

Town Introduces its own Currency - dangoldin
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aq6uUiFX9_ZM

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Protophore
I heard about this a month or so ago on NPR. I don't see the benefit in it
really. Unless they can back their currency with gold or something else it
will continue to fluctuate in value with the pound.

Furthermore I can't see why people would really want to have this town's
currency other than as a collectors item. You can only spend it in this
particular town, and not even at all of the businesses there.

It's been said that this will help keep business (money) in town. Meaning that
locals will be more likely (forced) to spend money at local businesses if they
have the local currency. But why would anyone want to restrict themselves like
this as a shopper? What's to stop them for refusing to accept change in the
local currency or to trade it in at the bank for official British currency?

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jsmcgd
I agree. Can someone explain how this currency which is tied to Sterling
protect people from the devaluation of Sterling?

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alexfarran
I was there last night. At the launch you could buy L£22 for £20. Local
traders are offering incentives, such as discounts if you pay in L£.

It doesn't force anyone to spend their money locally, because you can always
trade your L£ for sterling. It's more like a constant reminder and a helpful
system for keeping money in the local economy.

Income in L£ is counted as sterling as far as the tax man is concerned.
Stewart Wallis of the NEF mentioned a local currency scheme in Australia where
the taxes could be paid in local currency. Of course when it came time to
spend it it could only be spent locally. So they re-roofed the community
centre.

There's a web site here: <http://www.thelewespound.org/>

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jwilliams
I once had the idea for my own "personal currency"... I would set the exchange
rate... For some reason it didn't really catch on.

The article alludes to it, but in the UK, legal tender is a bit sketchy at
best:
[http://en.wikipedia.org/wiki/Legal_tender#In_the_United_King...](http://en.wikipedia.org/wiki/Legal_tender#In_the_United_Kingdom)

The reality of this really comes home when you try to spend your Scottish
Pounds in England (I got caught by this first time I went to Scotland).

Of course, the counter-example is the Euro - which the participating countries
seem to grumble about a bit (it's blamed for inflating some prices)... but as
a tourist it's a godsend.

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dangoldin
I think the reason it's frowned upon is due to tax evasion reasons. Imagine
paying your employees in this town's currency and then having them spend it
within the town.

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Protophore
I'm not quite sure I follow your reasoning here. How does paying your
employees in the town's currency allow tax evasion? You would still have to
report paying them the money.

You could pay them under the table (not report it to the government) in cold
hard cash using the British pound just as easily as using a local currency. I
can't see how using a local currency would make it any easier.

~~~
dangoldin
I guess the point is that it's easy to not report when you are dealing with
the town's currency.

If you take it to the extreme and consider a barter system. I can be a farmer
and give a few tomatoes to the barber who cuts my hair. The government does
not know what happened and you do not report the income as earned.

You are right that it's identical to paying under the table but I think there
is a higher incentive to do that with these town currencies.

Thanks for making me rethink my logic.

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gnaritas
Which is perfect, barter works, fuck the government and their theft of your
income.

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jwilliams
This is exactly the idea behind BarterCard <http://www.bartercard.com/>

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ken
<http://en.wikipedia.org/wiki/Ithaca_Hours>

~~~
mattmaroon
Ha, I was just coming to post that. On a related note:

<http://en.wikipedia.org/wiki/Tax_evasion>

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andyking
I read an interesting article in the paper the other week about Zimbabwe,
where the Z$ has been inflated so vastly that it is valueless for all
practical purposes.

The government there have started to ration petrol and issue vouchers
entitling the holder to 20 litres of the stuff. People started to swap these
vouchers between themselves for other goods and services, and in many areas of
the black market petrol vouchers are approaching the status of a de facto
currency. Instead of a loaf of bread costing Z$6 billion or something, it'll
cost you two litres of petrol.

It has fascinating implications--because the official currency is backed by
nothing and is now meaningless, these bits of paper backed by a tangible
quantity of a valuable commodity (ie. petrol) have effectively become their
own currency. People are trading them with no intention of redeeming them for
petrol, in the same way as you'd never go and ask for £10 of gold for your
tenner. Perhaps something inventive like this would be a better way of running
these town currencies than simply pegging them to the pound.

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streety
Statements like "Totnes, a town of about 8,000 people" and "In Totnes, there
are about 5,000 notes in circulation" suggest to me this is no more than a
gimmick. Even as a local currency it can't work.

