"It is strangely absurd to suppose that a million of human beings, collected together, are not under the same moral laws which bind each of them separately." ~ Thomas Jefferson
Across America an economic crisis is building like a tsunami after the eruption of a Richter 8 earthquake on the ocean floor. In response to this onrushing disaster, certain insightful people have chosen not to be crushed by the tides, but have sought higher ground with a very old solution: debt free local scrip.
There is simply no other credible means available to us with which we might address the crescendo of job losses and the debilitating erosion of the dollar's purchasing value in our communities from sea to shining sea. Although local currency systems cannot offer total relief from the depredations of the falling dollar, they can provide stable local economies for residents and small businessmen, as was once guaranteed under the law.
While our state legislators demand that we tighten our belts yet again, they expect us to continue funding everything from failing education programs to falling tourism and loser sports stadiums. We are told that another round of increases are necessary because "there just isn't enough money in the budget." Someone needs to tell them that there isn't enough money in our budgets, either.
On April 9, 2002, Scripps Howard News Service warned that what we were then experiencing was only the beginning: "I think the second wave is yet to come. We've just seen the tip of the iceberg," said Deborah A. Crabbe, a bankruptcy specialist and member of Foster, Pepper & Shefelman in Seattle, who also chairs the small business subcommittee of the American Bankruptcy Institute. "When the big boys go, you'll see it slowly trickle down. Next year at this time I think we'll be talking about the proliferation of mom-and-pop companies filing for bankruptcy." Too many Americans are now experiencing that second wave as it trickles, cold and wet, down the back of our exposed necks.
On April 28, 2002, Congressman Ron Paul said in a MSNBC television interview, 'Without the Federal Reserve, our money could not be inflated at the behest of big government or big banks. Your income and savings would not lose their value. Just as important, we wouldn't have this endless string of booms and busts, recessions and depressions, with each bust getting worse. They aren't natural to the free market; they're caused by the schemers at the Fed.'
According to Thomson Financial Media, in an article entitled, "Bankruptcy Filings Up 19% in 2001, Amid Recession," ". . . filings by American consumers and businesses jumped 19% last year, reaching an all-time high of 1,492,129 as the economy receded."
Thomson was right. The prodigal has come home to America. He has appeared in the form of an approaching financial storm, leaving families with nothing to save except the receipts of paid bills, or worse yet, the unpaid bills. For many, the only remaining bulwarks between home sweet home and a home under the boardwalk are low paying, multiple dead end jobs.
On September 26, 2003, Nicki Gondell, president and creative director of Trend House, a New York-based trend-forecasting firm, commented on CNN Money about the current "rampant unemployment, a collapsing middle class, extended work weeks, a shrinking dollar, mounting debt and bankruptcies."
An infusion of local scrip into a community's economy can ameliorate, as could no other instrument, crippling cash shortages due to unemployment, under-employment, personal financial distress and bankruptcies, once again establishing liquidity and equity in our local financial transactions.
But is local scrip a legal tender, you ask? According to the experts, local currency provides a completely legal, debt free and people friendly means of exchange, serving only the needs of the local community.
In "Rethinking Our Centralized Monetary System," law professor Lewis Soloman states, 'There is no legal prohibition to local scrip, community currencies or private exchange systems in the United States. The fact that there have been no challenges to the systems already in operation support that finding. Taxation operates under the same fundamental rules of trading with the national currency.'
"They're like Disney Dollars," says Betsy Holahan, a spokesperson for the Treasury Department. "There is no requirement that businesses must accept U.S. currency."
Armed with these facts, hundreds of communities throughout the U.S. have said, "no more." For example, the citizens of Lawrence, Kansas (pop. 80,000), who took control of their economic future and printed their own money. More than 100 Lawrence businesses accept the locally minted currency, called R.E.A.L. money (for Realizing Economic Alternatives in Lawrence). "We want people to realize where their money goes'which places are local and which are global." Elsewhere, the stark reality of insufficient income to cover the bare essentials continues to plague millions of other Americans who have no R.E.A.L. money, many of whom will ultimately be forced into bankruptcy and financial ruin.
So, what can we do? Could flourishing alternative money systems break the chains that have forced us to become bondsmen of the fraudulent fractional reserve dollar? Local currencies have proven to be an unqualified success in the revitalization of towns and cities in almost every demographic area where they have been introduced. Incredibly, simple trading vouchers are providing people with economic relief to overwhelming financial difficulties in towns where the people have finally said, 'The buck stops here.'
