* Every member’s time is of equal worth
1 hour of time is worth 35 operas.
Whether you are professional or amateur, spent 3 years at Uni or 20 years perfecting your skill – your time is as valuable as the next.
* Contribution is essential
Instead of “what’s in it for me?” it’s “what can I contribute?”
More about LETS
The following comments have been gathered from various sources including Michael Linton (the originator of LETS), economists and LETSystem managers in an attempt to explain the philosophies behind LETS.
WHY DOES A COMMUNITY NEED A LETSystem?
The problem with money. Every modern community depends on the flow of national currency through its internal economy. The money swirls in and it rushes out again.
As the amount of money circulating in the community falls, so does the level of trading. Business declines and people lose jobs, not because they have nothing to offer, but because there is not enough money to go around.
In the contest for a share of this limited supply, people work in ways that damage their own health, the environment and the wellbeing of the community.
People are prepared to do almost anything for money because they need it to take part in the “game”. This is the source of the problem, since money, by virtue of its very structure, is scarce and hard to come by.
There are three reasons for this:
* there is only so much in circulation;
* it can go virtually anywhere, and so it does;
* you can’t issue it yourself.
All over the world communities suffer from a shortage of money, simply because there is only so much of it, it’s gone elsewhere and they can’t print their own.
The Value of Money
“Money is the nothing we take for something before we can get anything.”
It helps to see how money can be used simply as a measure of value. People’s time, energy and skills have value, things have value, but to say that money in itself has value is to confuse the issue.
We can use inches to measure height and kilos to measure apples. But do inches have height? Or do the kilos themselves have weight? It’s the apples that have the weight, not the kilos.
We should think of money as merely a means of exchange, a set of tickets, a number in your bank account. It has no value in itself – you can’t eat it, wear it or build anything with it.
There need never be a shortage of the measure.
Yet we are often idle when all we lack is the means of exchange. There may be plenty of materials, equipment, skills, time, goods and needs to be met, but we cannot work or trade with each other because there are no tickets around, no scores on the sheet, no means of measuring relative value.
The problem suggests the solution
We can get around this problem by creating local money to finance local needs, to generate wealth and protect us from poverty. A local currency can’t leave the community it serves, so it ensures connections between people exchanging skills, goods and services. With a local currency, the community is less affected by fluctuations in the external money supply.
For a local currency to work people need to be able to use it alongside conventional money, and its design should resolve the three fundamental problems of that money. A local currency should ideally
* stay within the community it serves
* be issued by the people who use it
* exist in sufficient supply to meet the needs of that community.
LETSystems provide a means for people to trade using a new kind of currency – local currency.
Each new account starts at zero and thereafter may hold a positive or a negative balance. Those with negative balances have, quite simply, created the operas in the positive accounts. So this local currency is essentially a promise by some members of the community to give service to others.
Conventional money, while easy to spend, is hard to earn. As a result it is coercive by nature – people with money exercise power over people without it. Who pays the piper calls the tune.
In a local network, however, operas are easy to earn. Anyone can create local units and therefore everyone has local units to spend.
By the same token, nobody needs it, so things only happen when people want them to. People serve willingly, or not at all. Nobody can tell anyone else what to do.
The real wealth of a community lies in the skills of the people in it. Conventional money does not usually reflect this. Money moves to wherever people can get the best return. It often drains out of communities, leaving people and businesses short of cash.
A major community problem at present is unemployment and lack of ability to contribute to the community or work, the most distressing aspect of this is that the unemployed have many skills that other individuals and businesses could and do require, it is only a lack of money that prevents employment. Many good ideas are blocked because there is not enough money.
For most of us, cash is hard-won and even harder to hold onto. It is in limited supply. But the internal currency of a LETSystem is never in short supply, since the LETSystem money is issued as and when it is required.
The money issued within a LETSystem can only be spent within that system. It therefore stays within the trading community, going round and round, supporting further trading as it goes. LETSystems accounts are very cost-effective and more affordable than a bank or credit card account. No interest is charged on, or is payable to, accounts. This reduces costs and encourages people to keep spending, since there is no benefit in ‘hoarding’ positive balances.
Because LETSystem units cannot be spent outside the LETSystem, they do not have the same spending power as cash, but they are supplementary to cash, not alternative to it. As a result, those people who use LETSystems can reduce their cash outgoings, and make their cash go further.
- Member’s accounts start at zero; no money is deposited or issued. A person may immediately spend with any other account holder
- There is never any obligation to trade regardless of your account balance
- No tax is charged on negative balances or interest paid on positive balances
- LETSystems do not issue any local currency, each person creates their own
- A negative balance is NOT a debt. It represents your commitment to provide something of value to other LETSystem members in the future
- No application or collateral is required if you wish to have a negative balance
- There are no limits on your ability to spend or earn
- With local currency you can afford to purchase goods or services that you may not have been able to, if you had to pay all dollars
- All of the money remains in your community and is available for trading in the future
Now, trade is no longer limited by the availability of cash.