This Page Describes Various Scenarios Or Methods For Setting Up exchanges

Jill makes good bread. Her skill is an asset that creates value. As an entrepreneur her efforts are her own and the rewards accrue to her. However, God made us in such a way that we all need others, and no one is good at everything just an no one is without some gift. As a member of an Exchange Jill works with others to make bread. The activity of the Bread Exchange creates value for the church. The assets that go into making bread are the property of the church. The activity of making and distributing bread creates value that generates equity for the body of Christ. Jill’s gift creates value or equity in the Exchange for the church. Thus, Jill’s gift is able to serve God by bring Glory to God and benefit to His people.

Jill’s bread adds value to the Exchange. This value-added serves as the basis on which shares are issued. These shares represent the equity of the Exchange. Shares are produced based on the value created by Jill as a skilled baker. These shares are used as money in the Exchange. Thus, a gift of God is used as the foundation on which the currency of the church is issued.

John is a mechanic. If John is the only mechanic in the area it may not make sense for him to sell the tools of his trade to a Mechanics Exchange. He would be the only one using the tools. However, if the group were larger and there were several mechanics involved then it would make sense for the individual mechanics to pool resources to lower costs and risk. If John sold his tools to a Tool Exchange his actions would give other mechanics more tools to work with. He may find it made sense as this might give him access to more and better tools also. John would be reimbursed for contributing these assets. John is given equity equal to the value represented by the tools donated.

Ownership is not about personal power and control. Ownership is about creating specialization and therefore prosperity. Ownership is not a legal position but an economic one vis-à-vis an asset in an economy. Ownership is about linking responsibility with authority. An entrepreneur is a specialist. Entrepreneurism is about finding ways to do things in a specialized way within an economy and community. This process of developing specialized functions is the single source of all prosperity in a community.

John is a mechanic, so it makes sense for him to have and control the tools required for his trade. It also means that should he need additional equipment to do the work the church needs doing, it makes sense for the Exchange to provide John with additional tools and equipment. Why would those who will benefit from his expanded line of services refuse to make it possible for John to perform these other jobs? Having someone to fix their cars increases the equity of the community.

If the required tools and equipment are present in the Exchange, meaning if other members have the equipment needed, transferring these assets to John does not alter the asset mix of the Exchange. The transfer increases the value of the Exchange and thus the equity of the economy. When assets are better used their value increases. When the ability of people to work increases the equity owned and operated by the Exchange also increases in value. The assets are simply transferred from the account of one member to another member’s account, however, the transfer increases the economic activity of the Exchange. Tools that may have been idle are turned into wealth-creating assets for they allow the Exchange to expand services.

When one joins an Exchange, one is no longer dependent on what bankers think of your character or business sense.

Gladys has few resources. She is a single mother of two small children and is willing to baby-sit and do housecleaning. None of the members in the local community are well off and under normal circumstances would find it difficult to hire and pay Gladys. However, the church will find it is to their benefit to hire Gladys if they need her services. Small Group Exchanges pay all members according to the same scale. The world considers her work unskilled, but Gladys gets paid the same rate for her work as others get paid for theirs. 

Services are compensated for at the same flat rate. Exceptions are made if the church believes a higher rate of compensation is justified due to specific circumstances. Wage disparities will fade away over time as exceptional circumstances are corrected for. A lawyer may require a higher rate of compensation than other service providers over the short term. These issues are resolved as they arise. Over-time as the system evolves and more people are born into the program wages will settle towards a common level.

Bill is a handyman and does odd jobs. Gladys needs some plumbing work done. Gladys does not need units of the domestic currency to have Bill fix her plumbing problems. She does not need any money at all, which is good under normal circumstances Gladys would not be able to afford Bills regular rate. Gladys pays Bill in preferred shares. She transfers her equity position to Bill to compensate for the value created by his labor. The transfer of shares compensates Bill for the value he transferred to Gladys. The transfer means Gladys’s account in the church is debited for the same amount that Bill’s account is credited. 

Preferred shares are a unit of account that is created, as needed to reflect changes in the relative equity levels of members. Bill’s work creates equity and so preferred shares are created and issued according to the amount of equity created by Bill’s services.

If a paper currency is used the accounts of each member in a transaction reflects the equity transferred. Paper money allows the economy to function on a kind of Petty Cash accounting.

Gladys can buy bread, get her home and car fixed based on the equity she represents to the Exchange (as given by her cash on hand). She as a human being is valuable to the Exchange. The equity she represents allows her to obtain what she needs. The Exchange works to help her realize her full potential because she is an asset to the Exchange. 

