations, private voucher systems and community currencies represent the early stages of a process of power devolution that will inevitably lead to the end of POLITICAL money. But the end of money does not refer ONLY to the end of political money. It refers also to the evolutionary process by which the essential nature of money has changed over the past two or three centuries—from commodity money, to symbolic (redeemable paper) money, to credit money. Of course, the reciprocal exchange process will continue, but in a different way from before, a way that does not require the use of conventional money or banks. The ultimate stage in the evolution of money and the exchange process is the offset of purchases against sales, i.e., direct credit clearing amongst buyers and sellers, and the widespread application of this process does indeed mean, in a very real sense, the end of money.

Reciprocal exchange and finance are necessary aspects of any developed economy. As I explained above, money is nothing but credit. It is our common or collective credit that supports any generally used payment medium, including political money. We have allowed the credit commons to be privatized. What I advocate is the reclamation of the credit commons from the money and banking monopoly. We have seen how that can be, and is being done within cashless trading systems like LETS and the commercial “barter” exchanges that provide credit clearing services. Of the existing examples, the Swiss WIR cooperative trading circle (now called the WIR Bank) has been the most impressive for its longstanding success. These systems involve the allocation of credit, but they do not require the use of money as we have known it. However, the collective credit balances in the accounts of such a system can be thought of as a kind of internal currency. But it is one that is not “loaned” into existence, but comes into being in the course of trade among the members. If properly organized, it provides credit on a more honest, transparent, and democratic basis.

3. How do we get from the current financial system, via all the current experiments with local money, to a fundamentally different system .Do you have any concrete proposals for a transition?

Yes, the book contains multiple proposals and prescriptions addressed to various entities including individuals, businesses, social entrepreneurs, and various levels of government. These cover both system designs and implementation strategies. Perhaps the most promising and easily attainable is the bioregional development plan that I outline in Chapter Sixteen.

This is a multi-stage plan involving diverse segments of the community. It is designed to accomplish the following:

1. Institute measures that promote import substitution

2. Provide an alternative payment medium, independent of any political currency and banking establishment

3. Issue a supplemental regional currency

4. Develop basic support structures that strengthen the local economy and enhance the community’s quality of life

5. Develop an independent value standard and unit of account

The keystone of this plan is the organization of a mutual credit clearing association in the second stage.

I also describe the emergent web based exchange systems and slight modifications that are required to make them fully functional as non-governmental exchange and finance alternatives.

4. How do you reply to the traditional critique of the left, which says that money is just an external phenomena of our economic system of capitalism, and that changing just the money won't effect any fundamental change

If that is, indeed the “traditional critique” then I must conclude that the “left” is both lacking in imagination and does not understand the real basis of power. What is capitalism, and what is the basis of power within a capitalist system? As the saying goes, “the devil is in the details.” Why get bogged down in ideological debates when there is an obvious “elephant in the living room?”

To cut through all of the obfuscatory rhetoric, the main problems with the political money and banking system (and the relevant principles that need to be applied) are as follows:

1. The issuance of money on improper bases, mainly government debt, real estate, and assets of questionable value.

Principle: Money should be issued on the basis of goods and services already in the market or shortly to arrive there. All other needs (capital formation and consumer spending) should be financed out of savings.

2. Legal tender laws that force acceptance at par of debased political currencies. Principle: Legal tender laws should be abolished. Only the issuer of a currency should be required to accept it at par. In the absence of legal tender, debased currencies will either be refused or pass at a discount in the market.

3. The charging of interest on credit money that is created as “loans.”

Principle: Money should be created interest free as a generalization of trade credit that facilitates the exchange of goods and services.

If the system cannot be reformed, then new systems need to be created that apply the correct principles.

5. Your book seems very inspired by U.S. history and developments, and also seems to share a strong libertarian critique of the state, while audiences in Europe would be a lot more sympathetic if not nostalgic for the welfare state and its social protections. How international and global do you think your prescriptions are? What kind of reactions have you gotten in other continents that the U .S., say Europe and Asia?

