From AshevilleLETS

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On the morning after the Depression a man came to work building a house, and the foreman said to him, "Sorry chum, you can't work today. There ain't no inches." He said, "What do you mean there ain't no inches? We got lumber, we got metal, we even got tape measures." The foreman said, "The trouble with you is you don't understand business. There are no inches. We have been using too many of them and there are not enough to go around."

- Alan Watts, Of Time and Eternity

One of the paradoxes of money is that it is increasingly just blips of information - just a measuring system that we pretend is also valuable - but it does lead to some peculiarities.

To say there isn't enough money is like saying there aren't enough inches, said the originator of the Local Exchange and Trading System, Michael Linton, making use of an example by the philosopher Alan Watts.

And if you think about it, it is crazy. You may have someone to do the job, the raw material for the job and the demand for it, but no money to bring all those things together. In 1848, the radical Pierre-Joseph Proudhon launched a People's Bank which - although it was swept away that year of revolution - allowed the money to be created automatically in that kind of situation. The buyer would simply create a debit themselves, denominate it - not in dollars or pounds - but in some agreed currency, and pay it off later by doing work themselves.

That was the idea behind the explosion in local currencies in the 1980s, starting with ideas like David Weston's Community Exchange in Vancouver and Michael Linton's Local Exchange and Trading System (LETS) in Canada's Comox Valley. The idea is not just to increase the medium of exchange, but also to improve the quality rather than just the quantity of the economy.

Weston was a social innovator and academic; Linton was an Alexander Technique teacher. LETS spread rapidly across the English-speaking world in the 1980s and the French-speaking world in the 1990s, but it began as a mutual-credit system, called "green dollars." People and businesses decided the rate and conditions for accepting the community currency instead of normal cash, which they can negotiate with customers. You may need cash for the tax and cost of materials from outside the local economy, but you can use other kinds of money for other aspects of the purchase. So you issue your own money in green dollars, and by doing so, you are "committed" to honor it, redeem your money, and keep your promise.

The transactions are tracked, normally using a computer program. In the UK, where LETS spread to almost 400 schemes during the 1990s, a series of bizarre and colorful names were used for these - "bricks" in Brixton or "bobbins" in Manchester - much to the disapproval of the originators of the idea in Canada.

Linton's first LETS began in 1983: within two years, it had turned over the equivalent of $300,000 in "green dollars" trading, including vegetables, room rents and dentistry. What is exciting about LETS is its simplicity. It did not attract the attention of regulators and officials who might have been more concerned had this been some kind of "bank." There was also no problem about how much should be issued. The debits and credits on the system always exactly equaled each other: When you buy with LETS, you create a credit that can be spent by someone else.

LETS is normally taxable, like barter trade dollars, but governments have generally been confused about how to treat LETS for welfare purposes. New Zealand and the Netherlands are among those to have passed laws encouraging unemployed people to use their local currencies. UK cities like Liverpool and Sheffield have been have been among those experimenting with LETS as a way of building a sense of community on poverty-stricken housing estates.

The trouble with modern money is that it is issued by "them" - banks, regulated by central bands - rather than us. Local currencies mean that communities or towns or regions can issue their own, according to what they need - money that isn't loaded with complex information that makes it travel the world looking for higher returns, but which stays circulating locally.

"We have the materials, the tools, the space, the time, the skills and the intent to build - but we have no inches today," Linton wrote in his Open Money Manifesto. "Why be short of inches? Why be short of money?"