Jiu Jutsiu with the globalisation-machine

By Henk van Arkel and Camilo Ramada

Published in Dutch: ISBN

This is a rough translation, with which new versions will be created in English, Portuguese, Spanish, French, Italian and German. People who want to be co-author in one of these languages are requested to get in touch with Henk@strohalm.nl

As I look into a late afternoon sun, I see a spacious hilly landscape. The bench on which I sit is placed in front of a mansion in which only six years ago, the landowner would spend a few weeks of holiday once a year. Right in front of me I see about thirty new small houses, now inhabited by farmers and their families. In the distance are some sheds and stables; the rest I see is cultivated farmland. Six years ago this land was taken over by the movement "Farmers Without Land". My host, Alvaro, is the third son of a small time farmer from the poor North of Brazil. Full of confidence, he talks to me about the first years when they occupied the land together with about 2000 families. "For years the owner had neglected the land: it was a difficult time. The landowner’s small private army murdered a few of us and sometimes someone was beaten up just to scare us. No, that was not a very nice time. I remember that there were times when we nearly lost all hope. We seriously doubted if we would be able to continue. Fortunately a few hundred new people came in from Porto Allegre and gave us support. That gave us courage, we had not been forgotten eh? So, we managed to keep our courage and now we have established ourselves here ".

A few days ago I heard that the movement "Farmers Without Land" is using a law in which it clearly says that owner's rights of land that has been neglected are invalidated . "There are now 102 families living here, families that were without land in the past. Fifty-seven families work together in a cooperative", Alvaro tells me; pride clearly shows in his face. "Now everybody has a small but clean house. Later on people will be able to add an extra room". A little less certain he continues: "The grain silo has to be fixed up while the construction of the mill must continue. The modernization of the bakery is also on the program and will eventually return the investment, the only problem is that money is needed for that, I am sure you understand". Alvaro gets up, "Come along I want to show you something". I follow the 25-year-old farmer’s son who leads me along a small path between two wheat fields to the top of a hill. Pointing down he says: "We plan to fix up that watermill next to the river. It will produce electricity for our homes and the bakery. For the time being though nothing gets done, the building has stopped, because we have no money.

What Alvaro is showing me makes my blood flow faster: here are people who take the bull by the horns, people who organize themselves well, people who recognize the benefit of working together. People who decided without a doubt that as long as economic structures remain the same they would also continue to live with difficulty. These people also decided that they are no longer willing to accept that.

In general terms I talk to Alvaro about my work with "Strohalm"

" At Strohalm we work with the philosophy that it is possible for economic activities to take place without becoming obliged to the monetary system.

We are building economic networks so that for many people in many different businesses it is no longer necessary to have to come up with expensive money, and where it then becomes possible to make transactions without interest charges. Security becomes subjected to people instead of the other way round. We have discovered that economic activities are now possible in areas where under the current monetary system they would not be considered as profitable. Alvaro looks at me and says:" That’s exactly what we need! Then we can continue at our own pace. You know, it does not matter how hard we work over here, as long as we don’t get a chance to change the system itself, we’ll always end up holding the short end of the stick. You could see that a few years ago during the Peso crisis. At the first sign of trouble, investors removed their money; our country was left in ruins. We must find an alternative. The possession of this land has taught us that we must learn to be patient while at the same time willing to fight hard for it".

During my return trip in the car I continue to talk with my hosts: Milton, a former diplomat, now involved in the interests of Farmers Without Land, and Professor Paulo Albuquerque of the Brazilian University, which we at Strohalm have joined forces with. Paulo says: "The Farmers Without Land are not the only ones who decided to take matters into their own hands. There are thousands of large and small-scaled initiatives aiming to get a economy of solidarity going. Often these initiatives interweave, but real cohesion is still absent. I think that you people have shown us the missing link". "How do they pay each other now?" I ask. "Mostly with money", answers Paulo, "sometimes in goods. But there is an enormous shortage of money, that’s why it is really totally essential to work together and to set up an exchange network". In deep thought I look through the windows and out into the darkening landscape. " Are you really going to set up such a network?" I ask Milton. He looks at me quickly with a smile on his face, and then returns his attention to driving. "I am more concerned if you people in Holland are really capable in doing anything about the economic structure. Over here, we are ready for it. We have everything: people who are willing and capable to organize a network, we have thousands of cooperative businesses, there are more than a million people in our Trueque systems, a micro credit program exists in every town. We are quite aware that we must continue. No problem with that".

Finally I allow myself to become enthusiastic. What I’ve seen these weeks in the South of Brazil is heartwarming. Experiments to reinvent the economy are present at all levels. Local governments, social movements, universities, church groups, consumer groups, savings groups, credit unions, neighborhood committees, they are all there. Wherever we go, we end up talking to motivated people. Everywhere we see progress and human dignity. And when Paulo explains how the initiatives can work in conjunction with a consumer-business-network, everybody immediately becomes enthusiastic. I must say that it is like a breath of fresh air when one can talk normally about the monetary system and interest charges, and that the subject is quickly understood.

Here, as opposed to in the Netherlands, it is not necessary to convince people of the damaging consequences of interest charges. Here, people know how human misery is caused by endless interest payments and a monetary system that works badly. Together you can think about new ways of trade and other forms of exchange. What I also find extremely refreshing is that only very few people here are prejudiced in their thinking that it will never succeed. The people in the movement for economics of solidarity know the value of a guiding light that leads to a new reality; anyway they already have results (that) they can be proud of, and besides, it must be done. Here, years of work find fertile ground.

Back in the Netherlands we start with the writing of this book. We want the public at home to share our enthusiasm. No, not just sharing but participating, becoming actively involved! In order to make a new reality possible, all sorts of things must happen here and must become known about. Also here, it should be possible to do business in a different way, without us having to become nervous about the money system. In our affluent world we cannot afford to sit down and wait for people elsewhere to clean up the mess for us. We must act ourselves, by helping and stimulating each other. How? By believing in it and by working together!

This is a book about enthusiasm and hope. The hope that a solution to the problems of poverty in the world is in sight. We wish to share this hope and enthusiasm with you. They are based on the following facts:

Zap

Also, the discovery that money is changing and not only because of the

introduction of the "Euro" currency.

Zap

Zap

In the end this book will show you these facts and developments. In addition we shall examine how the current monetary system works and what sort of choices were made; zap, how poverty develops and is amplified because of systematic errors in the monetary system, zap, also, how our way of thinking has become imprisoned in prejudging the value of money.