TG: The prescriptions that I offer in my book are both comprehensive and global. The story of power in modern history has been pretty much the same throughout the world. The central banking, political money system has been established in virtually every country and in fact originated in Europe. What most people have failed to recognize is that, regardless of the nominal form of their government, their political power has been neutralized and exhausted by the privatization and misallocation of credit money.

Up to now, Europeans have managed better than Americans to preserve their hard won state benefits, but there too, these benefits are steadily being eroded and that trend will surely continue. My argument is not with government-sponsored social programs, per se, and certainly not with “social protections.” There is a legitimate role for governments but people seem confused about what that role should be or at what level the various government functions should be carried out. But it would be a digression for me to speak about general political philosophy. My objections are to the centralized control of credit money, whether that be by the state directly or by a nominally independent central bank. It is undemocratic, corrupting, and fraudulent. It misallocates credit, making it both scarce and expensive for the productive private sector while enabling central governments to circumvent, by deficit spending, the natural limits imposed by its above-board revenue streams.

All government programs, including social programs, need to be funded by legitimate state revenues, not by the underhanded means of monetary debasement. Centralized control of credit money and the imposition of legal tender laws enables the hidden tax called inflation.

Further, that system creates a small privileged class that is able to dominate economics, politics, and virtually everything else in the material realm. If we desire to have a peaceful world that can provide a dignified life for all, power must devolve to the people and their communities. That cannot happen so long as we allow the money power to be privatized and undemocratically allocated. Fortunately, we the people have in our hands the means of our own liberation. It is the power to allocate our credit directly without the use of banks or political forms of money. How to effectively assert that power is the main theme of my book." (via email, May 2009)

Monetary Stringency, Past and Present • Increasing Instability • The Magic of Compound Interest • What’s Wrong with the Global System of Money and Banking? • How Debt-Money is Dysfunctional • Three Aspects of Money Dysfunction • Moral Arguments, Laws, and Practical Solutions • Keys to Transcendence • Exchange and Finance—Two Distinct Credit Functions

7 The Nature and Cause of Inflation

What Is Inflation? • Who Has the Power to Inflate? • Improper Basis of Issue by Banks Is Inflationary • Government Deficits and Inflation • The German Hyperinflation—A Classic Case • How the Inflation Was Ended • Constraints Upon Debasement of the Money • Responding to Inflation

8 The Separation of Money and State

The Separation of Church and State—A Comparison • The Disestablishment of Monetary “Religion” • Two Meanings of “Dollar” • Delinking from the Dollar as a Payment Medium • Delinking from the Dollar as a Measure of Value • Stable Value Reckoning • Toward Freedom of Exchange

9 The Evolution of Money — From Commodity Money to Credit Money

What We Don’t Know Is Hurting Us • Kinds of Economic Interaction • “The Ladder of Economic Civilization” • The First Evolutionary Step—Barter to Commodity Money • Commodity Money • Symbolic Money • The Second Evolutionary Step—From Commodity Money to Credit Money • Two Distinct Kinds of Money—Fractional Reserve Banking • Redeemability Abandoned • Checks and Checkable Deposits Displace the Use of Banknotes • Gold Versus Credit Money—A Comparison • How Credit Money Malfunctions

10 The Third Evolutionary Stage — The Emergence of Credit Clearing

Banks and the Credit Clearing Process • A Confusion of Language • Particle or Wave? Thing or Relationship? • Clearing Through Banks Versus Mutual Credit Clearing • Direct Credit Clearing Makes Conventional Money and Banking Obsolete

11 Solving the Money Problem

The Basis of Monetary Dysfunction • Reform or Transcendence? • Emerging Exchange Alternatives • Separating the Functions of Money • Back to Commodity Money? • The Unit of Account Versus the Unit of Currency • The Measurement of Value • Proper Relationship Between Commodities (Gold/Silver) and Credit • Confusion Caused by Legal Tender Laws

12 Credit Clearing, the “UnMoney”

What Is Credit Clearing? • A Simple Example of Clearing among Banks • Settlement of Accounts • Mutual Credit Clearing Systems as Clearing Houses • Direct Credit Clearing — A Simple Illustration Using Four Accounts and Ten Transactions • Balance Limits and Settlement • Providing Surety of Contract • An Insurance Fund

