How to create local currency

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digging's picture
digging
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How to create local currency

Well if the main money system fails what would be a good way to build a local currancy? I have been wondering if a community had some kind of natural energy resource like hydro or such could they not issue money based on energy units like how gold? For example if you had had a wind mill could you not issue a IOU for a amount of watts to charge a battery? |So you could change your power into a form of currancy for trade? If you scale this up to a whole town then a coop could be formed and a local money could be created, Yes or no?

 

Digging

matslats's picture
matslats
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Re: How to create local currency

Hi first of all you can't create a currency by yourself. It takes a good while to build up local support, and to agree on a design. There are several places you should reference;

transition towns, or if you are in US http://transitionus.ning.com
http://ccmag.net
http://value4people.co.uk
http://www.network-economies.com/
http://ces.org.za
http://communityforge.net

Hope that gets you started 

silvervarg's picture
silvervarg
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Re: How to create local currency

You need people to trust a currency, or they will just not accept payment in that currency.
 There are a few simple ways to get that trust from start:
1. Base the currency on a limited resource that has a high price in todays working currencies. E.g. manufacture gold-coins.
    One shortcut is to use old currency that has a high content of gold or silver.
    To get a reasonable amount of money you probably want to go with old silver coins.
    There is a bit of a problem to get hold of large quantities of old coins to a reasonable price, so this is not too easy.

2. Connect your new currency to the exisiting local currency with a 1:1 ratio.
    Perhaps you want to start out with most things requiering payment with max 50% in the "new currency" as this will dodge away most to the tax problems.
   This has been done in a few places. Totney in UK seem to be the most famous and most successful.
   If the currency you have connected to looses a lot of confidence it would be a simple move to disconnect the exchange rate or just alter the exchange rate in fawour for the local currency.

I would defenatly favour a system similar to the Totney system, as a small community will not be sustainable in all aspects, so they will need to trade with the outside world. By having a currency with a clear relation to the outside world this is much easier. You must manage to have some control of the total money of the outside world currencies that floats in and out of the community.
Essentially this is a way to measure if you are a new exporter or net importer. I believe that a successful community should be a net exporter.

 

featherjack's picture
featherjack
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Re: How to create local currency

This is a good source too: http://www.transaction.net/money/index.html

I also like the concept behind http://hourmoney.org/ -- money representing hours of work.

Carl Veritas's picture
Carl Veritas
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Posts: 294
Re: How to create local currency

Don't look now but you guys are actually thinking outside the box.    When Jefferson investigated what the early colonists were using as money, it was actually the Spanish silver dollar.  A result of Britains policy of keeping precious metals from the New World.   This illustrates that  people  will find a suitable medium for trade and government simply   In our case it began with the dollar but it did not begin with politicians. 

gyrogearloose's picture
gyrogearloose
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Re: How to create local currency

Funny.....  got into a conversation with a bloke recently, he said "we do not needing money , just use hours....."

 

My summary of it, which he ended up agreeing with, was that all it does is change the name of the currency.....

 

Think it through, but change "money hours" to dollar or yen or....

 

What has actually changed? More money can be created at will by the people in charge if the system.

 

Just a very brief note. Spent 30 min going over it with him.

Cheers Hamish

featherjack's picture
featherjack
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Re: How to create local currency
gyrogearloose wrote:

Funny.....  got into a conversation with a bloke recently, he said "we do not needing money , just use hours....."

My summary of it, which he ended up agreeing with, was that all it does is change the name of the currency.....

Think it through, but change "money hours" to dollar or yen or....

What has actually changed? More money can be created at will by the people in charge if the system.

Cheers Hamish

 

Hi Hamish,

The difference is that the hour note is redeemable for something real -- work. An hour is an hour is an hour, Not so with un-backed, central bank-controlled fiat currency.

Your objection applies to any un-backed currency with a centrally-"managed" supply. Anyone attempting to build a local curency will want faith and trust in the currency as their first and (ongoing) primary concern and so will be very careful not to inflate the supply unnecessarily. Further, created as credit rather than debt, there is no intrinsic necessity for inflation or management of same.

The problem with debt-based money is that there's never enough of it -- there's always more debt than there is money to pay it off. Basing money on credit returns money to its proper role as a medium of exchange and store of value. That simplifies matters, and reduces the temptation to use money supply management as a policy tool. It also allows us to think about it, and trade, and "the economy", differently.

I suggest you look through http://www.transaction.net/money/timedollars. I found it quite enlightening.

Here's a taste:

Backed by an hour of community service and created via mutual credit, Time Dollars are the simplest currency system to implement: the only infrastructure needed is a central registry, which can be as simple as a notepad or blackboard, to record account balances.

Time Dollars are always sufficient, so they tend to encourage a "favor economy" of cooperation and trade among participants.

Time Dollars are created via mutual credit: Each transaction is recorded as a corresponding credit and debit in the accounts of the participants.

One hour is measured the same independently of place and circumstances, so Time Dollars are immune to the fluctuations in value of commodity-backed and fiat currencies.

Cheers!

gyrogearloose's picture
gyrogearloose
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Joined: Sep 8 2008
Posts: 549
Re: How to create local currency

Hi

featherjack wrote:

Your objection applies to any un-backed currency with a centrally-"managed" supply. Anyone attempting to build a local curency will want faith and trust in the currency as their first and (ongoing) primary concern and so will be very careful not to inflate the supply unnecessarily.

The US dollar used to be backed by gold....

The UK pound used to be backed by silver....

And you even say "very carefull not to inflate the supply unnecessarily"

The reserve banks act that way too.....

It all comes down to having grand ideals at the start, but somewhere along the line......  

CM claims 3800 paper currencies have gone to zero. How many " local curriencies " were in that number?

 

 

featherjack wrote:

The problem with debt-based money is that there's never enough of it -- there's always more debt than there is money to pay it off.

Imagine a country using only gramms of gold as a currency, with all transactions done in gramms of  gold, will still have problems if thay have lending with interest.

If you lived in that country, and loaned money to a friend, you have carried out reactional reserve banking.

There is then not enough money to pay back the loan and the interest.

 

 

 

From site in your link

www.transaction.net/money/glossary

There are only 3 ways of designing a currency system:

 

  • fiat (i.e. without reference to anything else);
  • valued by a commodity, when its value is expressed of terms of the value of that commodity (whether or not it is redeemable in that commodity--e.g.: Bretton Woods dollar-gold equivalence standard; airline miles); or

     

  • backed by a commodity, when the currency is in fact a claim to a given quantity of that commodity (which typically requires having a stock of that commodity on hand to meet such requests).

     

I may not be interpreting what they say correctly, but it seems to me there is a fourth one.

  :-  Commodity.  ie gold (by mass) directly. All other comodities valued IN mass of gold.

I have said in a theread here that as soon as a PM coin is called any thing other than the mass of the PM, the path to debasment has begun.

 

Cheers Hamish

 

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