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A Rising Tide May Lift All Boats, But The Tidal Wave of Globalization Smashes All but the Biggest
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Liberating Exchange
Two Synergistic Approaches:
Mutual Credit Clearing Exchanges Complementary Currencies
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Mutual Credit Associations and Community Currencies Provide Exchange Media That Are:
Abundant Community controlled Democratically allocated Interest-free Self-adjusting Stable and Sustainable
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Non-Local Vendor
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Non-member users
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An Example
Suppose $100,000 worth of community currency credits are spent into circulation by the associated businesses. That means that their collective cash expenditures have been reduced by $100,000. That $100,000 remains in the community instead of flowing out to pay for imports.
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An Example - 2
If the turnover is 10 times a year, that means $1 million in additional local sales. If the rate of profit on sales is 20%, that will result in additional yearly profits of $200,000.
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An Example - 3
Further, the issuance of community currency credits will have enabled some interest-bearing debt to be retired. If the interest rate on debt is 10%, the businesses will save cash interest costs of $10,000 each year. Every dollars worth of community currency credit issued means one less dollar that needs to be borrowed, and one less dollar that needs to be spent.
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Issuance and Circulation of Currency Credits Currency credits spent into circulation
CC Workers Suppliers Labor, services, supplies G&S CC G&S CC Business or Municipal Issuer
Merchants
CC=notes or credits
Issuance
Redemption
The amount of currency credits in circulation at any time (the level in the tank) is determined by the relative rates of issuance and Greco, Jr. November 2, 2004 Thomas H. redemption. 24
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Does not depend on the banks, the Federal Reserve or the government. Enables business to thrive on a smaller supply of scarce official money. Enables the sale of (excess) productive capacity. Enables local businesses to employ more of the locally available labor, skills, and resources.
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Provincial Currencies
Since the mid-1980s, due to the lack of sufficient federal currency, many of Argentinas 24 provinces issued their own currencies to meet their liquidity and budgetary needs. By 2003, 20 provinces had issued provincial currencies of various types. The province of Mendoza issued treasury notes backed by their oil royalties. The province of Buenos Aires issued notes totaling one billion pesos.
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The WIR business circle cooperative (Wirtschaftsring) was founded in Switzerland in 1934 as an answer to the money scarcity of the Great Depression, and still thrives after 70 years. Membership, at first completely open, was later restricted in order to build solidarity among the entrepreneurial middle-class. A balance between ideology, adaptability, and good business sense has enabled its long-term success.
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Stages of Implementation
1. Organize a mutual credit clearing circle comprised of trusted (business) members having overdraft privileges. 2. Accept to membership diverse other participants who are not given overdraft privileges to begin with. 3. Persuade non-member local merchants to be currency users willing to accept and spend the currency that is issued jointly by the members of the mutual credit clearing circle.
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Stages of Implementation
4. When the mutual credit clearing circle is functioning smoothly and the complementary currency has been widely accepted by the community, ease the restrictions on membership and extend the issuance privilege (overdraft privilege) to more members, 5. But determine credit limits on the basis of recent sales history and inventories of goods offered for sale.
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