Invent your own currency

April 19, 2009 at 2:00 am 9 comments

Wall Street financial operators, greedy banks (can you BELIEVE that some Australian banks are refusing to pass on the latest Reserve Bank rate cut?) and the consumerist society treadmill we have all been on for years have all led us to our current sorry state – the Global Financial Hissy Fit or GFC.

But here’s a trend I’m liking. Back in the Great Depression, communities in the United States were allowed to print and use their own local currency as long as it didn’t resemble Federal currency. This helped to keep local economies afloat. As communities in 2009 stagger under the impacts of the GFHF and face rising unemployment rates and closing down of businesses, some communities are printing and naming their own currency (also known as complementary currency or regional currency).

Don’t know about you but I don’t have a whole lot of confidence in our current financial system or the bailout packages that are supposed to heave us out of the black hole we’ve dug for ourselves (ably assisted by so-called financial whiz-kids of Wall St).

So if you’re a community facing an unemployment rate of 22.2% and your hometown confidence is heading south, what do you do? Print your own money! A bunch of business dudes in Detroit, for example, have banded together to support local commerce and provide a medium of exchange that can be used for local goods and services.  They’ve created the Detroit Cheers and local businesses are agreeing to use it as real money. The Cheers bill comes in $3 denominations. The owner of a furniture shop says:

“I can get a good meal, I can get a beer, I can help another Detroit business. That is money to me. To keep commerce in Detroit, I totally support that goal.”

A dog day care centre, a graphics designer, a carpenter, a nonprofit and several restaurants and bars are participating in the scheme.

I did a spot of research and found this really is an emerging trend in the US because other States have local currencies:

  • BerkShares in the Berkshires region of western Massachusetts
  • Pittsboro, N.C. is reviving the Plenty, a local currency it used to have
  • Bay Buck in Traverse City, Michigan
  • Burlington Bread in Burlington, Vermont
  • Brooklyn Greenbacks in Brooklyn, N.Y.
  • Ithaca Hours in New York (each one equal to either $10 or one hour of work)

Ithaca Hours is printed on good-quality paper with images of steamboats, waterfalls, children and animals. Each one has a serial number and a faint graphic on the currency to discourage counterfeiters (but because the currency is only used and accepted locally, I doubt counterfeiters would be interested). Check out the currency’s website.

From a knowledge management perspective, local currencies help to build social capital – a community preserves and uses its skills and expertise, strengthens local relationships, fosters confidence and faith within the community about its ability to survive and thrive during the worst economic hissy fit we’ve seen since the 1930s; and builds up community resilience. It also gives the local currency a ‘social life”.

I found this so fascinating that I did more research. A whole history of local currencies was revealed. During the Great Depression, the most famous example seems to be the Austrian town of Wörgl, which had the Stamp Scrip. And did you know that in Europe there are 65 local currencies competing with the Euro? The Bavarian region of Chiemgau prints the the Chiemgauer and Devon has the Totnesian pound.

Prior to the American Civil War, the US had no national currency and used local currency issued by banks. Only in 1863, did the US greenback come into existence.

The whole idea of local currencies is connected to Local Exchange Trading Systems (LETS) and I predict we’re going to see a return to community or network members desiring currency or credit (in the form of hours for example) for the benefit of the community and themselves. I don’t think this has to be a rejection of the global capitalist model but it could function as an adjunct to it.

We’ve ended up with money leading us around and we’ve forgotten that the notion of commerce used to be about conversation in the course of bartering and negotiating the exchange of goods and services. It used to be about social intercourse and mutual benefit. Let’s go back to that!

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9 Comments Add your own

  • 1. James Robertson  |  April 19, 2009 at 5:32 am

    There are now also “Chippo Dollars”, obtained by doing good deeds in Chippendale, and then redeemable in local stores. As is typical, these notes depreciate quickly to encourage spending. All good fun!

    Reply
  • 2. thinkingshift  |  April 19, 2009 at 6:43 am

    cool James….not sure what we’d call them here in Newcastle. Newies? Novocastrian hours?

    Reply
  • 3. Luke  |  April 19, 2009 at 6:58 am

    For Newcastle – why not call them Newks?
    It’s another form of a barter system – as an alternative to printed money – it would make a lot of sense to do some of this electronically – either using some form of cash card or an online system for exchange. Or even then, exchange one form of service with another. Makes it a lot harder for the tax system to track it as well. How do you report your BAS on Chippo dollars or Newks?

    Reply
  • 4. thinkingshift  |  April 19, 2009 at 7:16 am

    hey Luke, how’s Dubai going? I read that the tax system recognises alternative currencies (naturally, so they can grab the tax). I really think we are going to see communities looking seriously at how to support each other and work outside “the system”, which would include not having to pay tax, living off-the-grid and so on.
    Kim

    Reply
  • 5. KingofthePaupers  |  April 19, 2009 at 2:32 pm

    Jct: Best of all, when the local currency is pegged to the Time Standard of Money (how many dollars/hour child labor) Hours earned locally can be intertraded with other timebanks globally!
    In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours.
    U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
    See my banking systems engineering analysis at http://youtube.com/kingofthepaupers with an index of articles at http://johnturmel.com/kotp.htm

    Reply
  • 6. Mark Herpel  |  April 19, 2009 at 8:23 pm

    The Baroon Dollar is in AU, its a local currency.

    http://www.mainstreetcash.org/?p=490

    Mark
    Skype IM ‘digitalcurrency’

    Reply
  • 7. thinkingshift  |  April 20, 2009 at 10:38 am

    thx Mark, I’m trying to uncover AU local currencies so I can do an update post.
    Kim

    Reply
    • 8. Darren Mitchell  |  May 5, 2009 at 7:20 am

      Hi Kim and Mark
      The Baroon Dollar is the first Australian dollar-backed local currency in Australia. It’s a model project of the newly formed Australian Institute for Community Currencies Inc a non-profit community organisation founded to seed innovative local currencies around Australia. The AICC will work with local community groups to create their own community currency.

      Reply
  • 9. thinkingshift  |  May 5, 2009 at 9:03 am

    thx for that Darren…I’ll look up the Institute as I’m interested to follow this up further.
    Kim

    Reply

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