Looking for Insight and Advice on Creating a Mutual Credit System Currency

11 posts / 0 new
Last post
The Evolutionary Ape's picture
The Evolutionary Ape
Status: Bronze Member (Offline)
Joined: May 31 2009
Posts: 62
Looking for Insight and Advice on Creating a Mutual Credit System Currency

I'm looking for any criticism, advice, suggestions, questions etc. that are out there. I've never felt so passionate about an idea so I'm pretty much to take as many critiques as possible to get this idea hammered out on paper. 

Me and a couple of friends are currently writing a proposal for creating an alternative currency based on a mutual credit system in our community.  I have a few friends who are tech inclined and we've came up with the idea of building a closed social network site similar to Facebook/Myspace that allows members to post and respond to ads for service and products within our local community.  The medium of exhange would be this created currency as well as bartering.  We went with the social network site concept, because we believe that relationships and trust should be built around the exchange.  We figure the stronger those two elements the stronger the currency.  The social network would not only help to facilitate trade, but also to build community.

The currency would be backed by hours.  Basically 1 Note equals 1 hour.   We are thinking we create currency based on every member who is admitted in by volunteering in the community 50 hours.  50 hours of annual volunteer time equals so many notes of the currency within the closed community. 

We are running into some challenges though.  One being all hours are not equal especially when it come to specialized skills.  We're not sure how to valuate skills in combination with hours.  Certainly someone who helps babysit for an hour versus someone who fixes someone's brakes in an hour cannot have the same valued time.  I can pay a neighbor to babysit for an hour $15 while I may pay $50 in labor costs to get my brakes done.

The other major hurdle is getting the currency to flow.  If everyone has an balance of 50 Notes, what is the incentive to accept tasks within the community? 

Lastly we are looking to recreate Paypal (a very lofty goal).  We are certain we have an extension of our idea we think can drive alternative currencies mainstream with future generations.  We've been looking at Cyclos.org to see if their model would fit, but we don't have the technical expertise to recreate the site or use it to implement our idea.  So if have computer skills or know someone with the computer skills to recreate Paypal and also have a passion for alternative currencies, I personally would love to talk with them.

Thanks in advance to any suggestions.

V's picture
V
Status: Platinum Member (Offline)
Joined: Dec 14 2009
Posts: 849
Re: Looking for Insight and Advice on Creating a Mutual ...
The Evolutionary Ape wrote:

I'm looking for any criticism, advice, suggestions, questions etc. that are out there. I've never felt so passionate about an idea so I'm pretty much to take as many critiques as possible to get this idea hammered out on paper. 

Me and a couple of friends are currently writing a proposal for creating an alternative currency based on a mutual credit system in our community.  I have a few friends who are tech inclined and we've came up with the idea of building a closed social network site similar to Facebook/Myspace that allows members to post and respond to ads for service and products within our local community.  The medium of exhange would be this created currency as well as bartering.  We went with the social network site concept, because we believe that relationships and trust should be built around the exchange.  We figure the stronger those two elements the stronger the currency.  The social network would not only help to facilitate trade, but also to build community.

The currency would be backed by hours.  Basically 1 Note equals 1 hour.   We are thinking we create currency based on every member who is admitted in by volunteering in the community 50 hours.  50 hours of annual volunteer time equals so many notes of the currency within the closed community. 

We are running into some challenges though.  One being all hours are not equal especially when it come to specialized skills.  We're not sure how to valuate skills in combination with hours.  Certainly someone who helps babysit for an hour versus someone who fixes someone's brakes in an hour cannot have the same valued time.  I can pay a neighbor to babysit for an hour $15 while I may pay $50 in labor costs to get my brakes done.

The other major hurdle is getting the currency to flow.  If everyone has an balance of 50 Notes, what is the incentive to accept tasks within the community? 

Lastly we are looking to recreate Paypal (a very lofty goal).  We are certain we have an extension of our idea we think can drive alternative currencies mainstream with future generations.  We've been looking at Cyclos.org to see if their model would fit, but we don't have the technical expertise to recreate the site or use it to implement our idea.  So if have computer skills or know someone with the computer skills to recreate Paypal and also have a passion for alternative currencies, I personally would love to talk with them.

Thanks in advance to any suggestions.

