Creating Local Currency

Some of the community activists here have been working for almost
months toward the creation of a local currency. They are discussing
the trade-offs between the Ithaca Model ("time dollars"), the Toronto
Model (federally-backed and locally discounted) and LETS (local
computerized exchange database). I found this interesting on several
levels.

First of all, I am writing about their work for a local newspaper.

Beyond that, I have been sharing some of the examples of this and that
which have come my way as I have written about tokens, scrip, etc., in
the past. Some of the local collectors have been extremely helpful in
digging out their local tokens. The key find was from shopkeeper
Richard Bond who provided both examples of the local Depression Scrip.

My interest is in bringing some expertise to the process. Most of
these people are political leftwingers and therefore they often work
from incorrect premises when thinking through economic problems.
("Why couldn't currency with no value continue to circulate?" one
asked rhetorically.)

About 30 communities in the US now use some kind of local currency.

There is one fundamental difference between the Ithaca model and most other
local currency models. Many of the other local currencies are about
building community coffers only. The Ithaca model does that, but also
addresses related community problems. The difference is the direct tie to
work performed. The Ithaca Hour currency is based on an hour's worth of
labor performed. Any community that is short on funds to back community
projects (cleaning parks, streets, etc.), and has a high unemployment rate,
should look very closely at the Ithaca model. Setting aside (in a local
bank earning interest) a small pool of real (FRN) money to back the local
money to pay for community project labor can jump start not only the local
economy, but community pride and resident self esteem. It does not happen
fast, and has to be monitored closely, but it can work.


In article ,
(Michael E. Marotta) wrote:
Some of the community activists here have been working for almost
months toward the creation of a local currency. They are discussing
the trade-offs between the Ithaca Model ("time dollars"), the Toronto
Model (federally-backed and locally discounted) and LETS (local
computerized exchange database). I found this interesting on several
levels.

First of all, I am writing about their work for a local newspaper.

Beyond that, I have been sharing some of the examples of this and that
which have come my way as I have written about tokens, scrip, etc., in
the past. Some of the local collectors have been extremely helpful in
digging out their local tokens. The key find was from shopkeeper
Richard Bond who provided both examples of the local Depression Scrip.

My interest is in bringing some expertise to the process. Most of
these people are political leftwingers and therefore they often work
from incorrect premises when thinking through economic problems.
("Why couldn't currency with no value continue to circulate?" one
asked rhetorically.)

About 30 communities in the US now use some kind of local currency.

Deven Atkinson
--
Penny Lane Numismatic - Categorized Web Links
http://www.bright.net/~deven/pennylane.htm
ANA Member #1197707

"Michael E. Marotta" wrote in message
m...
Some of the community activists here have been working for almost
months toward the creation of a local currency. They are discussing
the trade-offs between the Ithaca Model ("time dollars"), the Toronto
Model (federally-backed and locally discounted) and LETS (local
computerized exchange database). I found this interesting on several
levels.

More successful examples can be found in Kobenhavn, Denmark, where some
idealistic community has been using it's own currency for some thirty years
now. There was a blurb about the community and their special currency on
Rick Steve's Travels in Europe whence he was there. I believe there might
be a similar though slightly younger example in Amsterdam.

Dave


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"Scottishmoney" wrote
More successful examples can be found in Kobenhavn, Denmark, where some
idealistic community has been using it's own currency

Would that be Christiana? I mention them in an upcoming Numismatist
column.

Christiana being what it is, I consider them as much a "micronation"
as a "local community." In Detroit and other big cities, there have
been "neighborhood dollars."

Several years back, I wrote "Time Dollars and Bone Money" for the ANA
"Money Talks" radio shows. You can find something similar to that
script posted at Coin Newbies.

www.coin-newbies.com/articles/bone.html
or as an Adobe Acrobat file
www.coin-newbies.com/articles/bone.pdf

This is something I have a long-term interest in. I wrote about the
Howell Time Dollar for the MichTAMS "Junkbox" about 10 years ago. I
was certainly not the first person to do that. Chester Clark was the
tokens guy in Howell for many years and my article for MichTAMS
depended on his article in the local paper. I just borrowed the
Krause book on Depression Scrip and was surprised to see that among
the many solutions offered was one from my old hometown of Lakewood
Ohio in which the money was self-liquidating scrip, worth less and
less at each transaction.

Some of the community activists here have been working for almost
months toward the creation of a local currency.

Where exactly is "here"?

They are discussing the trade-offs between the Ithaca Model ("time
dollars"), the Toronto
Model (federally-backed and locally discounted) and LETS (local
computerized exchange database). I found this interesting on several
levels.

