Local Exchange Trading Systems (LETS) are a great way for communities with goods and services but little available currency to revitalize their economy. In a LETSystem members create their own form of currency to be used amongst members of the group in adjunct, or sometimes in place of, their nations currency. How exactly does the issuing of one’s own currency play out? Well it can be different from place to place depending on community that is the beauty of it, without giving control to one organization you can better meet the needs of the many rather than those of the few. An example of how the issuance of your own currency would work could play out like this; every member starts with a 0 balance. By placing a transaction within the system, one account will always go up and the other down by the same amount. So if Bob builds me a shed and charges me 50 “LETS Credits” his account will go up by 50 and mine down by 50. This does of course mean that inflation within the system is non-existent, as the total amount of credits in existence is always technically 0 due to the negative balances. It also means that negative balances are a necessary part of the system and can’t be viewed as “bad”.
So then what is it that stops people from abusing the system and running up a major negative account balance? The answer is simple, it’s the one aspect of money creation that seems to be oh so hard to attain these days, transparency. By having all transactions and accounts publicly recorded and viewable by everyone in the system, you can look at another members account before deciding to trade with him/her. Having a negative balance is considered being in “commitment”, if an account is in commitment for 1,000 credits and has no transactions recorded there is cause for concern and possibly a democratic vote on how to handle the situation, however if an account is in commitment for 1,000 credits but overall has recorded a total of 2,000 credits worth of transactions then you know that person is actively using the LETSystem and not taking advantage of its benefits.
Another beautiful thing about LETSystems is their ability to be used in adjunct with your national currency, you can request that transactions be made partially in cash and partially by LETS credits (or Marklars or whatever you choose to call them, freedom is awesome) if someone’s account looks suspicious to you or if that is just how you choose to do things. Are LETSystems perfect? No, but they do allow people within them to use more of their national currency in areas of life where they may need it such as healthcare, taxes, bills, and other areas where your LETS Credits will not help you.