Re: Lets, Greshams's Law

[Stephen Sellars <ssellars@xxxxxxxxxxxxx>]

As a pkt newbie, and fledgling econ postgrad, I'm a bit fuzzy on the
LETS discussion
re: exchange rates.

If the exchange rate is defined simply as the ratio of the price of
tradables
to non-tradables: e = Pt/Pn, rather than the value of the foreign
currency to the domestic currency, how can you effectively carve out the
LETS portion of the
economy from the non-tradable segment, and thus alter the exchange rate?
This
assuming that the LETS goods will fall in the non-tradable sector.

Leigh Harkness wrote...
>
> A LETS unit of account can be a form of currency but it does not have to
> behave like an official currency whose value is determined by the floating
> exchange rate system.  The value of a LETS currency can be set at a rate
> that would benefit its participants.
>
> The purpose of a LETS group is to lower the effective exchange rate of the
> currency so as to increase the demand for products within the group.  This
> provides the group with employment and enables it to prosper.
>
Stephen Sellars
Centre for International Education in Economics
SOAS, University of London
ssellars@xxxxxxxxxxxxx