matslats.net

I've been writing here on Shareable about how to get neighborhoods organized for sharing, and one big reason to do so is the money neighbors can save when they operate in tandem as a group. Neighbors are de facto groups, connected by proximity, and often with shared goals, values, and experiences. When they're organized with intention, neighbors can start to utilize group economic techniques, and save big.

Here’s why… If you’re in a group you’ve got access to economic power. You can negotiate a discount with a merchant, you can barter, you can resource-share, and more. Here’s a simple example: Do you live on a cul-de-sac? You are one in a group of neighbors, with 5 houses, 5 yards… and 5 lawnmowers between you. All you really need is one lawnmower, a scheduling tool and the willingness to share.

Until very recently our groups have been locked; they’ve been economically dormant. We haven’t had the tools, or the incentives, to unlock their economic power. But this is changing. As resource-sharing ideas take off, we’re starting to be able to “unlock” groups. We’re starting to have the tools we need to tap into our groups to save -- and even make -- money. This is the basic idea behind what I call the third economy.

A tech startup called Groupon is leading the way. Groupon helps people in cities tap into their collective buying power by offering discounts to groups. Joining a group is easy, you simply add your name and credit card info to a list. Once there are enough members in your group, you all “buy” the product or service at a discount. Some say collective buying is the next big thing in Silicon Valley, and the 5 or 6 startups doing similar things may prove it.

Facilitating group discounts for individuals who don’t know one another is great, especially during our protracted recession. But wouldn’t it be even better if the concept was applied at a community level, rather than anonymously? After all, the more localized, direct and interactive group economics is, the more long-term value it will bring to those who participate. (Read Small is Beautiful: Economics as if People Mattered for more on this theory…).

Another tech startup 1BOG might have the right idea. It helps neighbors organize into groups to negotiate favorable deals from solar panel suppliers, installers and financiers. 1BOG has helped nearly 600 neighbors, in neighborhoods across America, add solar power to their homes. And this concept is just scratching the surface. Imagine the many other home improvements that would benefit from this model.

Here are a few more ways to tap into the economic power of groups. Use these techniques in your neighborhoods to save money, and build community along the way. You'll notice that most are still in a ‘low-tech’ stage of development, meaning you’ll need to tackle organization and record-keeping without much online help. Let’s hope this changes soon (a hint to you tech entrepreneurs out there…).

Collective Buying

Set up a wholesale food buying club. Buying clubs can be as simple as teaming up with neighbors on a Costco run and divvying up the spoils. Or you can join existing clubs that buy from wholesale distributors. Check these guys out for inspiration.

Much gratitude to a developer in Oregon who’s created free software spreadsheets to help get your neighborhood club set up and organized.

Produce-sharing CSAs are also buying clubs of a sort. Or buy a cow and share.

Buying to Share

Buy to share techniques save you money, and they also help us all to buy fewer products, which benefits the earth. Come together with neighbors and purchase a lawnmower, snowblower, or other home or lawn care item. Even better, share an existing one. This technique also works great for household items like vacuum cleaners, and recreational equipment like skis and tennis raquets. Or, in a slightly more extreme version, share buy a used car, truck, RV or motorcycle.

These examples, while relatively simple, require you to be well-organized as a group. Remember to identify one group member who will handle the financial transaction (collecting money from neighbors, purchasing the product). Also write up a short agreement on how to handle problems that arise (what happens when stuff breaks?). More tips here. You may also want to set up a sharing calendar so everyone in the group knows where the product being shared is, and can sign up to use it.

Another great way to save money and build community is to collectively buy or build a small shelter (a yurt, tipi, shed) for collective use. Or a pizza oven, outdoor theater or hot tub. These amenities, when shared, bring a neighborhood together in a positive way with benefits that go well beyond saving money.

Sharing Services

Another great way to build community while saving money is to share services. Ask a nanny, childcare provider, yoga instructor, landscaper or salsa dancing teacher if they’d be willing to give you and your neighbors a group discount.

Come up with your own creative ways to tap into group power? Let us know in the comments below…

Stephanie Smith10873299502629559260

There are things we do for money and things we do for free. And then there is everything in between. In that between-space, there is a growing and exciting world of barter, work exchange, gift circles, mutual aid societies, time banks, local currencies, and other modes of transacting that don’t use regular money. These transactions form a huge component of the “sharing economy,” the “third economy,” the “sustainable economy,” or whatever you may call this “new economy.”

I thought it would be a fun and important project to sort out the tax, business, and labor law implications of these “in between” transactions. However, when I got knee deep into the research, I found that things got rather soupy.

