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  1. Title of the Introduction in Jacques Rueff's, The Age of Inflation. Tr. A. H. Meeus and F. G. Clarke, Chicago: Henry Regnery Co., 1964.

  2. This is best exemplified in the Gaia Hypothesis popularized by scientist James Lovelock and others. See, for example, The Ages of Gaia, Gaia: A New Look at Life on Earth, and Healing Gaia.

  3. Hebrews 11:1.

  4. In the sense of "less substantial or material". Exchange media, representing individual choices and decisions, take the form, not of gold or silver, or even paper, but of ledger entries and electronic pulses moving with the speed of light from place to place. Such "electronic fund transfers" routinely take place in today's banking system, but the people's own credit is sold back to them for interest as if it were gold or silver.

  5. Bilgram, Hugo, and L. E. Levy, The Cause of Business Depressions. Philadelphia: J. B. Lippincott Company, 1914, p. 95.

  6. ibid.

  7. The LETSystem will be described in detail in Chapter 10.

  8. E. C. Riegel, Flight From Inflation: The Monetary Alternative, The Heather Foundation, Box 4, Waterford, VA 22190, 1978. pp. 15-16. Any serious student of money and exchange should read this entire volume, but especially Chapter 2, which explains the essential nature of money.

  9. E.C. Riegel, Private Enterprise Money: A Non-Political Money System. New York: Harbinger House, 1944.

  10. This point will be discussed further in Chapter 4.

  11. 1 Timothy 6:10.

  12. Modern Money Mechanics, Federal Reserve Bank of Chicago, 1992, p.3.

  13. For an excellent and authoritative, down-to-earth description of how the Federal Reserve System works, see Figuring Out The FED, by Margaret Thoren, 1985, 1993; available from Truth in Money, Inc., P.O. Box 30, Chagrin Falls, OH 44022.

  14. Two Faces of Debt, Federal Reserve Bank of Chicago, 1992, pp. 17-19.

  15. The Federal Reserve System: Purposes and Functions, Board of Governors of the Federal Reserve System, Washington, DC 1961, p. 7.

  16. A more complete but simple and straight-forward explanation of the money creation process is contained in The Truth In Money Book, by Theodore Thoren and Richard Warner; available from Truth in Money, Inc., P.O. Box 30, Chagrin Falls, OH 44022.

  17. Modern Money Mechanics, Federal Reserve Bank of Chicago, 1992, p.3.

  18. Green Revolution, Vol. 34, No. 10, December 1977. See Appendix A for a more complete statement of Borsodi's views of banking as a profession and his proposals for the reform of banking practice.

  19. For an explanation of the difference between usury and interest, see my earlier book, Money and Debt: A Solution to the Global Crisis, second edition, Thomas H. Greco, Publisher, P.O. Box 42663, Tucson, AZ 85733. 1990.

  20. Kennedy, Margrit, Interest and Inflation Free Money, Permakultur Institut e.V., Ginsterweg 5, D-3074 Steyerberg, West Germany, 1988. Fig. 3 facing p. 14.

  21. ibid. Fig. 4 facing p.15.

  22. Narayan, R.K., The Financial Expert. Chicago: University of Chicago Press, 1981.

  23. "Does Community Have a Value?", in Home Economics: Fourteen Essays. New York: Farrar, Straus and Giroux, 1987.

  24. It was at this point that the separation should have been made between the unit of account and the form of payment. The dollar, for example, as a unit of account, could have continued to be defined as the value of so much fine gold, while government and/or bank notes or credits might have been stipulated as the means of settling accounts. But the value of these notes and credits in terms of gold would have to be determined by the market, not by statute.

  25. Frederick Soddy, The Role of Money, 1935. It is significant to note the context of this quotation, as well:
    "The 'money power' which has been able to overshadow ostensibly responsible government, is not the power of the merely ultra-rich, but is nothing more nor less than a new technique designed to create and destroy money by adding and withdrawing figures in bank ledgers, without the slightest concern for the interests of the community (emphasis added) or the real role that money ought to perform therein..."
    For more of Soddy's analysis of money and finance, see also, Wealth, Virtual Wealth and Debt. third edition, Hawthorne, CA: Omni Publications, 1961. Reprinted from the second edition, 1933.

  26. Perhaps the U. S. should consider basing congressional representation, only partly upon geography and more upon voluntary association. A person could choose the organization through which he/she would cast his/her vote. Each such association, which would have to be some minimum size, would be entitled to elect a representative.

