Date: Wed, 03 Jul 2002 08:27:17 +1000
From: Stephen DeMeulenaere <iccs@indosat.net.id>
Subject: Re: Re; Papua New Guinea Project
In-reply-to: <000201c22071$dc04f1a0$c444343f@v4dq1>
To: "Thomas H. Greco, Jr." <circ2@mindspring.com>,
	Zube John <jzube@acenet.com.au>
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Dear Thomas and John,

John, many thanks for your contribution.  I don't have time at the moment 
to respond to yours and Thomas' comments at length, we get up with the sun 
and spend all day in meetings with many people, see events at which Tabu is 
redistributed, it's pretty tiring.

This location was the Japan southernmost command base during the war, it 
was heavily bombed by the allies and war junk is all over the place, from 
american bombers to japanese zeroes.  There are 40 ships resting at the 
bottom of the harbor.  They had 100,000 japanese soldiers here during the 
war, and about as many ANZACs and Americans by the end of it.

Yesterday, I went to a funeral for a young man who was outlived by his 
parents.  People brought Tabu to contribute, and the father's clan 
distributed about $1,500 US dollars worth of Tabu at the current exchange 
rate to the 300 people who came.  For these people, who would be considered 
poor in Kina terms, this is an enormous sum.  They keep telling me that 
they are not poor at all, with Tabu they are rich.  It was like Christmas 
Day, with many rolls of tabu, some the size of tractor tires with 1,500 
feet of shells unwrapped from their bamboo wrapping, cut into 3 foot 
lengths and handed out to everyone, including me.

Sellers came and we bought ice cream, pop, and lollies for the kids, this 
helps to bring some Tabu back for the people who contributed.  At weddings 
and initiation festivals, this redistribution is the same...it's basically 
how the money is issued.  The people purchase the shells from off island, 
have them strung, and save them until they or someone in their clan dies, 
at which time it is redistributed.

In advance of a complete inventory, we are safely guessing about 1.5 
million US dollars worth of Tabu in this little province of 200,000 people, 
with about $300,000 available for short and medium term spending needs, the 
rest tied up in long-term savings.  People divide their tabu into short, 
medium and long-term savings.  Short-terms savings goes into a 
specially-woven purse, medium term savings hangs in rolls on the wall, and 
long-term savings stored in a special house for the purpose.

Demand for Tabu is high because of the population increase, returnees from 
other parts of PNG wanting to get back into society (easily done by 
acquiring Tabu), or the unexpected death of a clan member.


At 12:54 PM 6/30/2002 -0700, Thomas H. Greco, Jr. wrote:
>Yes, the tax foundation is clearly a legitimate and effective basis for
>issuing currency. The prime current example is the provincial "bonds" being
>issued in Argentina over the past dozen or so years. I don't have much
>detailed information about their issuing procedures or their performance but
>I do know that they are used to pay provincial government employees, and
>they typically trade at a discount from the face vale which is stated in
>official "peso" units. Do you know of anyone who has made a careful study of
>these currencies? Do you have any further information?

I have scoured the libraries and internet for any information and turned up 
nothing, except that the IMF is demanding they be terminated, and that they 
have failed to fulfill their payouts and are going backrupt.  This is why 
we are looking at a debt-free 'legal tender as payment for taxes' currency 
that is issued privately at the local level.

>I think the key benefit of such currencies, and the object to be pursued in
>any alternative exchange system is to make the community economy, as you
>say, "largely independent from loans by local or central banks."


Absolutely what we are trying to do.  Of course, banks are not interested 
but the Credit Union is.  They want to find a way to get involved, and lend 
national currency out while taking Tabu in payment.


>You advocate for "competitively issued currencies, for which the most
>suitable issuers and acceptors are the producers and sellers - and their
>local combinations." This is the main point in Riegel's work, to which I
>wholeheartedly subscribe. If we can get this point across to even a small
>proportion of the masses, that will have been the great triumph necessary to
>enable civilization to evolve to the next level.
>
>How's this for a slogan: "Currencies should be issued by producers, not
>parasites (banks, governments)."


