Published on Aug 3, 2012
\opening statement for Rob Gray ofhttp://www.opencurrency.com/ testifying at Congressman Paul's subcommittee met on August 2nd, 2012 to examine sound money and parallel currencies.
I am fascinated by the concept of the widespread use of alternative currency. It is more theoretical than useful in my life right this very instant, but I am drawn to its possibilities. What is complementary currency? Here is a snippet from Investopedia.com:
An Introduction To Complementary Currencies
In communities around the world, people have come up with alternatives to the usual way of paying for goods and services. Instead of yen, pounds or dollars, they are using privately developed substitutes called complementary currencies.
Tutorial: Introduction To The Federal Reserve
What Are Complementary Currencies?A complementary currency is a medium of exchange that functions alongside a national currency, to fulfill a need that the national currency seemingly does not. According to the "International Journal of Community Currency Research," community and complementary currency systems have four main purposes:
Complementary currencies are thus legal, as long as they meet certain requirements. Businesses that earn them are generally required to count them as income for tax purposes. Also, complementary currencies are not allowed to look like the national currency. Bernard von NotHaus was convicted of counterfeiting in 2011, for his liberty dollars, which the U.S. government said looked too similar to government-issued money.
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Overview of Widely Used Complementary CurrenciesThere are dozens, if not hundreds, of complementary currencies in use around the world. The United States, Germany and Australia appear to have the greatest number of complementary currencies. Here is an overview of a few of these systems and how they work.
BerkSharesBerkShares are a local currency used in the Berkshire region of Massachusetts, backed by U.S. dollars. Consumers only need to exchange 95 cents of national currency to receive one BerkShare, therefore consumers effectively receive a 5% discount on local purchases made in BerkShares.
Lewes PoundThe Lewes Pound is local currency used in Lewes, East Sussex, United Kingdom, backed by the pound sterling. Individuals receive 95% of the value of the British pounds they exchange for Lewes pounds; the other 5% goes to community grants.
Toronto DollarsToronto dollars are a local currency used inToronto , Canada
Salt Spring DollarsSalt Spring dollars are used onSalt Spring Island , British Columbia,
Ithaca HOURSUsed in Ithaca, N.Y., and founded in 1991, Ithaca HOURS are the "oldest and largest local currency system in the U.S.," according to the organization that runs the system. This complementary currency system is not as straightforward as many others, in that one Ithaca HOUR equals one hour of basic labor or $10.00. Hours are issued as paper currency. Individuals and businesses have to join the Ithaca HOURS system, to be able to use the currency. Members can receive zero-interest business loans on a one-year repayment schedule. (For more on time and money, read Understanding The Time Value Of Money.)
Dane County Time BankThe Dane County Time Bank operates a currency represented by TimeBank Hours, but it's a different type of hour than the Ithaca Hour. TimeBank hours represent hours of service and they are not taxable because they have no monetary equivalent.
When I think of complementary currency, I think of either a barter system or, as in the video above, the use of actual metal instead of the Federal Reserve notes which are now the standard for cash transactions of any significant amount. I think that the widespread use of actual coinage or metal-by-the-ounce has the theoretical potential to free us from the Fed as an economic system without having to rely on step-by-step legislation. I think it also has the potential to change the way we shop and where we shop. Hypothetically, introducing currency options as another variable besides value/quality/longevity/ethical production, etc when we are evaluating a potential purchase might significantly change the equations that make large chains the current kings of efficacious shopping. Discounts if you pay in silver, anyone? :)
However.... while the theoretical possibility is fascinating, the pragmatic reality seems improbable. First of all, there are a great deal of logistical concerns to consider. Coinage of larger denominations would need to be more readily available, and the transportation, storage, and security of silver, for example, would need to be addressed. Then, of course, as Mr. Gray said: "Merchants accept complementary currencies on the assumption that someone else will be willing to do the same thing, later." Therein lies the rub. That's quite an assumption. In a way it's like voting 3rd Party- if enough people did it, it would be a boon to society, but if very few people do it it's a waste, except as a means of social protest.
Next, we'd have to assume that most people procure goods and services with money they actually have, as opposed to credit, aid programs, et c. In fact, while I don't know the exact statistics, I'd guess that there is a very significant number who would be left out of such a system by virtue of dependence on credit, assistance programs, or (assuming the alternative currency wasn't universal) simply the economic pressure to find the best possible value and the impetus to make that their primary, if not sole, consideration. Until we reform our beloved welfare state, implement more free-market economic strategies, and encourage and implement a civil and private ethic of financial responsibility, I don't really see alternate currency as a universal practicality at this time. It certainly bears watching, though....
