Sovereign Credit Money As A Public Resource

Free Republic of Vermont Ten Shillings Bill Of Credit. Issued 1781

John Ford

The role of public credit money on the Commons serves principally the purpose of fostering cooperation among people because it is based on a system of exchange that works best by encouraging interdependence among us. It cannot work otherwise, and unlike debt based currencies that are designed to work by competition through a long distance economy that draws wealth away from the people that are actually creating it, a Commons currency is designed to build value, and encourage stewardship through renewed citizen participation.

When we recognize that all wealth ultimately comes from the stewardship of the Commons, then it follows that we would design an economy around a currency that promotes reciprocation, mutual aid and maintains created value within the region. The more we can do for ourselves, be it feeding ourselves, healing ourselves, or reinventing ourselves, all add up to a greater responsibility for stewardship of the Commons. In this transition from a privately controlled debt currency to a publicly controlled Commons currency there are three primary areas that need to be examined:

  1. The role of Public Trusts
  2. The role of infrastructure and public works projects
  3. The reconstruction of the Commons through public credit money

Public Trust Doctrine affirms that resources belong to the people and not to the state. Historically it was the state’s obligation to manage these resources for the benefit of the citizens. A co-governing system of Public Trusts offers a ‘bottom up’ organized approach that does not require a direct government role in management. More importantly it places accountability for the beneficiaries (citizens) squarely on the shoulders of the trustees. The state government’s role in the beginning of this process is to legally recognize the ‘boundary lines’ that are being drawn up on the new map of the Green Mountain State.

This legal or constitutional recognition of Commons Trusts constitutes a formal treaty where the keys to the gate of the Commons are handed over to the commoners initiating this process of co-governance. The boundary lines on this new map separate the corporate sector, the asset markets and the debt finance systems from the Currency Commons and the subsequent Trusts, creating new common resources and rights. The state then assumes a more equitable position where it not only grants rights of securing profits to corporations on one side of the boundary, but more importantly it also recognizes the rights of stewardship management by Commons preserving trusts on the other side of the boundary.

In affect what you are doing here is creating two parallel ‘states’ where citizens move freely between the two territories or realities. In the virtual state reality of debt currency systems, people look like corporations, consumers are managed by the economy and denial ensures survival. In the ground state reality on the Commons, people assert their rights, citizens manage their economy and cooperation ensures their survival.

On the Currency Commons there is a monetary cycle that begins with money creation that is managed by a Currency Trust. This trust has the responsibility of ensuring an adequate supply of money in the system, and also of removing money from the system through taxation. Think of this system as working like hydropower. Money flows into the turbines spinning the wheels of business and commerce and back out of the turbines maintaining velocity. If there is too much or not enough water (money) on either side of the turbine, then inflation or deflation ensues.

Unlike hydropower energy however, money power energy does not necessarily need a tangible, physical substance (water) to create energy despite the aberrant claims of the gold money enthusiasts. Money in essence is an accounting device, a way of certifying that the holder of a note has performed his or her share of work and deserves their proportionate share of wealth. This accounting device represents a seed, that given the right conditions will germinate. The term seed money is not too far off the mark, and the real question now as always has been who will control the seed distribution and what will be the use (interest) fee for these seeds?

Within the territory of the Commons money control represents the ultimate authority of the citizens to assert their rights of self-determination through the doctrine of seignorage. In other words, we have decided to take control of the seed distribution. Historically, rights of seignorage or money creation were the prerogative of the monarchy or government where an independent treasury has long been a recognized legal requirement of a sovereign nation, representing both a responsibility and a creative opportunity.

When the money supply is under public control through a Commons Trust, there are four principal options for getting money into the system:

  1. Capitalization through fee based business loans to rebuild the producer sector.
  2. Transition farms programs with parity price supports for the agricultural sector.
  3. Public works and infrastructure projects.
  4. Commons annual dividend for all Vermont citizens.

When a monarchy or government held the power of money creation as with the tally sticks or colonial scrip currencies, Public Works programs served as a simple method for keeping people employed. Both provided a viable way of getting money into the system without any debt attached. These infrastructure programs created real value not debt since the money was not lent into the system, but spent into the system, an important distinction to keep in mind. Rather, this money was literally worked into existence by the labor and materials that built the bridge, repaired the road, designed the cathedral. How this money comes into existence determines everything that follows in an economic system. When money is created as debt it will continually extract value through interest, however when money is created through labor it will maintain value within the region where it circulates.

A Commons currency controlled through a Public Trust begins the funding of any number of Public Works projects. Without needing to get very creative here, we could simply pick up where we left off in the 1930’s with the CCC, Civilian Conservation Corps public works programs, where here in Vermont we had one of the highest concentration of workers in the country. They planted trees, built roads, schools, trails, and built state parks from one end of the state to the next. They built dams in Waterbury and East Barre and provided communities with improvements in flood protection, fire control and forest management.

And they weren’t just funding the utilitarian necessities of a community. They funded the arts and had traveling theater groups that entertained with plays and skits. So take a good look around your communities and your state and ask yourself what you think needs to be built, fixed up, repaired, cleaned up, and maintained, or what kind of public arts programs you would like to see that are not on the receiving end of the federal bailout bucks programs and understand that we can do all of this and more without needing to be on the federal dole.

You might consider for example, the radioactive soup that needs to be cleaned up at Vermont Yankee. And if by chance you count yourself among the Vermont citizenry that is growing increasingly exasperated with the continued pathetic whining, and lying from the clean, green and reliable nuclear dinosaur run by Entergy Corp. that is now leaking radioactive tritium into the ground water, then lets make good on the legislature’s vote to close it down and fund a percentage of the labor costs for decommission through a Public currency trust and send them all back to Louisiana.