Gladys does not purchase services from the Exchange based on her credit worthiness. Gladys may be unemployed and broke when she joins. She purchases goods and services on the credit worthiness of the Exchange itself. Sellers are willing to sell to Gladys not because they trust Gladys. There is no need to trust Gladys or know Gladys or be aware of her credit worthiness. The Exchange backs the currency it issues, so the seller only needs to know the church is creditworthy.

It is important that we take all the time needed to understand how Exchanges work to eliminate risk. Anarchy Works Exchanges bring people together in a way that reduces risk. Liability accounts represent risk levels. Exchanges eliminate liability accounts.

It has been taught that with opportunity comes risk. Some say the greater the opportunity the greater the risk but certainly the opposite is not true. If one does not understand that the purpose of an Exchange is to build the church and eliminate liberalism the casual observer will assume risk is being created. Remove liabilities and there is no risk.

If there was a risk the Exchange could not function as an agent of church construction.

Bill does not need to badger Gladys for payment nor get paid up front. No matter Gladys financial situation sellers know they will be paid. The community guarantees payment. The Exchange credits the sellers account so the seller is able to engage in economic activity. What this means for Bill and others is that Bill can buy goods and services on the strength of the credits he earned working for Gladys.

The Exchange pays Bill using shares issued based on the equity created by the job Bill just completed. All economic activity creates value and all value can be expressed as equity. Equity quantified in multiples of itself and issued in the form of shares are issued as a currency.

When Gladys hires Bill she is not creating debt in the way debt is understood by banks. Bill working for Gladys creates value. If Gladys has a house and Bill works on the house his work increases the value of the house, this increased value is expressed as an increase in the equity of the asset as well as an increase in the assets of the community and world. If Bills work is valued at $800.00 then the house has increased in value by $800.00. The Exchange can now credit Bill with the equity his work created. He can now transfer this equity to someone else and in exchange obtain goods and services from others.

The goods and services available to Bill provide Bill the security he needs to sell his services to any shareholder in the Exchange.

Bill never needs to hesitate when selling his skills. Exchanges always guarantee payment and always have the means to make payments because it is the claim on its assets that gives an Exchange the equity used to issue preferred shares which are what it uses to pay its bills with. A car sold to an Exchange or a member of the church is an asset that forms the basis of an equity issue of preferred shares. A car comes in one end of the accounting process and preferred shares are issued at the other end. Exchange structure equitizes risk and by this means eliminates it in the same way risk does not exist within a corporation making an in-house transfer of assets. Risk shared is risk eliminated. Risk is absorbed by common consent.

Conventional businesses that have large capital flows in the upward or downward stream may choose to create an Exchange as a kind of Trust Fund equal to the average value of goods and services in the stream. A business that risks $5000.00 selling goods to its customers may find it convenient to create an Exchange for facilitating exchanges between it and its customers. 

The supplier and its customers set up an Exchange capitalizing it with $5000.00 held in trust. All purchases and sales are done by and through the Exchange. Buyers and sellers are represented by accounts with the Exchange. Single Entry Bookkeeping as used by an Exchange eliminates the need to transfer funds back and forth or up and down the product stream. The Exchange turns separate businesses each representing a specific risk into a single pool of assets. Exchanges absorb risk because the risk is contained in the Exchange. A buyer cannot default because everything bought and sold, and all debits and credits are contained in the same pool of assets.

The entire product stream is contained within the parameters of the Exchange, so all the economic activity is part of the same economy. Exchanges create a closed system. A farmer who grows crops and feeds his family and livestock and breeds his livestock and saves the seeds from his crops cannot lose money within this process any more than could a group on an island. Bankruptcy and business losses are a result of dividing a production stream into individual components. Competition divides and compartmentalizes risk and thus increases risk.

Instead of a glassmaker selling bottles to a bottler as a unique economic unit the glassmaker transfers assets to another component of the production process and is credited the value of the transfer. Those who need bottles get bottles as a simple transfer of assets in exchange for equity. All shareholders represent equity to the Exchange that is all shareholders represent value to the rest of the shareholders. Each shareholder can acquire assets by giving up equity.

The bottler takes possession of bottles and obtains debits. This means the bottler has given up equity. The glassmaker gives up bottles and accepts shares in the Exchange as payment as credits. This means the glassmaker has acquired equity. If conventional currencies are obtained, they are traded for shares in the Exchange. The secret to eliminating risk is to share it. All shareholders of the Exchange share the risk by exchanging their exposure for equity in the Exchange.