Dozens of towns have implemented various forms of local currency, from the LETS computerized system in Tucson, Canada, London and elsewhere, to Ithaca, New York's 'Ithaca Hours,' from the Southern Berkshires' "Berkshares" to the Massachusetts' 'Monterey General Store Notes,' and from San Francisco's 'Bay Area Bucks' to Chicago's 'Time Dollars.' Other colorful and functional local scrip systems can be found in towns all across the U.S., called by names such as "Deli Dollars" and "Barter Bucks." The most viable of these alternate cash systems appear to be based on the median hourly wage of $10.00, and some feature local scenes or personalities on the various denomination notes.
Local currency is a form of exchange that doesn't come to town, shake a few hands and then leave to buy a rain forest in South America, or wage war tens of thousands of miles from home in which the local community has no abiding interest. Local scrip is created and circulated for the singular purpose of sustaining and growing area businesses and providing residents with increased purchasing power. The easy exchange of local scrip is a win-win situation, wherein individuals can utilize their talents and skills to support themselves and become valued members of the local economy.
Scrip systems work in tandem with the current debt system rather than against it, as an infusion of local cash frees up shrinking federal dollars to cover expenses that cannot be served by local scrip, such as electric bills and mortgages. While federal dollars consistently shift wealth out of the area and into the major banking centers of the world, local currencies will continue to build the community.
There is simply no better way to restore equity and decency in our economy than in the local issue of currency, as it is fully backed by the productivity of the people who trade with it, and stabilizes the delicate balance between production and consumption. Once again, honest labor becomes the source of individual wealth, and pride in workmanship awakens from its long slumber. Surprisingly, any initial resistance to the acceptance of an alternative cash economy generally arises from the fact that most people have never dreamed of having such power over their own worth and wealth.
Initiating such a system requires a wide variety of talents and skills. It also demands devotion to the principles of a free market economy and the ability to take on huge amounts of responsibility. Additionally, developing a local economy should not be undertaken without considerable research, conviction and commitment.
The crux of the matter is, of course, the necessity of recruiting local merchants and business owners who are willing to accept local scrip in exchange for goods and services and to honor its value. Businesses that are obviously undercapitalized would be a first priority, which definitely describes most small merchants today, regardless of their product line or base of operation. Opting in or out of the system should be made as painless as possible, offering opportunities, benefits and flexibility to all participants.
Service providers and merchants who benefit from a local currency include contractors, restaurants, movie theaters, massage therapists, dentists, chiropractors, gift shops, herb stores, video rental stores, cottage industries, local manufacturers, and hundreds more, the current cash flow of which is inadequate for their needs. Non-profit organizations, volunteers and charities should also be encouraged to participate.
In one such plan, the merchant or service provider purchases a minimum of $100.00 scrip in various denominations at a 25% discounted dollar exchange rate. Additional scrip can be purchased at the same discount rate for personal use at other participating stores, or simply to put in the cash drawer for change. This revenue is applied to the cost of producing the scrip, which should be printed on specialty paper such as hemp, and counterfeiting prevention methods such as a numbering system are advised.
For every merchant or service provider who signs an agreement and receives $100.00 in the local currency, an equal amount is issued to the consuming public at no cost. One method for issuing scrip would be through lottery drawings. Another is through the partial payment of employee wage increases and/or bonuses by participating business owners who purchase additional local currency at a 25% discount rate. There are no requirements on the part of consumers to own and trade the local scrip, other than a willingness to spend it freely with participating businesses and service providers.
Retailers should be encouraged to seek out local crafters and producers of hand crafted goods and make them available in their stores whenever feasible. Profit margins should be predetermined by mutual agreement between the merchant and the producer to avoid potential conflicts. Additional incentive scrip bonuses could be offered to merchants displaying locally produced items.
A newsletter detailing where the scrip can be exchanged should be distributed as widely as possible, providing regularly updated lists of participating stores and the latest currency news of interest to merchants and the public. The newsletter would provide a low cost advertising medium for businesses to advertise to their "special" clientele while generating needed advertising revenue for the developers of the scrip system and building capital for further expansion of the currency.
An entry form can be included in each issue to be filled out by consumers and submitted for free awards. However, these awards must exactly parallel the issuance of scrip to merchants to maintain the balance. Drawings for these awards should be held a minimum of once per month by participating storeowners on a rotating basis to avoid any perception of favoritism. Thus, the ratio of currency in circulation to participating merchants is perfectly maintained, and the system grows according to the will of the community.
It is improbable that any two systems would be identical or interchangeable. However, in some regions, entire counties could fall within the boundaries of a given currency, and each developer is entirely free to create a system that reflects the needs of a particular area. Quite simply, there is nothing and no one who can prevent a determined individual or group of individuals from making this plan come alive in their town.