I really don't understand local currencies at all. Take the Ithaca hours
for example. Let's assume that Ithaca has progressed to a level where
almost every local transaction is in Ithaca hours. The idea here is to keep
jobs and money in the local community. That is a great idea but I see
problems - big problems. The main exchange is obvious and easiest, the
exchange of personal labor. Isn't the idea to pay everyone the same amount
for labor? If this is so, where would the incentive be to spend money on
schooling, advanced degrees, etc when unskilled labor would pay the same
amount? The exchange of goods is not so clear in my mind. With a limited
selection of hour denominations (I believe 1/8 of an hour is the lowest),
and a fixed exchange of 1 hour = $10 US, that would mean the lowest amount
that anything could cost is $1.25. I can buy many items for well below this
with the US federal dollar. The other problem I see is with businesses. If
I am a business and excepting Ithaca hours, I still have to pay my taxes in
US dollars, but (and I believe I read this correctly) when I convert all of
my Ithaca hours to US dollars, I only get $9 US dollars per Ithaca hour back
(because 10% is retained for community projects). Now, community projects
are a good thing, but charity should be an act of kindness out of a person's
heart, not a forceful act when you convert currencies back and forth.
Besides, you have no say where that 10% hold-back is going and to what
community project it will be sent to. With charity and charity drives, all
the different views of different people allow them to personally decide
which project makes more sense to them and give their money appropriately.

Everytime I see reference to local currencies, there is the inevitable
comment that "this system of labor exchange is great", or something to that
effect. Like it is being hailed as a new vision. There is already a stable
system of labor exchange in place - the dollar

The problems local currencies address are genuine. International
corporations move at a whim without any regard to local economies and
community. But the solution is not to force a sense of "community pride" on
the citenzry of a politically defined incorporated city. Granted, no one is
forced to use Ithaca hours, but when you acquire one, you are forced to
spend it in Ithaca. It is useless anywhere else. Think about this, what is
stopping the international corporation from accepting Ithaca hours and just
converting all those hours to US dollars (adjusting its prices higher to
compensate for the 10% hold-back of course) and taking all that money back
out of the community again? Nothing, that's what. Sure, the "board" - or
whatever - can just not allow international corporations to accept them, but
if we get to that level, we don't need local currencies as we are back to
square one (for example, we could just as easily approve local regulations
that only allow a limited number of mega-corporations to open up - this
could be accomplished with size-restricted zoning for example).

All the problems local currencies "solved" can be just as easily solved
without Ithaca hours. A belonging to the community should not be forced on
anyone by convincing them to accept useless currency, it should be
encouraged that anyone accept their community at their own free-will, then
work creatively to solve that communities problems.

In article , "Da~One" wrote:
Some of the community activists here have been working for almost
months toward the creation of a local currency.

Where exactly is "here"?

They are discussing the trade-offs between the Ithaca Model ("time
dollars"), the Toronto
Model (federally-backed and locally discounted) and LETS (local
computerized exchange database). I found this interesting on several
levels.

I really don't understand local currencies at all. Take the Ithaca hours
for example. Let's assume that Ithaca has progressed to a level where
almost every local transaction is in Ithaca hours. The idea here is to keep
jobs and money in the local community. That is a great idea but I see
problems - big problems. The main exchange is obvious and easiest, the
exchange of personal labor. Isn't the idea to pay everyone the same amount
for labor? If this is so, where would the incentive be to spend money on
schooling, advanced degrees, etc when unskilled labor would pay the same
amount? The exchange of goods is not so clear in my mind. With a limited
selection of hour denominations (I believe 1/8 of an hour is the lowest),
and a fixed exchange of 1 hour = $10 US, that would mean the lowest amount
that anything could cost is $1.25. I can buy many items for well below this
with the US federal dollar.

The Ithaca, and other local currencies co-exist with FRN and coins.
Merchants do tender non-Ithaca change for purchases.

The other problem I see is with businesses. If
I am a business and excepting Ithaca hours, I still have to pay my taxes in
US dollars, but (and I believe I read this correctly) when I convert all of
my Ithaca hours to US dollars, I only get $9 US dollars per Ithaca hour back
(because 10% is retained for community projects). Now, community projects
are a good thing, but charity should be an act of kindness out of a person's
heart, not a forceful act when you convert currencies back and forth.
Besides, you have no say where that 10% hold-back is going and to what
community project it will be sent to.

IIRC, participating merchants do have a say, or at least a forum, for
project selection. At a minimum, they can always refuse to accept the
local currency. The only way this can work is if the local government,
local merchants, and local non-profits work as a team.

With charity and charity drives, all
the different views of different people allow them to personally decide
which project makes more sense to them and give their money appropriately.

Everytime I see reference to local currencies, there is the inevitable
comment that "this system of labor exchange is great", or something to that
effect. Like it is being hailed as a new vision. There is already a stable
system of labor exchange in place - the dollar

The problems local currencies address are genuine. International
corporations move at a whim without any regard to local economies and
community. But the solution is not to force a sense of "community pride" on
the citenzry of a politically defined incorporated city. Granted, no one is
forced to use Ithaca hours, but when you acquire one, you are forced to
spend it in Ithaca. It is useless anywhere else. Think about this, what is
stopping the international corporation from accepting Ithaca hours and just
converting all those hours to US dollars (adjusting its prices higher to
compensate for the 10% hold-back of course) and taking all that money back
out of the community again? Nothing, that's what. Sure, the "board" - or
whatever - can just not allow international corporations to accept them, but
if we get to that level, we don't need local currencies as we are back to
square one (for example, we could just as easily approve local regulations
that only allow a limited number of mega-corporations to open up - this
could be accomplished with size-restricted zoning for example).

