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Old July 18th, 2012 #1
Alex Linder
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Default Alternative Monies: local currencies, scrips, metals

[this is a thread for showing what people are doing with money or scrip or metal or whatever outside the central bank and its currency. the point is to demonstrate that governments should get out of money and leave that to the market]

Stepping out of the system
Clark Boyd

In lean economic times, alternative financial systems are sprouting up around the world. And now they come with a digital twist.

"The Greek state is completely absent," says Katarina with a deep chuckle. We are standing across from each other inside a sweltering building on the outskirts of the Greek city of Volos, about 200 miles north of Athens on the Mediterranean. Both Katarina and her daughter, who stands beside her, have been unemployed for months. They are at this makeshift market to sell their array of homemade jams, pickled vegetables and liqueurs, which are spread out on the table between us.

But this isn't a typical market. In fact, there isn't a euro in sight. Katarina is part of a network of more than 500 people in Volos who are taking financial matters into their own hands as part of an alternative local currency, known here by its Greek acronym TEM. "In the network, people can trade their goods and services," says Christos Papaioannou, one of the network's founders. "If I do a service for you, then you owe me a favour. And I can use that favour to get some service from someone else. So, we don't have to exchange directly, I can get it from some third person."

To be clear, there is no actual currency or scrip exchanged. Credits are tracked via an open-source community banking software system called Cyclos. Katarina, for example, banks her credits from selling jam to buy staple foods such as eggs and fresh vegetables that are offered through the network.

The barter idea is catching on in a number of cities in Greece during these lean economic times, returning communities to a centuries old system but with a digital twist. And it's not just in Greece. The global economic downturn has created renewed interest worldwide in alternative economic models.

"I think that people are becoming increasingly aware, over the past few years, that financial systems aren't sustainable. And that boom and bust is always going to be with us, despite politicians continually telling us they are going to work to remove [them]," says Ken Banks, who recently launched a project called Means of Exchange. The idea behind the project, says Banks, is to create a "toolbox" of web-based and mobile apps that will make it easier for people to engage in things like bartering, swapping and alternative currencies.

ďCash-mobĒ

Banks certainly knows a thing or two about creating technology for development and social change. Back in 2005, he built FrontlineSMS, a mobile and web-based platform designed to allow communities to harness the power of text messaging to meet local needs. Today it is used for everything from election monitoring, dispensing legal advice to powering local radio talk shows.

While Banks has been thrilled with FrontlineSMS's success, the project completely consumed him. He says he kept a list of other ideas for potential projects but never had the time to follow them through. Then, earlier this year, Banks decided to step out of the day-to-day leadership role at FrontlineSMS. Spurred on by the very visible signs of the global economic crisis, the tackled the first item on his list: Means of Exchange.

ďI was just seeing people having their lives trashed. I was reading about people lives being destroyed, people losing their homes, and really feeling it wasn't their fault in most cases," says Banks. "I started asking, 'how do you give people a little bit more control, buffer them slightly from the booms and busts of the system, and give people who care and want to do something a bit different the tools to enable them to do that?'"

Banks has already done his homework. For a couple of years, he has had two researchers looking into alternative currencies and barter systems around the world and feeding him ideas. Mostly, Banks says, he found that such projects failed to thrive because they could never reach a critical mass of users.

"A lot of the projects out there are not fun or engaging," says Banks. "People are missing a trick here. Where's the tech angle? Where's the social media angle? There needs to be rethink about how we build tools to help people succeed in these kinds of projects."

And so, in the interest of what Banks calls "fishing where the fish are," he says that Means of Exchange will focus heavily on mobile apps that harness the sharing power of Facebook and Twitter. He says one idea that has struck his fancy is something called "cash-mobbing," where people decide to descend en masse on, say, a candy store and each spend $5 or $10 each. It is very different from setting up a barter system, but still taps into the idea of communities helping each other out.

Imagine, Banks says, some kind of application that could allow individuals to easily set up a "cash-mob" like this with their friends. "People will do it because other people want to give it a go, feel like you're part of a community and people doing something cool and fun," says Banks. "And the fact that the shop keeper can stay in business for six more months is almost incidental to that. Itís a subliminal way of doing it."

Banks says he eventually would like to create a host of different applications that will allow individuals and communities to "pick and mix" depending on their specific needs. Not everyone will want to create an alternative currency, he notes, but maybe they would like some kind of credit system based on time or job-swapping. And some, he says, might one day want to expand the network farther afield.