13 The State of the Alternative Exchange Movement

Two Currents of Alternative Exchange • The Tucson Experience • Why Exchange Alternatives Fail to Thrive • Failure of Reciprocity • Inadequate Scale and Scope of Operation

14 How Complementary Currencies Succeed or Fail

Architecture of the Currency Itself • Principle 1: Who Is Qualified to Issue Currency? • Principle 2: On What Basis Should Currency Be Issued? • Principle 3: How Much Currency May Be Issued By Each Issuer? • Implementation Strategies • The Situational Context • WIR • Social Money in Argentina

15 Commercial Trade Exchanges—Their Present Limitations and Potential Future

Limiting Factors • Limited Scale and Scope • The Value Proposition • Operations and Agreements • Proposed Remedies • The Real Deal—Credit Clearing Services • Tapping the Vast Potential Market • What About Taxes? • An Eventual Cashless Trading Network

16 A Regional Economic Development Plan Based on Credit Clearing

Approaches to Community Economic Development • Stage I: Mapping the Territory and Import Substitution • Stage II: Mutual Credit Clearing Provides an Alternative Means of Payment • Sage III: The Credit of “Trusted Issuers” Provides an Alternative Currency for Regional Circulation • Stage IV: Support Structures for Localization—Saving, Investment, Finance, and Education • Stage V and Beyond: Transition to an Objective Measure of Value and Accounting Unit

17 The Next Big Thing in Business: A Complete Web-Based Trading Platform

The Convenience of Cards • Improving the Exchange Process—Challenge and Opportunity • Significant Trends and “Disruptive Technologies” • Strengths and Vulnerabilities of Political Money and Conventional Banking • From Disruptive to Sustaining—Moving Upmarket • The Emergence of a Complete Web-Based Trading Platform • Essential Components of the Web-Based Trading Platform • Completing the Web-Based Trading Platform

18 Organizational Forms and Structures for Local Self-Determination and Complementary Exchange

Toward Economic Independence • The “Banjar” and the Balinese Governance Structure • The Mondragon Cooperatives • Ways of Organizing Credit Clearing Exchanges • Corporations • Limited Liability Companies and Limited Liability Partnerships • Mutual Companies • Scale of Organization

19 The Role of Governments in Establishing Economic and Financial Stability

What National Governments Should Do • Objectives • Rationale • Legislative Proposals in Brief • The Role of State, Provincial, and Local Governments • An Early Example of a Local Currency

20 Exchange, Finance, and the Store of Value

The Store of Value • Saving and Investment • Liberating Saving and Investment • Debt Claims Versus Equity Claims • A Shared Equity Mortgage • Savings and Investment within Complementary Exchange Systems

Excerpts

The State of the Alternative Exchange Movement

Excerpt from End of Money, Chapter 13,

Thomas Greco:

Exchange alternatives are not entirely new. Indeed, in times past, there were many different exchange media that circulated simultaneously—and for a time, each bank was responsible for the issuance and redemption of their own banknotes. There are also numerous historical precedents for nonbank curren¬cies—such as the 1930s Great Depression–era scrip issues, and the mutual credit clearing system that was organized in Switzerland as the WIR Economic Circle Cooperative (since renamed WIR Bank). There are entire catalogs that list the many kinds of privately issued scrip, vouchers, notes, and coupons that have circulated as payment media. Some of these have been described in my earlier books.140

The current wave of innovation and implementation of exchange alter¬natives dates from around the early 1970s with the advent of commercial “barter” exchanges (properly called “trade exchanges”). This was followed a few years later by the grassroots emergence of mutual credit clearing asso¬ciations (LETS), Time Dollars, and various local currencies. From that time onward, we have seen a rapid proliferation, all over the world, of these kinds of exchange alternatives—they now number in the thousands. There has been growing global recognition and considerable journalistic coverage of these alternatives—with articles appearing in mainstream publications like the New York Times, the Wall Street Journal, Time.com, The Guardian (UK), and more than a little coverage on TV and radio. The commercial (business-to-business) side of the movement also continues to grow, developing better standards of practice and becoming ever more sophisticated.

