Community issuance of money

I’ve been reading The Role of Money by Frederick Soddy, after Michael Linton inspired me by forwarding me this great Soddy quote:

Money is the nothing we take for something before we can get anything.

I hugely recommend this book and will try to condense some of his thoughts on this blog. Here’s a first thought this book inspired me:

Money must be issued as receipt for a voluntary gift of goods/services to the community, not as privately-printed counterfeit community gift receipts in exchange for forced, future larger real gifts to the private issuer. Following the latter model puts you on a course where the community’s debt has to always increase – sometimes to bail out the private money issuers – and inevitably concentrate in fewer hands, while forcing the endless privatization of formerly abundantly available resources.

The key challenge in such a model of community-based issuance of money is determining:

  1. what constitute a “gift of goods/services to the community”, and
  2. how to measure it.

2. is not big challenge. Even though gifts are made to the community, the largest part of the economy would still be free exchange based, providing a market-based valuation of gifts made.

1. is the key challenge. Certainly a gift of one’s time to clean up a nearby public park serves better the community next to this park, than the community miles away. This is where democracy – the online real-time one – and multiple currencies can really help: identifying unmet needs that the community cares most about, and validating them as worthy of community receipts when voluntarily providing gifts in the form of goods/services. Furthermore, separation of commons can be achieved by having an issuer i.e. a distinct currency in each community.

This can work at any level, neighborhood, city, county, state, federal, world, essentially allowing to pay over time the interest-bearing public debt with non-interest bearing gift receipts. Governance can be truly decentralized.

There should be currencies for those who don’t want to use the community-issued currency as medium of exchange, for instance asset-based, like e-gold.

Fractional reserve banking can be made illegal.

Many taxes could be ditched as well in generous communities. Some communities may require to have taxes paid, but would require them to be paid in their own currency, so as to ensure that not too much is issued and it gets recycled to fund new projects. Paying taxes would be done by either giving your time/goods in exchange of issued currency, or paying the taxes with local currency collected via exchanges with other local currency holders.

Banks can focus on narrow banking i.e. accounting, identity, security.

P2P lending in any currency, community or asset-based, can thrive. No problem in lending money as long as lending more than you have is illegal.

As a practical example, imagine a school in need of a bus+driver to go on a field trip. The community would vote this project as worthy of a receipt. A bus company would accept to provide the service in exchange for these receipts. They could use the receipts at accepting merchants. Merchants would be interested to collect the receipts since that’s what they could pay their local taxes with.