Can anyone throw some light on this?

[glyn]

In my e-mails this morning:


To quote Richard Douthwaite from "Short Circuit":

"If people living in an area cannot trade among themselves without using
money issued by outsiders, their local economy will always be at the
mercy of events elsewhere. The first step for any community aiming to
become more self-reliant is therefore to establish its own currency
system."

As I have never heard this idea before I would appreciate some input from the membership. :)

[Ray]

The man is an anarchist - subverting the State!

He should talk about the barter trade as the solution to all evils!

[Parihaka]

In my e-mails this morning:


To quote Richard Douthwaite from "Short Circuit":

"If people living in an area cannot trade among themselves without using
money issued by outsiders, their local economy will always be at the
mercy of events elsewhere. The first step for any community aiming to
become more self-reliant is therefore to establish its own currency
system."

As I have never heard this idea before I would appreciate some input from the membership. :)

All money is based on trust. It's why Newton became master of the Mint, so as to establish a trust in the currency of England: namely that an English coin was no more and no less value than its weight in gold.
Gold was historically chosen as the basis as a medium of exchange because of its scarcity, as something like sea-shells have obvious drawbacks.
Thus goods could be exchanged at a distance because a person in one place could deposit gold or currency in a bank, and in another place far removed reclaim the weight in gold (minus expenses) and could exchange goods for gold etc etc etc.
But gold is simply an agreed method of exchange, oil is another, minerals are another, it simply comes down to trust between the parties, no matter the distance between them.
For a local economy to use a method of exchange other than the 'international' one, it simply requires the agreement and trust of the parties concerned. Many exchange methods do work, and are often used and flourish during times of depression. The most obvious are trade and exchange methods, whereby you swap assets with another. Often you can trade those assets without ever actually taking possession of them, a car for a tractor for twenty cows etc etc. What is required almost universally is a central person or persons to keep record of the exchanges and to factor in the worth of each asset.
So a farmer can exchange his livestock for services etc, using the central exchange as record keeper, and others can provide services in return for some of the farmers produce. You are thus insulated from distant calamities, except when you need something from a distance, where those people don't recognise your currency or medium of exchange.
Governments detest such systems and wherever possible attempt to destroy them through legislation as they are generally unable to tax them.

[Ray]

Pari,

Thanks.

It is so well put.

It is after a long time, I read something on economics that I understood.

Great!

[glyn]

I can see why governments are not keen on the idea (as if they don't tax us more than enough!), but it could be an interesting method in some locations provided it does not require a bureaucracy to administer it. Worthy of local consideration at least IMHO.

[Parihaka]

I can see why governments are not keen on the idea (as if they don't tax us more than enough!), but it could be an interesting method in some locations provided it does not require a bureaucracy to administer it. Worthy of local consideration at least IMHO.

It almost always requires a banker, someone who keeps the records and notes of exchange, which is what a banknote is. It also requires regular meetings of the cartel to administer it and to check on the accuracy and honesty of the banker or record keeper.
In Cornwall your everyday transactions for anything produced within the area such as food could be covered by notes issued by the Stannary (sic?) and any surplus could be used to exchange for goods with other like minded areas. Not that I would recommend such transactions as to do so would be to contravene several of Englands laws.;)

[Parihaka]

Pari,

Thanks.

It is so well put.

It is after a long time, I read something on economics that I understood.

Great!

It's a pleasure Ray. As a recommended read, I would suggest 'The System of the World' by Neal Stephenson, which covers the setting up of the modern worlds mediums of exchange, all couched within a ripping good yarn.

[Parihaka]

As an extra note, internet trade sites work this way. People can simply purchase goods on such sites, but also in places like New Zealand we also use it as a trading facility for goods without exchanging money. The concept of 'green dollars' works in just such a way.

[glyn]

[QUOTE=Parihaka;480955]
Not that I would recommend such transactions as to do so would be to contravene several of Englands laws.;)

Indeed, and you know how much that would upset the Celts.

[aktarian]

In my e-mails this morning:


To quote Richard Douthwaite from "Short Circuit":

"If people living in an area cannot trade among themselves without using
money issued by outsiders, their local economy will always be at the
mercy of events elsewhere. The first step for any community aiming to
become more self-reliant is therefore to establish its own currency
system."

As I have never heard this idea before I would appreciate some input from the membership. :)

that is true. all countries wishing to break from other countries establish currency as one of their first steps. This gives them control over their finances and prevent other side (former mother country) from artificially crashing their economy.