Sydney Local Energy Exchange Trading System (LETS)

LETS has been described as “a bank which has an unlimited line-of-credit giving members the ability to ‘print’ their own money”.

Whilst this utopian concept is not strictly true, it is on the right track. Unlike federal dollars which are issued and controlled by the government, operas are created by members every time they trade.

Each member holds an account which begins at zero. John pays Mary 40 operas for babysitting. Mary’s account is now +40 operas and John’s account in now -40 operas. In essence, John has just “created” his own money.

Mary then pays Bill 80 operas for carpentry work. Bill’s account is now +80 and Mary’s account is now -40. Mary has just “created” a further 40 units of currency.

With no boundaries on the ability to create and earn operas, the currency turnover of a LETSystem is unlimited.

Exploring this concept further…

“Operas” only exists as numbers in accounts, moving from one account to another.
You can’t hold them, you can’t lose them – you can only trade them. For one account to move up, another account MUST move down. So at any one time approximately half of the members will be in “credit’ and the other half will be in “commitment”.

The sum of negative balances and positive balances = 0.
For every member with a positive balance there MUST BE a member with a negative balance.

Being in “commitment” (negative balance) is an essential feature of a LETsystem, so it is not viewed as bad and wrong (ie. debt). A commitment is simply a willingness to supply goods or services to other members at some future date.

In a healthy system, account balances bob up and down, sometimes having a balance in credit and sometimes in commitment.

It makes no difference whether you have a positive or negative balance.

TURNOVER is the main issue. The most successful members are those with a high turnover because that means that the system is working for them.

Members do not have to have operas before they can spend them. Sydney LETS encourages members to go into commitment with their first trade. If you wait to earn before you spend, you could find it slower to start trading. If everybody had to wait to earn before they could spend, nobody would get started! You can start now, click here to JOIN >>

Creating a more equal society…

Now that you have your head around how to trade in operas, lets explore how operas can be used to value members time and skills more equally.
“THINK OUTSIDE THE SQUARE”.
Throw off all the confines of ‘federal dollar thinking’ and adopt a philosophy more conducive to community trading.

Time is valuable – and everyone’s time should be of equal worth.

In the “real world” a masseuse can charge $85 an hour because that is what the market will tolerate. The man who mows the lawn can charge $50 because it is considered ‘hard’ work. But that same masseuse or lawnmower man will balk at paying their babysitter $30 an hour.
WHY?
Isn’t the care of your child worth equally as much as getting a massage?
Do you value your lawn more than your offspring?

LETS gives you the opportunity to think beyond the materialistic, monetary value of services and instead, honours people for their energy and committment to helping create a closer community.

Leave behind the entrenched ideas of money, profit, credit, debt, greed & poverty.

Start thinking in terms of time-dollars. One hour is worth 35 operas. Whether you are skilled or unskilled, whether you have spent 3 years at Uni getting a piece of paper, or 20 years as a seamstress perfecting your skills – your time is valuable.

To see how LETS and time-dollars works in practice and to get a better idea how you can contribute to the system, please read the Benefits.

Philosophy

* Every member’s time is of equal worth

1 hour of time is worth 35 operas. Whether you are professional or amateur, spent 3 years at Uni or 20 years perfecting your skill – your time is as valuable as the next.

* Contribution is essential

Instead of “what’s in it for me?” it’s “what can I contribute?”

More about LETS

LETS is a concept that is not always easy to understand. The following comments have been gathered from various sources including Michael Linton (the originator of LETS), economists and LETSystem managers in an attempt to explain the philosophies behind LETS.

WHY DOES A COMMUNITY NEED A LETSystem?

The problem with money. Every modern community depends on the flow of national currency through its internal economy. The money swirls in and it rushes out again.
As the amount of money circulating in the community falls, so does the level of trading. Business declines and people lose jobs, not because they have nothing to offer, but because there is not enough money to go around.

In the contest for a share of this limited supply, people work in ways that damage their own health, the environment and the wellbeing of the community.
People are prepared to do almost anything for money because they need it to take part in the “game”. This is the source of the problem, since money, by virtue of its very structure, is scarce and hard to come by.

There are three reasons for this:
* there is only so much in circulation;
* it can go virtually anywhere, and so it does;
* you can’t issue it yourself.