Conventional money obtained by the Exchange is used to pay down the conventional debt of shareholders. The Exchange takes over shareholder debt, debiting shareholder accounts with the value of the debt and uses cash on hand to pay off shareholder debt.

Instead of the bottler trying to squeeze concessions out of the distributor and so on, the distributor and retailer share in a combined effort to reduce overall costs.

The bottle maker attempts to supply bottles in a timelier fashion and in a manner that fits with the usage needs of the bottler because both the glassmaker and the bottler are shareholders in the Exchange and benefit as the Exchange equity increases. This is the same as saying businesses prosper as the community prospers. There is more to be gained from paring down costs for the whole chain than there is to be gained by one part exploiting the rest. Whatever profits are made are shared so it pays the entire chain to work towards the lowest over-all costs. Exchanges create a closed loop where inputs equal outputs. Exchanges work as the early depictions of the economy as presented in textbooks say an economy ought to work. Exchanges are free markets in the ideal sense and co-existent with a local economy.

It pays the Exchange to keep commercial operations going. If a business is not producing goods and services that are needed its assets are re-assigned to other uses. An exit strategy is always in place.

Supporting a business when its closure will cascade costs throughout the community may require extraordinary steps be taken. If it costs more to close a business than to keep it open the community is better off if it continues to support the business.

Maintaining the operational services of a struggling retailer who is the sole supplier to a small satellite community may require another retail account to serve as a sub-station or drop off point where the distributor can leave extra product for the smaller store to pick up as needed. This enables the small store to get re-supplied at more frequent intervals than the distribution company can provide. What is important is the value created in the Exchange not the value of a single account. The entire production and distribution and consumption system is a single system. All open loops and waste are eliminated, and the system made as efficient as possible.

The market would see the struggling retailer as a liability and shut it down.

Canada Post and other nationalized services are constantly under attack by private interests who wish to take over the profitable routes whilst leaving the outlying areas to the national service or without any service at all. This makes sense according to the market but not to the community or the nation it is in. People have to get their mail and it does not serve the interests of the nation to deny services to people because the cost of delivery is higher to them than elsewhere. The profits made delivering to dense populations helps offset the cost of delivery to the outlying regions. The service is provided because the people and the nation need it. Finding ways to do this in the overall lowest cost per unit is the goal of decentralizing services. Servicing the fewest customers for the highest profit gives us Globalism.

National governments look at is what is best for the nation. It may make economic sense to move everyone into a single city (economies of scale could be captured) but from another perspective to empty the nation of people to make things efficient is not really a rational strategy. Efficiency is good, but it is not the reason the economy exists.

The best-case scenario from the perspective of a Capitalist is for a private company to service the densely spaced accounts and leave the public to fund the widely spaced accounts.

When a business is shut down the costs of running the operation are ended for the owner. The workers who lose their job are a cost, but they are a social cost not a business cost and they are not a cost that is recorded anywhere. The unemployed do not have an account. Indeed, the company recorded them as a liability and having divested itself of employees the company lowers its liabilities. Yet the cost of living has not really changed substantially for these men and woman. Yet, if they do not sign on with some government program they effectively disappear off the national books.

What Exchanges do is to keep unemployment costs on the books. To do otherwise is not rational. The Law makes such actions appear rational and as a consequence creates a division in society. Some think the business owner has the right to shut down a failing business others think this is unfair on the workers. Thus, our energies are spent in fighting over who is entitled to what instead of dealing with the real issue which is why does this division exist in the first place. Society does not escape the cost of unemployment by closing down a business. If the community needs the product and the jobs it may be cheaper to keep the factory running at a loss than absorbing the costs of closing the business down. It may make more sense to close it down in stages as assets are shifted elsewhere and consumer needs are met using alternative sources.

It is unrealistic to put the entire cost encountered from closing a business onto an individual when the business must be profitable to stay afloat. The profitability of a company is really the responsibility of a community and the costs of failure is a cost borne by the community. An unprofitable company cannot, by definition, live up to what might be considered its moral obligation to the community and its workers. 

A business by itself cannot eliminate risk. No business owner has the authority to make the decisions that would eliminate risk. A business is privately owned in a legal sense and yet no individual can alone maintain business solvency. Why ought the business owner face the responsibility represented by the costs of bankruptcy? Businesses are subject to all kinds of risk not all of them foreseeable or insured against. The more costs the business must absorb the more likely it will collapse. If society must bear the cost of business failure, then it also has the right to expect a share in the management of the company to ensure it does not fail. 

