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BerkShares (wikipedia.org)
214 points by grzm 42 days ago | hide | past | web | 88 comments | favorite



Greetings from Berkshire County! BerkShares don't actually exist, as far as I can tell. I occasionally run across news stories about them, but I've never seen one and have never met anyone who's ever seen one (and I've asked around, because it's weird seeing news stories about things in your hometown that as far as you can tell don't actually exist.)


what the hell? this is more interesting than the Berkshares themselves.


I mean, I'm not claiming it's a fraud or anything like that; I'm sure they actually did print these and that some business probably do accept them, like any other kind of coupon. Just that they're, well, not much more than any other kind of coupon.

According to their list of businesses, apparently my ex dentist accepted them. Missed opportunity there I guess. ¯\_(ツ)_/¯


For the real thing, Brazil have Local Currencies that are used to foster money lending by banks to small and poor communities. The idea is that the money lent in better terms than elsewhere, will not be used outside of the community.

https://en.wikipedia.org/wiki/Banco_Palmas#Local_Currency

more sources in portuguese (in case anyone want pictures)

https://solidu.wordpress.com/2009/03/27/41-moedas-sociais-ci...

http://g1.globo.com/economia/noticia/2014/04/numero-de-moeda...


How can this be possible when the Wikipedia page has pictures of them..?


There are also pictures of Bigfoot and the "moon landing", doesn't mean they exist.


I just realize of a prejudice of me.

Not that I though a lot about this before, but, I don't know why, until now, in my head, the set of people that don't believe in moon landing intersected totally with the set that believe in Bigfoot.

It seems I was wrong. Live and learn.


The moon landings also have videos of them. Also of the astronauts moon driving, which is pretty cool.


I could do a writeup of this video, but I am busy. Sacrifice 11 minutes of your time and be open minded:

https://youtu.be/SC2Qj8HsMK8


Umm, not sure what to say here other than "yes they do". Do you shop at the co-op market in Great Barrington? They were readily available in the past few years (I've since moved out of town). Specific local businesses provide a discount if you shop with BerkShares.


This is very common with those kind of experiments, nobody cares and nobody uses it.

If Berkshire County wanted BerkShares to be used they have a very 'easy' solution available: they should accept BerkShares and only BerkShares for the payment of taxes and others liabilities with the county.

Then, as the only BerkShares issuer, they would be able to mobilize any resource that they needed in the county.

Of course, that it's not without its problems, because in order to acquire resource from outside the county they would need 'foreign money'.


Grew up in a town that used these (a town in berkshire county, ma); I thought they were a novelty and didn't really buy or use any (or see anyone use them). Just a single datapoint.


Yeah this is not a common denomination. I never saw any of these in the 5 college areas. It just looks like the common chamber of commerce local business promotion scheme than anything too serious.


Agreed; grew up in the Berkshires and these were just a gimmick. I never saw them.


This is interesting, thought I am having a hard time determining what make this different enough from Liberty Dollars [1] which made a splash in NC years ago. Liberty Dollars were supposed to be worth the metals they were constructed of, so they were not pegged to any currency but their intended use was much the same (finding local businesses that would accept them). It seems odd that the purveyors of liberty dollars were arrested and other private currencies are allowed? The main complaint I saw was that they were too similar to "real" US currency, but the response seems exaggerated if thats all it really was.

[1] https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...


Berkshares appear to be a glorified version of Amazon vouchers, exchangeable at participating stores for a fixed dollar value. Except you can probably buy more with Amazon vouchers, and they probably look more like dollars.

On the other hand, the creator of Liberty Dollars campaigned for the abolition of the Fed whilst minting coins which were arguably similar to rarely-circulated commemorative dollar coins also called Liberty Dollars, and stamped a dollar value on them (which of course was in excess of the bullion value he was supposedly backing them with). Then when the US Mint issued warnings about "illegal coins" he took the suicidal decision to sue it to try to force it to withdraw them. Not a surprise that the government eventually found grounds to prosecute him under relatively obscure constitution-linked statutes covering exclusivity of coin mintage. (They also confiscated a lot of coins, most of which were eventually returned by courts. They're worth more now than when they were minted due to rarity value, looking pretty, and coin collectors and libertarians wanting them to show off)

There's a cautionary tale for the crypto-world there, probably.