And if we decide that we want to kick start a production based economy as part the renewable energy sector, then let’s put a photovoltaic system on every public building in Vermont, or better yet on every dwelling in Vermont and say goodbye to Vermont Yankee for the rest of their 40,000 year ‘half-life’. And while we are at it, let’s make sure we are installing photovoltaic systems that are built here in Vermont funded through fee based business loan programs with a Commons currency and not assembled in the maquiladora plants in the Mexican border towns that have come to typify the very worst of labor exploitation anywhere in the world.

The importance of the relationship between local production/manufacturing and a commons currency cannot be overstated. They fit together like hand and glove. A Commons currency would be of no use to anyone if we do not develop a conglomeration of local artisans, farmers and trades people all hammering and humming away at whatever it is they make that contributes to the well being of the Commons, supplying the goods and services that make the wheels go round in a local economy. In a dual currency system, the viability of the Commons currency is in large part determined by the strength of the local producer sector. In order to maintain a sustainable producer economy it is first necessary for the producers to maintain control of the money supply.  Getting enough farms started to feed ourselves and enough production of goods going to ensure we don’t buy everything from China requires adequate capitalization without the burden of usury, that in reality is an extractive cost born unwittingly by the whole community to its ultimate detriment.

In the domain of privately controlled U.S. dollar system, money is created exclusively as debt, a debt which over time compounds drawing the value of labor and production away from the communities and toward the periphery to be captured again and again by the financial sector, forcing everyone to ‘swim’ against the current of money flowing straight out toward the periphery.  It is a game where we are all forced to compete and the financial sector always wins. Competition is designed into the system.  The problem of course is that people grow tired of constant competition; corporations do not. When the only choice we have is to use a debt currency designed in favor of competitive corporate behavior, that currency will inevitably promote such behavior in all those who use it. One of the primary goals of a Commons currency then, is to shift the primary focus of money from competition to cooperation, and to keep the value created by this money right where it belongs; with the people and within the state.

Harnessing the power of public credit money for the purpose of the reconstruction of the Commons involves building back value in our state where it all started with our farms. In addressing the continued problem of the loss of farms we can look back to the success of the 1940’s farm parity programs that guaranteed a base price for farm commodities; a price that made it feasible for farmers to maintain a liveable wage. Supporting parity programs as part of a Transition Farms initiative through a Commons currency puts money into the economy where it is needed most, at the base where it has a multiplier affect on the exchange of money in the system seven times over. More importantly it is a recognition that farming is not merely the economic activity of raising cows, selling eggs and growing potatoes. But like trains and buses in France and farms in Switzerland, they represent an essential public good. Farms support long term food security, topsoil building and carbon sequestration and therefore need to be managed and funded for the collective good.

Recognizing the connection between healthy soils and healthy people, suggests that what we really need to be dealing with is farm care funding, not health care funding as a long term viable solution to chronic health problems. Long before we had any kind of health care program in Vermont we consistently boasted one of the healthiest populations in the country. In the 1940s Vermont supported over 11,000 small dairy farms reminding us that good health is a function of healthy soils and diversified farms.

To further support the transition toward a local producer economy, a citizens dividend fund could be created resembling the Alaska Permanent Fund begun in 1976 with an amendment to the Alaska constitution. The Vermont Citizens Fund would provide a modest annual payment to all Vermont residents of $3000 as a way of affirming that the Commons is the property of all persons, all of whom deserve to be recognized for their respective efforts in sustaining the Commons. Unlike the Alaska fund that depends on a percentage of oil revenues for its funding, oil extraction that contributes to continued environmental degradation, the Vermont fund as part of the Currency Commons would depend on the recognition that it is the social bonds of its citizens that are its most valuable resource in maintaining the viability of the Commons for future generations.

In assessing the feasibility of implementing a dual currency system in Vermont, we can look at how dual systems are currently working in other countries. The island of Guernsey in the English Channel began issuing interest free public credit money around 1816 in the amount of 6,000 pounds for various public works projects. Guernsey has continued the issuance of public credit money for roads, sea walls, public markets, churches and colleges, funding all of these projects with no debt accumulation. As recently as 1990 there was an issuance of 13 million pounds in state issued notes. Guernsey enjoys a high standard of living, no unemployment, no public debt and a surplus of public funds. Its citizens have the option of conducting transactions in either the British or Guernsey pound.

The WIR Cooperative in Switzerland was started in the 1930’s as a way for Swiss businesses to conduct transactions outside of the Swiss franc. Unlike Guernsey that asserts its right of seignorage with a public credit currency, the Swiss WIR is a cooperatively issued alternative currency, and as such has a number of limitations. However, the WIR still serves as a viable model for a dual currency system. The WIR Bank in Switzerland denominates accounts in both Swiss franc and WIR franc enabling its members to conduct transactions in either currency. With over 60,000 members, WIR membership equals approximately the population of Guernsey and accounts for over $1.65 billion annually in WIR franc and a total value of goods and services transacted in both currencies among members of $3.5 billion annually.

In concluding, it is interesting to note that a number of years before Guernsey first issued 6000 pounds in public credit money, the independent Republic of Vermont had authorized in 1781 an issuance of approximately the same amount for 5,590 pounds for military expenses and to increase the supply of money in circulation. The engraved seal on the face of the bills of credit depicts thirteen linked circles with another unlinked circle at the top representing Vermont. The motto around the seal reads “Vermont Calls for Justice.” Just think for a moment how different things might look here today had Vermont, like Guernsey sustained its issuance of public credit money.

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