Explaining legal concepts in an interesting and vivid way can be a challenge, which is why I’ve chosen to construct this article around a more familiar concept: soup. There are a couple ways of making soup that fit clearly into defined legal frameworks:

• Soup for Money: If I were to own a gourmet soup restaurant, the tax, business, and labor law questions are fairly straightforward. The income I make would be taxable and sales tax would apply (in most states). I would be subject to health and safety laws, permitting requirements, and other business regulations. The people who help out in my kitchen would be legally considered employees, and I would be obligated to pay them minimum wage, obtain workers compensation insurance, pay payroll taxes, and so on. 

• Soup for Me: On the other hand, when I make a pot of soup at home for myself and my partner, neither I nor my partner pay tax on it. (The value of the soup we create ourselves is what’s called “imputed income,” but the IRS doesn’t ask us to pay tax on it.) I don’t need special business permits, and when my partner helps chop veggies, she does not become my employee.

But once we go beyond these straightforward examples, making soup is definitely not cut and dry. I should warn that having a vast body of laws and regulations doesn’t mean that we actually know how to interpret them. Courts wrestle with the meaning of laws on a case-by-case basis, and that’s where we learn how to interpret laws. When things end up in court, it’s generally because there’s a lot of value at stake, like in a car accident lawsuit or major tax evasion case.

Truth is, the IRS doesn’t very often bring people to court over tax owed on a free guitar lesson received in exchange for babysitting. Definitely not often enough for us to have much case law to go on, or to know how to interpret the rules. The rules more or less say that barter is taxed and gifts are not. (For details, see Treas. Reg. § 1.61-1; IRS Publication 525; and 26 USCS § 102.) But in an informal economy, there are infinite ways to give and receive, and the line between barter and gifting could be unclear.

Furthermore, it’s hard to know how far the taxing of barter income actually extends. The IRS rule on barter, as written, appears to tax any good or service you receive in exchange for any other good or service. In practice, however, it’s probably not such a blanket rule. The IRS doesn’t seem to concern itself with one-time, casual, non-commercial exchanges of goods or property. Administratively, it would be a hassle both for taxpayers and the IRS to report the plums I gave my neighbor in exchange for his figs. Unfortunately, it’s hard to say at what point a barter arrangement has become sufficiently formal, commercial, or regular to be something that you should report.

There are also gray areas in designating what, exactly, is a business and what is an employee. As the informal economy begins to flourish, we may be surprised to sometimes find ourselves, unintentionally, operating a business, or, unintentionally, employing someone.

Sound confusing? Perhaps some examples and an extended metaphor will help. Let’s look at how all these rules play out using other scenarios in which I make soup:

• Soup Parties: What if I started throwing a fabulous monthly soup party for my friends? It’s all for fun and for free, although my friends sometimes show their appreciation by inviting me over for dinner, or by bringing dessert to my party. For the most part, these activities fall under the category of “gift,” and there will be few legal issues to worry about. I haven’t become a restaurant and the dessert my friend brings probably won’t be taxable to me as “income.” (However, even while this seems like an unregulated realm, I’ve been surprised to learn that in some cities there are laws that limit how many people you are allowed to feed for free.) 

Credit: Shira Golding

• Gift Economy Soup: Now what if I start having weekly soup parties and my friends start doing things for free too? As the spirit of giving and generosity grow, friends might offer free massage, gardening, computer help, handy work, or other favors. Other friends hold weekly salad nights, curry nights, or cook-out nights, and I get free dinners every day of the week! In this circle of giving, no one is obligated to give or receive anything, and no one is officially keeping track of who gives what and how it should be valued. What are the legal implications here? Since the giving occurs among friends and comes from a place of generosity, shouldn’t it be tax free? And because there are no contractual expectations of compensation and because people aren’t bargaining for things at a market prices, these activities aren’t commercial, are they? I would say that’s probably right, but it’s hard to answer these questions with complete certainty. Slight variations in the above scenario could cause it to look more like example #3 (Barter Soup) or #6 (Soup Enterprises), which probably are taxed and regulated as businesses. 

• Barter Soup: Now what if my accountant offers to prepare my taxes in exchange for coming to five of my famous soup nights? Deal! But what does it mean legally? This example differs from the above Gift Economy example, because now we have a direct exchange that we’ve bargained for, and we have a binding verbal contract for barter. As discussed above, it’s not clear to me that all barter is taxed, but this arrangement is something the IRS would want us to report. Another question to ask here is: am I now accidentally operating a soup business? Since I have a binding and bargained for agreement to receive valuable services as “payment” for my soup, I’ve essentially sold soup to my accountant. Regulation of business comes from all kinds of agencies – health departments, planning departments, state tax boards, and so on. In the eyes of some agencies, selling soup even one time is not acceptable. Since the law varies from place to place, and from agency to agency, the main thing to remember is: be careful and do your research before you accidentally find yourself in business. 