It was exagerrated-- the "crime" of liberty dollars is that one of the distributors in NC was the ex-husband of an FBI agents sister, who was bitter about the situation and the FBI Agent decided he could make a terrorism case out of it and in the process steal a great deal of money via Asset Forfeiture-- which they did, including tens of thousands of Ron Paul Presidential Campaign Copper pieces (literally presidential campaign propaganda stolen by the FBI, in violation of the First Amendment and making all involved at the FBI felons under USC 18-242) not to mention something like $6M in Gold, Silver and Platinum pieces.

Then they railroaded the Liberty Dollar defendants with fraudulent (in my opinion) jury instructions telling them that a silver piece 10 times the size of a dime that also has a picture of the statue of liberty's torch was "identical" to US Currency under the law... despite Liberty Dollar having letters from the Secret Service, federal reserve, etc, expressing the legal opinion that they were legal and the like.

It's just a joke.

This case is the one that proved to me that not only is government corrupt, and will steal money, but that it doesn't even follow its own laws, and a large portion of the population will cheer on this corruption (the issue when it got posted to HN was met with a lot of liberals cheering it on because liberals are in favor of the inflationist fiat monetary regime and think that "kooks making money out of silver" should somehow be prosecuted.)


> met with a lot of liberals cheering it on because liberals are in favor of the inflationist fiat monetary regime and think that "kooks making money out of silver" should somehow be prosecuted

citation? The only match I find is this: https://news.ycombinator.com/item?id=4696727 which has 1 person making an offhand remark that the government should "crackdown" in this case.

> rothbardrand

Thank you for not hiding your biases.


Fascinating! Thanks for the post, this is why I come to HN. Can you share some more sources from sources you consider reliable and not biased against Liberty dollars, so that I can read more?


Re: "This case is the one that proved to me..." I wonder if you are overgeneralizing here.

Sure, there are cases of corruption involving the government. Did you intend to say something broader? Proving systemic or structural corruption is another thing.

The question we should be asking, in my opinion, is not "Are all governments corrupt?" but rather "To what degree are particular people and particular institutions acting in corrupt ways."

Fighting corruption is hard. We win some and we lose some. Our goal should be to win more often.


Ironic, especially because the FBI is one of the primary law enforcement agencies investigating corruption [1] [2] [3]. It is almost like its a big organization that can't be summed up by a single statement.

[1] http://www.postandcourier.com/politics/fbi-investigating-sou...

[2] https://www.usatoday.com/story/news/nation-now/2017/08/14/fb...

[3] http://www.charlotteobserver.com/news/local/crime/article715...


Very similar to Ithaca Hours (https://en.wikipedia.org/wiki/Ithaca_Hours) which were sparsely used in Ithaca at the farmer's market while I attended Cornell


Sparsely used, but talked about ALL THE TIME


It reminds me of the https://bristolpound.org/






As an aside, the Transition organisation here in the UK back a few currencies, the https://en.wikipedia.org/wiki/Totnes_pound is well supported, this is not new, here's a good piece on 'time based currency' https://en.wikipedia.org/wiki/Time-based_currency and https://en.wikipedia.org/wiki/Local_exchange_trading_system which has some traction in the UK, though their website could do with a little help, http://www.letslinkuk.net/index.htm


Note that the manufacturer of the paper used in US currency (and many others around the world), Crane, is located in the Berkshires. Hence part of the reason why the currency looks so good.


I grew up in the Berkshires and worked at Crane (making paper for the currency of several countries).

Strangely, I've never heard of BerkShares.


Never heard of them either - from north county.


Grew up in Pittsfield. Went to South Berkshire schools. Also never heard of them.

But I still have a Berkshire Bank card in my wallet!


While not exactly an economist / finance type I would have thought the federal and state governments would have shut this down as it removes a certain level of currency control no?

Can anyone explain the legalities around this?


