The alt.community.local-money frequently-asked questions file. ============================================================== Version 1.80 1st September 1996 New in this edition - contact info for London, England! ============================================================== This FAQ and features on other aspects of local currency can be found on the Web (Thanks to Phil and Liem of SSC for their hospitality and help.) ============================================================= Contents: ========== 0.1 The purpose of this group. 1.0 What is local money? 1.1 Definition 1.2 Local money versus barter 2.0 What is/are LETS? 2.1 Description and history 2.2 Security of accumulated credits. 2.4 Legal issues (tax and benefits). 3.0 Setting up your own system 4.2 Step-by-step instructions 6.0 Other resources 8.0 Contact list 8.3 National contacts 8.5 Local systems (by country/city) 8.7 Trans-national systems 9 Contributing to this FAQ ============================================================ ============================================================ 0.1 The purpose of this group. ================================== This group exists to help promote development of community-based exchange systems (including those systems sometimes referred to as 'LETS' - local exchange trading systems). We welcome messages on related topics. Inappropriate postings (unrelated to local-currency systems) will be forwarded to the postmaster of the offending site, accompanied by a note of complaint. 1.1 What is local money? ============================ DEFINITION: 'local money' refers to any formal system for keeping track of the value of goods or services exchanged between members of a defined group. It differs from national currency insofar as it is valid only within the group. 1.2 Local money versus barter. ================================== BARTER is the direct exchange of goods or services, often called 'payment in kind'. If I mow my neighbor's lawn, then she gives me a haircut in return, that's barter. I do her a favor, and she returns it directly. LOCAL MONEY becomes involved if I am not interested in getting my haircut (or anything else my neighbor is offering), preferring to borrow her brother's boat for an afternoon. In return for my work in the garden, she persuades him to let me go fishing in his boat. After my fishing trip, I feel that my favor has been returned, but my neighbor is now 'in debt' to her brother, and will 'discharge' the debt at a later time. So I carry on mowing lawns around the town, accumulating obligations owed by so many people, until I feel that all the work I've done warrants an extended cruise in the boat, perhaps for a whole week. I need a method whereby I can pass on these 'favors-owing-to-me' to the boat owner, so he can collect from the people whose lawns I mowed in return for another loan of the boat. The transfer of such 'favors' representing exchange of g&s between members of a group can get rather complicated in real life, but can be kept track of by means of LOCAL MONEY. ============================================================ 2.1 Description and history. ================================ 'Local Exchange Trading System' (or LETS) is the name for a system which records transactions between members involving provision of goods & services. A group of people club together and produce a directory which lists their skills, services and goods, together with requests for anything they wish to obtain in trade. Everything can then be traded through a system of credits, with the accounts maintained centrally. Each member gets a personal account and checkbook, from which they can pay in LETS credits for any goods or services provided. No hard cash is deposited in the account, it is simply used to record information, registering any trading that takes place. LETS credits are simply an agreed-upon unit (such as kilos or miles) in which the value of the exchanges can be measured. It is often deemed to be loosely equivalent to the 'official' currency in circulation in the nation at large, although the name given to a unit often reflects a special feature or product of the group (e.g. Manchester BOBBINs, Glastonbury BEACONs, San Francisco FOGs, Beara HAGs or Internet VIRTs. A LETS is not designed to match people who wish to barter, since it is rare for two people to have things to swap of equal value, and at the same time. Rather, when you receive goods or services from another LETS member, you simply write out a LETS check to the agreed value of the exchange, and give it to the supplier. The check is sent on by the payee to the LETS accountant, who credits the payees account in the amount of the check (minus any processing fee which may apply in that LETS,) and debits yours. A new LETS account normally begins with a zero balance. This means that somebody has to go 'into the red' in order for trading to get under way. (Just like owing someone a favor before you can repay it). If your account goes below zero, no problem - LETS do not charge interest on negative balances. At the end of the accounting period you receive a statement listing the activity on your acccount. HISTORY: (from 'NEW ECONOMICS') The idea of LETS was developed in the early 1980's in Canada, based on a system set up by Michael Linton. They have now spread to the USA, Australia, New Zealand and the UK, where there are now around 300 active systems. An Internet system has recently been formed, taking advantage of that system's ability to put people in touch instantaneously across and between continents. 