All over the world communities suffer from a shortage of money, simply because there is only so much of it, it’s gone elsewhere and they can’t print their own.

The Value of Money

“Money is the nothing we take for something before we can get anything.”

It helps to see how money can be used simply as a measure of value. People’s time, energy and skills have value, things have value, but to say that money in itself has value is to confuse the issue.
We can use inches to measure height and kilos to measure apples. But do inches have height? Or do the kilos themselves have weight? It’s the apples that have the weight, not the kilos.
We should think of money as merely a means of exchange, a set of tickets, a number in your bank account. It has no value in itself – you can’t eat it, wear it or build anything with it.
There need never be a shortage of the measure.
Yet we are often idle when all we lack is the means of exchange. There may be plenty of materials, equipment, skills, time, goods and needs to be met, but we cannot work or trade with each other because there are no tickets around, no scores on the sheet, no means of measuring relative value.

The problem suggests the solution

We can get around this problem by creating local money to finance local needs, to generate wealth and protect us from poverty. A local currency can’t leave the community it serves, so it ensures connections between people exchanging skills, goods and services. With a local currency, the community is less affected by fluctuations in the external money supply.

For a local currency to work people need to be able to use it alongside conventional money, and its design should resolve the three fundamental problems of that money. A local currency should ideally
* stay within the community it serves
* be issued by the people who use it
* exist in sufficient supply to meet the needs of that community.

LETSystems provide a means for people to trade using a new kind of currency – local currency.

Each new account starts at zero and thereafter may hold a positive or a negative balance. Those with negative balances have, quite simply, created the operas in the positive accounts. So this local currency is essentially a promise by some members of the community to give service to others.

Conventional money, while easy to spend, is hard to earn. As a result it is coercive by nature – people with money exercise power over people without it. Who pays the piper calls the tune.

In a local network, however, operas are easy to earn. Anyone can create local units and therefore everyone has local units to spend.

By the same token, nobody needs it, so things only happen when people want them to. People serve willingly, or not at all. Nobody can tell anyone else what to do.

Community Wealth

The real wealth of a community lies in the skills of the people in it. Conventional money does not usually reflect this. Money moves to wherever people can get the best return. It often drains out of communities, leaving people and businesses short of cash.

A major community problem at present is unemployment and lack of ability to contribute to the community or work, the most distressing aspect of this is that the unemployed have many skills that other individuals and businesses could and do require, it is only a lack of money that prevents employment. Many good ideas are blocked because there is not enough money.

For most of us, cash is hard-won and even harder to hold onto. It is in limited supply. But the internal currency of a LETSystem is never in short supply, since the LETSystem money is issued as and when it is required.

The money issued within a LETSystem can only be spent within that system. It therefore stays within the trading community, going round and round, supporting further trading as it goes. LETSystems accounts are very cost-effective and more affordable than a bank or credit card account. No interest is charged on, or is payable to, accounts. This reduces costs and encourages people to keep spending, since there is no benefit in ‘hoarding’ positive balances.

Because LETSystem units cannot be spent outside the LETSystem, they do not have the same spending power as cash, but they are supplementary to cash, not alternative to it. As a result, those people who use LETSystems can reduce their cash outgoings, and make their cash go further.

Characteristics:

• Member’s accounts start at zero; no money is deposited or issued. A person may immediately spend with any other account holder
• There is never any obligation to trade regardless of your account balance
• No tax is charged on negative balances or interest paid on positive balances
• LETSystems do not issue any local currency, each person creates their own
• A negative balance is NOT a debt. It represents your commitment to provide something of value to other LETSystem members in the future
• No application or collateral is required if you wish to have a negative balance
• There are no limits on your ability to spend or earn
• With local currency you can afford to purchase goods or services that you may not have been able to, if you had to pay all dollars
• All of the money remains in your community and is available for trading in the future

Now, trade is no longer limited by the availability of cash.

Benefits of LETS

What occurs in any LETS system is limited by the imagination, available skills, time and commitment to the philosophy by the LETS members. Every exchange is different depending on the people in it, but every exchange has the potential to be amazing.

LETS IN ACTION…
Stories from across Australia and around the world about how LETS enriches lives…

When Joanne’s child started school, she decided to return to work part-time. However she calculated that all her earnings would be eaten up with childcare and there seemed little point in working. She joined LETS and was able to pay for after-school care for her son in local units. She earned units by providing home-cooked meals to her neighbour.

