An idea

+1 to dorra or DRA for the FTS100 peeps.

In a way, micro currencies already exist in communities like this.

There are things valuable only to this 'scene' of fixie skidders for example. Things like discontinued bike parts. They are no longer in production so there is a limited quantity in circulation. Their value is determined by 'the scene/micro economy' and they are traded for other items or currency totally outside a retail, taxed environment.

Making an actual currency like notes & coins could never actually work because the value of the currency is based on the items scarcity. The currency would always be able to be produced outside the control of individual so it would remove the confidence of a set value (like inflation) plus the notes would have no intrinsic/transferrable value like gold, oil or a rare bike part so it could never be trusted/adopted.

Sorry, I'm investing these in property..

Could one base a currency upon work rather than goods?

i.e. an agreed unit, be it time based or goal based.

So for example one LFGSS Megabuck is worth 25 minutes of bike maintenance, or one headset installation.

Making an actual currency like notes & coins could never actually work because the value of the currency is based on the items scarcity. The currency would always be able to be produced outside the control of individual so it would remove the confidence of a set value (like inflation) plus the notes would have no intrinsic/transferrable value like gold, oil or a rare bike part so it could never be trusted/adopted.

Thats why we need Velocio to setup the Bank of HTFU, control the production of LFG$$ and ensure that suitable liquidity is maintained. Bank of HTFU would hold your rare bike parts and give you LFG$$ thereby giving it intrinsic value to anyone who believes that rare bike parts have value (like us).

Inflation is a measure. Asking whether we need Bank of HTFU to operate and inflation targetting monetary policy is probaby something we need to discuss in a seperate thread.

Could one base a currency upon work rather than goods?

i.e. an agreed unit, be it time based or goal based.

So for example one LFGSS Megabuck is worth 25 minutes of bike maintenance, or one headset installation.

Now its getting interesting. So we are securitizing labour to abstract its intrinsic value and use it elsewhere. There is the risk here that the mechanic or LBS may refuse to redeem the work - I'm not sure how Moodys or S&P would rate this, but I'm guessing that it would be below AAA.

There is also a derivative element here, as you would be issuing securities for work to be conducted in the future, thereby allowing speculation on their value. If bike mechanics were scarce then the value of our currency would rocket - as long as these mechanics didn't default. Either way, there is a lot of risk in here, and personally I would want to see some decent spreads before I got involved.

i could act as one of the bankers in the flotation of the new currency

i have contacts very low down in some of the cities most average institutions

So VB would be acting as a central bank for this currency (Bank of HTFU?). For this to work we would need to have liquidity with the Bank of HTFU (taken in the form of t-shirts, parts and other sh*t of value) to create the LFG$$ for us to spend. If you just communicate intentions, then sooner or later someone will want to settle up and withdraw their profit from the system - if there is nothing there then the collapse in confidence will kill your currency.

On the upside, the seiniorage income could fund the forum.

LFG$$ = £ = gold.

Although the stirling gold link is now broken - the LFG$$ would follow the same system.

So when it comes to settling up the LFG$$ can be exchanged for stirling.

I thought most currencies had moved away from being backed?

i.e. in ye olden days I could go into a bank with their promisary note and they'd have to give me a specific amount of gold in exchange, but that this is no longer the case?

Yep, the link has been broken.

So in essence we would need a pool of something- gold being the traditional something- to be held for the settling of all debts, public and private.

Tynan- you provide the gold and I will open an LFGSS account.

Shurely should be pegged to the humble arrospok? LFG$$ 50 = 1 arrospok

So your LFG$$ would vary in terms of USD or GBP, but never in terms of arrospok.

However this might lead to ASM profiting from currency arbitrage, owing to his "grey" imports of cheap arrospok.

Are you sure?

So in essence we would need a pool of something . . .

Stirling.

I was thinking of something that would not be subject to things like quantitive easing.

The only reason to move from Stirling would be to a currency that is backed by something that is stronger than Stirling.

LFG$$ = £ = gold.

Although the stirling gold link is now broken - the LFG$$ would follow the same system.

So when it comes to settling up the LFG$$ can be exchanged for stirling.