• Time Bank Soup: To continue expanding on the soup scenarios, my next project could be going to the homes of elderly and disabled to help with cooking. Because they and I are part of a local time bank similar to the Japanese Furaei Kippu (“Caring Relationship Tickets”) system, for each hour that I spend helping out, I am credited a “time dollar” through an online accounting system. Later on, I could redeem each “time dollar” for an hour of someone else’s time. In three rulings, the IRS has given some vague indication that they aren’t interested in taxing exchange of services like this. They give at least two reasons: 1) The exchanges are informal, meaning that I get no contractual right to have my favor returned. 2) The exchanges are non-commercial, meaning that they aren’t bargained for at market rates; whether I spend an hour cooking soup or an hour providing legal advice, my hour is valued at the same rate, and all transactions are an-hour-for-an-hour. Those tax rulings are not supposed to be relied on as precedent, and there is disagreement about how they should be interpreted. Still, they provide some of our only clues about what the IRS views as being outside the realm of taxation. 

The TimeBank Program in Lathrup Village, Michigan. Credit: Michigan Municipal League

• Soup for Hire: Next, my landlord, who lives downstairs from me, learns of my superb soup and asks me to become a personal chef for her family, in exchange for allowing me to live rent free. I begin cooking two meals a day for her family, and at her pleading, learn to make things other than soup. The value of my free rent should be reported as income on my tax returns, and the value of my cooking services should be reported on her tax returns as rental income. It’s quite possible that I should now be classified as her employee, since I work for her regularly and take some direction from her about what to cook. Knowing whether a household worker is an employee or an independent contractor is critical. If you misclassify a household worker, you can end up with heavy fines. (Then, when you run for public office, you can end up with “nannygate.”) 

• Soup Enterprises: Moving on with my soup scenario, now my soup has become so popular that I make multiple pots of soup every day, invite people over to share it, or put it in mason jars for people to pick up on my door step. No one ever pays me U.S. dollars for my soup, but I have been able to use soup to “pay” for most of what I need. I now get “free” health care, bike repair, fresh produce, and many other necessities and perks in exchange for soup. Even with no money changing hands, chances are that I’ve suddenly found myself in the soup business, and should pay tax on the value of most of what I receive in return. I will need a business license and various food-related permits. Also, as crazy as it sounds, when my friends come over to hang out in my kitchen and help me chop veggies, the law says I should be paying them minimum wage. 

A collage made for for the Sharing Solution booth at the 2009 San Francisco Green Festival. Credit: Janelle Orsi.

• Soup Bucks: Finally, I can take my soup operation one step further and start creating soup gift certificates. If I “buy” things with soup, it might be more convenient to give people a certificate that they can redeem for soup when they need it or which they could give to someone else. In fact, the U.S. Dollar came about in a similar way, except that it was backed by gold, not soup. If my “Soup Bucks” start circulating within my local community, they essentially become a local currency. Each certificate has value not only because it can be exchanged for soup, but because it can be exchanged with anyone who is willing to accept it. The success of Soup Bucks as a currency will be based on the community’s trust in my ability to keep on making soup. Starting your own currency and printing paper money is a legal and legitimate thing to do in all but two states, and with some limitations. But if you plan to back the currency with a guarantee of particular goods or services, then it’s possible that the currency also meets the definition of a gift certificate, which is a form of contract and has various regulations attached.

I Can See Clearly Now the Money’s Gone

Even with all the annoying legal grey areas and hurdles, transacting without regular money is one of the most important things we can do to transform our economies. But why should we even delve into this world beyond money? After all, hasn’t our national currency been a useful and efficient tool for transacting with one another? Yes, in theory.

But, in practice, dollars aren’t always there when we need them, and whole communities suffer from the scarcity of dollars. To begin to understand how our money and banking systems play a role in actually creating scarcity, I’d recommend watching the movie “The Money Fix.”

The scarcity of money could actually be our good fortune if it forces us to see that value remains even when money does not. In reality, we have a wealth of valuable people, skills, goods, time, and potential in our communities. This value is highly unrecognized and underutilized because we’ve all had a lifelong dependence on transacting almost exclusively with our national currency.

Transacting through barter, gifting, time banks, and other creative means will instantly open up potential for strong, localized, and sustainable economies. While you can’t use “Soup Bucks” to shop at Target or Safeway, you may be able to use Soup Bucks to support local crafts people, micro-farmers, small manufacturers, and friends who can help you meet your needs. Rather than struggling to compete with multimillion-dollar companies, a new generation of micro-entrepreneurs will thrive on new kinds of transactions.

The new economy comes hand-in-hand with more connected and supportive communities – neighborhoods where people know each other, circles of acquaintances who actively support each other, and more widespread use of cooperatives as a way to feed, house, and provide for ourselves and others. The new economy not only gives as a means to survive; it gives us a great way to live.