Governments create programs that both help businesses and workers, but government programs invariably increase costs and therefore risk. Business owners are aware of this, but the only other solution was to not help, and this was never a realistic option.

Unemployment insurance is a liability for businesses and an expense for the nation, but the situation is like Canada Post delivering letters to the far North. It does not make economic sense to deliver letters to such remote locations, but it does not make sense not to either. If the nation is dependent on the minerals extracted by northern community’s then ensuring they receive mail is simply a cost of doing business that is borne by the nation. It may cost more to deliver mail to the far north, but it is just a cost of doing the business called Canada.

Canada Post does not exist to make money. In one sense it exists to increase the equity that is Canada. Canada Post is just a department in the national business. Brought up in a culture that sees ownership as a property of economic entities it is hard to think of ownership as a conditional relationship. The idea that profits are immaterial in the present business environment is difficult to accept. Canada Post exists as a service to Canadians to make the country work better and to make the nation profitable not any one part or sector. When an accountant sees that it costs 50 times more to deliver a letter to a remote community than what the customer pays it appears that the resident of the far north is being subsidized. The far North is viewed as a liability that ought to be removed.

Governments record liabilities and yet are required to subsidize various sectors of the economy. Government tax cuts serve to keep struggling sectors going by taxing solvent businesses. To an accountant or hard-nosed businessman every business ought to pay its own way. Many see government funding as akin to communism. To some extent State assistance does follow the Communist adage: “From each according to his ability to each according to need.” Any assistance beyond preventing an untimely death is considered by many to constitute a statist agenda. Ayn Rand became a cult figure by promoting a philosophy of rugged individualism a position reminiscent of Niccolò Machiavelli’s “The Prince”.

Niccolò Machiavelli (1469-1527), Italian statesman and writer, whose work The Prince (1532) advises that acquiring and exercising power may require unethical methods.

The following scenario describes a taxi service set up as a Christian mission to help those who need transportation. The mission objective is to provide work for members and a means of transportation that is less polluting and costly than other alternatives.

​Several cars are sold to the Taxi Exchange by members of a local community. The Exchange is a local mission set up by the community as a charitable mission. Exchanges are small groups numbering a dozen or so that come together as a mission to add value to the church for the church so that the church can better serve its mission field.

The vehicles purchased by the Taxi Exchange become assets of the mission. The Exchange swaps Preferred Shares or equity in the Taxi Exchange for the vehicles. The owner of a vehicle valued at $6,000.00 would receive 6000 Preferred Shares each with a cash value of $1.00 as compensation for the capital provided. This process is referred to as the capitalization of the mission phase.

​Preferred Shares are issued in denominations that are multiples of each other. Preferred Shares are used in the way currency is used in conventional markets. Riders pay their fare using Preferred Share as a medium of exchange (currency). 

​Earnings over charges are reinvested in the mission. Members own the equity of the Exchange as preferred shares. It pays the Exchange to hire members to do any work the organization needs doing. Wages are paid using the Exchange’s preferred shares. It benefits both the member and the mission to have members fulfill the roles opened up by the mission’s activity. It benefits the Exchange and its members if the members help one another find jobs within the mission field of the Exchange. It is the work done by members as well as the business activity generated by members that adds value to the church.

​Those with credits prefer to spend Preferred Shares rather than hoard them or lend them as they do not receive interest on them and the preferred shares are only useful as a medium of exchange within the Exchange. Members look for ways to spend Preferred Shares (PS) within the church body. This increases the potential for jobs to be created. As more people join more capabilities emerge and so unique ways of adding value and capacity to the church can be established. Exchanges provide different goods and services in response to different charitable ends. All of this activity adds value to the church helping it to fulfill its role in bringing people to Christ.

​The church body is able to create specialization spontaneously as social costs are eliminated. Five persons who joined the taxi service may be plumbers. In time they will come together to provide plumbing services to the church as a Plumbing Exchange. Providing plumbing services is the way these members add value to the body of Christ and reduce waste. Thus, the church grows and diversifies spontaneously as members acquire more diverse specializations.

Even as the members of one Ethical Exchange work together as a group with common goals, this Exchange joins with other small group missions to broaden the range of goods and services available creating a larger and more diverse missions’ field. Each Exchange is headed by a chairperson. The chairperson of each Exchange forms a council to administrate the activity of the connected Exchanges. This is part of the macroeconomic theory of the church.