.

In this book we also introduce you to "Strohalm". We intend to show you Strohalm’s ideology, what Strohalm wants, what Strohalm has achieved and what Strohalm has planned for the next few years. We invite you to participate and to intensify these developments by:

helping the organization;

assisting in the distribution of our intellectual property; ( reading material)

incorporating the ideas in this book into existing projects;

encouraging consumers and companies to participate in the consumer-

manufacturing cycle; (network)

helping us intensify our contacts in Latin-America;

becoming a donor to Strohalm

practicing your eventual influence as a consumer.

Join in improving the chances for the poor.

In this extended version, or in other Strohalm publications, you will recognize more developed points of view and theory found in this circulation-style book. An asterisk * references these points

We are writing this book in the first person, meaning the singular: "I"

We (have) decided to write it like this because it demonstrates our personal involvement to a greater degree.

We truly appreciate your effort in maintaining this text in circulation. Help us a little bit in pushing this development.

Enjoy.

People at Strohalm:

Henk van Arkel, Camilo Ramada.

We wish to thank Guus Peterse for his work as editor. Furthermore we are grateful to Ada, Andrea, Arie, Jan, Jeroen, John, Kees, Marjan, Marjolein, Miranda, Pascal, Renée, Rinke, Ruud and countless others for their direct or indirect support.

Published by: Strohalm

Oudegracht 42 , 3511 AR , Utrecht , the Netherlands

Telephone:+31(0)30- 2314314 Fax: +31(0)30- 2343986

Website: www.strohalm.nl email: info@strohalm.nl

What kind of future do we wish to build with our children?

[Picture of a gold mine in a Brazilian rainforest.]

To me this picture is a symbol of how poverty causes inhuman conditions. It is one of those pictures that still stimulate me. I have to confess that I no longer respond to most pictures. I don’t know how you react, but subconsciously I protect myself more and more from reality. Is that because I feel that there is nothing I can do about it? Isn’t that the case with most people? I prefer to mentally hide issues I am not able to deal with. Most of you probably act the same way. I can well imagine that as you pick your way through this book, encountering terms like "world economy", and "monetary systems" that those terms will quickly find their way into your respective cubbyholes marked "Ignore", "Incomprehensible".

In this book I hope to be able to show you that this is not necessary. I also hope to show you that our present monetary system does play a role in the causes of poverty, [zap] but that it can also play a positive and final role in eradicating poverty. [zap]

This book will show that new points of view are developing and that many people are working hard in trying to make these points of view a reality. Worldwide work that will allow a realization of a new monetary system that will also permit the participation of the poor is in progress. A technique that will allow us to choose another monetary system, and a different world, is within reach. The idea that it might be possible to change the monetary system and that we can contribute to that change is for us an unrealistic one. To most of us it appears that current changes have become increasingly overwhelming. But when one looks a little closer, one will discover cracks in the foundation of the modern money system. And you don’t need to be a radical world reformer to see this. It also was the vice president of the Bank of England who recently predicted that the current money system would disappear in the near future. It is his view that the current money system will be pushed aside by a new method, the method of speedy streams of information on the Internet. [Zap]

Another monetary system, another economy: suddenly we are able to visualize our boldest dreams again.

What sort of dreams do we tell our children?

During an address the Indian Chief "Seattle" asks himself: "What sort of dreams

does the White man speak about to his children during the long winter evenings"?

Something to think about. When it comes to dreams, has our affluent world not become rather poor? Do we still talk to our children about the future as if it is something that we can control, something that we can expect as wonderful, and something that we can contribute to? I am not talking about an individual career here.

Do television images teach us that excesses and miserable situations are normal? Or that it is now normal for children to live on streets and garbage dumps? It is important to have nice dreams. Nice dreams facilitate cohesion within a society. However, there must be some chance that those dreams will turn into reality. That’s why I am very happy that real improvements are now becoming more visible. I invite you to join others and me in becoming involved!

A hopeful future

There are multiple examples of people in poor countries who, with the aid of a savings or a barter system, have managed to free themselves of their poverty and who have managed to create their own opportunities. Later on you will be able to read more about this. [zap] The possibilities will continue. Because if during the next twenty years the monetary system will totally change, then a situation that will offer opportunities to all the poor people may develop.

In order to take advantage of these opportunities to their utmost potential, it is now essential that you and I be prepared to add our weight to the equation so that a more equal method of exchange can be realized. That opportunity now looks real. The opportunity to create an improvement in one of the most controlling factors of the economy: the monetary system.

In wealthy countries the present money system contributes to huge dynamics, rapid technological developments and an almost limitless expansion of wealth. In poor countries it leads to further poverty and stagnation in development. Increased poverty and escalating numbers of refugees are the flip side of the coin when looking at business expansion and increasing stock market values.

A money system that contains built in poverty.

Little attention is given to the influence of the money system on poverty. The idea is much more abstract than for instance the idea of poverty as a result of lack of education, natural disasters or war(s).

Still, when natural disasters occur, money is involved. An economy exclusively dependent on nature is sensitive, continued failures translate into hopelessness. And a lack of hope can become fertile ground for thoughts about going to war.

Off course the money system is not the only source of poverty. I am sure that thanks to the present monetary system millions of people unnecessarily end up in a hopeless situation. The most eye-catching relationship between poverty and the money system is off course the so-called debt crisis. The poor experience this as the equivalent of a nuclear blast. The debt crisis during the eighties subjected an entire generation to hunger, for millions the perspective to a better life was destroyed. Bridges had to be taken down, because there was no money for their maintenance, schools had to be closed, hospitals built with difficulty decayed. Still, money keeps on creating new chaos. At the present time the new I.M.F. programs addressing the Asia crisis, the Mexican peso crisis and closer to home the more recent crisis in Turkey have caused capital to evaporate and leave the population in a state of shock. Interest on money plays an important role in this. The creation of money is closely related to interest, and for this reason the world economy must maintain a continuous and fairly high interest rate. Because of this interest rate the rich will continue to grow richer while the poor will continue to remain poor. Because of interest and against all sense of reason the rich continue to be subsidized by the poor. Interest is always paid by those who are short of money and need to borrow, to those who have money to spare and are willing to lend it. *

A money system with built-in growth.

For the rich, interest is the driving force behind the creation of enormous sums of money. A substantial amount of that money is then invested in new methods of production that in turn lead to further updated and still more production, to more consumption, additional profits, in short, economic growth. The result is an accelerated development of wealth, investments, production growth, consumption growth, new efficiencies and a further concentration of wealth. In this cycle, nature, the environment and mankind are being more and more exploited *.

