The Innovative Proposal

The Innovative Proposal
By Tom J. Kennedy 
(Community Currency Consultant)
(for municipalities in the province of Ontario - and elsewhere)

Note: This 'Innovative Proposal' was initially prepared for municipalities in the province of Ontario since 2006 was a municipal election year. Our municipal politicians were being elected for a four year term. During the municipal election campaign of 2006, I shared ‘The Innovative Proposal’ with candidates seeking the offices of Mayor, Reeve and Councillor. Various incumbents seeking re-election and new candidates for municipal politics in Ontario contacted myself during the campaign requesting more background information about the usuryfree community currency movement.  I also shared ‘The Innovative Proposal’ with various local citizens who likewise requested more information. My observation is that this tried and proven idea of promoting a usuryfree community currency to motivate consumers to shop locally is ready for implementation. I have videos and DVDs and an abundance of printed literature and I plan to organize meetings early in 2007 at selected locations in rural Ontario where there is a sincere interest in reviewing “The Innovative Proposal’ with an intent to implement any or all of its elements.

Usury Economics 101

Tom Greco provides some convincing arguments against the exacting of interest or usury on loans in his book 'Money - Understanding and Creating Alternatives To Legal Tender' published in 2001. Here are some quotes from Chapter 15, 'A Note On Interest' - pages 164 -165

"The present official monetary regime is founded on the charging of interest, which, as in previous chapters have shown, creates an instability in the system and leads to economic inequities. Most of what today is called 'interest' is actually usury. ... Three of the world's great religious traditions, Judaism, Christianity, and Islam, all have prohibitions against the practice of usury. ... My arguments against usury and interest are not religious or ideological, but economic and practical. I have shown in earlier chapters that the foundations of our monetary system on interest-bearing debt creates a cancerous growth in debt. That, in turn, leads to a 'growth imperative' for the entire economy, which causes both ecological devastation and social decay. ... It is essential that we establish an exchange (monetary) system that avoids the imposition of interest on the medium of exchange at its creation. ..."

"The word usury has become taboo in our culture, particularly in academic and financial circles. It is almost never mentioned in the media anymore. But if we are to remedy the obvious inequities in the economy and discover a sustainable way of life, it is vital that we reexamine this concept and understand its economic and social impact. We need to know how it affects people in their daily lives - their ability to meet basic needs, to provide for their families, to enjoy lives that fulfill their creative potential. Those who call themselves economists have, for the most part, been derelict in their duty to provide such analysis. The few who have ventured onto this path have been ignored, repressed, and even vilified."

"There seems to be no disagreement that the effects of usury are, indeed, profound. ... My study of the matter has convinced me that the evolution of money during the 20th Century, including the incorporation of usury into its creation in the form of bank credit money, has placed an engine of destruction in our midst. ... What is a problem is that banks charge interest on these debts. The interest (usury) feature of bank credit money causes debt to grow exponentially. This, in turn puts pressure on the economy to grow exponentially as well, which of course is impossible in the long run."

To appreciate the details of ‘The Innovative Proposal’ it is essential to understand that banks do not lend out depositors' funds. Instead, banks create brand new money based on your signature on the promissory note that the banker presents to you when you make an application for a loan or mortgage.  Whether you as the debtor are an individual, a business or a municipal government the same basic strategy is applied when money is borrowed from any commercial banking institution in Canada.

It is likewise essential to understand that interest or usury is not created by the banks at the time that any loan or mortgage is created. Neither does interest or usury come out of thin air. It certainly does not come from the rich as they are the creditors exacting interest or usury from the debtors. So where does it come from? It routinely comes off the backs of the debtors, the working people and the poor. When municipal governments borrow money from banks all residents within that municipality become the debtors who are responsible for re-paying the principal plus the interest or usury which was never created.

After municipal politicians re-educate themselves about the design flaw of interest or usury and how it directly and/or indirectly causes poverty, scarcity and lack they can move forward without compromising their newly formed principles given the direction, guidance and working models provided by the usuryfree creatives who are active within the usuryfree community currency movement.

UsuryFree Economics 101

To appreciate the power and potential of this innovative proposal it is equally as important to understand that we-the-people, acting in our private capacity as free will men/women have the ability to create and spend our own usuryfree community currency to facilitate trades/exchanges within our own loyal networks. This so-called 'cashless' trading of products and/or services is an ancient form of commerce that is being re-birthed with the added twist of high technology. Indeed, it's time to revisit an idea as old as civilization itself.  Here's a thought-provoking questions for individuals, business owners and municipal politicians: 'Why are we still using their (the bankers') money and paying them a fee (interest or usury) when we have now found out that we can create and spend our own usuryfree community currency for FREE?'