One way to get currency to flow is put an expiration date on it a la Zimbabwe. The original notes could be good for one year or 6 months, or whatever.

I am more of an egalitariian so I would personally have an issue with placing different values on hours. Of course in the scenario you are talking about one on one negotiation about the exchange works. If someone is willing to accept less for their end of the trade fine. If someone wants to demand more fine. Good luck.

V

The Evolutionary Ape's picture
The Evolutionary Ape
Status: Bronze Member (Offline)
Joined: May 31 2009
Posts: 62
Re: Looking for Insight and Advice on Creating a Mutual ...

Thank you.  I really like the expiration date idea.

littleone's picture
littleone
Status: Silver Member (Offline)
Joined: Sep 24 2009
Posts: 203
Re: Looking for Insight and Advice on Creating a Mutual ...

Wonderful work you are doing!

 

Here are some of my thoughts...

 

I've always had trouble with the value attributed to certain trades.

I can pay a neighbor to babysit for an hour $15 while I may pay $50 in labor costs to get my brakes done. -The Evolutionary Ape

 

A while back I read an article on bankers vs. cleaners:

Cleaners 'worth more to society' than bankers - study

The research, carried out by think tank the New Economics Foundation, says hospital cleaners create £10 of value for every £1 they are paid.

It claims bankers are a drain on the country because of the damage they caused to the global economy.

They reportedly destroy £7 of value for every £1 they earn. Meanwhile, senior advertising executives are said to "create stress".

The study says they are responsible for campaigns which create dissatisfaction and misery, and encourage over-consumption.

BTW: I disagree with the end of the article calling for tax funds for further research.

 

 

I've sure noticed that doctors, attorneys, dentists, and bankers etc... earn so much, I cannot afford their services at all.

 

As a mother, I care for my children without pay of course, but if I go to work to support myself and children...I need to pay someone to watch my children. What if I have 4 children?...How competitive can I be in this situation? This is where families with children have time and money(scarcity) issues.

 

A possible solution would be for school age children to be allowed to observe skilled work as an apprentice and participate in community work like gardening. The value of more individuals possessing survival skills eliminates excessive dependence. The Amish usually have the older children care for the younger children while the parents do the more labor intensive work. Mothers could also trade childcare services.

 

A person who is a qualified babysitter or caregiver usually has many other skills...like first aid, nutritional meal preparation, cleaning and sterilization skills, developmental communication and boundary setting necessary for mature mentoring, guidance, and teaching, etc...

 

If someone shows me how to fix my brakes, I could pay them once for instruction and then do it myself from there on out. Additionally, I usually have a priority value...meaning if a lamp generally costs $30...I may not value any lamp at more than $5 because I don't think it's worth it or I could go without. So, I may look for a used lamp for under $5.

 

THE MONEY FIX addresses hours based currency.  Toward the end of  THE MONEY FIX a solution is offered allowing services to not just be traded or hours earned...but an allowance for natural debt to occur. Sorry, I cannot explain the concept very well...check out the link starting at 58:00 for a details on how this could work(total length 79:05).

 

Namaste

The Evolutionary Ape's picture
The Evolutionary Ape
Status: Bronze Member (Offline)
Joined: May 31 2009
Posts: 62
Re: Looking for Insight and Advice on Creating a Mutual ...

Thank you littleone.  The article you sited, explains why I personally can't stand our monetary system.  It's almost as if our monetary system eats the society that creates it.  The Money Fix actually got me started researching money and it's creation.  Thomas Hedin who is on this forum, suggested some other resources such as The Future of Money by Bernard Lietaer.  After studying some of the resources I've pretty much became obsessed with complimentary currrencies as a means protecting local communities if and when there is a currency collapse.

The Evolutionary Ape's picture
The Evolutionary Ape
Status: Bronze Member (Offline)
Joined: May 31 2009
Posts: 62
Re: Looking for Insight and Advice on Creating a Mutual ...

Here's a short intro to Benard's theories

PDXcurrency's picture
PDXcurrency
Status: Member (Offline)
Joined: Mar 19 2010
Posts: 3
Re: Looking for Insight and Advice on Creating a Mutual ...