"Maybe you could connect local communities up with each other, so that my village could then trade and barter and use whatever systems I've created with the next village, so I can actually use my units with the village down the road. You could make a virtual local trading area, by connecting up communities around each other."

But that's in the future. For now, Banks says, he's concentrating on making the Means of Exchange website a hub for anyone interested in these kinds of economic alternatives and developing the projectís first app, which will be available first on the site, but then also on mobile platforms such as iPhone and Android.

Banks says he is not in any rush. Like FrontlineSMS, he says, he believes that if he builds it ďthey will come." The trick, he says, is to have fun and engaging tools in place when people come looking for them.

"If I can get this right, I think it could be potentially much bigger than FrontlineSMS, because I just think the need is so great," says Banks.

"People are suffering through no fault of their own in many cases. They want more control over their lives, and we want to create self-help tools for those who want to rebuild something that was lost a long time ago in their communities."

http://www.bbc.com/future/story/2012...-of-the-system
 
Old July 18th, 2012 #2
Alex Linder
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[Gary North's commentary on the above]

Alternative Digital Currencies Based on Barter

by Gary North

The free market responds to demand.

When a government breaks down, free markets respond. This is happening in Greece.

In a town 200 miles north of Athens, a network of bartering townspeople has sprung up. No government agency is involved.

No taxes will be paid.

An unemployed mother and her daughter are selling jams, vegetables, and liqueurs.

They use a digital currency called TEM.

“In the network, people can trade their goods and services,” says Christos Papaioannou, one of the network’s founders. “If I do a service for you, then you owe me a favour. And I can use that favour to get some service from someone else. So, we don’t have to exchange directly, I can get it from some third person.”

To be clear, there is no actual currency or scrip exchanged. Credits are tracked via an open-source community banking software system called Cyclos. Katarina, for example, banks her credits from selling jam to buy staple foods such as eggs and fresh vegetables that are offered through the network.

This is not the only such system in Greece. They are everywhere.

“I think that people are becoming increasingly aware, over the past few years, that financial systems aren’t sustainable. And that boom and bust is always going to be with us, despite politicians continually telling us they are going to work to remove [them],” says Ken Banks, who recently launched a project called Means of Exchange. The idea behind the project, says Banks, is to create a “toolbox” of web-based and mobile apps that will make it easier for people to engage in things like bartering, swapping and alternative currencies.

Mr. Banks has competitors.

This is going to spread. It will appear whenever governments and banks break down. When this happens, production will scape the tax collector’s nets. The tax collector cannot track everything. He cannot brig charges against everyone. The more people who get away with unreported income, the more difficult it will be for governments to avoid contraction.

The future will have smaller, weaker governments.
 
Old July 18th, 2012 #3
Alex Linder
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Why trust the market?

For this reason: look around: everyone thinks he and he alone is right above everything. But how often is he? Not often.

It's not different with people running the government.

But when they are wrong, they still have power to FORCE people to go along with their wacky views.

When you leave questions to the market, it leaves people free to try whatever they think is right, and then in remarkably short order, what works and what doesn't work is sorted out. All with no one needing to run anything, or make any overall decisions, just by the undeniable nature of the process: it spits out a few ways or products that are markedly better than the rest. So that even the ego-driven losers, the guys with the inferior products or services, have to acknowledge they are wrong. But in politics, the fact you're wrong never matters - only keeping power matters.

And that is why the market is better than politics for settling very nearly every human question.
 
Old July 18th, 2012 #4
KraftAkt
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Not exactly the same topic, but still somewhat relevant.

Who Needs the Euro When You Can Pay With Deutsche Marks?

Germans have yet to give up on the euro. But as Europe's debt crisis rages on, many are indulging their nostalgia for the abandoned mark by shopping with it again-and retailers are happily going along.

http://online.wsj.com/article/SB1000...784840596.html
 
Old August 3rd, 2012 #5
Alex Linder
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We Must Have Parallel Currencies

by Ron Paul

Before the United States House of Representatives, Subcommittee on Domestic Monetary Policy, Hearing on Sound Money: Parallel Currencies and the Roadmap to Monetary Freedom, August 2, 2012

One of the most pressing issues of our time is the push for monetary freedom. The only sound monetary system is one which protects sound money and allows consumers, businesses, and investors the freedom to transact in the currency of their choice. The importance of sound money is summed up nicely by Ludwig von Mises: "It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments." It is no wonder that governments fight tooth and nail against sound money, as sound money protects the well-being of the middle class and the poor while preventing the expansion of government.

