Currency systems showcase

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Currency systems showcase

Post by Cryosun on Thu Dec 15, 2011 6:28 am

I thought I'd make this topic to present different currencies that are successfully employed around the world right now. First up: the Chiemgauer.

You may have already heard of the Waera stamp scrip. (that's Wara with two dots over the first "a"). The Waera was used throughout Germany during the early part of the 20th century, but only had half-hearted acceptance. But the Waera really turned heads when it was adopted by the village of Schwanenkirchen, Germany. The owner of a coal mine (that had been closed for two years due to the Depression) in Schwanenkirchen adopted the Waera stamp scrip from the Waera Exchange Association that had created the currency. The miner's wages were paid in Waera, the local village store accepted the Waera from the miners. The shopkeepers paid the wholesalers with it, the wholesalers paid the manufacturers, the manufactures either cleared their debts with it OR used it it buy their coal from the mine, thus completing the circulation. The currency, which had just been a good idea before, succeeded in creating wealth when it became redeemable in coal. The Austrian town of Woergl (Worgl with two dots over the "o") also implemented the Waera successfully. Instead of redeemability in coal, in Woergl the currency was redeemable to pay taxes. The town paid its public employees to do public works with the currency, employees spent the currency up through the local supply chain as before, then the town government forcibly collected the currency in taxes to compete the circuit. Again, I'm not a fan of involuntary transactions, but a tax base of issue does create a demand for the currency, no doubt about that.

The Waera was outlawed by the German and Austrian governments under pressure from the central banks at the time. But it's back thanks to a Bavarian schoolteacher who knows his local history. The schoolteacher has no coal mine and cannot forcibly tax people, nor does he have employees to pay with it to issue it into circulation, so he uses a cash buy-in model. The Chiemgauer is redeemable for Euros at a small penalty by businesses who accept them. People use Chiemgauer because using Chiemgauer supports their favorite non-profits. http://en.wikipedia.org/wiki/Chiemgauer

Currency issue, exchange and acceptance


Bills of 1, 2, 5, 10, 20, and 50 Chiemgauer are issued. To maintain an individual bill's validity, a "tax" corresponding to 2% of the banknote value must be paid every three months. (This system, called demurrage, is a form of currency circulation tax and was invented by Silvio Gesell.)

Chiemgauer, considered to be equivalent to the euro, circulates as follows within Prien and neighboring towns:[citation needed]


  • Non-profits: entitled to purchase 100 Chiemgauer at €97 and resell them at €100, therefore earning €3 to be spent for their own activities.
  • Shoppers: exchange €100 for 100 Chiemgauer at a non-profit they
    support, allowing the non-profit to benefit from the preferential
    purchase price. Also, spend Chiemgauer at local businesses at face
    value, therefore helping both local non-profits and businesses without
    any further cost.
  • Businesses: accept 100 Chiemgauer at face value and spend them for
    their own purchases or exchange 100 Chiemgauer into €95, losing 5% for
    commission but earning more by attracting Chiemgauer members to their
    products and/or services. Of this, €2 is devoted to administrative
    costs, and €3 replaces the original discount to the non-profit.

Stamp scrips have a places on the back to place stamps that represent the payment of the hoarding tax. The stamps must be purchased every so often (every month for the Waera, every three months for the Chiemgauer) or the bill loses its value. People won't accept a bill that hasn't had its tax paid, because they know they will have to pay it to make it valid. They can accept it at a discount for the amount of the tax, and then pay it themselves and not be out anything, but usually they will just tell the bearer to pony up or no sale. Since everyone has access to a calendar, it is easy for all to see if the proper amount of stamp tax has been paid. Some Americans tried to issue stamp scrips during the depression but they tried to make everyone who passed the scrip pay the tax- it became a transaction tax instead of a hoarding tax. It was a "fair" idea but totally counterproductive and impossible to verify.
I believe the demurrage must be paid in Euros, but I'm not sure about this. Various videos I've seen just mention the money loses value over time. If it loses that value in terms of its own unit, then that lost amount could be represented by a payment of some of the cash to buy stamps to keep the rest of the cash on hand valid. The value lost can be represented by a discount from the face value, but that's terribly confusing (which is what John Turmel doesn't like).

http://www.chiemgauer.info/
https://www.youtube.com/watch?v=6_Bf85tX9YE
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Re: Currency systems showcase

Post by ravenpaige on Thu Jan 19, 2012 7:53 am

Seems like many people now are looking for an alternative. This article on CNN yesterday. http://money.cnn.com/2012/01/17/pf/local_currency/index.htm?iid=HP_LN
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Wow, these systems are popping up everywhere!