David had just emigrated to Australia from Serbia. He found a flat but had no money left over to furnish it. His landlady paid for his LETS membership and sent the word around to other members for furniture and household items. Within a week David was 1000 units in commitment. He spent the next few months mowing lawns to bring his account back to zero and made a whole host of new friends in the process.

St John’s primary school was having trouble filling its canteen roster. They started paying their ‘volunteers’ in local units and in turn the children were able to buy their school lunch on LETS. They negotiated fresh supplies from the local baker who used the local units to get his van fixed. In time, nearly all the parents became members of LETS – trading sports equipment, second-hand school uniforms and text books. The school ‘micro-system’ had a 3400 unit turnover in LETS the following year.

Sophie had been an active LETS member for 3 years. She worked as the Office Manager getting to know all the members and had a huge turnover of LETS currency. When her third child was born with a learning disability she was no longer able to contribute her time to the system. Her balance, which had been kept close to zero for 3 years, started to creep into heavy commitment. The administrators of the system were aware of her situation and decided to do nothing – effectively allowing Sophie to continue trading unabated. She was able to gain much needed services like yoga and massage which assisted greatly with her state of mind whilst going through a difficult period. Two years later when her child entered specialist childcare, Sophie slowly tackled her huge ‘debt’ and worked her way back to zero. “No bank or financial institution would ever have given me the support that LETS did. There was no pressure to recontribute to the system and although I had enormous stress from my cash-money problems, I never had to worry about LETS”.

Jenny injured her back while skiing and took medical leave from work. The osteopathy (for which she could not afford the cash cost for regular treatment) was available on LETS. After seeing the osteopath regularly through LETS she was able to go back to work again, and repaid her LETS account by doing babysitting and selling unwanted clothes.

Jeremy worked in a busy architectural firm in the city. His assistant Bev had been a LETS member for 4 years and was very active. When another member needed help with his new house extension, Bev offered to approach her boss and invite him to join LETS. He liked the philosophy and could see the potential benefits so he signed up. He asked Bev if he should lower his normal $180ph rate. Her reply was that he could charge what he pleased – 180 local units was not unreasonable as long as he paid Bev’s daughter 180 local units the next time she did some babysitting.
“I begrudgingly did my first job for 20 locals, considering it to be more like a ‘favour’, but I soon shook off the exploited feeling when I visited the work site of the house extension. There were plumbers and electricians and plasterers all working for 20 locals/ph and I felt really proud that I had been a part of that. It felt like a family”

LETS enabled Barbara and her husband to feed the family. He worked all hours in the Health Service, but took home very low wages. Barbara had babysitters on LETS, allowing her to work in the evenings and build up a small sales business. Barbara earned LETS by lending out her car and giving massages. They bought most of their food, including regular home-made meals and goats milk (one of their children was allergic to cows milk) for LETS. “We now depend on LETS for our food. The scheme is absolutely marvellous. Without it, we literally couldn’t afford to eat.”

The LETS Garden Gang was formed in 1993. The members of the Gang were:
Sara, a young woman who wanted to learn all about gardening;
Mike, an out of work builder’s mate;
David, a retired teacher living alone and suffering from depression;
Paul, a graphic designer who was looking for healthy activity out of the office.
They thoroughly enjoyed working together clearing gardens, and were often given lunch supplied on LETS.
David says “The work was secondary, it was the socialising that became most important to me”

Maddi, a single mum, loved to travel. When the summer holidays came she contacted all the other LETS groups in Australia to seek accommodation. “My daughter and I spent six weeks travelling through Victoria and South Australia and not once did we pay for accommodation. The people were lovely and even if it was just camping on their loungeroom floor it was better than paying for a stark boring hotel room.”

Bob, a quantity surveyor, was unemployed and hard up. He provided home insulation, energy-saving advice and gardening. His partner Di offered home brew, Caribbean cookery, the hire of a bike with child seat and a powerful lawnmower. Bob said LETS was far more useful for helping him to develop his skills than any government training scheme. They spent their LETS on babysitting and holidays. LETS gave them the opportunity to get out of the house, and a break from the children – which, they say, eased a big strain on their relationship: “it’s really saved our marriage”.
Bob did gardening for Doris, an old age pensioner who became very enthusiastic about his regular visits; he provided her with company as well as additional handywork. She repaid the scheme by babysitting, cake making and pet minding. Doris, who was previously very isolated, became a grannie to the family. “Its a wonderful thing – the scheme has completely transformed my life.”