Ethical Realism is an economic philosophy comparable to capitalism and communism but based on a form of ownership that is validated by Scripture. Ethical Realism is theologically comparable to Catholicism and Protestants. The free enterprise model of ownership which is also known as capitalism and the state-based ownership of communism both require the backing of the state. Capitalism and communism and all the other political and economic ideas of man ultimately contribute to the building up of Babylon. Babylon is simply a concept denoting an unbiblical and non-scientific understanding of reality.

We believe the reforms of Catholics and Protestants have not progressed far enough.

Ethical Ownership is a non-state mandated form of ownership based on the Ethical Exchange business model. Ethical Ownership is equivalent to personal ownership, but it is based on the bible’s idea of stewardship. In the eyes of the world we own what we have but in our own eyes we are stewards of what we possess. Exchanges are an expression of our stewardship. Exchanges are self-sufficient missions that seek to fulfill the word of God in some way. Exchanges are a mission field performed as a small group within a local political jurisdiction. Exchange missions do not require the existence of the state to exist and operate as they are self-validating.

 An entrepreneur going into the egg business may look for investors who donate money and equipment and receive charitable receipts for the value of the investment made. Alternatively, an Exchange can capitalize the business through donations by members, of needed assets.

Producing eggs increases Exchange equity. The egg business is able to acquire investors and capital (supplies and equipment) because the equity represented by the not for profit covers the investments.

Eggs are priced at 5 prares a dozen. Bread is priced at 2 prares  a loaf. Ham is P6.00 a pound. Selling a dozen eggs gives the seller P5.00. This allows the seller of the eggs to purchase a half-pound of ham for P3.00 and a loaf of bread for P2.00. 

The seller does not directly profit from the sale of ham, or eggs or other goods and services. There is no need for entrepreneurs to accumulate capital or to depreciate assets. The replacement of hens or ovens is not dependent on the business making a profit. There is no risk because one’s capital is not consumed or put at risk. In an Exchange profits are as unnecessary as insurance, both represent risk. In Ethical Exchanges risk is liquidated.

When hens are needed they are obtained by a simple inter-business transfer. If more eggs need to be produced, then the egg producing facility acquires more hens from a hatchery. The Exchange transfers hens from the hatchery to the egg producer. This is just a transfer of assets from one account in the Exchange to another account in the Exchange. Hens go one way (in an accounting sense) and prares go the other. This keeps accounts in balance.

People brought up in a climate of risk have difficulty understanding how a business could be set up, operated and expanded without borrowing or saving or making a profit. Yet as members of a family or community this is done all the time.

When you help a friend move you have created a moving company with your friend as the client. You do not receive immediate payment, nor do you make a profit but at some point, your friend will help you or he will help a friend or yours who you owe a favor to. If one friend does not repay your kindness another one does, over-all the economy of your network prospers because of the contributions that you all make to it. Social Networks are informal Exchanges. They are informal because the accounting is subjective. Each person has an account that is debited and credited as help is given and received however the accounting is mental and lacks objectivity.

Exchanges formalize social networks by the addition of a method to balance accounts.

When a business starts up the community benefits even though the business is privately owned. Even in conventional cultures the equity in a town increases when a new business is started. 

Exchanges organize what mankind has always done in a better and more efficient way.

When eggs are purchased from the Local Exchange all shareholders benefit because the equity in the Exchange increases. The equity created by shareholders increases the equity of the Exchange. The Exchange benefits when eggs are sold and when bread is baked and sold and when ham is produced and sold because the Exchange is the economy of its shareholders and as the economy grows the equity of the Exchange grows. This happens in any community it is just encouraged more in an Exchange.

The Exchange provides feed and chicks to those who raise hens and ovens to those who bake bread. The Exchange provides goods and services as debits to the buyers account and as credits to the originating account. The person who provides eggs gets chickens from a local hatchery who is a client of the Exchange as needed. The hatchery is credited the value of the chickens as the egg producer is debited the same value. The hatchery uses her credits to get the farm supplies she needs. The Exchange credits the hatchery’s account for the value of the chickens sold and debit’s his or her account for the value of any supplies received.

It is not possible to externalize costs because all costs are part of the economy of the community, payable by the same shareholders who created them.

Shareholders find it beneficial to help one another because shareholders share and contribute to the same equity pool. One shareholder buying from another shareholder is akin to one friend helping another. There is no risk because the Exchange absorbs the risk and provides the benefit.

To start an egg production business the conventional way chicks, feed and equipment and facilities in which the production will take place must all be acquired. There are papers to sign and taxes to pay along with all the upfront costs. These costs add risk because these costs may not be recouped. The less likely these costs can be liquidated the higher the interest levied on any money borrowed, increasing risk of failure.