So we're pegging the LFG$$ to the GBP, which is ofcourse the sensible thing to do. But it somehow lacks ambition. I think securitizing NJS components would be more fun.

The gold standard for sterling was broken almost a century ago. GBP is fiat money - it has value because the government says so, we believe them, and the economy has some strength.

The advantage (much like all financial dealings) is that you need not transfer actual promissory notes - but just communicate the intention to do so

Come visit Ireland, see the recession, realise this is a dreadful idea!

I was thinking of something that would not be subject to things like quantitive easing.

The only reason to move from Stirling would be to a currency that is backed by something that is stronger than Stirling.

The real reason for local currencies is to keep the circulation within a geographical area - in other words encourage support of local shops and businesses by adding an extra hurdle to taking your business elsewhere.

Rather than adding an extra hurdle could there not be some incentive to use said currency, for example a discount applicable only to that currency?

In the modern age one wishes to be able to use ones specie to purchase anything, anywhere, often at the drop of a hat.

A currency that restricts me has no utility or attraction, whereas something based on firmer foundations than GBP has a strong attraction.

Come visit Ireland, see the recession, realise this is a dreadful idea!

The dreadful idea in Ireland was to assume that the economy would continue to grow at the rate that it did from 1995-2005, and then borrow against that assumption.

This is kinda what everyone did, but Ireland had the biggest boom, and borrowed the most and therefore had further to fall.

This part of the article is interesting:

"All businesses have to report all turnover and as every local currency is tacked to sterling, every sale, whether paid for in cream cakes, polar bears or carrots must be reported to its sterling value, the HM Revenue and Customs says."

Insofar as if we peg our currency to units of work, be they time or goal based then we could have grounds for saying that our currency is not related to sterling and is therefore not subject to taxation.

There are one or two issues related to that just as a concept, but we'll ignore those for now.

Rather than adding an extra hurdle could there not be some incentive to use said currency, for example a discount applicable only to that currency?

In the modern age one wishes to be able to use ones specie to purchase anything, anywhere, often at the drop of a hat.

A currency that restricts me has no utility or attraction, whereas something based on firmer foundations than GBP has a strong attraction.

The attraction of local currencies is that they support the local economy, which is something many people want to do. If you don't care about the local economy then it has no attraction for you.

If you are looking for something that has firmer foundations than GBP then the EUR or USD (and possibly the CHF) are about your only options. Assuming that your money is currently GBP however, the conversion is gonna hurt you.

Offering a discount for using local currency may attract trade to your area, but the vendors will take the hit in the long run (I doubt there are many wholesalers who will accept the Lewes or Brixton currencies). Like any discounting scheme, they would need to be sure that the increase in volume would account for the drop in per-unit revenue.

This part of the article is interesting:

"All businesses have to report all turnover and as every local currency is tacked to sterling, every sale, whether paid for in cream cakes, polar bears or carrots must be reported to its sterling value, the HM Revenue and Customs says."

Insofar as if we peg our currency to units of work, be they time or goal based then we could have grounds for saying that our currency is not related to sterling and is therefore not subject to taxation.

There are one or two issues related to that just as a concept, but we'll ignore those for now.

Tynan wants to peg our currency to Sterling - this is the only practicable way to operate a local currency. If you want to link our currency to units of work, then we introduce all the risks that the people who will provide this work default on that promise - the level of trust we need goes up, as we don't have the option to convert back to GBP (something we all believe in).

No wonder it took me ages to get a girlfriend.

Tynan wants to peg our currency to Sterling - this is the only practicable way to operate a local currency. If you want to link our currency to units of work, then we introduce all the risks that the people who will provide this work default on that promise - the level of trust we need goes up, as we don't have the option to convert back to GBP (something we all believe in).

Aha- you want to peg our new currency to something we all believe in.

Now it makes sense that Tynan was the originator, this is all a complex trap which he will spring shortly, the great purge of the believers.

One saddle skullychopped and/or blocked / tied = £20, or 15 lfgss dorra. Letters stamped £3 or 2 dorra.

I'm bloody in.

We could have some sort of financial police that made sure that people did not default on their work units owed.

That said we might need a fairly large debtors prison for the indolent amongst us.