Clare runs a parent link support group through LETS. It enables parents to meet and support each other practically (eg sharing toys, books and child care) and with ideas on childrearing, discipline, ways of handling teenage difficulties and improving communication within families.

Dennis had been in LETS for several months offering handyman work and gardening while studying at Uni. When he graduated and opened a small Dental practice he was concerned that his newfound profession would be in such high demand that his LETS credit balance would go through the roof. He was also paying rent and had high cash overheads. “There was a real need in the community for affordable dentistry but when I thought about juggling Medicare and Private Insurance and LETS it was all just too hard.” His wife drew up a plan to limit his LETS earnings each month by negotiating a different rate with every client on their ‘ability to pay’. Dennis paid his wife for book-keeping and tax accounting, work she would normally have done for ‘free’.
“At the end of the year she blew the lot on Christmas presents for the whole family! It was brilliant! All through uni I was never able to treat my mum to anything special, but now, because of LETS I can spoil her rotten.”

Peter: “Perhaps I owe my life to LETS. I was unemployed and distressed after my divorce. Pills from the doctor couldn’t lift my depression and I was thinking about ending it all. In desperation I rang the surgery, but no-one could see me for at least a week. I would then have to pay for a course of counseling, but I had no money whatsoever. But I had joined LETS: the acupuncturist on LETS could see me immediately – and finance was no problem. The treatment calmed me and lifted my spirits. I saw the acupuncturist over a number of weeks, and it began to change my outlook. I’ve now started a self-help group, supporting others going through similar crises.”

Penny liked making clothes, and wanted to make each item individual. As an artistic person she did not want to go into mass production, or even be committed to running a part-time business. She was very happy to produce a small number of special clothes on LETS – and her customers were happy, as they couldn’t afford the cost of tailor-made designer clothes otherwise.

The Hideaway Cafe on the south coast operates on 50/50 local units. They buy all their cakes and buns for locals and train apprentice waitresses and chefs paying them 50/50 locals. “The arrangement works perfectly for the whole community. People who could not normally afford to eat out can treat themselves; our business is flourishing because customers will travel that extra mile to dine using locals; we can afford to train new chefs every six months giving them the qualifications and experience they need to get full-time work. It’s just win-win all the way.”

A few more Quotes…
Geoff ” You feel a lot better about yourself when your community asks for things you like to do… LETS acts as a catalyst by reconnecting individuals with their fellow community members.”

Lawrie ” Just about every time I trade through LETS I get to meet someone personally. I’ve got to know an extra 100-150 people in this way. To me, that wealth of relationships in the community is synonymous with economic well-being.”

Joy ” It really gives you a sense of community spirit – because every time you buy something, you’re not only getting something you like, but you’re improving someone else’s situation. LETS has made my existence quite a bit easier by allowing me to fit my skills and time of working around my busy schedule.”

“The wonderful thing about LETS is that it gives “work” which is often undervalued in the conventional economic system, a completely new meaning. It encourages ingenuity, creativity, and self-reliance… it recognises skills which the normal market-place does not value.”

“It fosters an active and supportive community, uses otherwise dormant skills, encourages businesses in the face of recession, and keeps money local.”

“Instead of being stymied by high levels of unemployment, people have another route to use their talents and potential for economic activity in their everyday lives.”

LETS Success Formula

• Join the LETS elite and trade 100% operas @ 35 operas an hour
• Read your newsletter
• Make some phone calls
• When you need a service or goods, think LETS first and check your Register
• Advertise your skills and goods in the newsletter, have a special offer and/or discounts
• Make some phone calls
• Go to Trading Days
• Don’t wait to earn, go into debit – make a start
• Be organised. Keep your log in details and membership card with you.
• Think LETS for birthday & Christmas presents
• Meet other members at meetings and socials
• Tell your friends about your successes with LETS
• Keep a balance and work out each month how much cash you have saved by trading in LETS
• Help others by recommendation of their work
• Make some phone calls
• Write articles for the newsletter, telling your success stories
• Get a LETS member to design flyers or advertising brochures and hand them out at meetings or Trading Days