Lets, Greshams's Law

[PHILLPS@xxxxxxxxxxxxxxxx (root@xxxxxxxxxxxxxxxxxxxxx [130.179.16.47]) by for <pkt@xxxxxxxxxxxxxxxx>; Wed, 22 Jan 1997 22:55:43 -0600 (CST)]

Let me clarify a couple of points.  The PURPOSE of a local currency
is to isolate the local exchange from the overall market and
to _prevent local exchange_ from being leaked into a larger
circular flow which extracts surplus out of the local exchange.
Further, it allows local exchange to have VERY DIFFERENT EXCHANGE
RATES, not only with the outside community/economy, but also,
within the local community.  For example, in the large capitalist
economy, the ratio of dentist fillings cost to, say candle making,
may be 100/1; but within a Lets or eggmoney economy it may be
established on the basis of labour equivalents -- e.g. 3/1.  But
of course, it is only payable in the local (LETS) currency so that
neither the supply nor the demand (in crass neoclassical terms) controls
the price in "local money" terms.
  Whether there are outsiders who wish to get rid of their local money
or not is irrelevant (i.e. Greshem's law advocates) since transients
would not enter into the local exchange, or the "money so created".
If one were to pursue this whole issue further, (as an institutionalist)
this would be equivalet to comparing exchange *within the market* with
 distrtibution *within the family* -- note I did not say "exchange"
within the family or within the community where "price" (or
perhaps one should say exchange ratios in terms of local labour
equivalents) is related to local-exchange rates, not to external
market exchange rage
 (that should be exchange rates)

This leads to the conclusion that local currency systems are
protectionist -- but THANK GOD THEY ARE PROTECTIONIST -- since
they end up protecting local communities from the vagaries of
international and national markets, but
they also give economic coherence to the concept of economic
commutity.   ( unfortunately  e-mail messages are comming in
so that I can't realize what I am writing so, for now, this is it.)