Communities print their own currency to keep cash flowing

[girl gone mad]

I like this idea. Hope it catches on.

From http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm?csp=34">USA Today:

Communities print their own currency to keep cash flowing

A small but growing number of cash-strapped communities are printing their own money.

Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.

The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.

Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.

Ed Collom, a University of Southern Maine sociologist who has studied local currencies, says they encourage people to buy locally. Merchants, hurting because customers have cut back on spending, benefit as consumers spend the local cash.

http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm?csp=34">More...

[girl gone mad]

1. One question..

how do they avoid counterfeiting? Does anyone with experience using these currencies know?

[Jim Lane]

2. It's not counterfeiting. The local currencies don't look at all like U.S. currency.

Here's about BerkShares that includes an image of some BerkShares notes. You can see that no one would mistake them for U.S. currency.

By the way, in that image the woman pictured on the 10-BerkShare note is , a Massachusetts farmer who helped found the Community Supported Agriculture movement.

Another alternative currency, the Liberty Dollar, is promoted by right-wingers who think the Federal Reserve Bank is unconstitutional. They've run into trouble with the U.S. government because the Liberty Dollars are confusingly similar to government currency and are promoted in a misleading way. The U.S. Mint issued a warning people that Liberty Dollars are not legal tender. Currencies like BerkShares are different because their promoters don't try to mislead people. They also aren't legal tender but can be used between two willing participants to the exchange.

[girl gone mad]

3. I know what the towns are doing isn't counterfeiting..

what I meant was how do these cities keep people from counterfeiting their local currencies? Countermeasures like watermarks and holograms are expensive and may be impractical for a small town with a limited budget.

Thanks for the additional information, btw.

[Jim Lane]

4. Oh, sorry, I misunderstood you.

Some of those countermeasures might not be very expensive in light of technological advances. Also, with regard to BerkShares as one example, the notes are "printed on a special, limited availability security paper stock provided by Crane and Co." <http://www.berkshares.org/about/isaacs.htm>

I'd guess that the main factor, though, is the issue of scale. You couldn't suddenly show up in Berkshire County as an outsider and start splashing around huge quantities of BerkShares. There's a practical limit to how much counterfeit currency you could pass. A would-be counterfeiter would have to get all geared up to print fakes and then get only a small return -- probably not enough to make the effort, expense, and risk worthwhile.