  27. Manfred Max-Neef, "Reflections on a Paradigm Shift in Economics", in The New Economic Agenda. Mary Inglis and Sandra Kramer (Eds.), Findhorn Press, The Park, Forres IV36 OTZ, Scotland, 1985, p. 147, 148. Other works which deal more thoroughly with the theme of human scale are: The Breakdown of Nations by Leopold Kohr, E.P. Dutton, New York, 1957, 1978; and Human Scale by Kirkpatrick Sale, Coward, McCann & Geoghegan, New York, 1980.

  28. Dunkman, William, Money, Credit and Banking. New York: Random House, 1970, pp. 284,285.

  29. ibid, pp. 360-363.

  30. Cole, G.D.H., and W. Mellor, The Meaning of Industrial Freedom. London: Geo. Allen and Unwin, Ltd., 1918, p.4. Quoted by Erich Fromm in The Sane Society, p. 249.

  31. Max-Neef, op.cit., pp. 147-148.

  32. There is much more that might be said about this approach, but it is being adequately addressed by others. Good sources of information are:
    1. Missouri Community Economic Development, 628 Clark Hall, University of Missouri, Columbia, MO 65211.
    2. Oregon Marketplace, 1004 W. 23rd Ave., Suite 300, Portland, OR 97210.
    3. Industrial Cooperative Association (ICA), Community Economic Development Program, 58 Day St., Suite 203, Somerville, MA 02144.

  33. Mitchell, Ralph A. and Neil Shafer, Standard Catalog of Depression Scrip of the United States: the 1930s Including Canada and Mexico. First edition, Iola, Wisconsin: Kraus Publications, 1984.

  34. ibid.

  35. ibid, p. 13.

  36. ibid, p.70

  37. This account was taken from New Zealand GREEN$QUARTERLY, issue 6, November 1991, which cites the original source as, The Fig Tree, "a Douglas Social Credit Quarterly Review", June 1937.

  38. Gesell, Silvio, The Natural Economic Order. San Antonio, TX: The Free Economy Publishing Co., 1934 (Translated from the sixth German edition). Originally published in 1913.

  39. Fisher, Irving, Stamp Scrip. New York: Adelphi Company, 1933.

  40. This historical information was derived primarily from two sources: (1) Richard Gregg, The Big Idol, Navajivan Press, Ahmedabad-14, India, 1963, and (2) Irving Fisher's Stamp Scrip, cited above.

  41. The idea of the stamp stemmed from Gesell's notion that the value of money should depreciate with time, just as does the value of the items which it is supposed to represent. This "gimmick" will indeed speed the velocity of circulation of the currency. However, if a currency or scrip is properly issued and its supply is not artificially restricted, there should be no incentive for hoarding. The "demurrage" which the stamp represents, then, would be unnecessary. This point will be further elaborated in subsequent sections.

  42. This is another way of bringing scrip into circulation, but the use of official currency is not really necessary, as we shall explain later.

  43. Gregg, op.cit.

  44. Fisher, op.cit.

  45. ibid.

  46. This paper, first published in 1933, proposed a new issue of railway money to help alleviate the effects of the Depression. This information was obtained from an English version published in Peace Plans #9 compiled by Libertarian Microfiche Publishing Company, Berrima, NSW, Australia. See the section, Sources and Resources, for the complete address.

  47. Dr. Borsodi was the author of several books. One of his first, This Ugly Civilization, published in 1928, was widely read and anticipated the work of many of our contemporary social critics. Seeing the many social dysfunctions and unhealthy habits of the modern American lifestyle, Borsodi took his family to the country where they established a modern rural homestead. Much of this experience is documented in another of his books, Flight From The City. Borsodi founded The School of Living in 1934 to promote the further exploration of healthy living and healthy communities. Over the years, the School of Living has evolved into a nationwide educational network of people who are oriented toward personal responsibility, cooperative self-reliance, and ecological and social improvement. This author is a past President and Trustee of the School, as well as co-editor of its journal, Green Revolution.

  48. For a more detailed summary of the features of the Constant see Appendix C of Money and Debt: A Solution to the Global Crisis. For a complete description of the Constant experiment see Ralph Borsodi's, Inflation and the Coming Keynesian Catastrophe: The Story of the Exeter Experiment With Constants. Published jointly by The E. F. Schumacher Society, RD 3, Box 76, Great Barrington, MA 01230 and the School of Living, RD 1, Box 185A, Cochranville, PA 19330, 1989. The manuscript for this book was written in the early 1970's.