[Explanation]

The wealthy, willing to lend their money, demand interest. The borrower must pay this interest in addition to the amount borrowed. Thus people who borrow money end up paying more in return than originally borrowed. The flow of money from the poor to the rich is instrumental in the debt crisis experienced by many countries: despite the payments of many billions into debt reduction, debt in those countries has steadily grown during the last decades. [zap] Usually loans exist of new money. A characteristic of the present money system is that banks are capable of circulating money in the form of loans out of nowhere. Although created out of thin air, interest on these loans must still be paid.

[zap] While most people think it reasonable that those who save are entitled to some interest on their savings, this much larger flow of money is unjustified. We are able to see that when we read how during the 13^th century goldsmiths were able to collect interest by offering more in certificates representing gold values than they actually had in gold in their safes. When modern banks create new money the same philosophy is. In this situation the circulation of new money does not only result in an increased flow of interest from the poor to the rich, it is also the beginning of a continuing spiral of misery.

Since more money than originally borrowed (capital +interest) has to be paid back it stands to reason that, for the borrower, a shortage of money will come into existence after one year. As more new money is created, the shortage increases. Still more money needs to be created to fill the gap. Off course that money is also subject to interest. Etc, etc. The economy is now caught in spiral of a continuing increase in money and at the same time a growing shortage. Rising debt and rising interest now dominate the money market to such a degree that despite new money a shortage of money remains.

The connection between the creation of money and the debt load is clearly illustrated in the graph by Rowbotham.

[Graph Rowbotham]

On the opposite side of this increase in debt is the increase of wealth.

All the money paid in interest and all other profits, stock market profits, profits in real estate, profits realized in the speculation in natural resources, money transactions etc, all these profits end up in the hands of a relatively small group of wealthy financiers and institutions. Interest and profits solidify wealth at such a rate that very quickly increasing amounts of money are just waiting to be profitably invested. Worldwide thousands of investment advisers are now needed in order to find new areas where new profits might be realized. For instance, it is no accident that new developments in gene technology outpace the thinking about the consequences. The rapid, unprecedented development presently experienced in the world, is a logical result of the connection between money and rate of interest. The money flow from the poor to the rich is the driving force behind colossal rapid technical and material development in the affluent world. Naturally, renewal also offers us many good things in life; an easier life style, comfort, travel possibilities, cultural development. But larger groups of people are increasingly subjected to misery. The enormous growth in economic activities as a result of all this reinvestment has huge consequences for our nature and environment, our climate; even the health of millions is now affected and fearfully will likely be even more so in the future. What is most lamentable is that the poor will be hit hardest because of this unrestrained increase in wealth. It is precisely in the poor countries where deserts are increasing in size, where fertile soil is washed away and where seed either dries out or rots. In those countries we also dump our used batteries and the pesticides that for quite some time have been outlawed in our own countries. "Environmental pollution takes eight million lives a year", states an article in Nature and Environment, April 2001 issue. Most of the victims are in the developing countries.

Furthermore it is the developing countries that are hardest hit by the climate changes caused by our energy consumption. A report in the N.R.C. (a Dutch newspaper) of February 19th, 2001 states that food production in large areas in Africa and Asia is now in danger. This report came out of an enquiry initiated by the "United Nations". Because of the rising sea level tens of millions of people living in low-lying areas of Asia will have to be relocated. In Africa the size of deserts will increase, rivers will dry up, causing plant and animal species that the local population depends upon to become extinct.

In South America it is expected that more dry spells and flooding will occur and that the production of food will decrease. Ironically, in Europe and North America, the two largest contributors to the so-called hot house effect, it is expected that climate changes will have a positive outcome especially in the area of agriculture. In the mean time the dizzying technical developments bring poverty closer to home. The distance between the poorest country and the rich (affluent) world is less than a day’s journey; TV and the Internet bring it right into our homes. Next, the poor arrive on our doorstep. [Zap E.]

The present monetary system leads to enormous payments of interest from the poor to the rich. This causes the poor to become poorer while the rich become richer. On top of that the increase in wealth leads to problems in the environment. The poor are the most affected by these problems. ]

The kind of money that is in use these days has its own influence over the many choices that are made. In other instances it limits the possibilities to choose. Many noteworthy and beautiful things develop as a result of cooperation. However, it is a pity that money has managed to change the economy into a battlefield. On a battlefield the dark side of people rises to the surface.

This book will show how money can be used as a starting point in change, renewal and improvement. No matter how incomprehensible the money system may appear, it is becoming increasingly clear that it can become a point of departure for change. It does not require much imagination to understand that specifically for the poor a positive change could result in a real structural improvement. Possibly the greatest obstacle is the belief that money is something that can not be changed, that in this area changes are unattainable. This is a deep-rooted conviction. Academic circles have scarcely researched or tested attempts to investigate alternatives to the present system. Authorities in poor countries have never seen any reason to implement real change in the money system.

Even now, while money is changing rapidly, few appear to be aware of it. Through this book we call on you to push for change in the right direction. Many initiatives, already in existence in this area already prove that it is possible. Many people, particularly in the poor countries, have started to experiment with savings and exchange systems.[Zap.] This offers much hope for positive developments.

Money in its present form is anonymous; that has destructive consequences for people, communities and entire countries. The victims of anonymous money exist among the homeless in the big cities and the child soldiers in Africa. The fact that money can be anonymous is a choice because in itself money is not a neutral means of exchange. The kind of money system we have chosen determines the outcome.

Recently I spoke with someone about a lofty project that our town council wants to initiate. ‘They do that thanks to my money’, she said. The night after this I saw a report on television about child soldiers fighting a war that is being paid for by the diamond trade. Suddenly the penny dropped. I would not react so quickly and say: ‘They can do that because of my money’ . Who knows exactly where the money that pays for the weapons comes from? How do I know what happens to my money when I put it into a savings account or the money I spend in a shop? We don’t have a clue whether or how our money adds to all kinds of misery in the world. At the present time money can move without difficulty from country to country, or continent to continent. The pension company may deposit money into an investment fund that in turn invests the money in Tokyo or New York. Perhaps gold is bought from a bank that in turn supports a loan to a small factory in Singapore or Taiwan. How do I know that the Euro, presently in my possession, sooner or later is not used as minimum payment in a sweatshop? Perhaps somewhere along the line that same Euro was used as cover for a diamond transaction. In which case I managed in helping a War Lord in Sierra Leone and without knowing it!