Conventional businesses may miscalculate the cost of setting up production, the owner may not have understood all of the legal requirements that comes with selling eggs or he or she may have miscalculated potential profits and not be able to replace worn out equipment. These costs could be contained within a charitable institution or Exchange. Neither the individual hatchery or egg production facility nor banker or any component of the product stream assumes any risk. Costs and risks are contained within the charitable institution or Exchange. If a business does not do well it is a weakness in the Exchange itself, a weakness in the way assets have been allocated. The Exchange addresses the risk by reassigning assets to other uses. In the free enterprise system, large risk requires or justifies a large return. It is the business owner who must address all the issues evaluate what they mean and determine a solution and as said bear all these personal, financial and emotional costs him or herself.

Setting up an egg farm or any other business is a different experience than doing the same thing conventionally. Chickens are assets owned by a legal person transferred to another legal person only after the first receives an asset of corresponding value. Usually this means units of the national currency. In Exchanges individuals possess chickens and other assets but the ownership or final authority belongs to the Exchange. Chickens are assets transferred from one shareholder to another using the equity (represented by the chickens) as a form of currency. The transfer can take place at any time without any conditions being attached. It is not important if the chickens are under the care of Sam or Sally. The transfer of the asset (chickens) increases the equity of the Exchange. The asset is transferred to where the most value will be generated for all members. As assets in an egg production facility the hens increase the equity of the Exchange more than they would have as eggs consumed. Transfers are processed when the equity of the Exchange is enhanced. Chickens as eggs have only a limited value. Putting the chickens to work laying eggs increases the value of the eggs that were chickens. When the eggs were transferred to the egg producer the asset value increased because of the use to which the chickens were put. The farmer is given Preferred Shares to represent the chickens transferred and the egg producer is debited Preferred Shares to balance the asset received.

Assets represent values to individuals. The value of an asset represents what one individual will give another to obtain it. Equity represents value to the community. To increase economic activity and equity is why Exchanges facilitate the transfer of the chickens from the farm to the egg producing facility.

A free enterprise transaction may benefit Sam and harm Sally and the economy will be hit with social costs. In free enterprise, the net benefit of an exchange could be negative. Sally could buy 1,000 chickens and they all die before adulthood. Private ownership makes Sam and Sally combatants. Each business owner fights to gain an advantage over the other. In an Exchange the shareholder shares a common interest in increasing the equity of the community. 1,000 chickens might still die but it would not impact Sally the loss would be an economic loss; absorbed by the Exchange. The egg producer is an asset of the Exchange not a stand-alone proprietorship.

A family provides its members with what they need. Exchanges provide shareholders with what they need for the same reason. When each member of the family does what he or she does best the family qua family is enriched. Family members provide family members what they need because in so doing the family is benefited. It is a dysfunctional family that prevents members of the family from helping each other. There is and can be some ‘from each according to his or her abilities to each according to his or her needs’ in a family but an economy needs a more formal way to exchange goods and services.

A business that transfers a desk from one department to another increases efficiency without increasing risk; the desk is transferred to make the business as a whole more efficient without increasing costs. There is no danger that the receiving department will default on a desk payment and the seller go bankrupt because of the default, because the two departments are part of the same economic entity and the equity of one is part of the equity of all. The department that gives up the desk sees or ought to see a benefit in giving up something underused to make another department more effective for the objective of both departments is to make the business itself profitable. Equitizing assets in an Exchange produces the same dynamic for shareholders.

Builders, equipment makers, chick hatcheries etc. are assets that belong to a community administrated by those who use the asset to benefit the community. Assets can be transferred to where the need is greater. When more chicks are needed to supply egg producers, hatcheries supply more chicks. The buyer of chicks does not owe or pay the hatchery. The cost of the chicks is deducted from the buyers and the seller’s account is debited. The hatchery is not at risk of default by the buyer because it is the Exchange that credits the seller’s account. The buyer is not in debt to the hatchery or to a bank it has an account with the Exchange that is reduced by the cost of the chicks. It really does not matter about the buyer’s credit worthiness because the buyer and seller have accounts with Exchange and together they contribute to earth’s equity, so long as this equity of earth continues to increase the relative earnings of each account is not crucial.

The egg producer’s customers have accounts with the Exchange so those who need eggs can purchase eggs. For small purchases a local currency is used backed up by the customer’s account with the Exchange.