Post by Cryosun on Tue Jan 24, 2012 10:09 pm

There certainly are a lot more local currencies out there than there were just a few years ago. There seem to be a few models that are copied/adapted to local conditions that work well. This CNN story starts with one called the "Plenty" that looks like it is probably based on the Toronto Dollar model. I call it that because I believe it was invented in Toronto. However, it's one of those ideas that keeps getting re-discovered independently by people around the world. A version of this model was actually used in ancient Sparta! I'll go into detail about the Toronto Dollar in the next post in the thread. For now, here's the CNN clip:
https://www.youtube.com/watch?v=ghs_Ag8P6Lw&feature=related


Last edited by Cryosun on Mon Jan 30, 2012 7:59 pm; edited 1 time in total
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The Toronto Dollar

Post by Cryosun on Sat Jan 28, 2012 2:32 am

From the horse's mouth:https://www.youtube.com/watch?v=FXpjLbJWHPk
Ok, so what did he just say? Pitch pitch, benefit benefit, strengthens the community, buy them at select businesses, supports charities, 10% something or other... Huh? How do they work? How do I set this up in my community?

First concept: the traveler's cheque. Visualize an American Express Traveler's cheque. You give American Express US Dollars, they give you traveler's cheques for the same amount. You spend the traveler's cheques at a store, and the store accepts them just as if you had given them US Dollars. Why? Because the store knows they can redeem the traveler's cheques at American Express for the same amount in dollars. American Express obviously has those dollars ready to redeem their own cheques because you gave American Express those dollars in the first place. Between the time the traveler's cheques were bought and the time they got redeemed, American Express was busy earning interest on them. And some small percentage of traveler's cheques inevitably get misplaced and forgotten, and those unredeemed cheques constitute pure profit for American Express.

The Toronto Dollar is basically a nifty spin on the traveler's cheque. First, a Toronto-dweller exchanges Canadian dollars for Toronto dollars of the same value. Toronto retail businesses who accept the Toronto dollars accept the Toronto dollars on par for Canadian dollars because they know Canadian dollars have already been put into the redemption fund for every one of their Toronto dollars they accept. Well, almost. They're just like a traveler's cheque- almost. American Express Traveler's cheques are always immediately redeemed for US Dollars and never circulated as a currency in their own right because there's no incentive to do anything other than just redeem them as fast as possible. The creators of the Toronto Dollar wanted it to circulate in its own right, so they deviated from the simple traveler's cheque by only allowing for 90% redemption instead of 100%. And they also limited the redemption option to businesses only. So instead of just redeeming them, businesses have an incentive to spend their Toronto dollars on employees and suppliers because they get credit for the Toronto dollar's full face value when they do. So they have an incentive to seek out and prefer local suppliers. If they absolutely have to have Canadian dollars to pay a particular bill, they can redeem their Toronto Dollars and get the national cash they need. The 10% loss in value they suffer from redemption usually gets more than make up for in increased business they receive through participation in the program; they can chalk it up to advertising expense. At any rate, businesses are free to regulate how much of a percentage they are willing to accept as payment denominated in Toronto Dollars and thus effectively minimize their need for redemption at all. All things considered, businesses have a net incentive to participate because they know they will be sought out by clients and by other businesses who might otherwise turn to suppliers outside Toronto.

