# Deflation and "Local Exchange Trading Systems"; Are they a good/bad thing?



## ajapale (19 Mar 2009)

*Local Exchange Trading Systems*


I heard an interview on Radio Kerry about a group of people in Kenmare who are thinking of setting up a "Local exchange trading system".

I remember reading about such schemes here a number of years ago when some people in southern Germany set one up.

What are the pros and cons of such systems? I remember reading that official governments frown on such schemes and for more than the obvious tax reasons. 

Do they exasperate the deflationary cycle.


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## darag (20 Mar 2009)

LETS are to economics what homeopathy is to modern medicine.  They have some appeal among those who feel mankind has being going backwards since the discovery of agriculture but any justification for LETS collapses when subjected to the tiniest amount of rational analysis and/or when real world experience is taken into account.

They suffer obvious and deliberate flaws in terms of providing a medium of exchange or a unit of account - both vital properties of any money.  And without the backing of a sovereign government,  I certainly wouldn't trust one as a medium or long term store of value (LETS collapse all the time).


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