The system operates like a community bank using a system of mutual credit:
The Account: Every member opens an account. Unlike a traditional bank, the account starts at zero, and no interest is charged or earned.
The Directory: Members list the goods or services they can offer (e.g., gardening, web design, home-baked bread) and what they need.
The Transaction: When a transaction occurs, the buyer’s account is debited (minus) and the seller’s account is credited (plus).
The Balance: Money does not need to exist before it is spent. The system relies on the fact that the sum of all accounts in the network always equals zero.
Key Characteristics
Interest-Free: There is no incentive to hoard LETS currency because it does not accumulate interest.
Negative Balances Permitted: A negative balance is not a penalty; it simply represents a commitment to provide goods or services to the community in the future.
Local Scope: It is designed to keep wealth within a specific geographic community and stimulate local economic activity.
Taxation: In many jurisdictions, barter exchanges and LETS transactions are subject to standard income tax laws if the trade is conducted as part of a commercial business. Personal, hobby-based trades are often exempt, though local laws vary.
PERMAlocal
How It Works
The system operates like a community bank using a system of mutual credit:
The Account: Every member opens an account. Unlike a traditional bank, the account starts at zero, and no interest is charged or earned.
The Directory: Members list the goods or services they can offer (e.g., gardening, web design, home-baked bread) and what they need.
The Transaction: When a transaction occurs, the buyer’s account is debited (minus) and the seller’s account is credited (plus).
The Balance: Money does not need to exist before it is spent. The system relies on the fact that the sum of all accounts in the network always equals zero.
Key Characteristics
Interest-Free: There is no incentive to hoard LETS currency because it does not accumulate interest.
Negative Balances Permitted: A negative balance is not a penalty; it simply represents a commitment to provide goods or services to the community in the future.
Local Scope: It is designed to keep wealth within a specific geographic community and stimulate local economic activity.
Taxation: In many jurisdictions, barter exchanges and LETS transactions are subject to standard income tax laws if the trade is conducted as part of a commercial business. Personal, hobby-based trades are often exempt, though local laws vary.