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Milwaukee neighborhoods consider printing own money

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Milwaukee neighborhoods consider printing own money

By Erika Slife | Tribune reporter

December 3, 2008

http://www.chicagotribune.com/business/chi...0,2902061.story

 

They may be talking funny money, but it's not funny business.

 

Residents from the Milwaukee neighborhoods of Riverwest and East Side are scheduled to meet Wednesday to discuss printing their own money. The idea is that the local cash could be used at neighborhood stores and businesses, thus encouraging local spending. The result, supporters hope, would be a bustling local economy, even as the rest of the nation deals with a recession.

 

"You have all these people who have local currency, and they're going to spend it at local stores," said Sura Faraj, a community organizer who is helping spearhead the plan. "They can't spend it at the Wal-Mart or the Home Depot, but they can spend it at their local hardware store or their local grocery store."

 

Incentives could be used to entice consumers into using the new money. For example, perhaps they could trade $100 U.S. for $110 local, essentially netting them a 10 percent discount at participating stores.

 

It's not a new concept—experts estimate there are at least 2,000 local currencies all over the world—but it is a practice that tends to burgeon during economic downturns. During the Great Depression, scores of communities relied on their own currencies.

 

And it's completely legal.

 

 

My report on Bernard's book which covers this very subject:

 

Bernard A. Lietaer - The Future of Money, A very good book relevant to a finite world

http://www.greenenergyinvestors.com/index.php?showtopic=5083

 

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Why would people really do this?

 

Print your own money, and perhaps you can trade it for goods you've made or grown yourself, but if you're a shop who has had to buy in stock to sell, then you had to have used real money to buy stock from the distributor.... and then you're going to sell it for funny money!!!

 

And what officially recognised bank would you ultimately be able to deposit this money into, to convert it into proper money?

 

Therefore, unless you're going to isolate yourself from the main banking systems completely, I can't see how this can work. And if you are going to go it alone, then why bother printing funny money in the first place? Surely this would cost money in itself (paper, inks etc.), and you might as well bypass money completely, and go for batering/trading goods.

 

Seriously, would you accept some unrecognised paper fiat notes in trade for selling goods you owned?

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...

Seriously, would you accept some unrecognised paper fiat notes in trade for selling goods you owned?

 

I would if it was pegged to some recognised paper fiat notes.

 

But that only brings me back to your original question

 

Why would people really do this?

...

 

 

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Recently in the UK the towns of Totnes and Lewes issued their own paper pounds too....is it growing?

 

 

http://news.bbc.co.uk/1/hi/england/devon/6692755.stm

 

http://www.telegraph.co.uk/news/uknews/271...-the-pound.html

 

Don't forget the Brixton Brick

 

http://transitiontownbrixton.org/content/view/101/1/

 

 

 

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Why would people really do this?

If you dont have the dosh but have something to trade. Also bonding with the community at large gives some measure of security.

 

I was once impressed by a large baby sitting circle that used tokens amongst them selves until my host explaining the system admitted to forging extra 'credits' for her self. Got be transparent for it to work.

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Why would people really do this?

 

Print your own money, and perhaps you can trade it for goods you've made or grown yourself, but if you're a shop who has had to buy in stock to sell, then you had to have used real money to buy stock from the distributor.... and then you're going to sell it for funny money!!!

 

It's still fiat currency.

And it will lose value, the more that is printed, as people raise prices, since they have trouble

getting rid of the script they have collected

 

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No.

Bernard has listed ONE fiat system. The Ithaca Hour.

The rest are not fiat. This is vital to understand, because as he explains, this means they do not affect inflation.

And they are significantly better than a simple barter system because they enable a far wider movement of the money. For example, I could pay for 1 hours gardening in NZ, and the gardener who earns that 1 hour, could then pass it on to someone in the UK who could then pay for something worth 1 hour.

 

Bernard's book is full of examples that work. I strongly suggest that if you do not think they do, or have some objection to the idea, that you read my thread and try and learn about this, and understand why they do work.

 

It is important to understand that they are complementary currencies

That means they work beside the normal national currency.

 

If I had the money and could get hold of them, I would give everyone one of these books to read.

I have done my best to provide as much as I can find online for you to read, and I have described as much as I can given my time.

 

Thanks to those who have listed more examples. I'll get round to reading them and adding them to my growing list.