  49. Bilgram and Levy, op.cit., p. 416.

  50. Rueff, Jacques, The Age of Inflation, op.cit., p. xii.

  51. The Charlotte Observer, Thursday, Nov. 28, 1985, Sec. A, p. 50.

  52. Borsodi, Inflation and the Coming Keynesian Catastrophe, op.cit., pp. 6-7.

  53. American Heritage Dictionary. New York: American Heritage Publishing Co., 1973.

  54. In some countries the government issues money directly (through the central bank which it controls) by spending it into circulation. In the United States, the federal government does not issue money directly. It is the Federal Reserve, a private banking cartel, which issues U.S. money, as bank credit or in the form of Federal Reserve notes. The Federal Reserve is not under the control of the government. Indeed, it can be reasonably argued that it is the other way around. But the evidence shows that the Federal Reserve will do whatever is necessary to accommodate any level of government spending, no matter how profligate.

  55. This subject of the proper basis of issue is addressed more completely in Appendix B, which contains excerpts from "The Lost Art of Commercial Banking" by E. C. Harwood, taken from How Safe Is Your Bank, published by the American Institute for Economic Research, Great Barrington, MA 01230, 1989.

  56. American Heritage Dictionary, op.cit.

  57. Another means of keeping the prices of basic commodities low is by use of military intervention or threat of intervention to keep weaker countries from restricting or closing-off access to raw materials and export products. Thus, the Gulf War of 1991, the CIA engineered coup in Chile, and innumerable interventions around the world by the U.S. government made it possible for the U.S. to "export its inflation" to a large extent. The so-called free trade agreements like NAFTA, and the GATT, are diplomatic attempts to do the same thing.

  58. "Bonds That Brought a Boom" by Jose' Reissig, in New Economics, #20, Winter 1991, London, England.

  59. ibid.

  60. I have information from Mr. Reissig that on January 1, 1992, "four zeros were dropped from the national currency, which was renamed the peso instead of austral." From personal correspondence dated March 10, 1992.

  61. Personal correspondence dated April 20, 1992.

  62. ibid.

  63. ibid.

  64. Ithaca Money, No. 14, December 1993-January, 1994.

  65. IRTA Fact Sheet, The Commercial Barter Industry.

  66. IRTA Fact Sheet, The International Reciprocal Trade Association.

  67. The Commercial Barter Industry, op.cit.

  68. Suplizio, Paul E., Commercial Barter Exchanges in Society, an address presented to the Chicago Association of Commerce and Industry, Chicago, September 18, 1985, IRTA, 1985.

  69. See also, the description of LETS which appeared in an illustrated article entitled, "The Local Employment and Trading System", by Michael Linton and Thomas Greco, in Whole Earth Review, No. 55, Summer 1987.

  70. This may be a shortcoming of LETS groups. The help of a "broker" to stimulate trading might enhance the usefulness of LETS for many members. Brokers might take a commission in LETS credits.

  71. The members of a few LETS systems are presently considering supplementing their ledger systems with paper "receipts", which would function like paper currency, providing all the convenience and advantages of a circulating currency.

  72. Detailed information about how to start and operate a LETS system can be obtained from sources indicated in the section headed, Sources and Resources. This section also contains a list of selected operating LETSystems and software sources.

  73. Ruth Hobson, "The Amazing Growth of LETS in the UK", in LETSlink Newsletter, May 1993.

  74. ibid, and conversations with Michael Linton in September of 1993.

  75. K-W LETSLetter, #16, September 1993, p.2.

  76. ibid.

  77. See The Washington Post, Monday, May 20, 1991, Section A, page 1. This article describes Deli Dollars and Berkshire Farm Preserve Notes. See also, The Berkshire Record, April 26, 1991, Section B, page 1, which describes all four scrip issues.

  78. Ithaca Money, No. 13, October-November, 1993.

  79. ibid.

  80. "A Public Service Economy: An Interview with Edgar S. Cahn", Multinational Monitor, April 1989, pp. 17-21.

  81. Directory of Volunteer Service Credit Programs, University of Maryland, Center on Aging, College Park, MD, April 1993.

  82. Cahn, Edgar S., "Time Dollars", Co-op America Quarterly, Spring 1993.

  83. ibid.

  84. Cahn, Multinational Monitor, op.cit.

  85. Bilgram and Levy, op.cit., p. 383.

  86. The use of the term "credit" may cause some confusion since it has more than one meaning. It can be said that goods are delivered on "credit". In this case the seller is giving the buyer "economic credit", i.e. trusting the buyer to pay equivalent value later. In an mutual exchange system, it is the seller's account which receives "accounting credit" on the books of the exchange, indicating that the seller has so much value "coming to him." Thus, the buyer receives economic credit (in the form of goods or services), while the seller receives the corresponding accounting credit which represents his claim to value within the system.

