Buy local movement is spawning local currencies

By Brent Daggett:

With growing distrust of big banks and the unstable economy, the buy local movement is gaining more traction, especially if localities create their own currency.

The concept of printing local currency (in the form of paper money) is nothing new and is perfectly legal by federal law, except private coinage is not.

In 1991, Ithaca NY started to experiment with their money called hours.

According to author and founder of Ithaca Hours, Paul Glover, this is how the system works:

• One HOUR = one hour basic labor, or $10.00.
• Half HOUR = half hour basic labor, or $5.00.
• Quarter HOUR = quarter hour basic labor, or $2.50.
• Eighth HOUR = eighth hour basic labor, or $1.25.
• Tenth HOUR = tenth hour basic labor, or $1.00.
• Two HOURS = two hours basic labor, or $20.00.

The hour system starts at ten dollars an hour simply because it’s the community’s minimum wage.

However, residents of Ithaca are not the only ones participating in the concept of local currencies.

Beginning in November 2005, Bay Bucks (slightly modeled after Ithaca Hours) was born in Traverse City, Michigan with the collaboration of business people, farmers, students, artists, professionals and community activists.

Bay Bucks comes in the form of ones, fives, tens and 20s and can be used for food, plumbing, carpentry, chiropractic care, massage and bookkeeping/accounting, depending on the various establishments who accept the currency.

Individuals can obtain Bay Bucks by asking participating businesses.

Some other communities who use local currency are, Piedmont, North Carolina (The Plenty), Southern Berkshire, Massachusetts (BerkShares), Bellingham and Seattle, Washington (Life Dollars) and New Orleans (Crescent).

However, caution should be used when using local currencies, due to the fact that since the 1990s fewer than 20 percent of the 80 communities that used various forms of monies remain active.

The upside of using local currency is that unlike when individuals spend money at big-box businesses where $13 of $100 is spent in local communities, $45 out of $100 is spent locally when using local currencies.

While the Institute for Local Self Reliance, (which started in 1974 in order foster innovative strategies for local or regional needs) does believe local currency is one way to deal with the shrinking value of the dollar, Senior Researcher, Stacy Mitchell of ILSR offers her views to restore banking back to localities in her article, Banking For the Rest of Us, appearing in Sojourners Magazine on April 1 of this year.

Here are some snippets of her plan:

Break up the biggest banks. “In January, Public Citizen, a nonprofit group, petitioned federal regulators to break up Bank of America on the grounds that it “is too large and complex to manage or regulate properly, and its financial condition is poor and could deteriorate … causing a devastating financial crisis…”

Enact anti-concentration policies.  In order to move towards more decentralization, Congress should consider reinstating the Glass-Steagall Act.  This would allow for the “separation of commercial and investment banks, cap the share of the nation’s deposits that any one bank can amass, and introduce a graduated tax on bank assets that would further deter bigness.”

Protect consumers.  Crack down on abusive practices.

Penalize speculation.  Put a financial transaction tax on all Wall Street trades.  While Mitchell states the tax would be modest in order to damper high-speed trading and not burden legitimate investment, the tax percentage was not revealed.

Establish public partnership banks in each state. “The only state where local banks have flourished in recent decades is North Dakota, which has four times as many local banks per capita as the national average. Their strength is owed largely to the Bank of North Dakota, a publicly owned “bankers’ bank.” BND does not serve consumers directly but partners with local banks to increase their lending capacity. It’s a smart model, and more than half a dozen other states are now considering legislation to replicate it.”

Whether local currencies can become a real competitor with the dollar remains uncertain, but competition might actually have the ability to restore the dollar.

“The prospect of American citizens turning away from the dollar towards alternate currencies will provide the necessary impetus to the U.S. government to regain control of the dollar and halt its downward spiral,” Rep. Ron Paul said in his final statements of introducing Free Competition in Currency Act of 2011.

The Act has been referred to committee and will essentially, if passed, eliminate taxes by federal, state and local governments on coins and bullion, repeal legal tender laws and end prohibition on private minting.

For more information on this topic read this article.

Edited by Madison Ruppert

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