 

I find it astounding that Bernard describes incredibly well how the actual money system affects the way society acts. It is the charging of interest. He has identified the root cause. Astounding because apparently very very few people grasp this idea, although having researched this, I find a growing number of people working in this very area.

The way the Chris Martenson work meshes with Bernard's book, and other articles, makes me think this is the important area for the coming years.

 

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I think the goldbugs get the idea of fiat currencies versus "real money". The difference between a printable paper fiat currency and one based on a valuable rare commodity, like gold or silver.

But having read most of Bernard's book, I think many people are missing the more basic aspects of money.

You are so used to the current system that you find it difficult to comprehend a different system.

 

Go one level lower, and look at the way money affects the way people act. How the basic money system operates.

Bernard lists many different systems.

Most importantly, look at the way the money system affects the community.

 

I'm sorry if I'm failing to get this over to you. It's difficult in short writing when compared with a large book written by a a very experienced expert.

 

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Maybe these two images make the point.

 

ConvMoneyBoxPrison.gif

 

and

 

NumberOfComplementaryCurrencySystem.gif

 

 

Look at that chart. From 1984 the number of complementary currencies has grown.

 

You've got to ask why.

What is that is causing a growing number of people to set up new systems ?

What is it that they are seeing that those like me who have not come across them have not ? Until now.

 

Why is it that people interested in sustainability are also interested in community currencies ?

 

 

Images from:

 

Diagrams from the book

http://www.techrules.com/clients/aeatonlin...0of%20money.pdf

 

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A permaculture teacher I know is big on these: http://en.wikipedia.org/wiki/Credit_union

 

EDIT: He mentioned something along the lines of a bank/credit union = people investing their surplus to help others, they can get investment back but there's no interest. Using for eg., walnut trees (very productive yield) as an asset/holding and crop/timber revenue. Involves a 'post-medieval' mindset from investors - as he puts it! Note, he's fairly radical and not always that easy to follow!

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No.

Bernard has listed ONE fiat system. The Ithaca Hour.

The rest are not fiat. This is vital to understand, because as he explains, this means they do not affect inflation....

 

Define "fiat".

What backs these currencies?

If you dont want to swap them for someone else's labor, what else can you do with them?

 

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A permaculture teacher I know is big on these: http://en.wikipedia.org/wiki/Credit_union

 

EDIT: He mentioned something along the lines of a bank/credit union = people investing their surplus to help others, they can get investment back but there's no interest. Using for eg., walnut trees (very productive yield) as an asset/holding and crop/timber revenue. Involves a 'post-medieval' mindset from investors - as he puts it! Note, he's fairly radical and not always that easy to follow!

 

Not that long ago I would have classed quite a few people as "a bit odd" because of their "way out views".

Now I'm starting to think they have spotted something that most people haven't. Whether they have got it right I don't know. I suspect there are varied views, with some misthinking, but I think there are important truths in there.

 

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Not that long ago I would have classed quite a few people as "a bit odd" because of their "way out views".

Now I'm starting to think they have spotted something that most people haven't. Whether they have got it right I don't know. I suspect there are varied views, with some misthinking, but I think there are important truths in there.

 

Yep, just to make it clear - his ideas aren't 'odd' or overly 'way out' to me - but have been and will be considered radical generally, I'd guess. He's as sound as a pound! (When that had a good meaning!) http://permaculturefrance.com/accueil.htm His website. (eng version is out-of-date)

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Define "fiat".

What backs these currencies?

If you dont want to swap them for someone else's labor, what else can you do with them?

 

I'd prefer to quote Bernard, to put his quote into context, because his main point is about the attitudes of central banks, and how they should be dependant on whether a complementary currency creates inflationary pressures. From page 217:

 

From a central bank viewpoint, the critical concern is the relationship between complementary currencies and inflation. If large-scale use of complementary currency fuels inflation, legitimately they should block such development. However, if complementary currencies are not creating inflation, they should not. My thesis here is that well-designed complementary currencies do not contribute to inflation, and can even be used to reduce inflationary pressures on the national currency.

 

A good starting point for the relationship between money issuance and inflation is Robert Lucas's synthesis in his recent Nobel Lecture: "The prediction that prices respond proportionally to changes in money in the long run, deduced by Hume in 1752 (and by many other theorists, by many different routes, since) has received ample - I would say decisive - confirmation, in data from many time and places.

