Interesting Links on Alternative Money and Banking Systems
Check out Steven Carson's Monetary Evolution site (he's no relation, as far as I know). It's great. He also passed on a link to this article by Robin Good about Ripple, a sort of electronic P2P LETS network. That article, in turn, included a link to another great article by Sepp Hasslberger: "Social Credit: Make Your Own Bank"
Larry Gambone has a related post on the banking fraud at Porkupine Blog. Here's the money quote (no pun intended):
UPDATE: Atreyu, in the comments thread, provides a link to a site for Ripple.
Larry Gambone has a related post on the banking fraud at Porkupine Blog. Here's the money quote (no pun intended):
More than 150 years ago, Proudhon realized that workers and farmers had their own in-built collateral. For workers, it was the amount of labor over a given time period, for farmers, the crop or harvest. Hence, there was no need to have collateral in gold, bills or property, nor was there any reason, other than government preventing it from occurring, for farmers and workers to create money and loan it out to each other thru a mutual banking system. For the longest time banks ignored the workers and poor farmers, but with the rise of consumer society came a realization that a bundle could be made loaning money to these here-to-fore ignored customers. Our collateral is our labor, but the banks reap the benefit.
UPDATE: Atreyu, in the comments thread, provides a link to a site for Ripple.
posted by Kevin Carson | 6:46 PM
9 Comments:
Hey, there - interesting blog.
While I do not particularly agree with the theme nor the sentiments expressed in this blog, I must say that you bring up some interesting points and issues.
Been lurking here for a while, so I just figured I'd drop in and say a hello!
Cheers.
Thanks to all three of you for the kind remarks. I don't know about the "revering audience" and "ascendancy" though, Howdy. Might be nice to live in an alternate universe where that was true.
Thanks Kevin. I notice that the critique of the banking system is being picked up by a larger audience now than before. There have been articles in both Vive le Canada and The Tyee. Ten years ago a critique of banking would have been limited to the fringe. This is a good sign.
More than 150 years ago, Proudhon realized that workers and farmers had their own in-built collateral. For workers, it was the amount of labor over a given time period, for farmers, the crop or harvest. Hence, there was no need to have collateral in gold, bills or property...
Collateral is something the loanholder knows you have and can take as needed. Property is collateral because the loaner can seize it if there's a default. Labour is poor collateral because of the uncertainty factor. Ditto future crops.
As a further comment, there's something definitely unsavoury about labour as collateral. Say that a carpenter takes out a loan against a bank and puts up 1000 hours of his labour as collateral. The carpenter defaults. The bank now has a claim on 1000 hours of labour from the carpenter. At what, if any, price? Can the bank take so much labour as to damage the carpenter's ability to make enough to support himself or his family? What kind of labour can the bank direct him to do? Could they sell the labour collateral to someone else, say, to a corporation specialising in cleaning toxic waste?
- Josh
Josh,
I'd envision it as a contractual repayment mechanism, with payments set at a percentage of current income over a long time-frame. I'm sure it would be possible to stiff the system, just as it was possible to skip out on your "obs" in Russell's "And Then There Were None"; but the pariah status to the would-be parasite would also likely be similar, serving as an object lesson on the virtues of being a good member of cooperative society.
Kev,
You don't even need to worry about welchers to worry about the future as collateral. The future is fundamentally uncertain: crop failures, disease, accidents, bad weather, etc. Collateral is useful because it is certain. The future is not good collateral because it is not.
- Josh
That's true. But such risk can be minimized by spreading it out over time. Again, that's why I like the idea of relatively low repayment schedule, set as a percentage of income, over a long period. And the risk is also spread out over the membership of the LETS system/banking co-op (possibly most of the community), so there is little risk to any individual accepting the mutual banknote.
Time preference also enters into it. But the time preference of an organized banking cooperative, in a prosperous society of self-employed and worker co-ops, with a stable local economy, is not likely to be very steep. And the minimal risk to any member, compared with the advantages of start-up capital and easy repayment terms, is a pretty good tradeoff.
If time preference is long, and risk is minimal, reward is also likely to be minimal: too little to even bother with setting up the bank in the first place. You may as well bury banknotes in jars in the backyard.
- Josh
Josh,
The bank is not set up to make profit for a set of stockholders. It is intended to facilitate credit for its membership.
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