A debit balance with the Exchange is a debit balance covered by Exchange assets. The debit column is decreased when goods and services are obtained (cash decreases). Cash is spent or the member’s account with the Exchange is reduced. A debit account is buyer equity and a credit account is seller equity. Remember all we are dealing with are equity accounts. When a buyer purchases goods and services his equity account or cash account or account with the Exchange is reduced, credit increases. Consumption action is recorded in the credit column. The seller’s account is credited. The Exchange credit is transferred to the debit column in the sellers account books.

The accounts of the Exchange tend towards zero. The higher the debit account the more credits are pushed by the community members. The higher the credit account is the greater the pressure to increase debits. This simply means the more cash or credit a person has with the Exchange the more the person has to spend. 

If the amounts of eggs being produced are no longer required assets from this market activity are transferred out of egg production. Assets moved from one account are credited. Accounts that receive assets are debited. Prares serve as the Exchange unit of account.

Suppliers are not dependent on the egg business producing enough eggs at a high enough price to produce a profit so any liabilities the company has can be liquidated. The Exchange serves as a store of value that sellers can access when wished. The egg production facility provides eggs to those who need them because this creates more value for the economy than to not sell eggs. No one is concerned about the credit worthiness of a community member any more than a family member is worried about the credit worthiness of someone in the same family. Transfers of assets is just a transfer within the same economy and does not impact the over-all financial health of the community, what is important is the financial health of the community.

If the price of eggs is inadequate as the facility continues to increase debits the economic activity will increase the price of eggs and consumers will buy fewer eggs as the price of eggs increases. The Exchange will transfer assets into egg production or elsewhere, depending on what increases the equity of the Exchange the most. The business is part of the equity of the Exchange and all shareholders find it in their best interest to do whatever it takes to increase the equity of the Exchange.

If one thinks of the Exchange as a family or a group of friends working together on a project, it is easier to understand how an economy composed of not for profits works. 

The free enterprise system is composed of privately owned capitalist businesses that compete against each other. Each business tries to use what it owns in an efficient way to make more money than competing businesses. But people stranded on an island would not allow competition in the way the private enterprise system does. In a closed economy such as exists on this planet, where costs cannot be externalized the group is not benefited if one or two individuals shift costs onto the rest of the group. On an island or in any closed economy, if 70% of the population work and 10% benefit while 20% are destitute the ones in charge are likely to be metaphorically voted off the island.

Exchange accounts are always in balance. The debit accounts of some equal the credit accounts of other members. Debits always match credits and credits are always equal to debits.

If the accounting department of a large corporation decides to separate the tracking of income from the recording of expenses the income tracking office does not have to purchase what it needs from the accounting department. The assets are transferred from one part of the business to the new department. The costs may accrue to the new department and the assets transferred may be recorded as a credit to the department supplying the assets, but these are simply paper costs and do not create any additional risk for either the business or any of its constituent departments. The business is not going to push its Accounts Receivables into bankruptcy because it missed a payment. This scenario reflects the process used to create a new business using Exchange accounts.

The costs of setting up a new department are not a liability to the organization. Set-up costs do not pose a risk to a new department in the way they do to a business that is setting up using conventional methods.

When a child wishes to put on a play and needs props and costumes she takes clothes and other articles freely from family members – her need she feels is sufficient to justify them being pressed into service. If additional materials are required, the family purchases them but the child does not incur a debt at least not in the formal sense though a sibling pressed into service may believe he or she is owed a favor in return. The child does not make a profit and the family does not suffer a loss. There is no risk in the venture and thus no need for anyone to be compensated. Yet, a benefit is produced for all the members in the family even as all contribute in varying degrees to its success. Even being part of the audience is considered part of the project. All of this takes place without the profit motive being present and indeed specifically because it has been rejected. To put a monetary on the service and demand compensation is to destroy the very value that would otherwise have been created.

In the same way one member of a family may hand down clothes to a younger sister, members of an Exchange may give prares to another investor. Investing using prares is a good way to promote economic activity. There is no risk as prares are part of an Exchange’s equity and are always spent on products and services available through an Exchange. Giving away prares creates business for the shareholders of an Exchange. Prares are a perfect way to invest in future economic activity or pay economic development forward.

It always benefits the Exchange when investors spend or gift prares because this generates business activity.

At one time parents were in charge of their kids education, they hired the teacher and defined the curriculum. The church needs to reclaim the rights of the parents over their children’s education.

Mankind was not created to live a solitary life, not only do we need family we need to work with others to achieve our goals in life. If you are familiar with the Exchange model of social organization it is easy to understand how this method of organizing can be applied to setting up a school. 