In its present form money is a completely anonymous medium. I have thought for a long time that by definition it was precisely that. Of course, everybody knows, that much misery is caused by people who earn money because of its use; but like most people I always thought that misuse of money is inevitable. But that is not so.

Our money system did not spontaneously develop. When it was developed in the past, careful choices were made. Through International conferences and decisions made by national authorities, today’s money system developed into its present form.

[Zap G]. There were other possibilities. [ Zap different forms of money systems].

In the mean time we have got used to the idea that guilders can, without difficulty, be converted into French Francs, or German Marks and that as payment, dollars are used (can be used) nearly world-wide and that on money markets huge amounts of British Pounds are converted into Japanese Yen, or Dollars into Mexican Pesos. Via anonymous money markets, money can now without difficulty shift from one currency to another. In reality, this phenomenon is fairly new. Nowadays, shopkeepers from Brazzaville to Lima love to accept dollars, you could not try that 50 years ago. And if during that time you wanted to convert a million guilders into another currency, permission had to be requested, a good reason had to be given and that request could be accepted or denied.

The bank could refuse your request if in their opinion you did not have a good reason, or on the grounds that the purchase of foreign currency from a particular country would have a negative influence on the strength of it’s own currency. At the present time it is understood that the bank is in agreement unless the Tax Department or the Department of Justice have reason to object. Lots of work was done during the eighties and the nineties to see to it that money would be able to travel world wide as easily as possible. As a result, international monetary systems have become increasingly anonymous. This had enormous consequences. Money flow from one country to another has now established itself in some unbelievable fashion. Now, in one day, more money flows across the world than is needed to finance all purchases of consumer goods and services for an entire year. [Zap] The largest amount of this money is used for indirect and often questionable transactions. A shipment of grain often changes ownership several times while in transit. Money flashes to a destination where it will take in the highest possible profit unaware what kind of goods or services are purchased.

Often this has disastrous consequences. When it appears that a certain market is not going to perform well capital will dry up. Money has now managed to influence nervous expectations: manufacturing plants run out of money, supplies can no longer be purchased, investments come to a stop, wages can no longer be paid, people end up on the street, local currency devalues, goods for exchange disappear and within a few days an entire economy can collapse. For millions hunger started a few years ago when we witnessed the financial crisis in Asia and Mexico. Many men and women who lose their jobs can relate to this. A cousin who lives in Uruguay, a country reasonably well developed, has always been able to work but was never sure if work would be available the next day. He is a designer and is capable of making wonderful things. When the economy was stable he had lots of work, when the economy declined he was without work. No one needs a lay-out-artist when products become scarce. He would accept odd jobs such as driver, or dealer in dog-food, or do whatever was available. Steadily the good years got shorter, lean years got longer. In the last few years the crisis in all Latin American countries has worsened. Now, at 45 years of age he and many others are in the same boat, no work, no social assistance, no money, and no future. But something is not right here: people consider him to be talented , that what he makes is beautiful and that he is enterprising. Apparently, Uruguay does not lack skilled people; there are plenty of people like my cousin. It remains to be seen if he will ever be able to work again in order to support himself or to supply his clients. It depends on a world economy in which he has no say.

In the mean time there is no single proof that the liberal flow of money across the world has any benefit. For years South Africa has allowed a limited exchange of its currency. Yet, it was possible for the country to develop itself on a limited basis. This was possible in part because of the limited money flow to other financial centers: the rest of the money had to stay in the country and make the best of it. Thus, the money was invested in sectors that according to the world money markets were not profitable enough, but made good sense to the South African mentality. And so, the country gained. The present free system of exchange has not proven to be advantageous to the poor. Now, the money flows out to New York, Zurich or Amsterdam, where it gains more profit.

Simply put, when money can move through time and space without obstruction everybody ends up competing on a global scale!

[Summary]: The unlimited freedom with which money can travel around the globe results in destructive situations for some people, communities and indeed entire countries. The freedom of money movement and anonymity are no accident. This is by preference. The money system that was decided upon allows all this, makes it even unavoidable.

I think that it is clear that there is sufficient reason to develop different systems. It is imperative to look for a system in which the average citizen does not unknowingly ends up contributing to civil wars and child labor. [Zap: research programs for better kinds of money] Strohalm is looking into examples of other money systems. We discovered them through history and in different places in the world. Thanks to the Internet we can now collaborate with researchers all over the world while we are working towards a constant improvement of our analysis towards further improvement with universities in our own country as well as in foreign countries. [Zap G]

In future the money system will find its way more and more into the information highway. Therefore an understandable money system should be feasible. It is likely that money will become a packet of bits and bytes when send from one place to another. Then it should also be possible to include the history of that money in the information. That information would indicate the nature of the money: blood money, or decent money, then each individual can then decide whether to accept that money or not. Another possibility would be to allow money to circulate in a closed circuit where unidentified misery has no chance. [Zap]

We really do have options here.

--

Just before Christmas 2000 Jorge Alvarez arrived in Spain. Illegally. He was hoping to find work there, to earn some money to send home to Ecuador where his wife and two little girls had remained behind. Jorge had to borrow money to be able to make the trip. The passage and the services of the human smugglers ended up costing him about three thousand Euro. He figured that once in Spain he would be able to earn thirty Euro a day by harvesting fruits and vegetables. In Ecuador that represents an unimaginable amount of money! Of course out of that money a certain amount would have to be deducted for housing, transport and other related expenses but enough should be left over to support his family in Ecuador.

