New Money

What is money or currency? 

Imagine, you are on a deserted island all you have on you is your wallet. After a long day of searching for food and water you find a bag of diamonds and a chest of gold. Next day, the story repeats: another bag of diamonds and another chest of gold but no food no water. The question is, what all the riches are good for if you can’t not buy food and water. 

Money, in and of itself, is nothing. It can be a shell, a metal coin, or a piece of paper, but the value that people place on it has nothing to do with the physical value of the money. Money derives its value by being a trusted medium of exchange, a unit of measurement. Money allows people to trade goods and services indirectly, understand the price of goods (prices written in dollar and cents correspond with an amount in your wallet) and gives us a way to save. Money is valuable merely because everyone knows everyone else will accept it as a form of payment. 

The US dollar has this privilege. It is our official currency (or money). Generally speaking, each country has its own currency. For example, Switzerland’s official currency is the Swiss franc, and Japan’s official currency is the yen. An exception would be the euro, which is used as the currency for several European countries. 

Complementary Currency

Currencies suffer from monoculture, much like in agriculture, when a single crop such as corn is over or under produced. It’s thought by some monetary thinkers like Bernard Lietaer, who is a monetary theorist involved in the talks on the ECU that ultimately led to the Euro, that this is the cause of most of the risk and instability in the monetary system, which leads to crisis [1].

In 1934 Switzerland there was depression and shortage of credit. A small group of independent small to medium size businessmen were faced with severe shortage of money, as well as the strong competition of the larger businesses and corporations, all fighting for the shrinking markets. One day when they no longer were able to pay each other because banks refused to extend the line of credit, the businessmen joined together to form a ‘internal credit’ organization called the WIR Cooperative. They created a currency called WIR based on trust they have built throughout the years working together and (not to be naive) also on issued invoices payable in a defined time frame [2]. 

Did you know that WIR is still in use till this day along the side of the well known Swiss franc? And there thousands of what’s called complementary currencies in use through out the world. When Central banks fail, people in communities come up with ways of supporting and doing business with each other. It mobilizes their own credit potentials without using commercial banks as intermediaries. Also, it has been successful at protecting small and independent businesses against growing pressure from large, financially strong competitors. Local or community currencies by its virtue prevent outflow of capital and profits to the large chain stores, department stores, stock corporations. 

One of the key features of currency is trust. Look around and you will find people whom you trust. If there is trust there could be a currency. A group of new moms in Madison (WI) came up with an idea of using popsicle sticks to keep track of hours watching each other other’s kids. That was the birth of the Madison Eastside Babysitting Coop*.  

There are multiple examples of community based currencies. Just to name a few: 

  • Ithaca Hours (New York), 
  • BurkShare (MA), 
  • Trade Dollars (AK), 
  • Cascadia Hours (OR), 
  • Downtown Dollars (PA)
  • LET (Canada)

To find out more go to Schumacher Center for a New Economics [3] and start your own currency. 

 

 

 

  1. Rethinking Money, How new currencies turn scarcity into prosperity by Jacqui Dunne and Bernard Lietaer
  2. Robert Swann Essential Essay on Local Currencies (http://centerforneweconomics.org/publications/authors/Swann/Robert)
  3. Schumacher Center for a New Economics. Directory of active US, Canadian, Mexican and European local currencies http://centerforneweconomics.org/content/active-local-currencies

* To look for a coop in your area or learn how to start one go to https://www.sittingaround.com

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