I can suggest a couple of things here. What is the goal of the project ...in other words are you building "community" or is your goal to build "commerce"?

www.timebanks.org offers a great system for local areas that builds "community". Here you are matching assets to needs. Since each of us has extra time, we can sign up and 'donate' that time to help others. (this is very much like paying it forward) In this system each of our hours is worth the same and there is no free market valuation of services. My hour is equal to your hour, is equal to granny's hour etc. So this works well and appeals to people with excess time like the elderly, the unemployed or the underemployed. This system build community because of the neat bond and the interaction between users is a real positive feature of the TimeBank. Another big advantage here is since everyone is contributing or donating their time the IRS views a properly run time bank and the credits earned as NOT TAXABLE. They have given their written opinion or approval (whatever you want to call it) that credits earned are NOT taxable. This system does not work on a grand national scale, it's a local community based, core production project and it grows the local community in marvelous ways. TimeBanksNYC was recently started in NYC by the Dept. for the Aging. https://www.timebanksnyc.org/  I think there are now about a 150 registered timebanks across the US and many more times that number which operate as unregistered.

The LETS set up is similar.(Local Exchange Trading) With LETs a personal deal between regular people is not taxable but professionals offering services paid for with LETS are likely considered income. This is not a barter system but closer to barter than TimeBanks. LETS is a closed local money systems that uses private units which are generally pegged to the national currency. http://www.gmlets.u-net.com/ "Local Exchange Trading System - is the most advanced form of local currency in circulation."  This sounds more like what you want but it is not time based. How it works: Any group comes together and creates a mutual credit currency and all agree to accept it. Call it anything you like. Then offers and wants are posted, plus groups generally meet once a week or so and trade(and or have a drink). You set the price in terms of units for what you are trading, your offer to cut lawns may be 5 units an hour, or you may determine the quilt you are trading of is worth 10 units. Market forces set prices. Here everyone's new account starts at zero but after that may contain an positive or a negative balance if you decide to start spending right away. There is no requirement to earn before you spend. This is a very powerful system of local trading and also builds community.

I can also recommend a DIY program that is excellent and may work for you. Do you know Drupal.org? There is a marketplace plug in specially designed for local trading groups by http://communityforge.net/  This may be ideal for you, see it in action at http://www.richours.org/

Here is some more helpful info:

http://www.global-community.org/cgi/gc/scan/fi=news_topics/se=8/sp=topics.html

and my magazine is http://ccmag.net  Community Currency Magazine or blog  http://www.mainstreetcash.org

None of these system replace national currency, these ALL work alongside dollars to help fill in the cracks of where the national currency does not reach.

Good luck. Contact me anytime if you need to... [email protected]  twitter @pdxcurrency

 

KingofthePaupers's picture
KingofthePaupers
Status: Member (Offline)
Joined: Oct 31 2009
Posts: 7
Re: Looking for Insight and Advice on Creating a Mutual ...

 "a proposal for creating an alternative currency based on a mutual credit system in our community... building a closed social network site similar to Facebook/Myspace that allows members to post and respond to ads for service and products within our local community. The medium of exhange would be this created currency as well as bartering. The currency would be backed by hours. Basically 1 Note equals 1 hour. We are thinking we create currency based on every member who is admitted in by volunteering in the community 50 hours. 50 hours of annual volunteer time equals so many notes of the currency within the closed community. We are running into some challenges though. One being all hours are not equal especially when it come to specialized skills. We're not sure how to valuate skills in combination with hours. Certainly someone who helps babysit for an hour versus someone who fixes someone's brakes in an hour cannot have the same valued time. I can pay a neighbor to babysit for an hour $15 while I may pay $50 in labor costs to get my brakes done.
Jct: The problem is solved by using paper Hours. That way the mechanic can ask for what he's worth and the baby-sitter can ask for what he's worth and no one needs to know more than the 1 Hour note is the basic humsn unskilled rate earned by children, volunteers, even sheep-dog though that's pretty skilled.

TEA: "The other major hurdle is getting the currency to flow. If everyone has an balance of 50 Notes, what is the incentive to accept tasks within the community?"
Jct: Not having to use your scarce interest-bearing cash sitting in your bank account. If...

TEA: "Lastly we are looking to recreate Paypal (a very lofty goal)."
Jct: But the ideal. A PayPal currency based on time. What my UNILETS will do for the world.