And so each morning Jorge and 12 compatriots were crowded into a little bus that took them to the farmer and at night returned them to their quarters. During the beginning of January 2001, not even two weeks since their arrival the little bus was hit by a train on a unguarded railway crossing. Only the driver and a female passenger survived the disaster. Jorge Alvarez died at 25 years of age. His wife, pregnant with their third child, will be held responsible for all the costs. Jorge Alvarez leaves her nothing but debts and hope that went up in smoke. When this accident was reported in the press it became clear how many Ecuadorians reside illegally in Spain. Also how bitter their situation is. "Accident Exposes Scam" headlined La Vanguardia. [Zap you never get used to it]

Of course Spain is no exception. Refugees from poor countries live in all affluent Western Countries. Illegal, like pariahs. Without a regular income they are forced to work on the black market at best or end up as criminals or prostitutes at worst. The world has become increasingly vague. Where about 10 years ago it was still possible to turn the newspaper page or to click to another TV Channel, the victims are now appearing in our own backyard and their problems are becoming increasingly difficult to ignore. In addition, more and more people travel from wealthy countries to destinations where they witness misery with their own eyes. Protecting ourselves from the misery of others is becoming less and less possible. Of course, we continue to be busy, busy, busy. Busy studying, busy with social obligations, and busy playing computer games, watching new and more exciting "Reality TV programs". We have enough excuses to push problems away from us. We are overloaded more than ever before by information and by impressions of our wealthy existence. But in the midst of all this abundance, we can no longer ignore a signal such as that from Jorge. How much longer can we go on hiding behind the idea that there is really nothing we can do about it? We can do something about it. At least we can try to initiate something. Developments in the money area are offering us wonderful points to connect with. [Zap]

The little village of Dhule Gaunda is situated just outside Pokhara, the second largest city in Nepal. Twelve dhikuti’s operate among the thousand inhabitants. Dhikuti means storage box and a dhikuti is a local savings group.

Each member in a dhikuti contributes about two thousand rupiahs per month. At the end of the month the pot is handed over (given) to one of the members. The first time the pot goes to the person who started the dhikuti. The next time the pot is auctioned off to the highest bidder among those who not received anything yet. If the pot contains fifty thousand rupiahs for instance and someone bids twenty thousand rupiahs then that person receives thirty thousand rupiahs, while the remaining twenty thousand rupiahs is evenly divided among the rest of the members including the bidder.

Within 25 months or so a group had amassed about 1,061,990.00 rupiahs, the equivalent of about 11,000.00 Euro. Each month someone comes into possession of an amount of money that he or she otherwise would not have been able to save. Now they can buy quality type products that in turn raise the standard of living in the community. In Pokhara the dhikuti is just one example of rotating savings and credit associations, in short: Roscas, that flourish in many poor communities in the South.

One of Strohalm's contacts in South America who is working on the further development of an economy of solidarity is Sandra Magalhaes. She lives in Fortaleza a town with a few million residents in the poor North of Brazil. She immediately makes a deep impression on me when I meet her for the first time. This happened during a meeting in Santiago, the capital of Chile, attended by representatives of the economy of solidarity throughout Latin America. Sandra is a small and shy woman until the moment that she is given the floor to speak about her experiences. When she speaks it is not just her flaming red hair that adds to her intensity. With infectious enthusiasm she draws us into her work in Fortazela. About five years ago Conjunto Palmeira was still a shantytown like many others: about thirty thousand people living in squalor near the water’s edge. Conjunto Palmiera has become an quarter where the people have managed to organize themselves rather well. They have built a sewage system and improved the road. They have planted trees and flowers. It looks a lot nicer. The Banco Palmas to which Sandra devotes whatever free time she has is pivotal to this improvement. Immediately after her work for the town council of Fortazela she travels more than half an hour so that she can devote a few more hours to the bank. She took holidays leave to attend the meeting in Santiago. In reality the Banco Palmas is not a bank at all. It is an organization that operates its own money system in the quarter and arranges micro-credits in Brazilian currency. Credit, for the purpose of consumption is given to entrepreneurs in the quarter and also to the local population. There were many people in the quarter who regularly were out of money. Their problems in making ends meet are simply unimaginable, Sandra tells us. We decided that the Banco Palmas should hand out small amounts of credit for the purpose of consumer spending. We did not know anyone and we had no idea if that money would ever be returned. "Well, we need not have worried too much". Most people here find it very important to have a solution in case of emergency. They do their utmost to repay their debt. Their reasoning is that when necessary they can ask again, Sandra explains. Thus in the shantytown of Conjunto Palmeira money was used in an interesting manner. Thanks to the consumption credit small enterprises in the neighborhood benefited as well. With enthusiasm Sandra tells us more "In the mean time we are spending our own money in the neighborhood. People are not just using that money for local trade; it has also become easier to engage in activities aimed at the clean up of our neighborhood. Our neighborhood has truly improved" We say our good byes at Santiago airport. We agree that our next step will involve the consumer groups. [zap consumers]

In the Lunahuanavalley in Peru people have discovered a rather creative way to stimulate the local economy. A revolving fund was created, a loan that continues to be available. When the first borrower has paid of the loan, the next person or group picks up the loan again. In this manner the loan goes from one person to the other. Many funds like this have been set up, but unusual to these funds is the commodity of the fund. The loan does not exist in money but in guinea pigs! It all started with a group of poor women. After they had attended a workshop about breeding guinea pigs one of them received a loan of six guinea pigs, (one male, five females). She started breeding the guinea pigs and when offspring was produced six guinea pigs of the same quality were passed on to the next woman. While this practice continued, the first woman also maintained the breeding process. The initiative of that first small group of women caused others to follow their example.

Throughout nearby villages several women have started with the breeding and trading of guinea pigs. It appears to be going very well. After fifteen months all the women have guinea pigs for the purpose of breeding. Guinea pigs are an important part of the diet and therefore represent a way to earn money. On top of that, guinea pigs multiply rapidly. Since many foreigners visit the area plenty of guinea pigs are being sold. One guinea pig goes for six or seven dollar. This is a considerable amount of money considering that the average monthly income is about twenty five dollar.

The Strohalm publication on Local Economy Worldwide describes many such practices (methods of savings and exchange) all over the world. Few people realize that also in the Netherlands Co-operative Banks (Credit Unions) strongly influenced the development of trade and industry. Farmers and middle-class owned their own banks (co-ops). Now and then a renewal of this idea occurs in wealthy countries. A variation has been introduced in Scandinavia where it is possible to save with some kind of advantage while borrowing without interest charges is also possible. The so-called JAK-bank. An ingenious system sees to it that everybody contributes and also profits from the bank. Following this example Strohalm has developed a new method that can be realized in cooperation with a Dutch Bank.

[F. Yet to be written]

In the present system people who have money to spare are rewarded with interest when their money is made available for circulation. [Zap K.] Those who are short of money must pay them for that. (Those who are short of money are charged interest for the privilege of borrowing.) This ensures that there is a constant flow of money from the poor to the rich. [Zap L (Interest).] Other money systems where such a flow of money does not occur are possible. Different money systems lead to different results and also lead to different common values. Even in the recent past different systems existed as contrary to the one we now accept as the only one possible. [Zap.] During the past century political decisions were made that lead to a uniform global money system. Notable is the Bretton-Woods conference in 1944. The next important development was the release of the gold standard covering the dollar by Nixon in 1971, after that the liberalization of the money markets. [Zap.] Had different decisions been made at the Bretton-woods conference the world would now look different as well. Ever since, different ways in dealing with the money system have barely been explored while continuing holes in the present system need to be plugged. It is only in the Islam oriented countries that people are thinking to some degree about experiments with interest free structures. In fighting interest careful attention is given to laws and by-laws.