More importantly perhaps is the need to understand why the Exchange model needs to be adopted rather than the Babylonian or conventional model.

Its not just because Exchanges are based on Scripture and Babylon on the ideas of fallen man. To set up a school the conventional way requires a large outlay of capital. This makes an alternative school a prohibitive enterprise. But we can homeschool and if we can homeschool, we can set up the largest homeschool possible using available resources and over time combine homeschools into a more conventional school model but one that the children’s parents retain control of.

But there is also a need to create organizations of parents that are dedicated to oversight. Stop giving free rein to educators.

The key features are a means of exchange or currency system based on the equity created by the organization. Even if the organization is restricted to lobbying the ones who engage in lobbying the school board and government ought to be paid using the prefers currency system.

If a person provides a room or their time or other resources, pay them with prefers. This is extremely important. Christians must forgo all free loading of all kinds. Pay everyone for what they do and always accept payment for what you do and give. Donate the money if you wish but take payment. This is vital to create a functional economy.

See the material on Exchanges to understand how to create a Common Currency using preferred shares.

Exchanges are bible-based economic modules. Exchanges are a manifestation of works done in faith. Exchanges are free markets designed to convert the assets of Babylon into assets belonging to the church. In a very real sense this is what being a Christian is all about.

It is best to familiarize yourself first with structure of a Basic Exchange if you have not already done so, before delving into specific models. A Firewood Exchange is a basic Exchange with an accent on the provision of firewood. The program despites its prosaic nature still actively attacks Babylon. What this means is that Exchanges target and eliminate parasitic freeloaders. This makes Exchanges efficient, productive and its investors very motivated.

A Firewood Exchange is a specialized organization created as a way to provide members with low-cost high-quality firewood even as it weans people away from political and economic corruption of Babylon. Destroying Babylon and creating a sustainable economy that benefits all of us confirms the reliability and truth of Scripture.

The Firewood Exchange functions as a mission’s field. As part of the church, authority in an Exchange remains at the base of the organization. To shift power upwards is to create social costs and this is not biblical any more than it is rational. 

The woodlot from which the firewood is obtained is preferentially owned by the local church and turned into an Exchange. This property may have been owned by a member of the congregation, but ownership is transferred to the Exchange through a process dealt with elsewhere.

All work done in the Exchange is paid for using credit vouchers or preferred shares. The church members own the assets of the Exchange. All contributions of capital are paid for using preferred shares issued as Exchange equity.

If the church did not replenish the trees as they are cut for firewood, they will either need to buy a new woodlot or run out of fuel. There is, ergo, no benefit to the Exchange members, for not charging sufficient value for the firewood sold to create a sustainable source of firewood. The Exchange ensures that their supply of firewood is maintained. Ergo, the church creates a sustainable economy without the need for government intervention. Using the Exchange model there is no benefit for creating social costs, that is costs that the congregation will pay later. The community creating the costs is the community that will ultimately pay the costs.

The Exchange economy is ultimately a closed ecosystem. Inputs equal outputs because there is no outlet for externalizing costs. If we are taking wealth from the planet, we need to restore this in some way. We must think of our political jurisdiction as an island. Those in the jurisdiction trade with other jurisdictions but the focus must be on maintaining the health and integrity of the local jurisdiction or parish.

An Exchange can be viewed as an isolated market or a business engaging in inhouse transfers. It makes no sense for a business to create a shoddy product or service for a department of the same business. If one department needs a piece of equipment it makes no sense for the manufacturing arm of the parent company to produce the machine in such a poor way that the machine does not work as it ought and suffers multiple breakdowns. This holds true for the church. Business activity in and between Exchanges is similar to in-house transfers within a conventional business.

Social costs are what businesses call externalized costs. These are costs created by the production produces but not contained in the price of the products or services sold, thus the uncovered cost accrues to the account of society and future generations. This only makes sense when the entire benefits accrue to one segment of the population, but the costs are distributed more generally. The formation and pursuance of social agendas is the hallmark of liberalism. Social agendas are simply another way of saying externalization. The state benefits one group and spreads the costs over a far larger body of taxpayers. Exchanges are a targeted way of combating the social agenda of liberalism.

Using preferred shares as a medium of exchange allows everyone who contributes to the project to be paid. Anyone who creates equity for the Exchange is paid for the equity created in preferred shares (prefers). 

Those who buy firewood pay for the firewood using prefers. The Exchange becomes a closed economy using prefers as a medium of Exchange. This increases the probability people will help one another because they are paid in prefers and they can use prefers to hire help as they need it.