Municipal Politics 101

More and more citizens living in rural Ontario are struggling to survive in an economic environment that has been in steady decline since the latter years of the 20th Century. Jobs have been fleeing away from former small to medium-sized factories at a rapid rate. Most of these jobs have gone to China or other third world countries - all in the pursuit of more profit for the giant transnational corporations. Even more critical is the decline of agriculture which has been the mainstay in rural Ontario all throughout the 20th Century.

The results of these above-mentioned trends are obvious as the lower revenue base means that municipal governments must scramble to maintain an adequate tax base that will assure their residents of receiving worthy municipal services. Additionally, it is well known that the giant retail corporations and the big box retail stores have been successful at undermining the economies of countless small towns in rural Ontario (and elsewhere).

It is unfortunate that in recent years, too many municipalities have pursued economic development in a questionable manner that has been undermining the very economic security that they are mandated to nurture. Abundant tax dollars have been spent by too many municipalities to satisfy the demands of various large, transnational corporations that promised to initiate economic growth.

Time has proven many of these deals to be questionable or otherwise complete failures as the so-called retail development really undermines the infrastructure that formerly supported local community. This is evidenced by the number of locally owned businesses that get forced into foreclosure or bankruptcy.

It is common for the profits generated by these transnational corporations to flow out of the community except for the minimum wage retail jobs that barely offer survival living for that tiny minority of people who secure such jobs. There are no closed loops that support local community within this shift to commerce as offered by these transnational corporations.

The end result is that many municipalities are left managing a declining revenue base while the local residents constantly complain about increasing costs of property taxes, various fees and licences, higher insurance rates, intrusive regulations and a scarcity of money to cover all such expenses. Historically, municipal politicians become unpopular because they discontinue or alter services because of a 'shortage of funds.'

As visionaries, active usuryfree creatives are encouraging municipal politicians to examine ‘The Innovative Proposal’ and promote it as a workable solution which can be adapted or adopted, in whole or in part, by any municipal government in Ontario - or elsewhere.

'The Innovative Proposal' calls for the implementation of some proven and workable ideas about money that are guaranteed to facilitate the process of re-building local community in rural Ontario - and elsewhere. Various resources, books, DVD's, videos and printed literature are available for background reading by those who are willing and ready to explore how an action plan can be implement NOW!

Since various grassroots organizations and individuals within the usuryfree community currency movement have learned how to solve the matter of a 'shortage of money,' now it's time for municipal politicians to examine these working models of usuryfree community currency and take a leadership role in promoting the concept to all residents within their respective municipalities in rural Ontario - and elsewhere.

Defining A UsuryFree Community Currency

A usuryfree community currency can be valued as a 'time' currency or a 'dollar' currency. Multiple thousands of people from local communities all over the world are actively negotiating trades/exchanges using a usuryfree community currency as a complement with federal cash. There are occasions when traders will accept 100% of usuryfree community currency for a negotiated trade if there are no wholesale costs incurred to produce the product or service being purchased. Business owners are coached on the importance of covering any wholesale costs of doing business with federal cash and agreeing to accept a portion of the retail mark-up in any usuryfree community currency.

Basically, these modern age usuryfree community currencies have been evolving since the usuryfree LETS (Local Employment Trading System) software surfaced in the early 1980's. When Michael Linton created the usuryfree LETS software, the usuryfree community currency was commonly referred to as 'greendollars' and the credits and debits were virtual. Now, as we progress into this 21st Century, more and more usuryfree community currencies are issued as paper notes and the participants within the various groups/organizations trade these paper notes of usuryfree community currency as a commonly accepted medium of exchange.

The ultimate purpose of engaging in trade with any usuryfree community currency is to encourage each participant to seek to connect his/her unmet needs with the unused resources of other participants. These exchanges involve products and/or services or any combination thereof. The bonus element is that these community currencies operate without the function of interest or usury. This is why they are commonly referred to as usuryfree community currencies.

