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This piece is timely, given the common belief that personal money doesn't leave a LETSystem even if the people do. Focusing so much on the fact of the `money staying' ignores the reality which is that money simply represents - the energy and expectations. Even if the money hasn't left, the energy has. If we don't treat the numbers which we call money as being bound to monetary rules, we stand to suffer the consequences. And the consequences are not inflation, as we might expect, but the stalling of trading.
The following is what happens!
Waiheke Exchange and Barter System (WEBS) has some 60 members who live in what they call paradise - Waiheke Island - a $20 ferry ride from Auckland, one of the largest exchanges in New Zealand. WEBS has a history of very active trading. Over the last year they joined G$ Connections, NZ's inter-trading facility. A Waiheke motel, which belongs to WEBS, naturally proved very popular with members of Auckland Green Dollar Exchange. Who wouldn't want a green dollar holiday in paradise?! In turn the motel employs WEBS cleaners, gardeners etc.
The WEBS economy is, in effect, being pumped up with green dollars from outside its local economy. The result is that many of the most active traders in WEBS have accounts which are substantially in the positive. These people are not all that keen to do more work and pump their accounts up even further. Hence they are knocking back work until they can spend their accounts downwards. But when they try to do that they run into members who are in exactly the same situation!
Waiheke's geographical problem is to our educational benefit. It is an island paradise with an expensive monopoly ferry ride connecting it to other sites where WEBS members could spend their green dollars. Who can blame them for not wanting to spend the cash (about $40 return?) to leave paradise to go to an Auckland green dollar market to spend a few green dollars?
Their island dilemma not only highlights the potential pitfalls of intertrading, where a single uncontrolled account can generate unbalanced debits or credits in the local LETS economy. Such uncontrolled debit or credit creation can also occur with single recalcitrant traders or, more worryingly, by management groups who use their management accounts to pay for unfunded administrative work (revealed as a downward trending large negative balance in the management account). Worse still there appears to be cases of LETS' managements who have no comprehension that their numbers (ie local or personal money) represents energy (ie available energy (negative balances) or expected energy (positive)).
Waiheke's problem is not their's alone. Like the majority of LETS enthusiasts in structurally similar situations they have jumped in with little knowledge of the consequences of engaging in intertrading (or large negative management accounts or a high bad debt ratio as the case may be). Most of us are (thankfully in many respects) not educated in economics or in the workings of money. We are learning as we walk the tightrope. Then again I suspect most government treasurers (or Chancellors of the Exchequer) have little or no practical knowledge of economics or money. In fact one insightful wit at the NZ LETS gathering suggested that all government treasurers should have had the experience of administrating a LETSystem as a prerequisite for the job. In the areas of learning whilst doing, we are in good company.
The lessons here are pointed. How you manage your LETSystem, and the account figures which form the core of trading, is crucial to the long-term sustainability of trading. If you ignore the irrevocable relationship between the numbers which you call zacs, green dollars or whatever, and the work energy and expectations which they represent, you stand to preside over a trading ghost rather than a lively and actively trading body of members. You will also be responsible for recklessly (perhaps `negligently' or `fraudulently' might be more accurate adverbs in some cases) claiming that your LETSystem gives value to the work done by those who expect to get something back for their labours.
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