2.2 Security of accumulated credits. ======================================== In simple terms, there isn't any. Different systems address this issue in different ways, but the following remarks apply in most cases. All balances and trading records are open for view by members, who may thereby determine the apparent trustworthiness of a potential trading partner. Therefore, through a process of self-policing, traders who appear to be abusing the system can be avoided. There is really no way to force someone to bring a minus account back up into credit again. However, it is possible to limit the impact of defaults quite effectively, due to the nature of the system we use. Firstly, balances can be limited, based on trading record. In such cases, a member in good standing can be permitted to run a larger deficit than a new member whose reliability is unproven, helping to discourage people from joining in order to run up a deficit, then resigning. Secondly, the fact that favors are not returnable directly to the original giver means that unreturned favors (people taking goods and services without reciprocating) are not personal losses, as they would be in a cash transaction. Such losses are shared by the general membership, greatly offsetting the impact of the loss. Thirdly, since trading takes place within a closed group, there is a social cost directly felt by any defaulting member. Ultimately, the safest way of using a LETS is to maintain one's balance as close to zero as possible, while trading frequently in both positive and negative directions. 2.4 Legal issues (tax & benefits). ====================================== LETSystems themselves are not-for-profit associations. Under standard LETSystem membership agreements, individual members are responsible for their own tax affairs. It is not possible to provide comprehensive information on these topics in this FAQ. Please contact your national support organization (see list below) for information specific to your country. General observations which may be helpful: It is wise to avoid the legal description of 'barter' relating to LETS. 'Barter' means that the receiver must pay something back to the provider directly. In LETS, the commitment is to the whole community, not to any one person, and there is no thought of when or where it will be repaid. It may be useful to draw a distinction between two types of trade: * commercial exchanges, where you provide something connected with your normal line of work, or are supplying something regularly which results from the operation of a business. * social exchanges, in which you do something which is unconnected with your normal work, and can be classed as 'doing a favor for a friend' If you think you are going to be liable for tax, it is recommended that you collect part of your payment in 'hard' currency to cover your tax obligations. Is the service you are providing directly related to your normal work? If not, you may wish to employ the following arguments: * we are members of a club where trading between members is a hobby or pastime * we operate like a babysitting circle * if we made the same sales through a local paper, or in a yard sale, would tax be payable? Businesses who are using LETS, and accepting whole- or part-payment in LETS credits should maintain an extra column in its account books for the purpose of recording LETS transactions. All LETS account information is private to the network, but a refusal to disclose information to a government inspector will only increase suspicion. On the other hand, a detailed account of mutt-walking and waiting-in-for-the-PG&E-man could persuade an officer that further investigation would not be cost-effective. I am looking forward to hearing from the first national LETS organization who are able to persuade their equivalent of our IRS to accept LETS credits in payment of tax liabilities. In the meantime, it's safe to say that the IRS won't appreciate an offer of a year's window cleaning to settle a tax bill. 4.0 Setting up your own system. ===================================== 4.2 Step-by-step instructions (These instructions are offered as suggestions as to how you might proceed - not a prescription which must be followed in all cases.) 1) Obtain a copy of the LETS info pack 6th edition. (10 GBP from LETSLINK UK, 6 VIRTS from NETS), or your national equivalent from the contact list. 2) Select some articles from the pack, and circulate them among friends, neighbors and co-workers who you think may be interested in participating. 3) Contact a nearby LETS, or your national contact, and arrange for a visiting speaker or startup workshop to introduce the idea to your group. 4) Set up a group of those people willing to help start a scheme. See what resources / skills are available among the group members, and assign admin jobs if possible. 