Some examples of usuryfree time currencies are:
Tamworth Hours: http://www.cyberclass.net/currency/tamworthg.htm
Ithaca Hours: http://www.ithacahours.org

Some examples of usuryfree 'dollar' currencies are:
Our Community Dollar: http://www.ourcommunitydollar.com
Calgary Dollars: http://www.calgaryhours.ca
Burlington Bread: http://www.burlingtoncurrency.org

UsuryFree community currencies are often referred to as complementary currencies since they are commonly used as a complement with federal cash when business transactions are negotiated. Usuryfree community currencies are designed to supplement any business owner's cash business. Service-oriented businesses find usuryfree community currency to be especially appealing. Since they often have less wholesale expenses than product-oriented businesses, they can accept a higher percentage of usuryfree community currency on negotiated exchanges.

Some usuryfree community currencies prefer to be recognized for their social purpose rather than a purely business purpose. For example, the Japanese exchange 'Fureai Kippu' with a social purpose that is directly relevant within their healthcare industry. 'Fureai Kippu' translates to 'Caring Relationship Tickets' and the unit of account is the 'hour of service' especially targeted as a support system for the elderly. The 'Fureai Kippu' is a form of elderly care medium of exchange that functions in parallel with the conventional Japanese currency known as the yen.

Another example of a currency that can be defined as a usuryfree community currency is 'airline miles.' Though 'airline miles' are commonly described as a 'corporate scrip' with a specific commercial objective (customer loyalty) they are now earned in various ways and are redeemable for various products and/or services.

Connecting 'Unmet Needs' and 'Underutilized Resources'

Municipal governments are invited to take a leadership role in matching 'unmet needs' and 'underutlized resources' thereby creating new revenue streams for all who choose to participate. Adopting or adapting this 'innovative proposal' for the mutual benefit of municipal taxpayers and municipal politicians is a goal worthy of pursuit as Ontario municipalities prepare to serve the public for the next four years. Therefore, all elected municipal politicians are invited to study and review all available resources that are related to the usuryfree community currency movement in general and to this 'innovative proposal' in particular.

Wherever there is a usuryfree community currency already operational, there is opportunity for the municipal politicians to immediately commence a beta project. It would be a natural starting point for any municipal government to accept any usuryfree community currency as partial payment for municipal fees, licences, garbage bags, etc. As long as there are businesses (and employees) within the boundaries of the municipality that agree to accept the usuryfree community currency as partial payment for contracts and/or as employees, then the loop is closed. This simply means that a percentage of any accepted usuryfree community currency can be spent for products and/or services required by the municipal government to run its daily/weekly/monthly operations.

As local contractors and municipal employees learn that they can spend this usuryfree community currency locally, they will come forth and agree to willingly accept a portion of this usuryfree community currency as partial payment for any products and/or services offered to the municipal government. When the circle is completed as explained, all who participate win. The big winner will be all of the residents of the municipality for as the concept gains popularity, less money will have to be borrowed by the municipality and therefore, less interest (usury) will have to be paid to banks. Consequently, less federal dollars will need to be collected as municipal property taxes. As the concept gains wider acceptance, the percentage of usuryfree community currency accepted as partial payment of municipal property taxes can be increased.

Perfecting The Example

Let's push the envelope on this idea - just a little. Consider that all residents of any municipality incur a debt of property taxes on an annual basis. It has been convention that 'legal tender' - otherwise known as 'Canadian dollars' is accepted as payment for municipal property taxes. What if a usuryfree community currency were to be accepted as partial payment of  municipal property taxes?

This is already happening in Japan. Due to the growth and acceptance of the usuryfree community currency movement in Japan, two cities there are now accepting their respective usuryfree community currency as partial payment for municipal property taxes. These cities then use this usuryfree community currency as partial payment to those companies or individuals who provide products and/or services to the municipal government. Surely, we Canadians are as inventive as the Japanese?

Assemble A Leadership Team

It is recommended that the municipal government assemble a leadership team of quality residents from the community who share the vision of re-building the spirit of community by initiating beta projects involving usuryfree community currency. Local business owners need to be actively involved in any usuryfree community currency initiatives. Be open to expanding and welcoming the best talents to join the leadership team as this idea is expected to grow rapidly when people become aware of its power and potential.

