On the value of complementary currency

I was a little surprised at the hostility towards complementary currency over at Cryptogon, and since I can’t comment there I will comment here.

The Milwaulkie Community currency thing is obviously nothing new, LETS and Hours programs have been around for years (and Time Banking even longer than that). Like Kevin points out, you still have to pay taxes on your currency. And although I don’t think paying taxes is the worst thing in the world, the need to pay taxes in fiat causes the biggest obstacles for these currencies: you can’t pay your property taxes with ’em. You also can’t pay your mortgage. So getting food producers and landlords to accept alternative currencies is tough, and I’d wager food and rent are most people’s biggest expenses.

So what’s the point then? First of all, LETS and similar systems are a time tested recession-survival tactic (read this and this). They reduce (but don’t eliminate) dependence on fiat and the central banking system, and have enabled economies to keep doing business when fiat currency dries up. Establishing alternative systems now, and not after true systemic collapse (a la Argentina) is wise.

The more individuals and businesses in a community adopt an alt. currency, the more useful it becomes, Metcalf’s Law style. So over time getting food producers and perhaps even apartment complexes on board is plausible. I’d encourage people starting alternative currencies to target small time gardeners and people w/ basements for rent as starting points.

Of course, the real draw backs can/will come when governments feel their monopoly on currency is threatened. Read my article “the New Currency War” to find out more.

2 Comments

  1. You have probably already seen these, but when I was in Ithaca a few years back I was happy to see these being used on a pretty common basis : http://www.ithacahours.org/

  2. I am anonymous because LETS proponents have not one piece of hard evidence of economic benefit to any community anywhere and they viciously attack anyone who dares to say so

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