We'll be demonstrating something similar here.  Everyone who acquires tabu 
is a producer.but actually issuance is slightly different.  It is just done.



>Now to your recommendation regarding Tabu. You say,
>"Thus, I believe, the TABU should be liquidified or mobilized, by a kind of
>ticket money, that anyone or any group could issue - but must also accept,
>at par, for its goods and services. It would find, then, that it could issue
>it only to the extent that he or his association do provide, locally, the
>currently desired goods and service, paid for with this ticket money, and
>with the prices expressed in, and negotiated in TABU units, but payable
>only, if the payers has not TABU cash available, in the TABU tokens or
>substitutes, whether expressed in coins, plastic tokens or paper slips,
>marked clear enough with all the necessary details for issuers and
>acceptors."
>
>In principle, I think I agree, but your proposal is not entirely clear.
>You are calling for the private creation of credit money (i.o.u.'s) that
>takes the form of paper notes or plastic tokens with the terms and
>conditions expressed thereon. If coins are used, I presume you mean that
>they should be token coins of base material and not full-bodied coins of
>precious metal, which would be commodity money that carries value within
>itself.


I will present paper currency as an option.  We are considering a method 
for issuing through low-interest or interest-free loans with Tabu held as 
backing.



>The unit of account for this credit money would be Tobu. The suitability of
>Tobu as a standard derives from the following conditions:
>1. It is a customary unit with which all are familiar,
>2. Prices have customarily been expressed in Tobu and they have been
>relatively stable over time,
>3. There is the likelihood that the value of actual Tobu (shells) will
>remain relatively stable into the foreseeable future.
>4. Tabu (shells) are actively traded so that their current market value is
>always known.
>5. The market for Tabu is free and not dominated or controlled by any
>particular group or individual.
>To the extent that these above conditions are true, Tabu will provide a good
>standard. If they are not substantially true, another standard should be
>sought.
>Given that Tabu are mostly held in hoards by the Big Man, this last
>condition could be the most problematic, however, if he is not intent on
>manipulating the market value (in terms of goods) of Tabu for personal gain,
>it may not be a problem.


The market is appearing in reality to be freer than I first thought, 
through the research I was doing.  It appears that big men are not so big 
after all.


>The big question is how to assess at the outset the extent of the issuing
>power that should be allocated to any individual or group. Until actual
>sales performance figures develop for those producers participating the
>paper currency scheme, the issuing limits will have to be arbitrary. The
>German school seems to favor a rule of thumb of 1% daily reflux, i.e., an
>issuance limit equal to three months sales, or more precisely, local
>currency earnings. How would you arrive at this "arbitrary" figure?


I would appreciate any practical ideas on this.


>Finally, you say that the prices for goods/services/ would be payable either
>in real Tobu (shells) or Tobu denominated currency. This parallel
>circulation is necessary to maintain the parity between the two forms of
>money and to show up any debasement that might occur.


Exactly the same as I'm thinking.



>The necessary feature of any currency is as you say
>"optional acceptance or rejection and free discounting, with only the issuer
>being obliged to accept his own issues like legal tender, at any time at
>par, regardless of how much it may have been discounted in general local
>circulation."
>
>I agree that any credit currency "should have a limited life span." This is
>one way of assuring that it is used only as an exchange medium and not as a
>store of value. An expiration date is less cumbersome than, e.g., demurrage
>charges imposed by affixing stamps.
>
>Finally, I very much like your statement, "monetary freedom, intelligently
>used, is one of the most powerful means to resist and overthrow any kind of
>despotism." May I use it as a chapter lead quote in my next book?
>
>Regards,
>Tom


Kind Regards,

Stephen



----------------------------------
Stephen DeMeulenaere,
Community Exchange Systems in Asia, Africa & Latin America

HP:	  Australia           +61 (0) 408 881 469
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