Sign of the times - local communities printing their own "currency"?

[Relic]

very interesting...

http://www.usatoday.com/money/econom...5-scrip_N.html

Communities print their own currency to keep cash flowing

By Marisol Bello, USA TODAY
A small but growing number of cash-strapped communities are printing their own money.

Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.

The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.

Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.

Ed Collom, a University of Southern Maine sociologist who has studied local currencies, says they encourage people to buy locally. Merchants, hurting because customers have cut back on spending, benefit as consumers spend the local cash.
FIND MORE STORIES IN: United States | North Carolina | New York | Massachusetts | Indiana | Institute of Certified Public Accountants | Depression-era | Plenty | Berkshires | Bureau of Engraving | University of Southern Maine | Tom Ochsenschlager | Piedmont Biofuels

"We wanted to make new options available," says Jackie Smith of South Bend, Ind., who is working to launch a local currency. "It reinforces the message that having more control of the economy in local hands can help you cushion yourself from the blows of the marketplace."

About a dozen communities have local currencies, says Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts. She expects more to do it.

Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops.

During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage.

By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.

"We print the real thing," she says.

The IRS gets its share. When someone pays for goods or services with local money, the income to the business is taxable, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. "It's not a way to avoid income taxes, or we'd all be paying in Detroit dollars," he says.

Pittsboro, N.C., is reviving the Plenty, a defunct local currency created in 2002. It is being printed in denominations of $1, $5, $20 and $50. A local bank will exchange $9 for $10 worth of Plenty.

"We're a wiped-out small town in America," says Lyle Estill, president of Piedmont Biofuels, which accepts the Plenty. "This will strengthen the local economy. ... The nice thing about the Plenty is that it can't leave here."

[tplyons]

Fascinating... but does this go against the constitution? Or is this actually legal?

Either way, I'd love to get my mitts on some of this stuff.

[kserg]

Originally Posted by tplyons

Fascinating... but does this go against the constitution? Or is this actually legal?

Either way, I'd love to get my mitts on some of this stuff.

Disney has their own dollars - so i guess it's ok.

[Mark Latimour]

Originally Posted by tplyons

Fascinating... but does this go against the constitution? Or is this actually legal?

Either way, I'd love to get my mitts on some of this stuff.

Its probably not illegal - you can agree to swap anything for anything, but the GOvernment would not be bound to recognise the value of the "faux dollars" which are in circulation. You are left with a risk that if you hold a bunch of this fake money, at any time, teh community could decide to stop recognising the value of that money (or it could be devalued by printing more) and you have no protection because at that point, it just becomes paper. The real value in money is that the government / federal reserve recognises its value and therefore the people (both internally and abroad) accept its value. You don't have that benefit with fake money.

Basically all this is a group of people getting together and giving a notional value to something that is otherwise worthless and then using that as a method of exchange. It is exactly the same way that real money started, but real money has government recognition. With these fake money you may as well be exchanging potatoes for a car.

[Passinwind]

Originally Posted by tplyons

Fascinating... but does this go against the constitution? Or is this actually legal?

Either way, I'd love to get my mitts on some of this stuff.

It's entirely legal, but I'm not conversant with the finer details. We've had "River Hours" available here for a number of years, with kind of so-so acceptance in the community. I'll see if I can scare up a $3 bill for you...

[The Golden Boy]

Originally Posted by tplyons

Fascinating... but does this go against the constitution? Or is this actually legal?

Either way, I'd love to get my mitts on some of this stuff.

Any time you go to a fair you buy ride tickets and food and drink tickets- and accepted as monetary payment. Then after the fair you're stuck with all these leftover tickets...

[MakiSupaStar]

Can someone bring me some cereal?

[jive1]

Originally Posted by Mark Latimour

Basically all this is a group of people getting together and giving a notional value to something that is otherwise worthless and then using that as a method of exchange. It is exactly the same way that real money started, but real money has government recognition. With these fake money you may as well be exchanging potatoes for a car.

There's actually some type of value behind any type of currency such as gold or silver. No currency, whether it is backed by a federal government or not, is worth anything unless there is something of value behind it.

For these local currencies, the value that is behind it is either a precious metal such as gold or silver, or US currency which is also backed by gold or silver. So it's not fake money, it's real, and has real value.

[fitbass3p]

Originally Posted by jive1

There's actually some type of value behind any type of currency such as gold or silver. No currency, whether it is backed by a federal government or not, is worth anything unless there is something of value behind it.

For these local currencies, the value that is behind it is either a precious metal such as gold or silver, or US currency which is also backed by gold or silver. So it's not fake money, it's real, and has real value.

This used to be true. However, US currency has been fiat since we went off the Silver standard in the 1970s: "The most widely-held reserve currency, the US dollar, is a fiat currency. Federal Reserve Notes receive no backing by anything." (emphasis mine)
So, there's no inherent value other than the fact that the Government gives it a value, and people believe that the system can continue functioning as it is. Confidence is the only thing keeping the system going, not gold, silver, or any other commodity.

http://en.wikipedia.org/wiki/Fiat_currency

/rant

[iamlowsound]

We have had these in our town for years. Not all that popular.

lowsound

[tplyons]

Originally Posted by jive1

There's actually some type of value behind any type of currency such as gold or silver. No currency, whether it is backed by a federal government or not, is worth anything unless there is something of value behind it.

For these local currencies, the value that is behind it is either a precious metal such as gold or silver, or US currency which is also backed by gold or silver. So it's not fake money, it's real, and has real value.

fitbass is correct.

The American Dollar has not backed by any precious metal, but rather the belief that it has value. I suppose these local bills are backed by Federal bills, but those are backed by nothing.

Feeble, I suppose, but it's been working for a while.

[mike_v_s]

I'm not sure I'd call it "currency", but I've been trading sex for beer and groceries for years. Buying a car is a pain in the ass, though.

Mike

[The Golden Boy]

Originally Posted by mike_v_s

I'm not sure I'd call it "currency", but I've been trading sex for beer and groceries for years. Buying a car is a pain in the ass, though.

Mike

Literally.

[jive1]

Originally Posted by fitbass3p

This used to be true. However, US currency has been fiat since we went off the Silver standard in the 1970s: "The most widely-held reserve currency, the US dollar, is a fiat currency. Federal Reserve Notes receive no backing by anything." (emphasis mine)
So, there's no inherent value other than the fact that the Government gives it a value, and people believe that the system can continue functioning as it is. Confidence is the only thing keeping the system going, not gold, silver, or any other commodity.

http://en.wikipedia.org/wiki/Fiat_currency

/rant

Interesting. Wasn't aware of that.

So local currencies are in essence fiat currencies in that they are backed by US currencies. I wonder if any local currencies are backed by gold or silver.

[Chriss62]

Originally Posted by mike_v_s

I'm not sure I'd call it "currency", but I've been trading sex for beer and groceries for years. Buying a car is a pain in the ass, though.

Mike

Whore Foods? (Whole Foods?)

[Relic]

Originally Posted by mike_v_s

Buying a car is a pain in the ass, though.

Mike

alls I can say is that had better have been one helluva car...

[jive1]

Originally Posted by Relic

alls I can say is that had better have been one helluva car...

The car was more a fringe benefit, me thinks.

[jive1]

Originally Posted by Chriss62

Whore Foods? (Whole Foods?)

I have relatives who call it that.

[Chriss62]

Originally Posted by jive1

I have relatives who call it that.

I see what you did there.... Or wait. Did I do it?

[WickedPissah]

Kind of like a gift card, innit?