 

However, all this excellent work has invariably been based on the implicit assumption that there is only a single currency system in a country. For example, with that frame of mind, the appearance of a second complementary currency may be interpreted as a simple local increase in money supply. All economists would immediately understand why such a process would create employment, but also (erroneously) conclude that complementary currencies would automatically add to inflationary pressures on the economy as a whole.

 

This reasoning would be valid if and only if the complementary currencies were all fiat currencies as are the dollar, the euro or any other national currency of today. There is indeed one type of complementary currency (the Ithaca HOUR described in chapter 6) which is such a fat currency, and which could pose such a risk if its use became widespread. However, it will be shown that other designs, including mutual credit systems (eg LETS, Time Dollars) do not contribute to inflationary pressures.

 

Rather than argue from theory to prove this point, let us take three practical examples of increasing complexity.

 

In the case if simple barter exchanges, where no currency is involved at all, the only offset of such an exchange is who owns what. No inflationary pressures arise from barter exchanges given that the overall quantity of goods and currency in circulation remain unchanged.

 

In the case of mutual credit systems (eg LETS or Tim Dollars) the situation is in some respects similar to barter, because for every credit generated thre is a simultaneous creation of a debit within the same community of consumers. The net amount of currency in circulation is therefore still the same, exactly as in the case of straightforward barter. In fact, from a monetary perspective, mutual credit systems simply facilitate multilateral barter, and have the same overall effect as a group engaging in triangular or multilateral barter.

 

 

The best starting point to see the overall thinking in Bernard's book might be this one file:

 

http://www.techrules.com/clients/aeatonlin...0of%20money.pdf

 

which contains slides from a Madrid 2004 conference.

 

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Yep, just to make it clear - his ideas aren't 'odd' or overly 'way out' to me - but have been and will be considered radical generally, I'd guess. He's as sound as a pound! (When that had a good meaning!) http://permaculturefrance.com/accueil.htm His website. (eng version is out-of-date)

 

Sorry, I wasn't suggesting he is any more "odd" than a goldbug :D

I think though that the initial impression of "radical" people can be that they must be "odd"....until you listen to what they say, and then you become one of them !!! :lol:

 

I'll check out the website tomorrow :D

 

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Steve, I really appreciate the effort you have gone into on this thread and your other main one to discuss these concepts. I have to admit I haven't read all the material you've posted yet, but one thing which springs to mind is that the current fiat systems are often tied into national tax systems. The fact that there is a single dominant currency within a country allows the government to relatively easily track income, transactions, profits and tax them all.

 

This would be more difficult with competing local currencies wouldn't it? I suppose as long as these competing currencies remain fairly marginal governments wouldn't really be very concerned, but they might feel threatened if they did become more popular. For example the government might try and accuse people who use them of evading taxes? Does Bernard discuss this aspect at all?

 

 

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Steve, I really appreciate the effort you have gone into on this thread and your other main one to discuss these concepts. I have to admit I haven't read all the material you've posted yet, but one thing which springs to mind is that the current fiat systems are often tied into national tax systems. The fact that there is a single dominant currency within a country allows the government to relatively easily track income, transactions, profits and tax them all.

 

This would be more difficult with competing local currencies wouldn't it? I suppose as long as these competing currencies remain fairly marginal governments wouldn't really be very concerned, but they might feel threatened if they did become more popular. For example the government might try and accuse people who use them of evading taxes? Does Bernard discuss this aspect at all?

 

He certainly does. You see, if you check out his background, he's very much someone you'd expect to call "an insider".

I admit when I started reading the book I was 90% expecting something I'd hate. I thought "oh this is going to be some insider theories on changing the monetary system". Boy was I wrong.

 

My one regret in life in not persevering with touch typing. So I'm a bit limited in how much I can type in a reasonable time :(

That last full page quote took me rather too long !!!

 

I'll try and summarise his comments on tax sometime soon.

 

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He certainly does. You see, if you check out his background, he's very much someone you'd expect to call "an insider".

I admit when I started reading the book I was 90% expecting something I'd hate. I thought "oh this is going to be some insider theories on changing the monetary system". Boy was I wrong.

 

My one regret in life in not persevering with touch typing. So I'm a bit limited in how much I can type in a reasonable time :(

That last full page quote took me rather too long !!!

 

I'll try and summarise his comments on tax sometime soon.

thanks steve, look forward to it when you get the time

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