  87. For a thorough and relatively rigorous exposition of the fallacy of the volume theory of the value of money, see Bilgram and Levy, op cit., pp. 136-155.

  88. Greco, op.cit., Section III.

  89. Hayek, Friedrich von, Choice in Currency: A Way to Stop Inflation. London: Institute of Economic Affairs, 1976.

  90. Riegel, Private Enterprise Money, op.cit.

  91. The cost of the stamp used in stamp scrip is a form of demurrage.

  92. For a more complete elaboration on this point, see Greco, op.cit., pp 54-59.

  93. For a more complete explanation of this banking error, see Appendix B, which contains excerpts from "The Lost Art of Commercial Banking" by E. C. Harwood, in How Safe Is Your Bank, published by the American Institute for Economic Research, Great Barrington, MA 01230, 1989.

  94. Edited and adapted from Silvio Gesell, The Natural Economic Order.

  95. Local Currencies, brief, Landsman Community Services, May 8, 1991.

  96. An individual may, of course, issue his own currency (his I.O.U.) by his own authority; however, its acceptability will be limited in comparison to a currency which many people are committed, by agreement, to accept.

  97. Some might argue that some amount less than full parity should be credited, say 80%. This, however, would place into circulation an amount of money insufficient to purchase the deposited commodity at par, thus tending to force prices down and preventing the producer from obtaining an adequate return or recovering his/her costs.

  98. In actual practice, the details of the procedure might be somewhat different but the effect would be as described. The bank, which maintains a continuous inventory record and issues release certificates for withdrawal of wheat from the warehouse, would begin to retire currency from circulation as it came in to pay for the wheat. This is somewhat similar to existing bank practice with regard to financing automobile dealers' inventories of vehicles, except that banks charge substantial interest.

  99. Naisbitt, John, Megatrends. New York: Warner Books, 1982, p. 183

  100. As I understand it, the IRS currently does not recognize the donation of services as a tax-deductible contribution. Only cash and in-kind donations qualify. Some change in the tax regulations might be necessary to gain tax advantages for donation of ERR's.

  101. This topic was fully covered in Chapter 9.

  102. Although United States currency is presently issued by the Federal Reserve banking cartel, the U.S. government is its ultimate guarantor. U.S. Treasury bills, notes and bonds represent direct obligations of the U.S. Government and are the ultimate in safety, even in these shaky times. Their safety derives from the power of the government to impose taxes on the people. Fall they may, but they will likely be among the last securities to do so. In the meantime, they provide a safe store of value, plus interest income which can be used to bolster "good work" organizations. Since U.S. Government securities provide the basis for much of the money issued by the banks, there is a certain elegance about using the same securities to establish a new transformational exchange medium.

  103. Donations of services, on the other hand, are not deductible under current IRS regulations.

  104. Ideally, there should be no liquidation of the security fund at all. As the pool of government securities increases, more official money would be replaced with FTRs, transforming the medium of exchange from a debt-based medium to a service-based medium. As a practical matter though, the interest income from the endowment fund would probably be distributed to member organizations to help meet their cash needs.

  105. Mark 10:31.

  106. Flight From Inflation. op.cit., p. 49.

  107. This limit might eventually be relaxed or eliminated as the system becomes established and stable operation is demonstrated.

  108. Such a standard, using an assortment of basic commodities, is proposed and described in Part III of my book, Money and Debt: A Solution to the Global Crisis.

  109. I disagree with Borsodi's reliance upon licensing statutes and their enforcement by the state as a means of maintaining professional standards. Licensing often leads to restraint of trade and extortionate fees. It can also be argued that most licenses are a violation of basic human rights guaranteed by the constitution. I favor the elimination of such statutory privileges and prefer to rely upon (1) open access to information, (2) consumer education, and (3) the certification of practitioners by private accrediting agencies. As Borsodi himself proposes below, banks should not be operated as corporate businesses. Without the limited liability protection afforded by the corporate umbrella, banks would tend to be smaller, local in scope, and more responsive to the needs of their clients. If the establishment of banks (or the exchange systems which might succeed them) was less restricted and the depository function was handled by other agencies, the potential for currency abuse would be greatly constrained.

  110. This section is based on material contained in an article, "The Lost Art of Commercial Banking" by E. C. Harwood, in How Safe Is Your Bank, published by the American Institute for Economic Research, Great Barrington, MA 01230, 1989. All quoted passages in the following text are taken from that article which was originally published in 1974.

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