Torekes: land and money

There about 180 currencies which are considered as legal tender in one or more nations. In addition there some 4,000 alternative or complementary currencies. Since there is a wide variety in different types of complementary currencies, these are of great interest for monetary reform. Here will discuss one of such alternative currency: the Toreke.

The Toreke is a currency used in the Rabot district in the Belgian city of Ghent. This currency is issued by the city to inhabitants who perform certain tasks (such as cleaning the neighborhood) and in return people can use this currency to rent a small allotment garden (150 torekes per 4 m² per year). There are more than a hundred available gardens.

Since the allotment gardens are located at an abandoned plot of land already owned by the city, the authorities can issue Torekes at virtually no cost. Consequently this local currency allows stimulation of the local economy without increasing the debt of the city government.

Torekes were introduced in 2010 and are quite a success, given that the project is still running in 2016. One of the reasons for its popularity is that torekes can be spent in local businesses. We have to point out that torekes can be exchanged for euros, though most are circulating in the local economy.

In 2015 1280 volunteers participated in the projected and earned about 117,000 torekes.

This experiment is important as it combines the two principles of the fiscal and monetary system we endorse for space settlements:

  • land rent as the principal source of public revenue;
  • debt-free money issued by the government to fund public expenditure.

The toreke-case demonstrates these policies actually work in practice and are not just theoretical concepts.

The value of the toreke is derived from the fact that it can be used to rent a small plot of land. Without this torekes will just be pieces of paper and people would wonder why they should accept those.

Despite the similarities between the toreke and the Mordan talent, there will be a couple of differences:

  • there will be no fixed exchange rate ( 1 euro = 10 torekes);
  • the land rent will vary from location to location and depend on the local land value.

This experiment shows that governments can successfully introduce debt-free currency to fund public expenditure and avoid to pay interest.

Links:

Official website of the toreke project

Article by Bernard Lietaer on the toreke project

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6 thoughts on “Torekes: land and money”

  1. That’s interesting. What stops governments from doing this with the main currency? What happens if money is available at very low interests rates?
    Would it be bad for the economy?

    1. >>What stops governments from doing this with the main currency?

      One reason is simply a lack of creativity. Most politicians simply believe the monetary system has to be as it is, something that’s promoted by the financial sector – as it’s beneficial to them.

      >>What happens if money is available at very low interests rates?

      According to Magrit Kennedy about 45% of prices of consumer goods is made of by interest. Low or even zero interest rates would result in lower inflation and lower prices in the long run.

      On the other hand low/zero interest rates is bad for retirement funds, which invest great amount of money in government bonds and mortgage loans.

      >>Would it be bad for the economy?

      As with everything there are positive and negative effects. An uncontrolled increase of the money supply would result in high inflation. Though this could be counter-acted by pegging the increase of the money supply to real economic growth.

      On the other hand, reduction of interest rates for governments means that tax could be decreased or that more funds are available for education, infrasture, healthcare and so on,

      1. We pay an interest, currently, of up to 25% on bank loans. I think this is driven by greed on one hand and another by high interest charged by the international banks.
        I think with low interest rates would be generally positive to the economy. Banks and states should fight financial malpractices.

        1. >>We pay an interest, currently, of up to 25% on bank loans

          That’s high, though I am not familiar with your local market.

          >>I think this is driven by greed on one hand and another by high interest charged by the international banks

          I am quite sure about this one.

          >>I think with low interest rates would be generally positive to the economy.

          I agree.

          >>Banks and states should fight financial malpractices.

          Banks are the main culprits to financial malpractice. And yes, governments should fight it, but they are deeply in the pockets of the banks.

    1. Thanks for commenting!

      Despite the similarities between both local currencies, it’s good to keep in mind the differences between both systems.

      The Bristol Pound derives its value from the fact it’s fully backed by national currency. Whereas torekes derive their value from the ability to rent a small plot of land with this currency.

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