Communities print their own currency to keep cash flowing

[scotty2hotty89]

I didnt know that this was going on. It's very interesting. I am not sure how I feel about it yet; I will have to give it some thought. What do you guys think?

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.

"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."

http://www.usatoday.com/money/econom...05-scrip_N.htm

[69chevy]

I think this is a great idea. If you look at it, it usually benefits the local population because it helps local business, while hurting these big mega chains. I know during the depression that local communities that did this could still get stuff done because of this, while other communities suffered. If this gets too popular though, the government will move against on the behalf of well connected big business and the money masters (the fed reserve), just like they did in the depression.

I believe the colonists did this early on and were prosperous while they controlled their own money supply. I rather pay no interest, then pay interest to a bunch of aristocratic European bankers who own the federal reserve. In essence your remove the power from a bunch of aristocrats and put it where it should belong, in the hands of the people.

Of course nothing is without down sides and you also have to be worried about counterfeiting and hoarding. Hopefully someone more well read in economics can provide more techincal reasons as to why this works.

[ChamberedRound]

I don't have any problem with this. While the Constitution gives the US government the authority to print currency, I don't believe that authority is given EXCLUSIVELY to them. People are allowed to barter and exchange goods and services using any medium they desire, so long as they don't break any laws regarding taxes.

[Dredly]

I have mixed feelings on this one...

Positive:

Local business benefit from this exclusively and it encourages community growth

Negative:

- How does "mixed money" work? what if I have 50.00 left of "play" money but I'm buying a 75.00 item? is there an exchange rate because the real money is worth more?

- What does the shop do with the money after it gets it? Does it get turned back in for 95.00 / 100.00 handed in or does the shop get the full 100.00 back? Where does the missing 5.00 come from? How do they report this on their sales records?

- How "secure" is this money? How easy to duplicate and what kind of "anti-duplication" technology is incorporated into it? Water marks? special inks? etc

- This won't assist with inflation in any way as the community is still trading in US currency for everything that they sell, if anything it makes inflation worse as their money is worth less then the US dollar do to the exchange rate

[69chevy]

- This won't assist with inflation in any way as the community is still trading in US currency for everything that they sell, if anything it makes inflation worse as their money is worth less then the US dollar do to the exchange rate

I think what would happen, is that it would encourage people to begin producing the common every day stuff locally.

[knight0334]

I don't have any problem with this. While the Constitution gives the US government the authority to print currency, I don't believe that authority is given EXCLUSIVELY to them. People are allowed to barter and exchange goods and services using any medium they desire, so long as they don't break any laws regarding taxes.

The USC empowers Legislature to only "coin money" in Art.I, Sec8. The USC forbids only the states from coining money in Art.I, Sec10. The people, corporations and lessor governments can still coin money or print currency constitutionally. Private banks printed their own currency and coined their own money well into the late 1800's. However, I do believe Lincoln's administration and congress passed a federal law strictly making the US govt the sole coiner/printer.

[spratman]

The thing I found ironic about this article was that people were losing jobs, but could still use the monopoly money for yoga classes....

[archangel689]

It will go the way of the liberty dollar. Only the federal reserve bank can print money so that it may be lent to us with attached interest that can never be repaid, see....

[dc dalton]

It will go the way of the liberty dollar. Only the federal reserve bank can print money so that it may be lent to us with attached interest that can never be repaid, see....

Sadly you are very much correct here .... the 'power to coin money' was given away to the private banks, the FED included a long long time ago.

But then again if things keep going like they are it will all be toilet paper soon.

[Shawn.L]

I think its a great idea
and so was the liberty dollar

at the very least it shows people are showing some more interest in the monetary system and how exactly we have been getting screwed with it.