The funny money here is stilled pegged to the US dollar, so the Fed can still exercise monetary control over it. It's really just a form of gift certificate (or scrip) from my reading of it. Anyways, there's a history of using non-USD money in the US: see company towns that only dealt in company scrip, Disney Dollars, etc.

No matter what you're making money in, the government expects to be paid, and it only accepts US dollars.


The history of non USD goes back way further than that. Historically, the Federal Government was in charge of the coins but banks issued paper Banknotes which circulated. Then during the Civil War the federal government issued notes with which you could pay tariffs and land taxes. These became popular. It was only a few years later that the Legal Tender laws were passed, making the Greenback the most-accepted banknote in America.

https://en.m.wikipedia.org/wiki/Greenback_(1860s_money)#Pre-...

Having said that, most of our money today is credit money in bank networks, like VISA or Paypal. In China it had a meteoric rise with WeChat etc.

My company is working on a platform that will allow ANY community to issue its own currency. And no, I don't think there is any requirement to have it pegged to the dollar.


I looked at your profile and I didn't see the company you're talking about. Would you please provide a link?


Sure.

https://qbix.com/blog

Feel free to get in touch - the email link is in my profile.


"The funny money here is stilled pegged to the US dollar, so the Fed can still exercise monetary control over it."

It doesn't matter if it is pegged or not to the US dollar. Nothing is going to out-compete the US dollar in USA territory while the federal government taxes have to be pay in dollars. The federal government can create demand for dollars by the simple act of taxing.


I believe there is still a tax on private bank notes along with some federal regulations that make it extremely unattractive for banks to issue their own currency.

State governments are prohibited by the constitution from issuing their own currency.

Otherwise private entities are free to issue whatever currency they like. Nothing requires it to be pegged to the US dollar as far as I'm aware. You're effectively trading the "full faith and credit" of the US government for some pretty paper. Whether that pretty paper is worth something depends on whether you believe you will be able to purchase things of value with it, or in this case because banks guarantee a fixed exchange rate with the dollar.


The ironic thing is that the US broke their faith and credit, by closing the gold window.


how is this different than a coupon? or a store branded Gift card? .. funds available for redemption at a subset of merchants.

Edit: I see now that its considered the same for tax reporting purposes. https://en.wikipedia.org/wiki/BerkShares#Taxation


It's pegged to the dollar.


For the moment, the wikipedia article talks about plans to not have this be the case.

> but Nick Kacher of the Schumacher Center has discussed the possibility of pegging its value to a basket of local goods in order to insulate the local economy against volatility in the US economy.[6]

What then?


With a peg to the USD, banks will be happy to take your real money and hold onto it while the exchanged Berkshare remains in distribution, because they know that at worst they only have to pay back the original money. But as soon as the Berkshare is able to move against the dollar, participating banks assume some risk because they may be forced to pay out more than 1 USD for a single Berkshare. There's even some risk that the bank could run out of "foreign currency reserves" (USD deposits) to defend the Berkshare, causing it to collapse.


It is barter, goods for goods. The profit is still taxed. This is not technically money in that it is not backed by a government. It's just bits of paper. Printing your own probably isnt a horrible crime, more a copyright violation or fraud rather than a felony.

That people assign value to these bits of paper is no differnt than bitcoin. If a bank wants to sell bitcoin, or buy them, it can. The regulations re whether a bank can call such holding an asset make thing complicated for the bank but so long as things remain small there isnt much of an issue.

It also isnt money because people can refuse to participate. An employee need not accept these in lieu of wages. A business need not accept them. Real money cannot be avoided. All debts in the US can be settled with dollars.


> "This is not technically money in that it is not backed by a government."

Being "backed by a government" is not a necessary condition for something to be money. From wikipedia: "Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. ... Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money." Even though most contemporary money systems are fiat, that doesn't mean that all money has to be.


> Even though most contemporary money systems are fiat, that doesn't mean that all money has to be.

If you want to avoid deflation you need a supply of money that grow at least as much as total wealth (otherwise the relative value of money is increasing => deflation). That's why gold-based currency are now considered a bad idea (and crypto currencies also, see [1] for illustrations about the deflationnist situation in bitcoin).