This is the first in a series. In the next entry, we look more closely at the legal nuts and bolts of the gift economy….

Credit: Shira Golding

Caveats

This article was an attempt to give readers at least some sense of orientation in relatively unsettled or uncharted legal territories. When legal definitions are unsettled, the best that we can do is 1) gain as much understanding as we can, by reading laws, regulations, tax rulings, and court cases, and 2) based on that information, make good faith and reasonable determinations about how to classify our activities. Sometimes, you may get the answer wrong, which means dealing with the consequences when the IRS, Department of Labor, or other agencies come calling. It’s up to you to decide what risks are worth taking.

Please keep in mind that the information in this article is not legal advice. Legal information is not the same as legal advice, which is tailored to an individual's specific circumstances and relies on the lawyer knowing all the relevant facts.

Acknowledgments

This article was made possible by my recent inspiring and helpful conversations with: Mira Luna, Edgar Cahn, Aumatma Binal Shah, Erin Byers, Nicolas Barry, Jenny Kassan, Mike Leung, Alpha Lo, Arno Hesse, and Guillaume P. Lebleu. And the soup mania may have been partially inspired by attending Soup Stone last year.

Janelle Orsi11771576028378554411

D2 is shorthand for the second global economic depression.   

Unlike the Zombie apocalypse -- the complete collapse of civilization, nuclear winter, EMP wipeout, 99.99% mortality pandemics, etc. -- D2 is real, tangible, and here today.  

You can't outlast D2 by stockpiling canned goods/bottled water, buying gold, or arming yourself to the teeth.  It will stretch on for a decade or more. 

The way to survive, even thrive, during D2 requires a different approach.  It requires a vibrant and productive local economy.  It requires people with the skills/equipment to contribute to it and the wherewithal to defend it if necessary.  

http://bookmooch.com/

Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

Graduates of the Crash Course series emerge aware that, economically speaking, the next twenty years are going to be completely unlike the last twenty years.  This invariably leads to the question, "How do I prepare financially?"

We have entered some truly treacherous investing waters, where we must question everything and accept nothing, even (and especially) the base assumption that any given currency, be that the US dollar or euro or Yen, will retain its value.  Is a ‘double-dip’ recession coming?  Nobody knows for certain, but all the warning signs are there.  Our view is that it’s best to start thinking about preserving and protecting your wealth now, while you still have that opportunity.  The bottom line here is that you should not be taking your cues from what your neighbors seem to be doing, but instead being sure that your own house is in order.

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cmartenson

INSIDE HIS dusty electronics repair shop in west Delhi, Sonu Kumar aims a screwdriver at the innards of what looks like an unsalvageable transistor radio. Yet after a couple of turns, a Hindi dance tune pours forth. The customer hands Kumar two crumpled 100-rupee notes (worth about $4.39), which vanish into a shirt pocket. Until recently, those banknotes, like all of Kumar's earnings, would have stayed in his pocket. Like many Indians, the 21-year-old repairman had never had a bank account. Making the trip to a bank branch, waiting in line when he could be out earning income, dealing with deposit minimums and other fees—banking in the conventional sense has always been out of reach for India's poor.

But a quiet revolution in financial services is now underway, thanks in large part to an unlikely hero: cell phones. Across the street from Kumar's shop is a cluttered drugstore, Sharma Medicos, where owner Lakhan Lal Sharma sells vitamins, shampoo, prepaid minutes for cell phones, and, as of last fall, mobile bank accounts managed by a startup called Eko. Kumar walks over to Sharma's, places 1,000 rupees on the counter, and pulls out his phone. The store owner punches in a code, then Kumar's phone number—which doubles as his bank account number—followed by a dollar amount and another code. A few seconds later, Kumar receives a text message from Eko confirming that his savings account with the State Bank of India has been credited 1,000 rupees. Sharma's agent account has been debited the same amount.

Economists say giving poor people access to basic financial services would go a long way (PDF) toward reducing poverty in the developing world. Without a bank account, everyone you know—a perpetually drunk cousin, a hungry neighbor, your belligerent spouse—can steal your hard-earned money. Without a bank account, you may have to spend days riding buses and walking to deliver cash to a relative, or endure steep fees to wire money home. And although microfinance loans are helping millions of people, receiving or making payments on those loans is complicated when you have to do it in cash.

Continue Reading »

No Comments | Post Comment    David Wolman

An Associated Press story reported in Forbes magazine indicates that China has for the past two months been  reducing its holdings of  U.S. Treasury debt. ” The $24 billion decline in China’s holdings in June followed a $32.5 billion drop in May. China’s holdings had hit a high for this year of $900.2 billion in April.” And this was down from their record high holdings of $939.9 billion reached in July 2009.

This seem to confirm my expectation that China would be diversifying its foreign reserve holdings away from dollar denominated securities.