In addition, a new and growing wave of activist energy has been directed toward making money once again a political issue, with the objective of changing the dominant national monetary and financial systems. In this, there has been particular emphasis on the matters of usury and interest, metallic money, and the gold standard. Ron Paul’s candidacy during the 2008 presi¬dential campaign has been particularly significant in raising this issue in the United States, while in the United Kingdom similar efforts by various groups and members of Parliament to raise awareness have been ongoing for many years. While prior efforts to reform the dominant monetary and banking system through the political process have been wholly unsuccessful, the issues they raise have relevance and need to be considered in the design of private, free-market exchange options.

Two Currents of Alternative Exchange

There are two distinct “currents” in the present movement toward alternative exchange and noncash payment mechanisms.

They are:

1. the grassroots, noncommercial, community-oriented currencies and mutual credit systems; and, 2. the commercial, business-to-business trade exchanges.

Encouraging as these developments might be, none of the grassroots alter¬natives, with a couple of notable exceptions, has managed to become a signifi¬cant economic factor; the commercial segment of the movement, while having achieved a measure of success, has barely begun to realize its enormous market potential. Both have been limited by some serious design deficiencies and vari¬ous other factors that will be discussed in the following chapters. Many local currencies and LETS have been launched with a flourish of enthusiasm only to fall back into oblivion. The typical pattern is initial enthusiasm by the organiz¬ing group and rapid growth in participation, followed by volunteer burnout and a slow, steady decline in both trading volume and number of participants. A system may be formally declared defunct, but more often it simply limps along in the background with little trading and a much diminished participant base, then eventually fades away. Even well-designed systems can experience the same pattern of decline, as I can attest from personal experience.

The Tucson Experience

By the time I arrived in Tucson, Arizona, at the end of 1989, a mutual credit clearing system—called LETSonora—had already been launched. Working in conjunction with a small group of other community-minded people, LETSonora was started by David Koressel, a social entrepreneur who also happened to be a professional accountant. Having read the article about LETS systems that had appeared in the Whole Earth Review141 (which I had coau¬thored with Michael Linton), they were inspired to give it a try. I soon joined the core team and helped to run the system until it finally ground to a halt around 1993. During that time, despite considerable inputs of volunteer labor, the membership never grew beyond about forty members and the monthly trading volume never exceeded more than a few hundred dollars.

A few years later, I began a series of discussions with some local activists with the intention of introducing them to the possibilities of using in-kind donations from local merchants to back the issuance of vouchers that might be used to support local nonprofit groups, vouchers that could also circu¬late as a supplemental local currency.142 This was to be a type of arrangement that Michael Linton and Ernie Yacub refer to as “community way.” This did not interest the people I was talking to, but they were interested in starting a mutual credit clearing system. I cautioned them about the difficulties and risks, describing to them my earlier experience with LETSonora, but they were enthusiastic and eager to try it—arguing that it wouldn’t take much work to set up a ledger of accounts and that conditions might now be right for it to achieve critical mass. I agreed to act as an advisor, but made it clear that I would not be involved in the administration. Thus was launched Tucson Traders.

It was easy to create a set of accounts to keep track of trades among the twenty or so initial members. It started with a notebook and a pencil. The notebook contained a page for each account holder, on which their trades could be recorded and which would show their running account balance.

It was decided that the accounting unit would be called a Tucson Token (TT), with each token having a value equivalent to one U.S. dollar. It was also decided that, in the absence of any data upon which to decide initial lines of credit, each and every account would be allowed up to 200 tokens, i.e., an account balance could be negative to a limit of minus 200.