Governments throughout history have sought to monopolize the issuance of money, either directly or through the creation of central banks. The growth of central banking in the 20th century allowed governments to monetize their debt in an indirect manner while still ensuring a ready market for government debt. And central banks' slow but sure debasement of the currency allowed governments to repay their debts in devalued money. What debtor would not want such a sweetheart deal?

Indeed, the 20th century witnessed a revolt by governments against the strictures of sound money. In some countries such as Weimar Germany the revolution came quickly and the results were both immediately apparent and instantaneously disastrous. In other countries such as the United States, the revolt came more gradually, with the destructive effects of money printing only recently becoming apparent to more and more Americans.

Over the past 100 years, the Federal Reserve has continually pumped new money into the economy, resulting in a 96 percent devaluation of the dollar. This devaluation does not affect everyone equally, as the banks who receive this new money first benefit from using it before prices rise, while average Americans suffer the price rises first and receive only a trickle of money well afterward. In this way the Fed enriches Wall Street while impoverishing Main Street, leading to a growing disparity of wealth.

The wealthy are always able to protect the value of their assets against inflation to an extent that the middle class and poor cannot. Anyone with enough money and resources can set up a foreign bank account denominated in euros or Hong Kong dollars, or purchase gold and silver that will be safely stored in London or Singapore. The rich are best able to purchase precious metals, the only ones able to invest in high-yielding hedge funds, and the ones most able to shelter their assets from punitive taxation.

All the legislation and regulation that ostensibly protects the average American from losing money in fact does exactly the opposite. It keeps the average American from being able to defend against inflation by investing in precious metals, forces him into mediocre investment opportunities that do not even keep up with inflation, and leaves him at the mercy of the taxman. Compared to their counterparts in other countries, the average American has far fewer financial options available to them.

Mexican workers can set up accounts that are denominated in ounces of silver, and can take delivery of that silver whenever they want, tax-free. In Singapore and some other Asian countries, individuals can set up bank accounts denominated in gold and silver. Debit cards can be linked to gold and silver accounts so that customers can use their gold and silver to make point of sale transactions, a service which is only available to non-Americans. In short, Americans have far fewer options to protect their wealth than citizens of many foreign countries do.

The solution to this problem is to legalize monetary freedom and allow the circulation of parallel and competing currencies. There is no reason why Americans should not be able to transact, save, and invest in the currency of their choosing. Unfortunately, decades of government restrictions and regulations have hampered and prevented the circulation of parallel currencies and destroyed the familiarity of Americans with any sort of money aside from Federal Reserve Notes or bank deposits denominated in U.S. dollars. The thought of introducing parallel currencies undoubtedly scares many people who understandably wish to minimize their financial risk.

All financial activity is fraught with risk. Most people understand the risks inherent in stock or bond investment, but the risk of holding savings accounts or cash is still drastically under-appreciated. Everyone is familiar with the maxim "Don't put all your eggs in one basket" and investors and savers are constantly urged to diversify their portfolios, yet the U.S. government continues to set roadblocks that force Americans to transact and save in dollars that continue to depreciate.

According to the government's official figures, price inflation runs around two percent per year which means that, since interest rates on savings accounts are near zero, the real rate of return on savings accounts is negative. Anyone holding a savings account or cash is losing nearly two percent of the value of his savings per year with this relatively mild inflation. Some private economists estimate that actual price inflation is running closer to nine percent per year, which would make the loss from holding dollars enormous.

Even greater danger comes during bouts of hyperinflation, such as during Weimar Germany and more recently in Zimbabwe. But when Zimbabwe's dollar became worthless, people began to use U.S. dollars, South African rand, and Zambian kwacha to conduct transactions. Similarly in Weimar Germany, many individuals resorted to using dollars, pounds, and precious metals. So despite the economic hardship wrought by hyperinflation, not all economic activity ground to a halt, largely due to the circulation of parallel currencies. Should the United States ever face a hyperinflationary crisis, which due to the Fed's quantitative easing is very possible, the only means of survival would be through the use of parallel currencies.