Whoever cares to delve into the past will discover different possibilities. One discovers how ridiculous it is to think that the present system is the only one possible. During the course of history the character of money has changed many times; there are enlightening examples where it was not possible for money to flow from poor to rich as a result of interest charges!

When the historian Preisigke deciphered Egyptian hieroglyphics it appeared that the papyrus scrolls contained directions for the administration of a giro banking system which was totally different from what we are used to. Its principle was simple. Since the Nile River was unpredictable in the overflowing of her banks, harvests were considerably affected. Sometimes the harvest was abundant, sometimes there were several lean years one after the other. That was why the Pharaohs built grain silos for the farmers to deposit their harvest. When the grain was delivered, it was weighed. Its weight was then converted into a weight that represented a standard quality. The Silo’s administrators now entered a credit representing that weight to the farmer. If the farmer already had a credit, it was simply added. Later the farmer could stop by and pick up some of his grain for food, but he could also transfer a certain amount to the accounts of others. This way he could purchase land, pay taxes and pay tradesmen. Grain ended up as exchange medium, as money. While the grain was in storage it moved (by giro) so to speak from hand to hand.

Of course the service of the central grain storage building was not without costs, although it was cheaper than having to build one’s own (shed) storage facility. People with large amounts of grain naturally paid more than those who stored only a few kilos. This system was in use for several centuries and if you care to examine it a little closer and look at it as a system where in a sense money was being kept for you, then you’ll see that people had to pay a fee for the money that was being stored. (or prevented from being circulated). The wealthier you were, the more you paid. Wealthy people started looking for alternatives. They preferred to spend their money. It would be cheaper for them to invest in art or other possessions instead of having to pay for storage. Also artists and craftsmen spent their money freely. It made no sense to keep something that they would not be able to deplete.

Thanks to this system of paying with money expressed in grain the owner of the grain was not in a position of superiority over those who wanted to borrow some of it and therefore could not demand interest. It was easy for a young and talented blacksmith, ready to start his own business, to find people who were willing to finance his new venture. His position was relatively strong during the negotiating process of the loan and made it possible for him to demand a loan without interest charges and build his blacksmith's shop). The rich person was happy because in a few years he would get his money back while in the mean time he would not have to pay for it. The blacksmith was happy because in securing the loan he did not end up having to deal with a growing debt load. He only had to pay storage charges for a short period of time, in the end the money was handed over to the contractor. The smith did not have to add interest costs to his products so his clients were happy as well. To sum up, everyone paid the storage costs but no one got richer, because they happened to be in possession of the exchange medium. The best element in this whole system was that people preferred to spend their money rather than saving it, hence they contributed to a flourishing economy!

In Germany and Austria during the crisis years of the thirties, a system somewhat like the grain exchange was used through the issue of a local currency: people who blocked the circulation of money, because they elected to keep it in their possession ended up paying for it. This system was made to work by forcing people into spending a weekly small amount for a stamp that had to be glued onto a document. The document only became of value when all the necessary stamps had been attached. It meant that, just as in the grain system, people had to pay if the money remained in their possession, and again money was kept in circulation. Wealthy people were quite happy if someone wanted to borrow their excess money: the borrower ended up paying for the stamps. In the middle of the crisis years the local economy recovered and neither businesses nor their clients had been subjected to excess interest charges.

Many states and cities in the United States wanted to copy this idea. Irvin Fischer who at that time was the American economic Guru enthusiastically promoted it.

The U.S. was caught in the crisis and at one point in time President Roosevelt himself considered changing the failing money system in favor of a money system where instead of poor people, wealthy users of the system would be charged for the circulation of money. Roosevelt consulted with the Central Bank Managers. They answered: "Presumably it will work but keep in mind that it will probably create other unthinkable social issues". They were correct in that aspect because as in the Egyptian grain exchange system a balance would be created between those who needed money for business purposes and those who would be pressured into lending their money so that they would not have to pay for keeping it. Roosevelt was afraid to jump into that kind of commitment and the crisis raged on for years. After the Second World War the money system developed in stages to the present point in which the creation of money through interest against unimaginable debt levels has lead to a practically unlimited growth of money resulting in a continuing financial balloon like expansion, absorbing increasing amounts of money from the production-economy cycle. In this balloon-like situation astronomically large amounts of money are traded based on pure speculation. About a thousand times more money than is necessary for real trade and commerce is now circulating in the form of stocks, options or other legal tender. This balloon is causing enormous pressure on governments. Under no circumstance can governments allow the profit margin in the money markets to drop to the point where all this speculative money returns to the productive cycle where real products or services can be purchased. There simply are not enough consumer goods available to spend all that money on. An enormous shortage of consumer goods would take place, causing hyperinflation in no time at all. In fact, governments have no other choice but to co-operate with the ongoing inflation of that balloon. A true stock market crash reducing all that speculative money in one fell swoop to a fraction of its value would be catastrophic. [Zap.]

[ Graph Lietaer, page. 399 in his book.]

The misery in poor countries caused by the speculative flow of money has also produced some hope: the search for alternatives has been stimulated. People in many areas have begun to experiment with their own savings and exchange systems. Thus they improve their own living conditions while building structurally new developments. [Zap.]

[End explanation.]

[Summary: Historic models show that quite different money systems are possible instead of the present one: systems in which those with too much money have to pay for keeping it in their possession. If in this situation a continuous flow of money can be established, then prosperity for everyone will occur. This system has been brought into practice on a small scale in modern times.]

Increased production to supply the world market is the present strategy for economic development in the poor countries.

Competition with each other and the rich countries has begun after cutbacks, a massive sell-off of natural resources, and further lowering of wages. This strategy ignores the failing money system. Therefore it is not surprising that it does not work. More and more people are looking for different ways. Other money systems, systems like the ones where in principle the one in possession of money pays, but also other local savings and exchange systems already active in many areas could be just the way to get things going. [Zap.] Recent and future developments addressing the core of the present system also offer opportunities. [Zap.]

For many it will be a true revelation when they discover what sort of fantastic possibilities could emerge if we make the money system into the spear point of a new development strategy! That would offer a perspective on a society that would combine an increased standard of living with non-material riches of solidarity.

Strohalm in co-operation with people all over the world is looking into what sort of possibilities renewed monetary systems could offer, how they could be reinforced, which elements and variables could be entered into such systems and where we may be able to find examples that will inform, etc.

In this network there are for instance field experts and researchers from Venezuela, Chili, Brazil, Poland, Ireland, Thailand and Japan. We communicate through the Internet. We share analyses and work together in areas of research and actuality. The organization could use more support. Communication has to take place in at least two languages (Spanish and English) and preferably also in Portuguese, French and German. Our principal manuscripts are in Dutch! At this moment a lot of time is lost in the translation effort(s). Perhaps you can help us as a translator?

Because the organization is not yet in a position to offer financial compensation many of our partners in the poor countries have difficulties in finding the time necessary to think about these issues. In order to improve that situation we offer shares in knowledge. Through the purchase of such shares you assist in the financing of the organization. The fees mean more hope for the future.

It is worth the effort beyond doubt. We are in contact with researchers who have tremendous capacities, knowledge, insight, and often are in direct contact with the reality where inspiring developments are going on. In the organization the enthusiasm of one individual can stimulate another. Globally we try to support each other this way and attempt to make progress, step by step, in our search for new of money.

[Somewhere here a diagram indicating what people can do]

Applying for memberships in consumer circles.

local organizer ( limited compensation)

potential consumer

becoming a donor to Strohalm

increasing the distribution of booklets

participating in / supporting the Latin American network

becoming a bonus sponsor

helping with translations

purchasing shares in research

adoption of an experiment

covering money in circulation: buy emerging Euros

--

In modern society the money system dominates the way the community is organized. When there is unemployment in a poor country it means that there is something wrong with society itself and the money system. Otherwise, local manpower would be occupied fixing local shortcomings while making use of local possibilities. But in practice there is an insufficient circulation of money since the rich are hoarding it, or it has left the country or the region. In short the poor are living in a local economic crisis, a crisis that can be attached to only one specific group of people.

Older people experienced the crisis that hit the thirties during the previous century in Europe. They remember the idiotic situation when factories had to close while there were plenty of people who were in need of their products. They remember that people became unemployed and ran out of money that they needed to buy the products. More factories went bankrupt and more workers became unemployed. Etc. In those days more than one family lived in a single house while the houses where they had lived in before now stood empty. At the moment the situation in many poor areas is comparable.

During those crisis years the British economist J.M. Keynes rediscovered the importance of purchasing power. For manufacturers it only makes sense to manufacture and invest in production when the manufactured goods can be sold. Therefore people must need the product and they must have the money to buy that product. In other words there has to be a demand and the purchasing power. When these conditions do not exist, when people have no money to buy goods then the combined existence collapses. From one day to the next factories may close down, homes are deserted and people become unemployed and destitute. The poverty created in this manner is really totally unnecessary. Because there is still as much need for the products as before, there are still as many workers as there were before and the raw materials and production methods are still sufficiently available.

In reality many of the poor continuously live under such an economic crisis, even when this crisis is only local and associated with one specific group of people. Much of the poverty we see on TV has the same origin: in the communities supply and demand as well as services are present but the lack of money as a method of exchange blocks the transactions.

In contrast to the crisis of the thirties this time the crisis is largely caused by external influences. During the thirties a country could still stimulate purchasing power and kickstart the economy through the influx of government reserve money. That spending would be covered, or returned, in the form of extra income taxes. Today however, the international trade has become so dominant that the poorer countries no longer have this option.

When they bring extra money into circulation (to stimulate purchase power) that money quickly flows out of the country, it is spent on subsidized meat from the European Union, medical prescription drugs and luxury items for the rich people. The government receives very little money in taxes in return.

[Summary: When money disappears from a society, its structure also disappears. When people no longer have money to pay each other for goods and services, then mutual trade stops. Unnecessary poverty develops because of a malfunctioning money system].

It would be good for us to realize that when poverty goes hand in hand with unemployment; it is not because of a development problem but because of an organizational problem. The poor have every reason to work. A slum area needs workers to build walls and roofs, diggers are needed for sewage systems and lay streets. Although all these skills are available, they are not being used, because there is no money for wages. Good organization is totally absent due to a discrepancy in the money system. Since the money flows out of the country a situation develops in which people are no longer able to work for each other and thus become unemployed.

There is only a means of exchange (money) for activities that will sustain the expected interest level of the world money market. People continue to fall behind in self-sufficiency and direct exchange due to a shortage in the means of exchange. They no longer have the opportunity to specialize themselves in the products for which there is no market. The poverty level increases, the possibility for self-reliance has been cutoff, the only chance to create economic development now lies with foreign investment. Now that we have no choice but to conclude that ‘our’ money system is the reason why local development is systematically being hindered, it is time to take an entirely different approach! It is time that we study examples of how people with the aid of local exchange systems are managing to extract themselves from the spiral of misery. [Zap I.]

I. Argentinean system demonstrates the possibilities of local exchange systems

In Latin America, a steady increase in the build up of all sorts of solidaire economics is emerging. A few years ago we attended a conference in Buenos Aires. I used the opportunity to pay a visit to the Argentinean Trueque Exchange system.

A report:

Horacio, my host welcomes me with open arms. I gave him with a few books about money I had taken with me and which he accepted with great enthusiasm. He insisted that he had to pay for those books. I don’t understand: it is a present!

But he keeps on insisting: ‘I want to pay you in créditos, you can use them yourself’. While talking Horacio produces his wallet and starts counting out all kinds of multi-coloured pieces of paper. A large green one represents 10. A smaller orange one 5. But also a blue one for 10. And another yellow one for 5. All sorts of different notes!

The next day Horacio takes me to the local market. I see a small stall with a man who has a pointed mustache selling food, I realize that I have an appetite. I approach him and I buy a bun. Just as I am about to pay the man, Horacio intervenes. "Are you thinking about your créditos?" he asks me. He is right, I was looking for my pesos out of habit. Mr. Mustache is quite willing to accept my créditos, gradually I discover that just about everybody in that market accepts créditos. There is a lively trade going on and just about everything can be paid for in créditos.

A little later Horacio explains to me that several markets in Buenos Aires accept créditos.

There is even a market where products strictly from that neighbourhood are sold for créditos. There is also an advertisement flyer offering all kinds of services: baby sitting, repairs, courses and what have you. All to be paid in créditos.