The slack is being taken up by Japan and Britain so the immediate impact on the dollar in foreign exchange markets may continue to be minimal– for a while.

Central banks collude to advance their common objectives, but given the astronomical budget deficits and continued monetization of U.S. government debt by the banking system, it is unlikely that they will continue to support the dollar in the future as they have in the past. At some point, they will allow the dollar to slide into the void as they roll out their new plan for a global reserve currency. –t.h.g.

Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

Increasing Your Local Food Sources

For us, the next step after getting some food stored away was to increase our local sources of food.  Our primary local sources include the farmers who produce our meat and raw milk and the community-supported agriculture (CSA) vegetable operation to which we belong.  Our local demand translates into more local food—a worthy outcome by itself, but we also happen to get superior food as part of the bargain.

And there's more.  Our CSA is run by two fabulous young farmers whom we adore, it employs a crew of young local people, and they grow everything organically.  We are getting tastier and healthier food, increasing demand for local food, and supporting our local community, all in one fell swoop.  If you do not yet belong to a CSA and have the opportunity, it is well worth pursuing.  And if a CSA is not available or affordable to you, then at the very least, make connections with local farmers and food producers and purchase food from them directly whenever possible.

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cmartenson

WASHINGTON, SAN FRANCISCO, Aug. 04 /CSRwire/ – The recession’s squeeze on green businesses in the United States will be loosened a bit starting next week with the launch of the “Green America Exchange” (GAEx), an enhanced barter network with a complementary currency and interest-free lines of credit designed to support a robust and sustainable business-to-business (B2B) marketplace. GAEx launches nationwide on August 10th, but will have its strongest initial focus in San Francisco.

Located on the Web at http://www.GreenAmericaExchange.org, GAEx is a project of the national nonprofit Green America. As GAEx comes online, it will feature such offers as advertising space in national magazines, carbon-neutral Web hosting, graphic design, merchant services, organic catering, and dozens of other items addressing green business needs.

Green America’s Executive Director Alisa Gravitz said: “Our goal is to put the green back in greenbacks by developing a complementary currency that promotes trade between America’s sustainable and socially responsible enterprises. The Green America Exchange is so much more than a simple barter arrangement; it will help the small businesses at the heart of America’s green economy make additional sales, gain new customers, conserve cash, support fellow green businesses, and purchase the products and services they need all in the same place.”

Green America Exchange Project Manager Keaty Gross said: “By turning un-sold goods, un-booked appointments and under-utilized space into a liquid currency, the Exchange facilitates trades that wouldn’t have otherwise happened in our cash-strapped economy. So on top of GAEx’s potential to strengthen the green economy as a whole, it is also a profitable venture for each participating business.”

There’s no front-end fee to join the Green America Exchange. Instead, all GAEx members will pay transaction fees that ensure that the proper management and oversight to trading remains in place and sustainable.

Members will also be able to upgrade to a Premium account, benefits of which include a personal broker and the opportunity to apply for a credit line, for a low $10 cash/10 trade monthly fee.

GAEx is available to all members of Green America’s Business Network, which has an associate membership open to all businesses. All products and services offered on the Green Exchange must be green (both socially and environmentally responsible).

The Green American Exchange is now in the process of enlisting and activating accounts. To learn more visit www.GreenAmericaExchange.org or contact the Exchange Manager at Keaty@GreenAmerica.org

ABOUT GREEN AMERICA
Green America (formerly Co-op America) is the leading green economy organization. Founded in 1982, Green America provides the economic strategies, organizing power and practical tools for businesses and individuals to solve today’s social and environmental problems. Green America’s green economy programs encourage corporate responsibility, tackle climate change, build fair trading systems, advance healthy, local communities, and provide green purchasing and investing information for families and businesses.

To receive Green America’s popular publications, including the Green American and the National Green Pages(TM), participate in Green America’s Green Business Conferences or Green Festivals, or to get its free e-newsletter, providing the latest green news, green discounts, and opportunities to take action for a green economy, visit www.GreenAmericaToday.org, email info@GreenAmericaToday.org, or call at 800-58-GREEN.

Businesses interested in joining the Green Business Network and taking part in the exchange can go to http://www.greenamericatoday.org/cabn/join/ or contact the Green Business Network at 202-872-5330.

For more information, please contact:

Todd Larsen Phone: 202-872-5310 Leslie Anderson Phone: (703) 276-3256

For more from this organization:

Green America

Is outfitting your horse carriage with velvet and battery-powered lights too much luxury? Is even owning a horse too advanced of a technology?

These are the kind of questions that Eric Brende grapples with in his book Better Off: Flipping the Switch on Technology, about “two people, one year, zero watts.” That is, he sets out to see what’s it like to live (with his wife) in a village of Minimites.