It is horribly unjust to force the American people to do business with a dollar that is continuously debased by the Federal Reserve. Forcing a monopoly currency with legal tender status onto the people benefits the issuer (government) while harming consumers, investors, and savers. The American people should be free to use the currency of their choice, whether gold, silver, or other currencies, with no legal restrictions or punitive taxation standing in the way. Restoring the monetary system envisioned by the Constitution is the only way to ensure the economic security of the American people.

http://lewrockwell.com/paul/paul817.html
 
Old May 4th, 2013 #6
Rick Ronsavelle
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Default Tide Laundry Detergent being used as money

http://www.bloomberg.com/video/stole...YIshsb4Dw.html
 
Old June 26th, 2013 #7
Rick Ronsavelle
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Default legal tender laws, alternative currencies, very good thread

Legal Tender & 5 things I learned from D.C.

August 3, 2012 by Rob Gray 45 Comments

As some of you know, I had a rare opportunity to testify August 2nd 2012 before the House Financial Services Subcommittee on Domestic Monetary Policy regarding parallel currencies. For a full video of the hearing, click the image on the left. It all passed so fast, and the reality didnít set in until I left the chamber.

My first thought upon walking out of the building was really anti-climatic: ďI spent all this time over the past week for that?Ē And to think I could have focused my time and energy somewhere else. Nonetheless, testifying in front of the House Domestic Monetary Policy subcommittee was a learning experience. Unfortunately, I donít think theyíre going to invite me back anytime soon. So hereís what I got out of it:

1) Itís easier to get in to congress than it is on a plane Ė Maybe itís part of the new regimeís open-door policy, or maybe itís always been like this, but apparently itís really easy to enter the lionís den. Simply walk in the front door, stick you cell phone and keys in a bowl, and walk right on through the metal detector, complete with shoes, jacket, belt, pocket change, lighter, liquids, gels (you donít even need a 1-quart bag!) and anything else you feel like bringing in. There are no guard dogs, no intimidating desk clerks, and you donít need an I.D. or boarding pass (or any other doc that proves you should be there).

2) Very few in government care Ė When you say House Financial Services Domestic Monetary Services Subcommittee to me, it sounds important. First, the domestic economy is in shambles, and our monetary policy is at the very root of this issue. Maybe you donít know enough to agree with me, but certainly the members of the committee DO (or at least should). 30 seconds before the hearing was scheduled to start, we were still unsure if the hearing was going to start. Why? Because, as Ron Paul explained, ďWe need at least one other committee member here to call the session to order.Ē Iím sorry? No one shows up for this stuff? And thatís okay? At the scheduled hour, almost on the dot, we were lucky to be joined by Congressman Luetkemeyer, and the meeting was called to order.

Ten minutes in to the session, Congressman Al Green joined us, and then Congressman Schweikert. Congressman Green left after less than three minutes.

3) The most stressful part for me was wondering if I had enough time Ė You get 5 minutes. Thatís it. My speech, in full and at the right tempo and tone, was 13 or so minutes. I cut more than half of it. I rushed at the end of the delivery just because I didnít want to get cut off. 2 minutes after my time was up, I finally wrapped up my oral argument and realized they probably didnít hear any of it. Except for Congressman Green, who walked out as soon as I mentioned ďthievesĒ.

4) Ron Paul doesnít understand legal tender laws or is up to something Ė Itís kinda a big deal to make an accusation like that, but I have a very hard time believing that he is completely ignorant of how the legal tender code actually reads.

ďUnited States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.Ē - 31 USC ß 5103 Ė Legal Tender
I knew I should have printed this and brought it with me. Congressman Paul asked the panel of witnesses if we thought we needed to repeal the legal tender laws to make competing currencies a reality. When it was my turn to answer, I first asked Congressman Paul to summarize his understanding of the Legal Tender Laws Ė he said no. So, being only 99.9% sure of how the legal tender laws read, I said ďLeave them alone.Ē They donít need to be repealed.
A lot of inference was made to legal tender laws resulting in tax obligation, exclusive requirement and/or mandatory acceptance. Legal tender laws provide for none of this. In fact, Iíll go one step further and say (on a rare occasion) that Iím IN FAVOR of legal tender laws. Why?

