OWNERSHIP: Decentralised banking to expand ownership

[Shann Turnbull <sturnbull@mba1963.hbs.edu>]

Dear members of the economics of ownership discussion

(For Cc recipients refer to Capital Ownership Group at http://cog.kent.edu/ 
with archives of the discussion at 
http://cog.kent.edu/archives/ownership/index.html )

There are two proposals "on the table" of this discussion group for seeking 
a consensus for democratising wealth and I would like to add a third.

That is the use of local currencies created at the level of the community, 
town and regional/state to provide interest free credit to finance 
individuals into owning self-financing (procreative) assets.

The first proposal was put on the table by Norm Kurland in his summary of 
our different positions on July 27th when he asked for "support for or 
against binary economics".  This proposal has generated most of the current 
discussion.  I have not entered into this discussion and do to wish to 
except to point out that the objectives of COG can be achieve without the 
need for binarian economics as demonstrated by my proposals.

This was part of the reason for putting the second the proposal on the 
table to provide a complementary and/or alternative position by inviting 
"Support for minimizing the overpayment of investors" .  This proposal has 
not been properly understood by the "binarians", Dan Bell thought that it 
might be difficult to achieve and Alan Zundel is still to form an opinion.

It is also part of the reason for putting this third proposal on the table 
to show that there are other ways of providing low interest credits than 
that proposed by the binarians to finance people into owning procreative 
assets.  Again this can provide a complementary and/or alternative approach 
to central bank discounting.  The Sovereignty loan plan is another approach 
for the issue of interest free credit to finance public works.  As interest 
charges can increase the cost of public utilities to more than three times 
their value, this plan, also based on central bank discounting, can make a 
major contribution in reducing the cost of utility and public works.

While I accept and promote central bank discounting as another useful "band 
aid" solution, it reinforces the power of government and their central 
banks.  I am philosophically against such centralisation of power, 
especially when governments establish national currencies as a 
monopoly.  The widespread adoption of "Stamp scrip" during the great 
depression in the USA was made illegal by the New Deal legislation because 
it threatened the power and relevance of the Federal Reserve 
system.  Digital cyber currencies have introduced the same threat and so 
the opportunity to re-introduce negative interest rate (ecological) forms 
of money.  It has ecological characteristics because it has limited life.

Stamp scrip was issued with a limited life of typically two years and 
required a one cent stamp to be affixed to the note each week to maintain 
its value.  The 104 cents collected by the local chamber of commerce or 
local government body which issued the note and the stamps was used to 
redeem the scrip after 104 weeks to provide a profit of 4 cents per note 
issued.  Today credit cards charge 2-4% per transaction and as the one 
stamp scrip note might circulate through ten or more transactions per week 
its cost would only be 0.1% per transaction or 20 to 40 times cheaper than 
modern credit cards.

Over the last 15 years thousands of communities have introduced Local 
Enterprise Trading Systems (LETS), Time Dollars and other forms of 
alternative ways of exchanging value.  My colleagues of the E.F. Schumacher 
Society in Great Barrington, MA have been promoting regional currencies 
since "Constants" were issued in Exeter, New Hampshire in 1974.  They have 
promoted a number of variants of local currencies.  They have also promoted 
Self-Help Associations for Regional Economy (SHARE) programs.  This is 
described in our book 'Building Sustainable Communities' along with 
elements of autonomous banking.  The significance of the SHARE program is 
that it used the local banking system to finance the acquisition of 
self-financing assets to democratise wealth. It provides a format for 
achieving the same objective with interest free local currencies.

These sorts of practical examples and experiments can be introduced without 
the need for lobbying a central government and its holy of holies the 
central bank.  I believe it would be much more cost effective in time and 
money to introduce interest free credits through the use of local 
currencies than attempting the band aid solution of modifying the 
activities of central banks.  Especially, as they become irrelevant with 
the introduction of privately issued digital currencies like "fly-buy" 
points, etc.

Just a thought from

Shann