The people aren’t really called Minimites; that’s a name Brende made up for them, since they’re similar to the Mennonites (and the Amish) in avoiding modern technology. He vowed not to reveal exactly who they are, or where they live, hence the made-up name.

Continue reading: In striving for the simple life, how far should we go?

Muslim advocates of the dinar believe it will stop the excesses of capitalism, but it is just another avenue for exploitation

Imagine a world trading solely in gold and silver coins. Imagine the size of your wallet.

Yet this is the ideal world envisaged by some of Malaysia's activists championing the Islamic gold dinar and silver dirham as a new form of legal tender to replace paper money – a utopia that could see the light of day as early as the middle of next month.

This is when one such group, Muamalah Council, plans to implement the dinar system in Malaysia's northern state of Kelantan. If information on its website is to be believed, the council has the blessing of the state's Islamist government, Parti Islam SeMalaysia (Pas), to kickstart the dinar in three moves.

First, the state will pay a quarter of its public servants' salaries using the dinar. Second, all state companies will accept dinar payments. Lastly, some 600 commercial enterprises will also embrace this currency.

Inspired by selective religious sources and backed by historical precedents within the annals of Islamic history, the gold dinar system is touted by certain fiercely proud Muslims as the Islamic answer to thwart capitalism's woes.

The idea was first mooted by Malaysia's former prime minister, Mahathir Mohamad, in the aftermath of the 1997 Asian financial crisis. He argued that the coins would never hang their possessor out to dry in the same way that paper money had. As precious metals with intrinsic value, gold and silver are more resistant to market fluctuations and devaluation compared to the US dollar – an argument he took to the Organisation of the Islamic Conference as a tool to battle western hegemony.

Today, Islamic gold dinar advocates would cite the recent credit crunch as proof. Indeed, the rocketing price of gold – possibly transcending a record high of $2,000 an ounce – can only strengthen their pitch.

While Mahathir's grand plan for Malaysia to implement the dinar system by 2003 may have been unceremoniously scrapped by his successor, Abdullah Badawi, the idea has since gained currency beyond Malaysia's shores.

In neighbouring Indonesia, for instance, an outfit known as Wakala Induk Nusantara (WIN) had begun minting Islamic gold coins for use in Australia, Malaysia and Singapore. Its spokesman, Riki Rokhman Azis, claims that the number of dinars used in the world's most populous Muslim nation has more than doubled in 2009 to 25,000 pieces.

What is perhaps more striking is the UK connection to the increasingly globalised Islamic gold dinar movement. The Indonesian grouping is adhering to a fatwa issued by the South African-based cleric Sheikh Abdalqadir as-Sufi, a Muslim convert in Cape Town formerly known as Ian Dallas of Scotland.

Then there is Dinar Exchange, the British equivalent of Indonesia's WIN. As the "official certified supplier of Islamic gold dinar and silver dirham in the United Kingdom", the company had just concluded a month-long series of roadshows in May that saw it promoting the gold dinar to Muslims in key UK cities such as London, Birmingham and Edinburgh. The group is inviting more to spread this Islamic vision as dinar agents. For a fee, of course.

As the dinar movement gathers momentum, its propagators – which include some of the Muslim world's most polemical figures such as the Trinidad-born cleric Imran Hosein – would doubtless dismiss Antony Lerman's recent suggestion in the Guardian that no credible anti-capitalist doctrine exists today. To them, the Islamic gold dinar is perhaps mankind's best-formulated answer to beat capitalism's excesses.

Yet, as an anti-capitalist weapon, the Islamic gold dinar is far from mint.

It is motivated by politics more than benign religious values. The Kelantan example is instructive. Implementing the Islamic dinar serves as a political statement to Muslim voters that Malaysia's Islamist opposition party, Pas, is more Islamic (and hence more legitimate) compared with its competitor, the United Malays National Organisation. Even in its pristine form, the idea as it is originally propagated by Mahathir could be read as a radical attempt at power politics.

But a more serious flaw lies in its contradiction. At the heart of the dinar system can still be found the same capitalistic spirit of commodification.

It lacks the egalitarian spirit embodied in socialism's virtue of the common good. Its advocates say that the poor could never be taken advantage of because the coins they own have intrinsic value. But Britain's recent gold-rush dilemma suggests that the poor do not always get their money's worth – even when trading gold.

Like paper money, gold is also vulnerable to the manipulations of valuers, our gatekeepers of wealth. And let's be honest, how many of the poor have stacks of gold already in their possession? Gold is a precious metal precisely because it is so rare.

On a wider scale, who is to prevent gold-rich nations from banding together as a cartel to fix prices at exorbitant amounts in the same way that the oil-producing nations of OPEC did?