Choice Of UsuryFree Community Currency (Hours & Minutes or Dollars & Cents)

Though usuryfree community currencies using 'dollars and cents' - with an equivalency value in Canadian Funds - are popular, those communities using 'hours and minutes' as a unit of account are considered more visionary. This is because a usuryfree time currency which commonly equates to one hour of time involving basic or unskilled labour to be valued at $12.00 (Canadian Funds) or $10.00 (US Funds) can be traded locally and/or globally without banks interfering and charging an exchange fee.

Depending on one's profession, a calculation is easily made to determine the equivalent value in Canadian Funds. Simply multiply the base value of $12.00 by the factor that will result in an amount of Canadian Funds deemed to be the fair payment for that particular service in the free market. For example, if one is a plumber and the free market rate for a plumber's labour is $48.00 (Canadian Funds) for one hour then nothing impedes the plumber to ask the customer for four hour units of usuryfree time currency for his/her one hour of work to repair the pipes.

Additionally, usuryfree time currencies will automatically avoid being decimated in any potential crash of the national currency for one hour of time has a fixed value of 60 minutes in every country on planet earth and such a simple conversion can be immediately implemented with ease in a time of crisis.

Zero-Interest (Usury)

Usuryfree community currencies by their definition are operating without the exacting of interest (usury). No interest or usury is paid on a positive balance and no interest or usury is exacted on a negative balance. This is why we correctly refer to community currencies as 'usuryfree.'

Popular Issuing Procedures

(1) Issuer signs a Promissory Note
The issuer signs a promissory note and backs his/her usuryfree time currency with a promise to offer products and/or services to the group/network with a value equivalent to the amount of credit (paper notes) issued. This model is patterned after conventional banking procedures - minus the interest or usury element.

(2) Central Distribuition
A central office distributes a previously determined amount of usuryfree community currency to everyone who qualifies and participates.

Though there are other issuing procedures that are typically designed with a narrow and specific purpose in mind, these two seem to be commonly used and they have the potential for much wider use. It has been observed that usuryfree community currencies that are fully backed by the signature of the issuer on the promissory note are more likely to gain credibility at a faster rate as the issuer's reputation, honour and integrity is at stake.

Cost Recovery

There is human labour required to launch and keep any usuryfree community currency operational. Participants who offer their time and energy to usuryfree community currency groups commonly agree to accept usuryfree community currency as a reward for their input. This reduces the burnout that too many volunteers experience as the participants are actually rewarded for the skills and resources that they offer. This proven model of paying volunteers with a usuryfree community currency that is spendable locally can be adopted by any charitable organization which relies on volunteer labour.

The start up fees required to design and print the paper notes of usuryfree community currency need to be solicited. Some communities seek local businesses to advertise on the backs of the paper notes of usuryfree time currency and this action becomes a fundraising activity to launch a usuryfree community currency. The Madawaska Valley Unity group implemented this idea when they launched their usuryfree community currency in the Spring of 2006.

Otherwise, the classical cost recovery plan that works optimally is to assess a flat fee on a periodical basis (monthly/annually). It is common for businesses to be assessed a higher fee than individuals. This fee is often payable with partial federal cash and partial usuryfree community currency as there are always some cash expenses to cover.

The Circulation System

Obviously the wider and more prominent the circulation of any usuryfree community currency the more likely people will experience a taste of usuryfree living and learn the magnificence of enjoying the usuryfree lifestyle experience. Municipal governments are in a unique position to maximize circulation. Let me explain. Usuryfree community currencies need to travel through the community in circles commonly referred to as 'closed loops.' Just as engineers look for complete circuits, so do successful usuryfree community currency models require complete circuits to function with maximum capacity.

By accepting a portion (for example 5% to 10%) of usuryfree community currency as partial payment of municipal property taxes, any municipal government will maximize circulation with the optimal 'closed loop.' Every business owner and every residential property owner will do a quick calculation and figure out how much usuryfree community currency they can use for payment of their property taxes. Business owners will gladly accept this amount from local customers who purchase products and/or services. Other citizens will likewise make similar calculations and then agree to accept that amount of usuryfree community currency. As the usuryfree community movement gains credibility, the municipal politicians will become more popular when they vote to increase the percentage of property taxes that can be paid with usuryfree community currency.

As the usuryfree community currency gains credibility, all local citizens will come to realize its potential as they use it more and more, thereby using their federal cash to pay off any debts which have a growth factor because of the component of interest or usury. Eventually, we can expect this usuryfree community currency to become more popular than our usury-bearing federal cash.

