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rCredits

Common Good Finance is developing a set of open source tools for local communities to create liquidity and investment capital, backed by their own productivity. It is looking for local economic actors such as chambers of commerce or Transition Towns who are ready to update the way they do business.

Intro
Transition and the money system

The global money system is essentially ponzi scheme in which the the originators end up with absolutely everything. Money is a weapon for keeping countries subservient and a tool for keeping the poor at bay. Everyone is subject to it, but worse, everyone is part of it. If money is the blood, we are the organs. When value, created by our work, is monetised and sold, the managers of the money system suck that value up the pyramid, through the supermarkets and banks and tax havens, and lock that value away for their own purposes. We have no idea how much they have hidden. That's how despite productivity has rising steeply decade on decade, our quality of life has not.

With the political will, the economy could be greened very quickly, and we could soon work with more dignity, producing less, consuming less and enjoying more. Many thinkers and activists envisage a 'transition' path towards an abundance not of mere money, but of the assets that make life worth living. The transition implies a full spectrum of changes accross our whole society; in law, in money, in policy, in social provision, in business, and hopefully even in government. However governments monetary policy is driving financial crisis from bad to worse, and grass roots activists are reaching out for locally implementable economic ideas. They want to enable a rapid transition with or without the support of the kleptocratic elite.

The less value is exchanged via debt-money, the less the issuers of the debt will control, redirect, and ultimately confiscate that value.

So how can we opt out of this nightmare economy, create value with dignity, and have no part in exploiting and being exploited? How can we not feed the beast, without starving ourselves, or reverting to hunter-gathering? How can we seed and nurture alternative exchange systems and investment systems which work in the interests of the producers, not the system administrators?

Reconstructing money
Solutions and non-solutions

Anyone can stop selling their labour for debt-money, and continue creating and exchanging value. They requires only that the value created is used in the same network that your needs are net. This is what 'local currency' means. Local currency is an essential pillar of relocalisation, because it offers its local communities the monetary tools to create what it values.

So far the attempts at monetary reform within the transition movement have achieved very little. Proxy pounds are simply an attempt to nudge people into buying local. They will never increase liquidity, create new investment, or shield against sterling instability. Basic understanding of money & credit remains low in the transition movement.

If local towns are to help themselves, they will have to be bolder than they have been so far. Supporting the local economy is meaningless if we require that it operates with the ruthless, impersonal efficiency of the global marketplace. But by our committing to our local economies, especially collectively, much value can be unlocked and put to work! The mechanism is simple; the community issues credit individually or collectively instead of the bank. Instead of being backed by bailiffs and the sound policy of the Bank of England, softer contracts can make local provision for defaults. If there were interest repayments, they could not leave the local system. Members of the community assure each other that they will purchase, and make available goods and services for this credit.

The first benefit of a local exchange system is liquidity. There is always enough money as long as the economy is producing and using value in equivalent amounts. Taxes and fees have to be spent back into the local economy. This encourages enterprise to fill niches which aren't met locally. as people realise they have spending power then local jobs will be created.

The second benefit is the ability to issue money not only on the basis of day to day exchange, but over the long term, say for investment in local infrastructure and value creation.

Using local labour and materials, a community can create the money to lend to itself, interest free. Or it can issue bonds backed by local businesses, or credit unions. It could peg its currency to the price of a local commodity; it could implement 'sound' money systems using precious metals or fiat currencies or mutual credit. The basic idea is elementary, but much innovation is necessary and much experimenting is needed to find the appropriate models for this transition.

A solution
Common Good Finance is building rCredits
Now three projects are coming together in rCredits, which will provide the foundations for a new decentralised network of local economies using local currencies and which can address all those issues.

  1. Common Good Finance has been teaching and advocating for decentralised local banking solutions for many years. In 2011 they received funding and started building their own banking software.
  2. Drupal Community Accounting reduces the cost of designing and running currencies by providing a highly flexible interface. It is already used by many timebanks and LETS and can plug in to a variety of other payment technologies, starting with SMS.
  3. OpenTransaction does highly secure, financialised accounting. It allows for the creation of contracts which can then be signed, encrypted, and circulated as money.

This combination will provide a whole set of options for communities of a certain capacity to issue and manage their own exchange media, locally. Softer social currencies like LETS, and harder, more contractual currencies will all be possible in the same open source framework, ready for integration with the whole range of web technologies and payment systems.

Common Good Finance is designing the rCredits model for Chambers of Commerce to issue. But the deeper work is in creating legal, software and monetary templates. Later in the year they will be looking for implementation partners. Be ready!

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