TEA: "We are certain we have an extension of our idea we think can drive alternative currencies mainstream with future generations. We've been looking at Cyclos.org to see if their model would fit, but we don't have the technical expertise to recreate the site or use it to implement our idea. So if have computer skills or know someone with the computer skills to recreate Paypal and also have a passion for alternative currencies, I personally would love to talk with them.
Jct: Tell me what you decide. I have never had the time to do more than propose a time-based PayPal as my UNILETS dream for the world. As for the suggestion that there be an expiry date on your chips, the Toronto Dollar system used to but then announced that they would not expire because no one likes to the the last person to be caught with the "Queen of Spades" before the chip expires and people should always be allowed to cash out their chips. Demurrage negative interest-rate feedback is an unnecessary spur to economic activity.

soulsurfersteph's picture
soulsurfersteph
Status: Silver Member (Offline)
Joined: Jun 16 2010
Posts: 204
Re: Looking for Insight and Advice on Creating a Mutual ...
The Evolutionary Ape wrote:

Lastly we are looking to recreate Paypal (a very lofty goal).  We are certain we have an extension of our idea we think can drive alternative currencies mainstream with future generations.  We've been looking at Cyclos.org to see if their model would fit, but we don't have the technical expertise to recreate the site or use it to implement our idea.  So if have computer skills or know someone with the computer skills to recreate Paypal and also have a passion for alternative currencies, I personally would love to talk with them.

REALITY CHECK TIME!!

No offense, TEA, but if you don't have anywhere near the expertise and think that you just need someone with generic "computer skills" to recreate PayPal, you are in way over your head. Scale back. You are in over your head. 

I'm just trying to give a dose of reality here. I started out doing web design in 1994. I am nowhere near a top-level expert when it comes to programming and heavy-duty application development, but I certainly know enough to know that you aren't going to be able to recreate PayPal with a friend of a friend with "computer skills," who happens to know how to create a website by setting up a page over at Blogspot.

Creating an Internet payment system that is reliable, accurate, and bullet proof is not a small project that can just be spit out quickly by one person, unless that person happens to be a super genius with no life and no need to eat, sleep or otherwise live.

Do you have *any* idea what it takes to make PayPal work? Do you even have any concept of the infrastructure required in terms of servers, redundancy, or bandwidth requirements?

Do you have any idea of the capital needed to get something like that started? Do you have any money to get this thing off the ground? Because even if bartering is the ideal, for something like this you'll need cold hard cash, and lots of it.

Please don't take offense at what I am going to say next...it's probably because i spent many years doing web development, and I had to deal with a lot of clients who wanted the moon and the stars but no concept of the amount of hard work that goes into creating a website:

It is a given that people who aren't technically inclined will come up with what they think is the "next big thing," believing that their vision for their website is the most amazing thing since sliced bread. Not understanding the limitations or challenges of the technology, they imagine wild crazy things that might sound great in their minds but aren't practical or realistic to implement...especially with their budgets and current infrastructure.

It's usually the job of the consultant to reign in the wild imaginings of said client and get them to realize that their budget is not usually in line with their desires. "Oh, I only have $250 to spend but I want fully functioning e-commerce, an online community like Facebook, and to launch my own version of Twitter!" SORRY, NOT GONNA HAPPEN!

See this comic from the Oatmeal for an idea of what web developers go through...and this is just the graphic design part. When you bring in backend and programming, it gets even worse:

http://theoatmeal.com/comics/design_hell

At any rate, not to burst your bubble, but my sense from your post is that your vision far exceeds your technical or financial capabilities to implement it realistically. I would suggest getting an account with an existing site like timebanks.org and work INSTEAD on organizing in your local community. Play to your strengths - organize people. That's what you're good at.

Don't try to reinvent the Internet or recreate currency right now. I'm sorry...from your post it seems quite obvious you're not tech savvy enough and you have no idea what sort of impossible nightmare project you're trying to take on. I mean, if you can't even deal with an existing platform like Cyclos, what makes you think you'll magically find some person who can "recreate PayPal" for you?