[1] http://avc.com/2017/08/store-of-value-vs-payment-system/


> "want to avoid deflation"

Not necessarily desired. Deflation gets a bad rap, but on the positive side it does encourage sensible economic behavior such as saving and avoid of wasteful spending.

> "need a supply of money that grow at least as much as total wealth...That's why gold-based currency are now considered a bad idea (and crypto..."

Well there is no requirement to limit the money supply to one currency...


You are describing legal tender, a positivist concept. Real money need not be propped up with such measures.


>Nick Kacher of the Schumacher Center has discussed the possibility of pegging its value to a basket of local goods in order to insulate the local economy against volatility in the US economy.

Is there a name for pegging a currency to a basket of goods? I can't find any examples online.


If it's a local currency this can be considered a local Consumer Price Index. If you peg the local currency to it, the local currency is always available to buy the food, based on the local CPI of necessary goods, regardless of shortages etc. (if the pegging is daily).

I had a similar scheme for local based UBI here: https://qbix.com/blog/index.php/2017/09/the-future-of-money/


Awesome, thanks. It sounds like you're working on some of the ideas I've been mulling over this week. I like the idea of localizing the currency and having immigration restrictions. Localizing helps solve the problem of scaling pseudonym parties. Finding a world-wide, or even nation-wide time where everyone can show up in a group in order to verify their personhood would be tough.

I guess the next issue is how do you take that CPI, adjust, and issue currency in a decentralized / consensus way. Also, how susceptible to manipulation would these schemes be.

I would love to see a more economically sound cryptocurrency, rather than the deflationary mess that is Bitcoin.


Related to deflation - I believe there are demurage schemes for local currencies where the value of a particular bill lessens over time. It incentivises circulation instead of hoarding.


Units of account: http://www.econ.yale.edu/~shiller/online/uf-usa4.html

Shiller is a fan of interesting financial engineering of this type which he discusses in his books "Finance for the Good Society" and "Macro Markets".

For example, he also proposes a US bond which pays out interest fixed relative to GDP.


Ithaca, NY has (had?) a similar system: https://en.wikipedia.org/wiki/Ithaca_Hours


A superior system.

1 hour = 1 hour of work (rather than a USD equivalent). Or at least, that is how it started.


And everyone's hours are treated interchangeably?


They are HOURs, not "hours"

> One Ithaca HOUR is valued at US$10 and is generally recommended to be used as payment for one hour's work, although the rate is negotiable.


Yea, that's the idea, and why I never touched it when I was living there.


There seem to be a lot of these "community currencies" in circulation throughout the United States. I wonder how much economic activity actually takes place using them, though. Millions of dollars? Billions?

https://en.wikipedia.org/wiki/List_of_community_currencies_i...

Meanwhile, up north, there's Canadian Tire Money.


My company (Conpoto), runs a local currency/gift certificate platform that is purchased with regular dollars, but is only redeemable at local merchants participating in the program. We're in a bunch of states and Canada.

We'll do hundreds of thousands of dollars in currency purchases annually in some communities. It's used quite a bit by employers who want to keep money local (rather than sending it to Amazon or Target).


On the face of it, that feels like companies issuing their own currency to control their employees. If leaving the company means moving somewhere your money isn't accepted, you won't leave. If you won't leave, the companies can screw you and you have to take it or lose all your savings.


Sorry - I should have clarified more. These companies are using the currency for small rewards, holiday gifts, etc - as opposed to as a salary.


We had something similar in Tyrol, Austria called Freigeld (1)

(1) https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W.C3.B6rgl_Expe...


There was a good Odd Lots podcast covering this:

https://www.bloomberg.com/news/articles/2017-03-27/odd-lots-...


So the issuing banks print a BerkShare, sells it for $.95US to the public, and got to keep the $.95US. Hmm, anything that I missed that would dampen my enthusiasm to be an issuing bank?


Nah, you're required to exchange one for $0.95 later.

Taking printing and other administrative costs into account, you definitely lose as the bank.