As the word got out among the various activist and nonprofit networks, the membership grew quickly—eventually reaching a peak of more than two hundred participants, which included a handful of progressive businesses. Trading fairs and potluck dinners were held regularly, and for a while they attracted a sizeable crowd of enthusiastic traders. A directory and a newsletter were also produced. Along with the growth in membership, the workload of recording the transactions also grew. The notebook ledger was shortly replaced with a computerized set of accounts. Still, the work of recording transactions became too much for the volunteer administrators. It was then decided that the administrative burden could be greatly reduced by eliminating the need to record each and every transaction. This would be accomplished by allowing each member to draw out paper currency notes against their line of credit. Thus someone who already had a debit (negative) balance of, say, 75 tokens would be allowed to draw paper notes to the extent of 125 tokens against her account. Members of Tucson Traders could then pay each other by passing the paper TT notes from hand to hand, in just the same way as we do with regular cash transactions. A few local artists volunteered to design the notes, and a local printer volunteered to print up a supply. There was a big party at which the notes were distributed, and at that point the tokens that originated as ledger credits began their life as a circulating paper currency. There was a formal agreement that, if anyone wished to leave the system, they would first settle any outstanding negative balance—either in tokens or in cash.

As the novelty wore off, people lost interest in potlucks and trading fairs, and with the membership scattered all over town, the inconvenience factor began to take its toll. Despite the reduced workload that accompanied the shift to circulating paper notes, the volunteer core grew tired and less enthusias¬tic. Administrative personnel changed several times, but the downward spiral continued. By the fourth or fifth year, trading using Tucson Tokens had virtu¬ally stopped.

This story typifies the experience of grassroots complementary curren¬cies and mutual credit clearing systems as they have thus far developed. New ones continue to pop up and a few vintage systems are still functioning. One high profile case that has attracted an astonishing amount of worldwide media attention was the 2007 launch of the Berkshares currency in western Massachusetts. That is not a credit clearing system, but a local currency that (for the moment at least) is sold for cash.

It is important to recognize that, even though Tucson Traders did not achieve sustainability as a mutual credit clearing system, there were significant positive outcomes.

In the words of permaculture design consultant Dan Dorsey, who had been a core group member,

- we who worked together on the project still refer to Tucson Traders fondly—as a wonderful and useful experiment and model that will be valuable when economic times really get tough. We also refer to the great connections and friends we made, which went beyond just the money exchange and trading. I still have friends today that I met through TT, who I might not have met otherwise. . . . I use Tucson Traders as an excellent local case history of using Permaculture design principles to put together what we call in Permaculture an “invisible structure”—those structures that have a big impact on our lives but aren’t necessarily visible like sun angles and water cisterns.

'Why Exchange Alternatives Fail to Thrive

There is much to be learned from these experiences if we are willing to accept their hard lessons. Here we will consider the grassroots initiatives. The limi¬tations and possible improvements to commercial trade exchanges will be addressed in Chapter 15.

The pertinent questions are:

• What are the main factors responsible for this pattern of decline? • Why have complementary currencies and credit clearing options remained a fringe phenomenon and not been widely adopted? • How can mutual credit and community currency systems be made to sustain themselves and to thrive?

There are two fundamental reasons why exchange alternatives fail to thrive.

These are

1. failure of reciprocity and 2. inadequate scale and scope of operation.

Failure of Reciprocity

Any payment system exists for the purpose of facilitating reciprocal exchange, which can be roughly described as “getting as much as you give, and giving as much as you get.” Whether it be a currency or a credit clearing system, anything that interferes with its ability to fulfill reciprocity (or creates doubt regarding its ability to assure reciprocity) will work against its adoption and continued patronage. Failures of reciprocity can stem either from system design flaws or from management issues.

System design flaws include:

• Improper basis of issue of credits or currency • Inadequate account limits, i.e., overissuance of credits or currency in relation to an issuer’s productivity and the demand for their goods or services • Lack of a clear agreement between issuers and users of credits or currency

Management issues include:

• Lack of accountability and transparency • Inadequate management procedures and controls • Overreliance upon volunteer administrators • Failure to respond to internal or external threats

Inadequate Scale and Scope of Operation

There are several aspects to the problem of scale and scope, which can be summarized as follows:

• Failure to achieve critical size of the participant base • Too narrow an assortment of goods and services being offered • Failure to attract participants from all levels of the supply chain (production/distribution circuit)144 • Failure to gain wide acceptance among the mainstream business community"

End of Money and the Future of Civilization

Contents

Description

Interview

Contents

Excerpts

The State of the Alternative Exchange Movement

Navigation menu