A workshop about creating an economy focused on the needs of people over profit is coming to Raglan on August 6. Organised by the Raglan Timebank team the workshop will be led by Bryan and Jo Innes from the Living Economies Trust.
While money is the traditional currency used to buy goods and services, the Timebank team are passionate about rethinking the economy to look at the ways wealth can be kept within the community of Whāingaroa for the benefit of all.
(Listen to the full interview below:)
Financial institutions like banks often operate in seemingly mysterious ways with about 3% of all money being created by the Government and the remaining 97% created when commercial banks extend loans.
“The money is created from thin air and then you have to create ‘real money’ to pay back the loan,” says Etai Gilad from the Raglan Timebank.
The bank’s ability to create money is technically constrained by its ability to borrow money from depositors to lend to borrowers, primarily making their profits through lending, investing and bank fees. Most of the banks in New Zealand are owned by overseas interests so any profits often go abroad.
Thinking about an average mortgage, by the end of your 25-30 year term, you will have paid approximately the same amount of interest as the cost of the actual house. Once you have borrowed the money, you work to pay the loan back - often using up finite resources to do so.
About 10 years ago, Bryan Innes from the Living Economies Trust calculated that every year, approximately $10-12 million was leaving the Whāingaroa community through the banking system and is proposing independent systems that will help keep some of this money within the community.
One of these is the already established Timebank which uses time instead of money as a currency and everyone’s time contribution is recognised and valued equally. Each hour spent is one TimeCredit. You can exchange these time credits to obtain the services you want.
As an example, you could find somebody to fix something in your house based on time credits you have accumulated from doing things for other people.
Etai says it’s about reciprocity and the idea that we can all help each other in some way - regardless of the different skills we have.
Saving Pools
Raglan currently has two savings pools operating successfully. Saving Pools are usually made up of a family-sized group of people (anywhere from 4-30) with members coming together to contribute money for mutually beneficial financial services.
The members of that pool decide how much is contributed to the group savings pool and the group decides in turn what the members financial needs might be and extend interest-free loans.
When Etai arrived in Raglan five years ago they’d been travelling the world and had some substantial credit card debts they needed to pay off.
“By the time we landed, our credit card debt was in the thousands. Not only were we paying the debt but also transfer and exchange fees. We were swimming against the current! By chance, knowing nothing about this awesome place and special community we ended up in Raglan and were introduced to the Raglan Savings Pool.”
After joining, they borrowed money from the pool and were able to pay off their debt at an affordable rate. Although there are no interest rates, there is an expectation that you pay back double the amount of what you borrowed to make that money available to other members.
Interest is replaced by reciprocity in the sense that if you borrow $50, you would pay the $50 back plus another $50 as reciprocation (equal give and take) towards the future pool account. Once you have paid back the extra amount, you can then take that money back out of the pool again.
Changing the economic landscape
In 1972, the fourth king of Bhutan declared that Gross Domestic Happiness was more important than Gross Domestic Product (GDP) - the measure by which a country’s production and expenditure is calculated - and by changing the goal of governance, Bhutan took a holistic approach to the economy, ensuring that wellbeing and the environment were taken into account.
In New Zealand, economic growth is often measured using GDP. The Central Bank controls the money supply at the national level while banks facilitate the flow of money within the markets they operate in.
Measuring growth using GDP often fails to take into account the wellbeing of people and the environment at large. Etai also mentions that the pandemic has exposed the inequalities in our society.
“We need to ensure that resources are spread around the community, this is the time to really take action. The current money and banking situation is not sustainable.”
The Raglan Timebank are looking for ways to support the community through financial cooperation and they are also looking into blockchain technology to create an alternative currency similar to how crypto currency operates.
If you’d like to learn more about an alternative economic approach, including the potential creation of a Raglan Dollar and Land Trusts head to the Economies for People Not Profit event which will be held August 6 at the Raglan Bowling Club. More details at this link: https://fb.me/e/3jpxZoZ1h
You can also check out the following websites for more information:
Living Economies: https://livingeconomies.nz/solutions/problem
Positive Money: https://positivemoney.org.nz/