Or multimillion corporations from exploiting poor but gold-rich nations? This is best exemplified in the case of Pacific Rim, a Vancouver-based firm that has filed an appeal via the Central American Free Trade Agreement (Cafta) to bypass local legislation so they can mine for gold in El Salvador despite local objections. In a world mired by climate change troubles, one also needs to mind the environmental cost of gold mining – an operation that involves huge amounts of water and toxic chemicals.

The Islamic gold dinar could not thwart capitalism's excesses. It is only providing one more avenue for exploitation. For this reason alone, it will not have my buy-in.

• Malaysia
• Islam
• Islamic finance
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Nazry Bahrawi
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Nazry Bahrawi

Goldman Sachs' $550m fine is as much as the bank takes in trading revenue in just one week

Even after the final full stop is affixed to the last piece on the great banking crisis of 2007-10, one phrase about one bank will sum up the entire episode. It comes from a Rolling Stone profile last year of Goldman Sachs. The second and most quoted sentence of Matt Taibbi's piece describes the world's number-one investment bank as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money". As pithy descriptions go, this had it all: the power of the leading firm in an all-conquering financial industry, and how that could be used to print money and to plunge the world into a financial firestorm.

Well, the bottom line at the end of this week is that the vampire squid is doing just fine, thank you. It may not look that way. After all, Goldmans shelled out $550m on Thursday night to Wall Street watchdogs. And it now faces a slew of regulation, thanks to the passage of the financial reform bill through the US senate. Yet in both cases the Masters of the Universe are getting off lightly – showing yet again how the bankers who triggered an economic crisis, which is now turning into a social crisis (as governments across the rich world make all those spending cuts), are ducking their fair share of the bill for the mess.

First, the fine. In paying the biggest ever penalty in a regulatory case, Goldman Sachs is admitting that it wrongly marketed a $1bn deal to investors – a big blow for a firm that prides itself on a good name, and a hefty dent in the balance sheet. Or so you might think. But $550m is as much as the bank takes in trading revenue in just one week. And it is a tiny sliver of the $16bn it paid in bonuses to its bankers last year. More to the point, set against the enormity of the charges it faced, Goldmans has got off lightly. After all, the bank stood accused of creating and flogging a package of dodgy home loans – without telling investors that one of its biggest hedge-fund clients had hand-picked the loans that went into the package, and had bet that they would fall in value. Cut through all the fancy terminology and this was an old-fashioned fraud case, in which Wall Street's finest were charged with screwing over their own business partners (including, naturally enough, our own financial sink-estate, RBS). The regulators have now binned their case in return for some loose change from Wall Street.

Then there is the US reform bill, which last night passed its final hurdle. Indeed, for Mr Obama to pull off another big bill (following on from healthcare and the $787bn economic stimulus), let alone one that has not been eviscerated by the Republicans, is a triumph. The coming mid-term elections may be bloody for the Democrats, but Mr Obama is using his political capital rather than hoarding it. The bill has plenty of sensible (albeit vaguely worded) proposals: a single Financial Stability Oversight Council to monitor markets more closely, more derivatives to be traded in clear sight of the regulators, and financial firms to be quickly wound up. All this is so practical that it simply shows up how bad financial regulation was before Lehman Brothers. Depending on which American papers you read, this is either "another landmark legislative victory" for Barack Obama or simply a "stunning success" for the president.

Yet there is nothing in the bill that would prevent another billion-dollar scam such as the one Goldman Sachs was accused of. There is certainly nothing that questions whether finance should be about stiffing investors with dodgy products and forcing subprime credit on low-paid workers. Banks have been given hurdles to jump, rather than obstacles to doing dodgy business. The bottom line? Goldman Sachs and its brothers have been given a slap on the wrists for their part in the crisis, but it is the voters – facing tax rises and huge spending cuts – who will get a kick in the teeth.

• Goldman Sachs
• Securities and Exchange Commission
• Financial crisis
• United States
• Stock markets

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Alfred Palmer Pistons February 1942"Aluminum casting. The heads of these heat-treated pistons must be spotted prior to Brinell hardness testing. Young women are employed for this job by a large Midwest aluminum foundry now converted to war production. Aluminum Industries Inc., Cincinnati, Ohio" Ilargi: Right. So Fannie and Freddie have now been delisted from the New York and Chicago StockIlargi13095412481562945788

RHD’s Equal Dollars increases in value

Submitted by:Resources For Human Development

Posted: Jul 06, 2010 – 12:50 PM EST

PHILADELPHIA, Jul. 06 /CSRwire/ – Philadelphia’s Equal Dollars complementary currency has decided it won’t be so equal any more – at least with the U.S. Dollar.

The central banking committee of the 12-year-old Equal Dollars system says it will no longer match the value of the community currency to the Federal Reserve dollar, as of January 2011.

The reason? The government greenback’s continuing erosion in worth, due to inflation and other effects of U.S. monetary policy.