Local bartering organizations in my area use timebanks.org, and if I were you, I would simply do that. There is SO MUCH that needs to be done in terms of organizing people. Even with timebanks.org being utilized here, and I'm in a large city with LOTS of people interested in "sustainability," these time banks are NOT getting really off the ground that quickly. WORK THE PEOPLE ANGLE, get your community going, and leave visions of the Next PayPal to someone who actually has the techpertise, money and staff to do it. For you, with absolutely no background in this sort of thing, you are dooming yourself to failure and wasting time that could be spent getting out there and creating community, using *existing technology* that is ready to go NOW.

Namaste.

 

 

 

 

 

 

 

 

jhart5's picture
jhart5
Status: Bronze Member (Offline)
Joined: Jul 25 2009
Posts: 89
Re: Looking for Insight and Advice on Creating a Mutual ...

 

TEA - You might want to check out this site out of Great Barrington, MA .  jhart5

BerkShares are a local currency for the Berkshire region. Dubbed a "great economic experiment" by the New York Times, BerkShares are a tool for community empowerment, enabling merchants and consumers to plant the seeds for an alternative economic future for their communities. Launched in the fall of 2006, BerkShares had a robust initiation, with over one million BerkShares having been circulated in the first nine months and over two million to date. Currently, more than three hundred and sixty businesses have signed up to accept the currency. Five different banks have partnered with BerkShares, with a total of thirteen branch offices now serving as exchange stations. For BerkShares, this is only the beginning. Future plans could involve BerkShare checking accounts, electronic transfer of funds, ATM machines, and even a loan program to facilitate the creation of new, local businesses manufacturing more of the goods that are used locally. Click here for more information about BerkShares.

http://www.berkshares.org/

The Evolutionary Ape's picture
The Evolutionary Ape
Status: Bronze Member (Offline)
Joined: May 31 2009
Posts: 62
Re: Looking for Insight and Advice on Creating a Mutual ...

Wow thank you for amazing feedback!

@ PDX Currency- Is Prezi.com your site.  If so I like the concept of the PDX Currency.  How did you get local credit unions to buy into the idea?  Edgar Cahn's work on Timebanking has been the foundation for my ideas.  I agree this probably is hard to do on a national scale.  But that's why I like it.  Timebanking puts the focus on the local community and encourages members to help their neighbor.  It seems a lot of the challenges we face as a nation, is because we have forgotten the importance of looking out for our neighbor and have bought into the corporate media's me first propaganda.  With the LETS system as you describe it, I'd fear pegging it to the dollar given the fact the dollar has so many short comings.  Plus it seems you are using 95% of your dollar.  I'm looking for a system that would leave the dollar untouched and operate independently of the dollar by using a person's time as their asset. 

Thank you so much.  These resources you gave are amazing.  I've added them to my list to review in detail.  Thank you so much. 

@KingofthePaupers-  I am putting together a short proposal to give to some professors and contacts I've found on the web.  I'll probably PM you later.  What was the reaction to your proposal?

@soulsurfersteph- Thank you for your feedback.  Yeah like I stated before it's a lofty goal.  I have a cousin who is a network security engineer who builds websites on the side and he continually reminds me of how lofty a goal this is.  But after the research I've done on our current monetary system,  I am convinced that something has to be done at some point and time, and I truly believe my idea is an answer.  My idea differs in that  I beleive using technology  can accelerate the spread of alternative currencies, especially among the younger generation.  I don't possess the experience, but I am certain someone somewhere has the skills I'm looking for and also holds my view. 

Recreating a Facebook type site is pretty simple and cheap.  Though the design is lacking in my opinion http://transitiontownworthing.ning.com/ shows what is possible with the Ning platform for community building.   I work with the platform as a hobby for musicians, so I know how to set up a community online.  The database, recording accounts and other things Paypal does is where I am lacking.  As a side note, the Ning platform is great for anyone that is looking to compliment local community with an online space. 

@jhart5- I like the concept of Berkshares.  It sounds similar to PDX Currency shown at Prezi.com.  I have two questions though.  What backs the Berkshares?  If they are pegged to the dollar, then I'd be curious what happens to its value when the dollar's value fluctuates.   Also how does the IRS treat the currency?  It seems to differ from Timebanking where the backing asset is the person's time.  Also you are still spending dollars, just 5% less of them.  However, I love the fact it encourages local business though. 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments