THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

understand why such a process would create employment, but also
(erroneously) conclude that complementary currencies would
automatically add to inflationary pressures on the economy as a
whole.
This reasoning would be valid if and only if the complementary
currencies were all fiat currencies as are the dollar, the euro or any
other national currencies of today. There is indeed one type of
complementary currency (the Ithaca HOUR described in Chapter 6)
which is such a fiat currency, and which could pose such a risk if its
use became widespread. However, it will be shown that other
designs, including all mutual credit systems (e.g. LETS, Time Dollars)
do not contribute to inflationary pressures.
Rather than argue from theory to prove this point, let us take three
practical examples of increasing complexity.
In the case of simple barter exchanges, where no currency is
involved at all, the only effect of such an exchange is who owns what.
No inflationary pressures arise from barter exchanges given that the
overall quantity of goods and currency in circulation remain
unchanged.
In the case of mutual credit systems (e.g. LETS or Time Dollars) the
situation is in some respects similar to barter, because for every credit
generated there is a simultaneous creation of a debit within the same
community of consumers. The net amount of currency in circulation
is therefore still the same, exactly as in the case of straightforward
barter. I fact, from a monetary perspective, mutual credit systems
simply facilitate multilateral barter, and have the same overall effect
as a group engaging i triangular or multilateral barter.
In the case of well-designed integrated payment systems such as
the Minneapolis Community Exchange Network system, which was