Why do shoppers go to the trouble to exchange their Canadian dollars for Toronto Dollars when both dollars are worth exactly the same amount at the store? That's where the mysterious 10% not available for redemption comes into play. You see, when a Toronto shopper first exchanges Canadian dollars for Toronto Dollars, 90% of the those Canadian dollars are set aside in the Toronto Dollar redemption fund held at a Post Office account. (Apparently, Canada still offers savings account services through the Post Office like the United States used to until the year 1967.) Interest earned on that redemption fund pays for the administration of the Toronto Dollar. The other 10% of the Canadian dollars used to buy the Toronto Dollars gets allocated to a local charity support fund. The administration of the Toronto Dollar makes cash disbursements to local initiatives (such as the local "Out of the Cold" project) to aid the unemployed and the homeless. Since it is understood that those funds are set aside as soon as they are received, they are immediately available for disbursements to charity. Toronto shoppers go to the trouble to exchange their Canadian dollars for Toronto Dollars because they know they are helping the poor without contributing to panhandling and without losing any spending power from having made the exchange!

The Toronto Dollar is just a win/win/win for everyone. In the thread about Banker's Usury money we talked about how money is used primarily to settle accounts between people. But we also said additional information besides just the settling of accounts can be designed in to be communicated through the money. When we use bank money, we communicate the value and ownership of wealth being transferred between people. But we also communicate how much of a cut of that wealth the bank gets by the means of interest designed into the money's issue. The Toronto Dollar is a good example of a currency that has also been designed to communicate external information besides just the trade between two parties. By the design of the Toronto Dollar's issue, the degree to which the homeless and unemployed will be supported is also communicated by virtue of the rules of its issue.

Here's their website:http://www.torontodollar.com/
Here's their FAQ:http://torontodollar.com/FAQ/index.php#howwork


Tom Greco gives some insight into the history of the Toronto Dollar on pages 108-109 of his "Understanding and Creating Alternatives to Legal Tender money". He writes that the founders of the Toronto Dollar originally wanted to set up a LETSystem, but were unable to get businesses interested in pricing their wares in terms of LETS credits. Then they looked to the Ithaca Hour who had already succeeded in getting a large number of local businesses to participate in the Hour. They considered adding the LETS credit feature to the Ithaca Hour model.

"But because of merchant concerns "about getting stuck with large amounts of Toronto Dollars," a substantial departure from the Ithaca model was made. Another of the founders, businessman David Walsh, insisted that Toronto Dollars should be issued based on the payment of Canadian dollars, and that they should expire at some point. It was recognized that tying the Toronto Dollar so closely to the Canadian dollar would limit its empowerment potential, but it would provide the level of safety needed to satisfy the business community and achieve the primary goal of broad-based acceptance of the local currency The existence of the Toronto Dollar Reserve Fund and the option of redeeming community currency for federal currency were seen as powerful selling points in gaining the participation of the business community. Indeed, the participating merchants generally view Toronto Dollars as safe, credible, and risk-free."

So chew on that. It's kind of a finanglement and it's a compromise. But it's a success. It's unfortunate there's no way to increase Toronto Dollars in circulation when Canadian Dollars become scarce due to a national credit crunch. But there's a lot to be learned from the Toronto Dollar about how to get widespread acceptance right away. The founders asked business what they wanted and also sought and obtained co-operation from the city government before launching the currency. That helped a great deal. Not all city council's are filled with people who will co-operate with good-sense ideas, however. So if you can get co-operation from "authority" figures that's great. If not, there are other models to use that still may be able to incorporate ideas from the Toronto Dollar to your currency's benefit. Wherever you may be, your locality has its own unique attributes that you can play off of to strengthen the currency and give it a sense of local belonging and identity.

Next post: A currency that learned from the Toronto Dollar and gave it a local spin appropriate to what makes sense for Salt Springs Island, Canada.
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Salt Springs Island Issue Monetary Foundation

Post by Cryosun on Sat Jan 28, 2012 3:26 am

These guys do such a fantastic job of explaining their currency I'll just step out of the way and let them explain it.

http://saltspringdollars.com/about-us/history.html
http://saltspringdollars.com/about-us/issuing-policies.html


Interesting approaches:

They use interest to fund their operation, like Toronto Dollars. They also intentionally use the principle of seigniorage to fund the operation. (Seigniorage is the difference between the cost of making a note or coin and its value in the market.) Since a note has a low production cost but yet people pay for its full face value in this national-cash buy in model, the system enjoys quite a profit margin if it is never redeemed. They intentionally make the notes very beautiful to encourage collectors to buy them. (The United States did the same thing recently with their issue of state-themed quarter-dollars and the president-series "gold" dollars.) Their huge tourist population funds the operation every time they bring home Salt Spring Dollars as souvenirs. Here's another great example of what to emulate: look around at what YOUR location can use to give its currency an advantage and an identity!

Salt Spring Dollars are legally considered to be gift certificates. But instead of being valid with only one issuing merchant, they are valid with a network of merchants. And between the merchants as well- facilitating trade business-to-business. And therefore money. Yet still legally unassailable as gift certificates!

Now, I like the Salt Spring Dollars. They encourage local trade. They're cool. They're pretty. They 100% accepted on Salt Spring Island. But don't get me wrong. They are a far, far cry from the ideal currency that liberates and levels the playing field for all.

They don't expand and contract their circulation in conjunction with the needs of commerce. They have no credit component. When one Salt Spring Island Dollar goes into circulation, a corresponding Canadian dollar goes out of circulation. Well, not entirely- the Canadian dollar earns interest and therefore is used as a deposit in the fractional reserve lending system to permit new money to be lent into circulation that otherwise would not have been. So it "circulates" as regular interest-bearing savings would and yet is still circulating in proxy as the Salt Spring Island Dollar until redemption. Did that last sentence make sense? What I mean is that a dollar deposited in a regular savings account to earn interest is not available to be spent until it is withdrawn. In contrast, when a Canadian dollar is exchanged for an S.S.I. dollar, it then effectively has doubled itself to exist in two places at once- both in the interest bearing reserve account and also in circulation as the S.S.I. dollar. So that does represent an increase in the money supply as a derivative of the Canadian dollar. But since the Canadian dollar is invested, this increase is likely not a harmful one and at any rate is reversed upon redemption. But at any rate this doubling is not an increase due to credit accounting. Otherwise, the S.S.I. dollars really are just gift certificates/traveler's cheques improved to allow for circulation before redemption.
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Re: Currency systems showcase

Post by ravenpaige on Sat Jan 28, 2012 2:55 pm

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Thanks for the video on Equal Dollars!

Post by Cryosun on Mon Jan 30, 2012 10:00 pm



Thanks, ravenpaige! I hadn't seen that one before. They're utilizing "excess capacity" as the redeemable "backing" for their currency. That's a model I haven't posted about yet: the frequent flyer mile model. Airlines "spend" "frequent flyer mile" currency to "buy" the customer's loyalty to the airline. The frequent flyer miles are redeemable for the airline's "excess capacity" (empty seats). Since the it costs the airline no more to fly the plane with a free rider than it does to fly the plane with an empty seat, they can go ahead and use those seats to encourage behavior (customer loyalty) that benefits the airline. Anyone bearing the frequent flyer miles can redeem them for a plane ride. Businesses that use a lot of air travel are glad to accept them as payment for their own services because they know the frequent flyer miles are just as useful to get them the business trips they need as dollars would be. So Frequent Flyer Miles have a chance to circulate before they eventually end up in the hands of someone who actually spends them on air travel.

Many people are allergic to the term "fiat currency" but this is actually what this currency is and it works. But it's "fiat" with a very important caveat. A producer of a good or service (the airline) has declared the currency redeemable in their own good or service. A fiat currency is only a bad thing when it is declared to have value by an issuer who produces nothing for which the currency can be bought. Governments sometimes produce useful things- municipal governments often provide their own water and trash disposal services, and the Federal Government is required by the Constitution to provide postal service for the people. Where governments get into trouble is when they issue (spend, whether by borrowing or by outright printing) money but produce no marketable thing with it (like B2 Spirit bombers). Instead of completing the redemption circuit with value, they force the return of the money by taxes. If they repeatedly take wealth from the economy without producing any value for the people, the money will get tied up in this non-productive circuit and there will be less and less wealth in the market to buy with it as taxes starve people of the money they would otherwise use to keep the wealth-producers solvent. This condition results in the dreaded hyperinflation scenario where money is still hard for producers to come by but yet that monetary scarcity mysteriously fails to maintain its value against real world goods. Prices of market goods soar and the worth of people becomes horribly undervalued by this distortion.

At any rate, when I talk about a local currency using a "fiat" model, I don't mean a local group using the power of police and judges and prisons to rob the common citizen. Fiat means decree, and a while a decree often does come from a dictator and his sycophant military/police commanders, it is also possible for a local community group to decree that they are willing to accept their own currency in return for support for their own values. They just can't decree that you support their values OR ELSE.

This Equal Dollar group has gained the co-operation of businesses who otherwise would be throwing these foods away as excess capacity. This capacity may not be profitable for grocery stores to deal with within their own stores- a nearly expired loaf of bread here and there is easier just to throw away. Pooled together into one store, these occasional excess capacity foods make a trip to the Equal Dollar store worthwhile. Armed with this value with which the organization can redeem its currency, it can then declare what its values are and decree how much of its currency it will pay for people to work toward those values. And that's exactly the same thing the airline does. It pays people with its own redeemable currency to support its own values as an airline.

There's no credit basis for this model. it is definitely not a LETS. And there's no skills directory linking the redemption with labor available in the directory so it's definitely not an Ithaca Hour based model. As long as the group only pays people to do work when they have something with which to redeem their currency, they will do just fine. If they pay people to GENERATE things with which to redeem their currency, they can grow beyond dependency on excess capacity for their redemption scheme.

I hear you asking, "Couldn't they just add a LETS component at some future time and still have the LETS issue use the same printed paper (for cash withdrawals) as the fiat currency they started with? Well, sure, because LETS only puts money into circulation when it also puts wealth into circulation. So you would just as easily be able to find something in the community to buy with LETS-issued Equal Dollars as with the fiat-issued Equal Dollars. Now, the deal originally is that you can buy food from the store with the Equal Dollars; if you had a big thriving LETS community all go down to the store at the same time to redeem all their LETS-issued Equal Dollars for the store's food, of course the store would not be able to make good on those redemptions. Is that likely to happen? No- there's no reason for the group to make a run on the store like the reason nervous bank customers have for making a run on their bank. People using fiat issue Equal Dollars would be just as likely to spend their Equal Dollars into the LETS community as long as the LETS community was producing things of value. Some sort of flexible equilibrium would establish itself between the two issues of currency circulating under the same name.

These are important things to consider when cobbling together a designer currency out of the different issuing schemes we use as building blocks. This gives me an idea. Perhaps it would be useful to write up the known issue circuits and what ends they achieve. And also how they can work with or conflict with each other within a macro-system. In the Salt Spring Island Dollar, achieving 100% acceptance was their primary objective and so they went with a strict 100% cash redemption model. Redemption basis of issue gets quick acceptance. Credit basis of issue allows for economic growth. If you possess absolutely NOTHING with which to redeem a currency, you can start with individual members issuing credit to each other (LETS) and take POSITIVE well-planned steps to get local business production redeemable in that currency. "Local production" includes city services! If you can get the city on board to pay their employees and accept taxes in the currency, you're in fantastic shape. (Fantastic as in literally living in a fantasy world...) -Out of all the cities and towns in America, there must be some small percentage who will see the light and shine it out to the others. There's always the early adopters for every good idea. Maybe one of those towns is your town!- But at any rate, even without city hall, businesses are always looking for a way to keep solvent. A coherent plan will find the co-operation to build a network. The Equal Dollar people have proven that.

Ha! I just wrote that like some kind of motivational speaker! As for me myself, I'm still working on getting my coherency together... But my day to sink or swim is coming.
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Unbelievable factoid I just found

Post by Cryosun on Tue Jan 31, 2012 12:47 am




1. Flugmeilen



Nach
einem Bericht im Economist (2002) haben die internationalen Fluglinien
über acht Billionen (8,000,000,000,000) "Viel-Flieger-Meilen" im Wert
von 500 Billion US$ angehäuft. Damit sind die Flugmeilen die 2. größte
Währung nach dem US$. Zum Vergleich: Die Goldreserven der Deutschen Bank
sind mit 45 Billionen Dollar (Dezember 2003: 3449,5 Tonnen) nicht
einmal ein Zehntel dieser Bonusmeilen. Die US Goldreserven mit insgesamt
106 Billionen Dollar (Dezember 2003: 8135,4 Tonnen) sind ungefähr ein
Fünftel davon!



I just saw this relevant factoid on the Coinstatt site http://www.coinstatt.org/
It says:

"According to a report in "Economist" (2002) the international airlines have amassed more than eight trillion* "frequent-flyer miles" worth over 500 billion U.S. dollars. That makes the "flymile" the second largest currency after the US$. For comparison, the gold reserves of the Deutschen Bank are at 45 trillion dollars (December 2003: 3,449.5 metric tons) not even a tenth of the worth of these bonus-miles. The U.S. gold reserves at a total of 106 trillion dollars (December 2003: 8,135.4 metric tons) are approximately a fifth of their value!"

Now that's testament to the power of an alternative currency!

*milliarden are the German billions, billionen are the German trillions. When they refer to 500 billion US$ they mean our billions, the way large values are commonly denominated internationally. Otherwise, they would have used the plural "Billionen" if they had meant trillions. It's confusing, I know. Oh, and you grow up learning there are only 5 (five) continents in the world if you grow up in Europe! Who'd a thunk? Yeah, the Americas counts as one, Eurasia counts as two just like we teach our puzzled kids over here, and Antarctica doesn't count. Africa and Australia both count as one each. A fact's a fact, unless you grew up somewhere else.
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Re: Currency systems showcase

Post by ravenpaige on Sat Feb 04, 2012 10:34 am

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The Göttingener Augusta

Post by Cryosun on Wed Feb 22, 2012 2:56 am

http://www.augusta-regional.de/index.php?option=com_content&view=article&id=63&Itemid=88

I've been working on a piece concerning the flow of national currency into and out of local currency systems. It's been kind of a monster to grapple with. I've already written about how a national cash buy-in model can't be mixed with a credit model because national cash isn't put into the redemption fund to redeem the credit-created money. Researching more about this topic, I found the Augusta. The Augusta is a weird and fascinating compromise cooked up by some folks from Göttingen, Germany. First, there is no promise to redeem the Augusta for national cash (central bank cash at any rate- Euros). So, yeah, that obviously takes care of the redemption problem. Of course that limits acceptance at first, but it avoids catastrophic runs on a redemption fund. Yet the public does have the option to put Augustas into circulation by buying them 1:1 for Euros. Like the Toronto Dollar, the motivation for the public to do so lies in the support of charity organizations. Unlike the Toronto Dollar, the buyer of the Augusta determines which particular charity she wants to support with the 3% of the Euro cost of the Augustas earmarked for charitable donation. That of course would resonate with Germans who are used to voting for their favorite party in elections. The 3% becomes a vote for a charity they believe in. And who would not rather make that determination themselves than to leave it up to the currency's steering committee? So that's cool.

But also unlike the Toronto Dollar, the Augusta is not only put into circulation via cash buy-in. Do they use credit clearing to get more money circulating? No. It's necessary to have some kind of accounting office to do that (or at least someone who manages the Cyclos software on the internet) and they don't. And no, they don't simply print and give out money to causes they believe in like the Ithaca Hour does nowadays. That practice absolutely relies on Seignorage (i.e.collectors taking money out of circulation) to prevent inflation. It does not complete the currency circuit and should not be relied on. Instead, the Augusta completes the currency circuit by charging first an issuing fee and then an annual fee to the issuer. They restrict such issue to local businesses, of course.

The businesses receive an amount of Augusta when they sign a contract of receipt of the currency. In the contract, the business pays a smaller fee up front for a much larger amount of Augusta to put into circulation. The business also agrees to pay a larger fee at the end of the year. Both fees are payable either in Euros or in Augusta. Probably they won't have Augusta to start with and will thus likely first pay in Euros. The Augusta are issued in proportion to the cost in fees thus: for every 150 Augusta issued, the starting fee is 20 Euros/Augusta, the year-end fee is 40 Euros/Augusta.

Here's the clever bit. When the business receiving the Augusta for distribution into circulation decides how much percentage of the issuing fee(s) it will pay in Augusta versus in Euros, it also contractually promises to accept the same percentage of sales prices in Augusta from customers. The business of course would rather pay its own fees in Augusta and save its Euros, but to do so means it will have to accept its own issue of Augusta. If it would rather not accept as many Augusta, it can also not use as many Augusta for its issuing fees. That's reciprocity! And of course, at the end of the year, the business had better accept some Augusta anyway to have on hand to pay its fees to the community currency administrators if it hopes to pay in Augusta. It's almost like a credit issue. The business itself has to guess how many Augusta it will be able to recapture from circulation before it decides to issue them.

Now, the businesses don't spend the issue into circulation. So it's not people accepting the issue who are extending the credit as they would be in a LETSystem. Instead, they give the money out as coupons to be redeemed at their own business. Of course, the coupons can be redeemed at any of the participating businesses. What do the businesses do with the Augusta that their customers bring in? In practice, I don't know. I don't know if they have yet been successful trading the Augusta business to business or as payment for employees. I don't know if the customers bearing the Augusta trade them among themselves to settle debts. Since the issuing businesses accept them, people ought to find them valuable and use them to trade with each other. To encourage people to spend the Augusta a slight demurrage is imposed on the notes. The Augusta is a stamp scrip. The low value notes (1, 3, 5) are however not stamped. The 10 must be stamped 2X/year. The 30 (largest note) must be stamped 6X/year- every other month. The stamps all cost 50 Euro cents. That works out to a 10% loss in the bearer's purchasing power over the course of a year for both the 10 and the 30. So everyone wants to spend the currency before the next stamp date, as with all demurrage/stamp scrip schemes. The Germans love their demurrage. Both Silvio Gesell and Rudolph Steiner wrote about the benefits of demurrage, and it is their German writings the Germans are reading.

The Augusta carries an expiration date, always the following August. The notes are issued once a year, and the fully stamped notes are exchanged 1:1 for new un-stamped notes in August. Again, there's no redemption in Euros. Now, a business may decide to ramp up its issue during the year; I suppose notes pre-stamped up to that particular time of year would be issued in that case so that the expiration date would still be the coming August for all notes to keep things simple.

One other cool idea- the business receiving Augusta for circulation must submit their business' logo to be printed on the back side of the notes they issue. This gives businesses bragging rights among the public. When the public sees a lot of a particular business' logo on the back of the notes in their wallets, they know the business is a strong participant in the currency.

What else, what else... Oh, the business prints 5000 copies of its directory of participating businesses at the beginning of the issue year. There's that idea again. Directories remain a very important thing for a currency to publish, of course.

Well, there are some clever ideas to borrow. The annual issue seems like it would be a sluggish way to grow the system, but it does require less continual management that way. For a group that doesn't yet have the ability to make their living from their system and can only attend to it part time, this would make sense.

One other thing. The Augusta enables the possibility of using the currency as a store of value. Now, saving the physical notes themselves is discouraged by the 10% annual demmurage. But holders of excess Augustas can indeed save the value of their money by lending them out. The system helps broker bond contracts between borrowers and lenders. The borrower agrees to repay the full amount of the loan at a certain future time. During that time, the lender's money incurs no demurrage penalty. Its value is thus stored- preserved during that time. Now, for the borrower to accumulate and store up the money over time to repay in a lump sum might be costly. The accumulated amounts would of course need to get stamped to retain their validity. So it's in the borrower's interest to repay the money in any amount they happen to have in hand along the way to avoid paying for stamps. If the lender/saver doesn't yet need to spend the money she'll want to get it back out into another loan as soon as possible to avoid buying stamps for her savings. I just love how the demurrage mechanism encourages all the right behaviors to keep an economy healthy!
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Cryosun
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