Letís suppose I go in to a restaurant with my family and order dinner. We enjoy our meal, ask for the check, and get ready to pay. Unfortunately, without sign or notice, the restaurant in Dallas exclusively accepts Korean Won. Since I do not carry won, I am unable to pay my bill. The police are called, and Iím arrested for theft. Not cool.

In the US, legal tender laws ONLY apply to debt obligations. To clarify, if you are in debt, as in you just ate your meal, in the US you must be able to satisfy that debt in federal reserve notes. Period. Legal tender laws protect you from a merchant getting creative on you and making it difficult or impossible to pay your bill. Good idea, right?

Well, it doesnít stop there. Legal tender laws are so un-important that most/all states have plenty of exceptions to the rule. For example, a gas station can refuse any bills larger than $20. A soda machine can only accept coins. A bus driver can only accept tokens. A business owner, who has an unlimited right to private contract, can negotiate a deal in gold, silver, copper, direct barter, or any other way they like. And if thatís not enough, states will recognize this contract even in the event of a default. For example, you negotiate a contract in ounces of silver, default on the deal and lose in court: the court will still enforce the original agreement!

What legal tender laws do NOT do is make the federal reserve note the exclusive form of payment in the US. You can pay any way you like, so long as itís agreed and accepted before you incur a debt. Again, there is no law that requires you to spend or accept federal reserve notes. None.

The part where it starts getting weird is the contradiction between the state ďHonest Money LegislationĒ and the Ron Paul ďFree Competition in Currency ActĒ. They seem to be opposite. The state groups want to make gold and silver Legal Tender. Ron Paul wants to eliminate Legal Tender laws. Maybe someone should bring the two groups together and get on the same page. From the state perspective, how is requiring a business to accept gold and silver fair to the business owner? I thought we want to do away with the government telling business owners how they can accept payment. What if your bill is $18, and you whip out an ounce of silver to pay. The business now has to look up the price of silver and figure out how to make change for you? What if they donít want the silver? Are you asking the government to force them to accept it?

Congressman Paul should know all of this. Heís been saying it long enough to know what the legal tender law actually means, and he should have known that it could have been explained at the hearing in less than 10 seconds. Instead, he refused to define the words used in his question. I donít know what it means, but something smells fishy.

5) Not only do they not care, but theyíre almost completely clueless Ė the committee members asked questions about consumer protection, consumer confidence and how the poor people would deal with community currencies. Iíll address these issues one by one here:

Consumer protection Ė this comes down to one thing: personal responsibility. ďAlternativesĒ are not for everyone. Some people will never buck the system, or even try anything outside the box. The ones that will must be educated on the risks associated with operating outside the jurisdiction of government. Thatís the way it goes with voluntary systems. Congressman Luetkemeyer brought up the FDIC, and how it guarantees deposits. Sure, the FDIC guarantees the deposit, but it canít guarantee the depositís purchasing power. Take this example: the FDIC was crafted in 1933, when gold was about $20 per ounce. If you put that $20 in the bank, today it would be worth $20, even if the bank went belly-up tomorrow. Wanna guess how much gold you can get today for $20? Not a lot. Is that consumer protection?

Consumer confidence Ė people are pulling money out of the banks at an alarming rate. People donít have confidence in the system because they are beginning to realize the currency is built on a foundation of debt, and that it all must be repaid. Gold & Silver, on the other hand, are debt-free, never need to be repaid, canít be fractionally loaned, and buys more today (in most cases) than it did through history. Which system inspires more confidence? An honest one, or one thatís run behind closed doors?

The poor people Ė Do you know where the poorest area of the country is right now? Itís not Detroit, Cleveland, Kansas City or some other dried-up industrial center. Itís the Pine Ridge Indian Reservation, which boasts a whopping 95% unemployment rate, 22% male suicide rate, 42-year average male lifespan, and a 75% illiteracy rate. And they decided to start their own community currency because they flat broke, not because theyíre flooded with capital. Itís predominantly poor people that launch community currencies because they believe taking control of the issuance of their money will help them create economic opportunities, like producing, trading, and exporting goods and services in exchange for more capital.

All things considered, I had a great time. It was a lot of fun hanging out with [and a very special "THANKS" goes out to] Chris Duane from Silver Bullet & Silver Shield. Chris spilled the better part of a full glass of wine on a US Congressman of unknown identity at dinner.

Go here to read the excellent comments:

http://www.opencurrency.com/5-things...rned-from-d-c/
 
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