“The principle underpinning of Equal Dollars is its stable value, year after year,” said Bob Fishman, chairman of the currency’s central banking committee and CEO of the currency’s sponsor, national human-services nonprofit Resources for Human Development. “While the U.S. Dollar fluctuates in value over time, gradually losing purchasing power, the Equal Dollar will remain balanced: What you bought with Equal Dollars yesterday, you can buy tomorrow at the same price.”

The “equal” in the community currency’s name refers to the community’s agreement to pay the same fore everyone’s labor, Fishman said, and was never intended to describe its relationship to the U.S. dollar.

Even so, Equal Dollars has never undergone a revaluation until now.

“We realized we needed to reaffirm Equal Dollars’ purpose of providing stable value over time,” said Deneene Brockington, director of the Equal Dollars system. “Other currencies, including the U.S. Dollar, may have valid reasons for fluctuating their worth, but Equal Dollars are meant to represent the same value year after year.”

In January, Equal Dollars will increase it value relative to the U.S. Dollar by 3 percent. That means that a member with 1,000 Equal Dollars in their account, for example, will see 30 more Equal Dollars as a result of the revaluation. Conversely, a member who owes 1,000 Equal Dollars will experience a 30-unit adjustment that results in a new debt of 970 Equal Dollars.

Equal Dollars accounts, whether money on deposit or loans, are interest-free.

In addition to the 3 percent revaluation, the currency’s banking committee also is setting a “minimum wage” of 12.40 Equal Dollars per hour of labor.

“We needed to be clear about the minimum value of somebody’s time,” Brockington said. “We weren’t aware of any abuses, but we want to make sure there aren’t any going forward. It’s a preventative measure that reaffirms the respect and dignity that everyone in the community deserves.”

Brockington said that while the January adjustment is the first in the currency’s history, it won’t be the last.

“We’re going to do this every year, if necessary, so that the worth of Equal Dollars in 2010 is the same in, say, 2030 and beyond,” she said.

Equal Dollars boasts nearly 600 members and 20 organizations. Nearly 200,000 Equal Dollars are in circulation.

About Resources for Human Development
Resources for Human Development is a comprehensive human services organization based in Philadelphia, Pa. Its mission is to empower the most vulnerable and marginalized members of society as they build the highest level of independence possible. RHD oversees and supports more than 160 locally managed programs in 14 states. These innovative and effective programs specialize in helping people who have mental illnesses or developmental disabilities, homeless individuals and families, people rejoining society after incarceration, and people with histories of substance abuse so that they may all build better lives for themselves, their families and their communities.

For more information, please contact:

Kevin Roberts Communications Specialist Phone: 215-951-0300 ext 3714 Fax: 215-849-7360

For more from this organization:

Resources For Human Development

Fast transitions to resilient communities that offer energy independence, food security, and thriving local economies will require a new approach.  Resilient communities need to be sold as an investment (there's tens of trillions in investment capital currently on the sidelines).  An investment package that makes it more attractive than the alternatives.  That shouldn't be hard, the alternatives are in terrible shape:

• The financial markets are now casinos, a place where only inveterate gamblers feel at home.  Rampant uncertainty and distrust have turned investments in stocks, bonds, and real-estate into the equivalent of lottery tickets.  
• Existing economic security is evaporating.  Our governments are approaching default, and with them the viability of the social safety nets they provide.  Real estate is in ongoing free fall.  Incomes are in decline, caught in the buzz-saw of global outsourcing.  Pensions and benefits are vanishing through fraud, organizational bankruptcy or forced shifts to contract work.  
• Worse, the social decay, corruption, crime, and widespread violence experienced by other countries in economic circumstances similar to our own, looms on the horizon.  We will all soon live in corrupt hollow states.

How to package the RC as an investment

There are three ways to package resilient communities as investments that will attract significant capital.   These are:

• Consortiums, businesses, and co-opts that retrofit existing communities with resilient systems.  Typically, this is focused on existing residents.  As in, make it possible for people to shift their retirement funds or buy into something that they can immediately benefit from.  The Mondragon model should work well here.
• Resilient community technologies.  Businesses that focus on enabling local production of everything from energy to food to products.  Think in terms of collaborative finance from places like kickstarter.  
• New developments that build resilient communities from the ground up, designed with last mover advantage to survive future dislocation.  Sell this as a hedge against the future, a speculative play in future economic failure, or a way to personally escape potential chaos.

These investments may become the only investments worth having as the developed world declines.  Package them correctly, and people will invest.

This video with Dan Pink summarizes recent behavioral research that blasts the myth of homo economicus totally away. Once basic needs are met, what motivates people in performing complex cognitive tasks is NOT more pay, but autonomy, mastery, and purpose. Watch it. – t.h.g.