Big corps have accepted local senior citizen discount programs without
jacking up the prices. With the local government and non-profit working
with the local manager of a mega it should also be possible to treat a
local currency the same way.


All the problems local currencies "solved" can be just as easily solved
without Ithaca hours. A belonging to the community should not be forced on
anyone by convincing them to accept useless currency, it should be
encouraged that anyone accept their community at their own free-will, then
work creatively to solve that communities problems.

Agreed. There are many ways to solve problems. Ithaca hours are creative,
and are not forced on anyone. It is a "volunteer to use them" free-will
local currency.

Deven Atkinson
--
Penny Lane Numismatic - Categorized Web Links
http://www.bright.net/~deven/pennylane.htm
ANA Member #1197707

"Da~One" wrote
Where exactly is "here"?
Traverse City, Michigan, a town of about 15,000 in a county of about
18,000 in a region of about 25,000. Many small manufacturers are
nestled among many small hobby farms and a few huge commercial
agribusinesses. Tourism (boating, skiing, motorcraft of all kinds,
golf, etc.) is the primary source of income.

Let's assume that Ithaca has progressed to a level where
almost every local transaction is in Ithaca hours.

No local currency is ever funded to that level. The largest dollar
volume I know of is Toronto at about $300,000. Most are about
one-tenth of that.

Isn't the idea to pay everyone the same amount for labor?

It is a principle that your time is worth as much as mine, that my
skills are as important to you as yours are to me. It is also true
that doctors, lawyers, and plumbers often get paid in a combination of
local money and federal money. Workers in progressive businesses get
only a fraction of their wages in local money. It is not unheard of
for some local businesses accept the local currency only up to some
limit of the total transaction. Ithaca is one place that uses time
dollars. Other places have other customs.

If this is so, where would the incentive be ...
when unskilled labor would pay the same amount?

In point of fact, it has been proved with objective polls and blind
interviews that most people do not work for "wages." Wages are
important. They do not define the choices we make for careers.

... (I believe 1/8 of an hour is the lowest),and a fixed exchange of
1 hour = $10 US, that would mean the lowest amount that anything
could cost is $1.25. ...
I can buy many items for well below this ...

Probably none of them is organic, natural or locally produced. The
upfront cost of good food is balanced the fact that it is much better
for you. Aside from that, as stated above, only a fraction of any
transaction is likely to be in local currency. Change can be made in
federal money, if the merchant decides. And so on. The rules are
flexible and open to allow everyone to participate on their own terms.

... I still have to pay my taxes in US dollars ...

Local currencies are limited in volume and cross-denominated in
dollars to make bookkeeping easier.

... when I convert all of my Ithaca hours to US dollars,
I only get $9 US dollars per Ithaca hour back

Different communities have different rules and I was not aware that
this was a feature of Ithaca. It is a feature of the Toronto Dollar.
Businesses that participate will be donating 10% back to the
community. They understand this when they agree to sign up.

There is already a stable system of labor exchange in place - the dollar

The biggest problem with the dollar, from the leftwing point of view
(and oddly, it sounds a lot like the old right wing point of view) is
that it is a debt note.

... what is stopping the international corporation from accepting Ithaca
hours and just converting all those hours to US dollars ... and taking all
that money back out of the community again? Nothing, that's what.

Generally speaking, the people who choose to participate in local
currency markets are not interested in new flatscreen home
entertainment systems. The most mainstream commercial application
seems to be restaurants, the local bistros with specialty chefs, not
the ones whose ads run at the same time on every TV in the nation.

... for example, we could just as easily approve local regulations
that only allow a limited number of mega-corporations to open up

Not so easily. You have to influence boards of people who play golf
together or you and five hippie friends have to get elected to such a
board. With local currencies, the threshhold for success is much
lower. I think that in Madison, Wisc., they started with 50 people
and 8 businesses.

All the problems local currencies "solved" can be just as easily solved
without Ithaca hours.

Madison Dollars are about $40,000 circulating and $20,000 in reserve.
That reserve can be, has been, and will be, given (given) as grants to
people and organizations. This is a creation of money. Political
conservatives who tend to be "gold bugs" have a hard time with that.
I did for most of my life. Then, about a year ago, when I started
writing about paper money, a light went on, and I realized that for
people whose custom it is to do business on a handshake, a promissory
note is, indeed, worth far more than the paper it is written on.
Local currencies are as Anerican as apple pie.

And, they are collectible.