5) Ask everyone who wants to join to pay the first annual membership fee, to cover setting-up and running costs (phonecalls, postage, etc). 6) Produce the necessary stationery. You will need a checkbook, account statement form, offers/wants form, and the facilities for producing a directory. Advice on producing these is contained in the pack. The LETS info pack also contains a lot of useful advice on how to promote the expansion of your group. 6.0 Other resources: ==================== 6.1 The econ-lets mailing list. =============================== A continuing discussion of issues arising from the use of local currencies, and speculation regarding future trends. To subscribe to econ-lets send a one line email to mailbase@mailbase.ac.uk of the following form: join econ-lets firstname lastname using your own first and lastnames. Example: join econ-lets John Smith Email sent to mailbase@mailbase.ac.uk is responded to by an email handling program which understands various other commands send as email for example: help index econ-lets help commands send econ-lets introduction 6.3 Web pages related to currency & exchange issues: ==================================================== (by courtesy of Dana Hofford ) http://www.digicash.com/ecash/client.html - DigiCash http://digicash.support.nl - Digicash support http://www.catalog.com/intersof/commerce/emoney.html -Intersoft http://inet.nttam.com/HMP/PAPER/136/abst.html - Jon Matonis page on Digital Cash and Monetary Freedom http://ganges.cs.tcd.ie/mepeirce/project.html - M. Peirces page (on Digital Cash) http://nii-server.isi.edu:80/gost-group/products/netcash/ - net cash http://www.itk.unit.no:80/ansatte/Andresen,Trond/finans /interest-free-money.txt - paper by Bernard A. Lietaer about interest-free money. http://luff.latrobe.edu.au/~lssmoj/index.html - Mark Jacksons home page (articles mm) http://www.primenet.com/solutions - The Spiritual Economy http://www.ex.ac.uk/~RDavies/arian/wir.html - article about WIR in English http://www.ex.ac.uk/~RDavies/arian/wired.html - article "Why Money Shouldn't Matter" http://www.ex.ac.uk/~RDavies/arian/money.html - Roy Davies money page http://www.reach.com/matrix/welcome.html - David S.Bennahums page (ecash mm) http://www.prairienet.org/community/religion/idf/currency.html - info an Ithaca HOURS including color images http://www.cin.gov.au - Community Info Network info om LETS in Australia http://www.peg.apc.org/~freedom/ - Ken Guntars home page http://www.u-net.com/gmets/home.html - LETSgo@Manchester http://www.u-net.com/~yesyou/sulets/yesyou.html. - YESYOU LETSystems Registry http://www.newciv.org/solutions/ - Steve Moyers home page ftp://scorpion.cowan.edu.au - letsreg software LETS-Connect - the information & support network for the UK LETS community presently located at http://www.u-net.com/~lcs/letsconnect/ A report on the development of Salford University LETSystem together with a series of short essays on Ecological Perspectives of LETSystems is at http://www.u-net.com/~yesyou/ctc/report.htm 8.0 Contacts list. ================== 8.3 National contacts: ====================== Australia OZLETS (national newsletter) PO Box 1640 Armidale 2350 New South Wales Canada Kitchener-Waterloo LETS Box 1731 Kitchener Ontario N2G 4RE Holland LETSLINK HOLLAND Jan Hanzenstraat 26-3 1053 Amsterdam New Zealand Green Dollar Quarterly (NZ LETS newsletter) Box 299 THAMES Spain MADRID (& Spanish) LETS Dan Wagman El Trueque C/ Manuel Badia 13 28038 MADRID United Kingdom LETSLINK UK 61 Woodcock Road Warminster BA12 9DH United States TIME DOLLAR NETWORK PO Box 42160 Washington 20015 8.5 Local systems (by country/city): ==================================== Australia: ========== Fremantle LETS 3/15 Essex Street Phone: +61 9 335 1053 FREMANTLE WA 6160 freolets@cleo.murdoch.edu.au http://cleo.murdoch.edu.au/~freolets/ Fremantle LETS Home page. http://cleo.murdoch.edu.au/~freolets/notice.htm Fremantle LETS Trading Sheet http://cleo.murdoch.edu.au/~freolets/wallets.htm WALLETS Home page. http://cleo.murdoch.edu.au/~freolets/waletsys.htm A list of Western Australian LETSystems. France: ======= (In France, 'LETS' is called 'SEL'.) http://www.altern.com/sel/ http://www.dtr.fr/lyoncap/anciens/20troc.html (Lyon) United Kingdom: =============== London LETSystems Directory: http://www.bogo.co.uk/network/on.Lets.html Godalming LETS: http://www.surreyc.gov.uk/godlets/ 8.7 Trans-national systems: =========================== NETS (Network Exchange Trading System) e-mail: mailserv@ukefl.demon.co.uk Put the single word INFO in the body of your message. Internet-based trading system (HQ in Switzerland). 9. Contributing to this FAQ. ============================ Please send corrections, additions, suggestions or whatever to: martinl@ukefl.demon.co.uk who is currently the maintainer of this FAQ file. DISCLAIMER: This file may contain information which is incorrect, outdated, misleading, unhelpful, dangerous, illegal and/or only partially true. Those acting upon it do so entirely at their own risk. This file expires on November 30, 1996, after which time it will be superseded by the next edition of this FAQ. ============================================================