What Are Complementary Currencies?A complementary currency is a medium of exchange that functions alongside a national currency, to fulfill a need that the national currency seemingly does not. According to the "International Journal of Community Currency Research," community and complementary currency systems have four main purposes:
- To promote local economic development
- To build social capital
- To nurture more sustainable lifestyles
- To meet needs that mainstream money does not
Complementary currencies are thus legal, as long as they meet certain requirements. Businesses that earn them are generally required to count them as income for tax purposes. Also, complementary currencies are not allowed to look like the national currency. Bernard von NotHaus was convicted of counterfeiting in 2011, for his liberty dollars, which the U.S. government said looked too similar to government-issued money.
............................................................................................................................................
Overview of Widely Used Complementary CurrenciesThere are dozens, if not hundreds, of complementary currencies in use around the world. The United States, Germany and Australia appear to have the greatest number of complementary currencies. Here is an overview of a few of these systems and how they work.
BerkSharesBerkShares are a local currency used in the Berkshire region of Massachusetts, backed by U.S. dollars. Consumers only need to exchange 95 cents of national currency to receive one BerkShare, therefore consumers effectively receive a 5% discount on local purchases made in BerkShares.
Lewes PoundThe Lewes Pound is local currency used in Lewes, East Sussex, United Kingdom, backed by the pound sterling. Individuals receive 95% of the value of the British pounds they exchange for Lewes pounds; the other 5% goes to community grants.
Toronto DollarsToronto dollars are a local currency used in
Salt Spring DollarsSalt Spring dollars are used on
Ithaca HOURSUsed in Ithaca, N.Y., and founded in 1991, Ithaca HOURS are the "oldest and largest local currency system in the U.S.," according to the organization that runs the system. This complementary currency system is not as straightforward as many others, in that one Ithaca HOUR equals one hour of basic labor or $10.00. Hours are issued as paper currency. Individuals and businesses have to join the Ithaca HOURS system, to be able to use the currency. Members can receive zero-interest business loans on a one-year repayment schedule. (For more on time and money, read Understanding The Time Value Of Money.)
Dane County Time BankThe Dane County Time Bank operates a currency represented by TimeBank Hours, but it's a different type of hour than the Ithaca Hour. TimeBank hours represent hours of service and they are not taxable because they have no monetary equivalent.
When I think of complementary currency, I think of either a barter system or, as in the video above, the use of actual metal instead of the Federal Reserve notes which are now the standard for cash transactions of any significant amount. I think that the widespread use of actual coinage or metal-by-the-ounce has the theoretical potential to free us from the Fed as an economic system without having to rely on step-by-step legislation. I think it also has the potential to change the way we shop and where we shop. Hypothetically, introducing currency options as another variable besides value/quality/longevity/ethical production, etc when we are evaluating a potential purchase might significantly change the equations that make large chains the current kings of efficacious shopping. Discounts if you pay in silver, anyone? :)
However.... while the theoretical possibility is fascinating, the pragmatic reality seems improbable. First of all, there are a great deal of logistical concerns to consider. Coinage of larger denominations would need to be more readily available, and the transportation, storage, and security of silver, for example, would need to be addressed. Then, of course, as Mr. Gray said: "Merchants accept complementary currencies on the assumption that someone else will be willing to do the same thing, later." Therein lies the rub. That's quite an assumption. In a way it's like voting 3rd Party- if enough people did it, it would be a boon to society, but if very few people do it it's a waste, except as a means of social protest.
Next, we'd have to assume that most people procure goods and services with money they actually have, as opposed to credit, aid programs, et c. In fact, while I don't know the exact statistics, I'd guess that there is a very significant number who would be left out of such a system by virtue of dependence on credit, assistance programs, or (assuming the alternative currency wasn't universal) simply the economic pressure to find the best possible value and the impetus to make that their primary, if not sole, consideration. Until we reform our beloved welfare state, implement more free-market economic strategies, and encourage and implement a civil and private ethic of financial responsibility, I don't really see alternate currency as a universal practicality at this time. It certainly bears watching, though....
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