Tuesday, 22 March 2011
Spent some time talking with some smart folks working on alternative currencies in SFO. Here’s the conclusions from this conversation. Alternative currencies can do three things:
1. Serve as a store of value. Presumably, this currency holds value better than existing currencies. In this way, it acts like an asset (land, etc) but is more fluid/granular to allow its use in transactions. Think gold and commodity backed currencies. A way to apply this approach to a resilient community is to combine it with a food reserve (a currency backed by food you can eat if things break down — see the Mendo Credit Slip as an example of this).
2. Enable a loyalty program. In short, these currencies entice people to do business with a favored group of individuals/companies. Think local/regional currencies or commodity currencies backed by locally produced products. This can be a powerful way to accelerate consumption of local goods (keep the supply limited, focus on superiority via quality/freshness, etc.)
3. Jumpstart a local/virtual economy. Full cycles of transactions from producer to buyer and back again. This is very difficult to do. A good example of success is Austria’s depression era Worgl. Why did it succeed? It made the Worgl important to both producers/retail and consumers. As in: the town that issued the Worgl accepted it as payment for taxes. It then launched infrastructure projects that paid the employees partly in Worgls.
Phi Beta Iota: In the aftermath of the extraordinarily irresponsible and corrupt degradation of the US dollar, localized resilience will rely heavily on localized currencies. We note with interest the concerns of bureaucrats who question any alternative to the US dollar (as the Chinese, Iranians, Russians, and just about everyone else has); localized currencies do not undermine the legitimacy of the US dollar–that has already been done by the US Government. The “dream world” of infinite funding for a political economy based on war is ending. The “real world” where an average person earns $30,000 a year instead of $250,000 including combat, housing, and other subsidies for “going along, is here now. The rural areas will do best–the time for urban gardens is now.