Case Stories

(1) In the mid-20th Century, the small town of Tamworth in rural eastern Ontario thrived with a bustling agricultural economy. Unfortunately, for the local residents of Tamworth, the agricultural economy has plumeted in recent years. As a result, unemployment in this part of Ontario is high and too many people are experiencing financial hardship. Local businesses strive to compete with the transnational retail and franchise corporations that have muscled their way along Highway 401 on the north end of Kingston, Napanee and Belleville. Too many Tamworthians have been driving to the 401 corridor to spend their money with these giant transnational corporations with the hopes of saving a few pennies.

Since the advent of Tamworth Hours in November 2004, local businesses have been invited to enrol and allow customers to use a portion of Tamworth Hours for negotiated exchanges. By using Tamworth Hours as a complement with federal cash, local customers can free up more Canadian dollars to pay off any debts (personal loans, car loans, mortgages, lines of credit and credit cards) which are growing because of the design flaw of usury. The publication 'Hour' Tamworth Times which publishes the Directory of time-traders also offers an efficient and inexpensive way for local businesses to advertise, since all participating businesses get a free listing in the local directory with the option of purchasing additional advertising with a combination of usuryfree community currency and federal cash. Anyone can accept Tamworth Hours as partial payment for a negotiated trade but to get listed in the Directory and issue yourself some Tamworth Hours, one must sign a promissory time-note and complete a form that lists your offers and requests.

It is noteworthy that more businesses beyond the borders of Tamworth accept Tamworth Hours than within the town limits. Tamworth Hours have been accepted in Napanee, Kingston, Belleville, Maynooth, Bancroft, Eganville, Killaloe, Ottawa, Montreal, Toronto and places in between. There are stores in Maynooth and Bancroft that accept 50% Tamworth Hours for any purchase of merchandise from their selection of products.

(2) During the 1970's and early 1980's, Courtenay, a small town in the Comox Valley on Vancouver Island, BC was a thriving economy because of a local US Air Force Base and a Timber Mill. The base re-located and the mill closed in the early 1980's when interest (usury) rates were skyrocketing to 21%. The local economy declined as unemployment increased and many people experienced financial hardship.

In 1983, Michael Linton created the usuryfree LETS (Local Employment Trading System) software and introduced the usuryfree greendollar currency. People who were short of federal cash learned to exchange products and/or services using 'greendollars' as their preferred medium of exchange.

Similarly, by using 'greendollars' as a complement with federal cash, local customers learned that they could free up more Canadian dollars to pay off any outstanding debts. Thanks to Michael Linton for inventing the usuryfree LETS software which introduced people to a new, yet old way of doing business. Now is the time to take this idea to the next level - the municipal level of politics.

Resources (Available from the UsuryFree Network)

Brochure - Shifting The Political Spotlight by Tom J. Kennedy
Article - Life Without Usury by Peter Jon Simpson
DVD - Money As Debt by Paul Grignon
DVD - Money - Who Creates it? Who Controls it? Who profits? by Isaac Isitan
CD - Beyond Usury 101by Tom J. Kennedy
Books - Money - Understanding and creating Alternatives To Legal Tender by Tom Greco
Seminars/Workshops - The UsuryFree Network offers seminars/workshops for individuals and/or groups.

The UsuryFree Network

The UsuryFree Network is a private network of UsuryFree Creatives who advocate usuryfree living as the optimal lifestyle as we progress into this 21st Century. UsuryFree Creatives are usually enrolled within a network of like-minded thinkers where people are learning how to create and spend their own usuryfree community currency to use as a complement with their diminishing amounts of usury-bearing federal cash.

During 2007 and beyond, the UsuryFree Network is offering special workshops and/or seminars to municipal politicians who were elected in the province of Ontario on November 13th, 2006. These special workshops/seminars are likewise open to the common citizens who voted in their respective municipalities in the province of Ontario during the 2006 municipal election. It is anticipated that one or more municipalities will take action during this next four-year term of office to support the concept of re-building community by implementing strategies that involve (a) using already existing usuryfree community currencies and/or (b) creating and issuing a usuryfree community currency of its own. Contact the UsuryFree Network for more information and resources and details of any upcoming seminars and/or workshops:

The UsuryFree Network,
P. O. Box 9333, 
Ottawa, Ontario  K1G 3V1
Tel: 1.888. NOUSURY (668.7879)
Email: usuryfree@gmail.com
Website: https://www.facebook.com/usuryfreenetwork