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ID-18-3 Effective Precedents. January 8th, 1986
Effective Precedents.
Although the LETSystem is an entirely new arrangement, almost all
the parts of its operation are well established procedures in the
world already.
We can further establish the credibility and viability of the
system as a whole by comparing it to these partial applications.
The most obvious comparable operation is the widely used
commercial "barter" network.
So-called "barter" networks are rarely, in fact, engaged in barter.
More typically transactions within these networks are one
directional, the administration issuing barter credits to one
party's account while drawing them from the other.
They are in fact performing an identical service to that of a
LETSystem.
Typically, however, they constitute themselves as intermediaries
in the process, as quasi-banking organizations, and claim to be
the originators of the money in circulation.
It is an indication of the actual cost of money, and the
advantages to be gained from using such monies, that clients of
such networks are commonly prepared to pay at least 7% and often
as much as 10% commission, in hard federal cash, for the service.
These charges have nothing to do with the cost of operating the
basic system; they are required to support the sales and
management effort required to maintain the network in good shape.
This effort is required entirely because the relationship between
the operation and its members is essentially extractive.
The operator is effectively saying to his clients, "You can use
this money, but I will charge you principally in cash."
Given this basic relationship, such counterproductive
administrative policies as full invoicing in "barter" credits and
cash commission on that invoice, and the entirely authentic
reports of operator fraudulence, the fact that these systems
survive at all is excellent confirmation of the power of the idea.
For further comments on these operations and the proper attitude
toward them of LETSystem user groups, see REA-10.
Landsman Community Services Ltd. ID-18-3 Page 1
ID-18-3 Effective Precedents. January 8th, 1986
Marketing Schemes.
Every business that has ever offered sales discounts is using the
principle that a reduced price will bring in more customers, and
contribute to cashflow.
Unfortunately, that is all it does.
Issuing discount coupons, either through the press, by flyer or
at the point of sale, has the same effect.
More customers and more money, but at a discount which is not
recoverable, as the coupons can only be spent at the retail
outlet, and are hence of no value to the retailer himself.
The cost of printing, distributing, handling and accounting for
these largely worthless pieces of paper is high, no matter how
you count it, but the payoff apparently justifies the expense.
Over the last few years we have seen examples of major national
retail stores and gas companies extending the discount voucher
operation into mutual acceptance.
That is going to the second stage of a three stage process.
Hopefully in the near future, some bright spark in a some such
national organization will recognise the advantages to be gained
from LETSystem support.
All the advantages of price elasticity, maintained margins and
excellent public relations in every community they serve.
Any department store using its own charge card system already has
all the facilities to offer a LETSystem to existing customers, as
does, for that matter, every corner grocery store.
Don't wait for us to call you. We just did.
Landsman Community Services Ltd. ID-18-3 Page 2
ID-18-3 Effective Precedents. January 8th, 1986
The most ironic source of support for this concept derives from
the persistence of conventional currencies.
While it may not be entirely clear at first sight, conventional
money can be considered as the terminal condition of an aberrrant
LETSystem.
All the committment backing the process rests with those perhaps
least reliable - the government, which is constantly changing,
and draws only intermittent support from its constituency, and
the banks, which are simply gambling organizations of differing
reputation and reliability.
The history of mismanagment, preference and deceit that is
inextricably entangled with these enterprizes has necessitated
stringent controls and regulations, few of which present problems
to those who can evade them, or do little but stifle the proper
process of business by the legitimate.
It is as though the first wheels were squared off to prevewnt
them from running downhill.
If a LETSystem were created where only a few particular people
were entitled to be in committment, and the size of the system
were unlimited so that money could be taken anywhere, it would
look just like a national currency.
If we can work with conventional money, there is no limit to what
we can do with the real stuff, our own money.
Landsman Community Services Ltd. ID-18-3 Page 3
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