The créditos are the official means of exchange in the Red del Trueque, " the exchange system". Trueque started a few years ago in areas where people started a swap system and kept track in a folder who owed what to whom. A did something for B, B did something for C and C did something for A, then the mutual obligations were erased from the folder. As less money became available the more people embraced the swap system. This way they could even out their needs and possibilities without ending up at home unemployed. But it was not very convenient. That’s why people in the Bernal area decided to stop the book keeping and instead use printed pieces of paper with values of 1, 5, 10, and 20 "credits". (créditos). Everyone in this area who took part in this system was given a total of 50 créditos. Thus bartering was now possible without having to write it all down. Because people knew each other reasonably well there was no fear of fraud. The idea caught on in other areas and within a short period of time all kinds of coloured pieces of paper in various sizes representing different values and printed in various neighbourhoods started to show up. Since many citizens in bordering communities started to accept these créditos it did not take very long before the créditos got mixed up. In the end it did not matter very much. What was important was that people had an easier way of reciprocating in baby sitting, making repairs, offering or taking courses, making pies and swapping other products, etc. Off course fraud became inevitable. At one particular moment people noticed that an unusual amount of créditos representing a particular area had started to appear. That was not a coincidence. It turned out that people had become so enthusiastic about the Trueque method that instead of 50 créditos 500 had been handed out. The recipients had purposely started to shop with these créditos in other areas. When this became clear no one accepted these créditos any more. But for many it was already too late, because they now had many of those créditos in their possession.

This became a rather large problem, but a solution was found. Local committees decided to print new and difficult to falsify créditos and give the inhabitants of their area a one time opportunity to exchange their useless bills into the newly printed créditos. In the end this little bit of fraudulent behaviour did not turn out too badly, because when the extra means of exchange started to circulate more people were able to purchase things from each other. It stimulated mutual trading and the loss became barely noticeable.

For many Argentineans the créditos fill an important gap because of the scarcity of the Argentinean peso. Pesos are scarce because the Argentinean Government has to pay humungeous foreign debts and wants to keep the value of the peso equivalent to the American dollar. Therefore they can not circulate more pesos than the amount of dollars the government can permit itself to buy. As a result there is a shortage of money, attributing to a slump in local trade. Many companies have already ceased to exist. People have become unemployed and no longer have an income. An economic crisis out of the booklet. [Zap.]

The créditos offered to the local population give them ample opportunity to work for each other and everybody wins. At this moment in Argentina more than half a million people deal in créditos. A few things have changed since the early years. The bills now difficult to falsify have become more important. However you will still find the original local bills in many areas. Often both types are commonly traded. Everybody can decide for him or herself whether to trust (or accept) the bill offered in pay by someone else. Sometimes there is a problem, is a bill false or has the originating area stopped trading while their créditos are still in circulation. But in the mean time an achievement has been created: these people help each other, they work for each other and it is all done with paper that has no value as such! [Zap Trueque overig.]

The amount of participants in the Trueque system is steadily growing. In many areas people are busy, with the help of créditos, setting up new enterprises or rebuilding old ones. With the aid of a créditos credit Carlos Monaco is looking forward to reopen his shoe factory in his neighbourhood. Others are busy trying to convince local authorities to accept créditos for taxes owed. Some municipalities have already accepted this idea. Local money can now be found all over Latin America. It is an important element in the system that is building an economy of solidarity.

_________________________________________________________

Mary Akoth lives in the town of Ahero, situated in the poor countryside of Kenya. She is thirty-eight years old and has five children. Her husband deserted her years ago.

After that her life became a daily struggle in supporting her family. In 1992 she became a member of the Nyando Women’s group. She received advice and a loan of 200 Kenyan shilling (about 4 dollars worth). With that money she started a small street business in chapati’s and tea. Quite quickly she made a profit of 40 shilling a day. Half a year later she added the sale of rice and beans. Her clientele increased rapidly. She asked the town council for a small plot of land to put up a kiosk. Soon she employed some one to assist her and after a short while she added two more people to her enterprise. With the aid of a loan of no more than 4 dollars she had become the owner of a profitable business. She now makes a profit of 8 dollars a day. She can pay the rent and send her children to school. She says that she has rediscovered her dignity.

(From Microcredit Summit 1997-Institutional profiles.)

To make some money you must be able to sell something. First you need to buy raw materials: bamboo to make chairs, flower to bake cakes, textiles to sew clothing. But where do you find the money for your investment. In the poor countryside of the countries in the south you go to the only stone house in the village. Somebody who has money and is willing to lend it lives there. This money grabber, the loan shark, demands a very high interest rate. Sometimes as much as 50% for one day. You’ll understand that in cases like this all the profits end up in the hands of the loan shark while the people remain in the never-ending poverty spiral. These people do not qualify for a bank loan. The size of the loan is too small and not profitable enough for a commercial bank. On top of that: the bank does not know them. They live in a slum village where streets have no names and houses are without numbers. They don’t have any collateral and in any case the banks simply do not believe that poor people can be productive. Up to a few years ago there was no alternative but deal with the loan shark. Until the Grameen bank in Bangladesh that specialized in small loans was set up. That turned into a huge success. Countless people could now be assisted and the payback percentage of 90 percent is very high. Ordinary banks seldom reach that level. It turned out that people in disadvantaged situations were extremely inventive and were determined to achieve something.

Nowadays, in many poor areas, there are many micro-credit banks like the Grameen bank. In many cases the members manage the banks themselves. After an initial startup-period during which the bank is kept solvent with donor money, the participants return money themselves. These credits allow the members to earn money but the managing group asks its members to save a part of the profits so that other members may be able to borrow. Gradually this money becomes the basis for new loans. However, not all is rosy in the world of Micro-credits. An important disadvantage is that people who receive assistance through the micro credit system are by nature enterprising, active individuals. They represent an important segment in the collective and social values of a community.

They tend to direct their energies more towards a formal economy and this can become a drain on the community. In the more formal economy there is often not enough room for these individuals who could create spin-offs directed at other community members. And with a loan, someone may be able to improve his production methods but that does not mean that other community members can afford to buy his products. In other words: micro-credits improve the production capacity but they don’t guarantee purchasing power. Purchasing power can not be ignored as the driving force in an economy! [Zap H. zap Banco Palmas]

Some form of a bonus system could be an important addition to micro-credits. Strohalm is looking into a way out of these dilemmas by combining the micro-credit system with local exchange methods that could augment the local economy and improve the social structure, as well as production methods and create a higher level of purchasing power. [Zap Bonus.]