How is that different from what you did as a founder? Say you create a company and issue 100M shares of worthless stock. Then after some time you end up selling 1M shares at $10/each. You get to keep $10MM that you created out of thin air?

Truth is, by creating the company, you created value. And the bank, by providing liquidity and reducing transactional friction does the same.


They are pegged against the dollar, meaning that the bank agrees to buy it back for what they paid for it. So basically, the issuer is taking out a zero interest loan from the users of the currency. Not a bad deal considering that the bank doesn't have to do any of the work involved in their typical source of zero-interest money (checking accounts).


Isn't it the other way around? The bank is issuing a zero interest loan to the currency user? What benefit does the bank get from there being more Berkshares out in the world?


The public can also sell a BerkShare to the bank for $0.95. I don’t see how the bank makes a profit from this, other than using it as a way to acquire customers. (EDIT: Or some interest on the float, I guess)


You just described cryptocurrency.


Since it is pegged to the dollar why doesn't it qualify as pure waste of time?


you pay $0.95 but it is accepted as $1 so you effectively get a 5% discount. This is done to incentivize spending locally.


Makes sense.


Virtually all the wealth created in the world is because of unfettered trade. Trying to create an insular economy is just a path to poverty. Are they going to build their own iPhones, Teslas, LCD screens and microprocessors? Obviously not.

When a local consumer decides to pass on buying a local good for a substitute made far away, it's because they believe they benefit economically from doing so.


That would be true if currencies couldn't be converted / traded. Nothings stops you from trading Berkshares for USD or vice versa the same way you would Euros / Bitcoins / etc.


The 5% discount does.


I agree with what you said, mostly.

I say mostly because the world is complicated, and economics is something that applies at the it's complicated end. I think we do tend to go a little bit overboard about economic ideas. Local iPhones, Teslas, LCD screens and microprocessors is absolutely a path to poverty. Cultural and economic (I think these closely related) isolation is a path to poverty, of several kinds. Our isolationist instincts are often wrong, and closely bound with our xenophobic instincts. All else equal (including whatever you consider to be important), why buy local? Are faraway people not brothers and sisters? I am very comfortable making the case for openness.

Yet... There is still lots of room for experimentation, and oddities, and places where the rules are bended. There's some food bank collective that hired an economist to invent a fake currency and auction market for them. It needs some part time central banking, but supposedly works well. The market & currency has all sorts of quirks like negative prices to help with their specific needs.

Messing about with 5c on the dollar locally is totally fine. It's more than fine if it has a positive effect, and I wouldn't be surprised if that effect is something we'd see as "cultural."


This only applies in a market where consumers always make objectively ideal decision.

This applies to smart phones, electric cars, and CPUs. (mostly, see post-script)

But for most goods, there is no such thing. What is the "best" tomato or a jar of honey for a consumer to buy? Is it the cheapest? The brightest? The most delicious? Yes, all those things. But the evaluation of them is subjective for most. A tomato from a local farmer you see on the street every weekend will look brighter and taste better and feel healthier to a lot of people than one coming across the world from Peru. Regardless of the truth or economics of scale.

Also why is it a zero sum game? If some consumers choose to spend more to support local producers, is that not just a form of local subsidy which rebalances the wealth slightly from consumers to local producers?

*Actually iPhones and Tesla are also emotional decisions. For some people an Android or a Chevy Volt are better decisions for factors beyond financial yet for emotional reasons they want the entire package that comes with the top brands.


Consumers always make objectively ideal decisions. What you think the best good for them to buy is not necessarily what they think, and they are the ones who are right.


I've bought things despite knowing it wasn't the best for me. I think that one shouldn't presume to know better than the consumer, though.


That's the argument I'm making. Consumers know best.


Then why do class action lawsuits exist?


To enrich class action lawyers.


why not create a crypto version that would be distributed to current currency holders? Get rid of the costly cash and you can sell it worldwide if you want to, while Berkshire residents control voting rights on the blockchain. With current crypto prices going sky high, bring some real money into the economy.


...and thus begins BerkCoin... a name which surprisingly hasn't already become a cryptocurrency.




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