Print your own money

Mar 9th, 2009 | By | Category: Ireland

The recession is cutting deep in our community.  The Minister of Finance’s slip of the tongue last week when he used the word ‘depression’ may have more truth about it than he would care to admit.

How do people earn money when no-one can pay them?  How do people pay for things when they cannot earn money?  If someone had the answer to such questions, the country would be a happier place.

Flicking through “What is your dangerous idea?” the 2006 publication by The Edge group of scientists, I found an economics piece by Douglas Rushkoff.  “What is your dangerous idea?” Rushkoff was asked, and he responded:

It’s not only dangerous and by most counts preposterous – it’s happening. Open-source – or, in more common parlance, ‘complementary’ – currencies are collaboratively established units representing hours of labor that can be traded for goods or services in lieu of centralized currency. The advantage is that while the value of centralized currency is based on its scarcity, the bias of complementary or local currencies is toward their abundance.

So instead of having to involve the Fed in every trans­action – and using money that requires being paid back with interest – we can invent our own currencies and create value with our labor. It’s what the Japanese did at the height of the recession. No, not the Japanese government but unemployed Japanese people, who couldn’t afford to pay health-care costs for their elderly relatives in distant cities. They created a cur­rency through which someone could care for someone else’s grandmother and accrue credits for someone else to take care of theirs.

Throughout most of history, complementary currencies existed alongside centralized currency. While local currency was used for labor and local transactions, centralized currencies were used for long-distance and foreign trade. Local currencies were based on a model of abundance – there was so much of it that people constantly invested it. That’s why we saw so many cathe­drals being built in the late Middle Ages and unparalleled levels of investment in infrastructure and maintenance. Centralized currency, on the other hand, needed to retain value over long distances and periods of time, so it was based on precious and scarce resources, such as gold.

The problem started during the Renaissance: As kings attempted to centralize their power, most local currencies were outlawed. This new monopoly on currency reduced entire economies into scarcity engines, encouraging competition over collaboration, protectionism over sharing, and fixed commod­ities over renewable resources. Today, money is lent into existence by the Fed or another central bank – and paid back with interest.

This cash is a medium, and like any medium it has certain biases. The money we use today is just one model of money. Turning currency into a collaborative phenomenon is the final frontier in the open-source movement. It’s what would allow for an economic model that could support a renewable-energies industry, a way for companies such as Wal-Mart to add value to the communities it currently drains, and a way of working with money that doesn’t have bankruptcy built in as a given circumstance.

The idea is not so new, in farming communities for generations farmers used to exchange days, but giving someone a day never reached the level of an informal currency.  The idea of a complementary currency does not seem to have gained any prominence on this side of the Atlantic – perhaps it is too dangerous. The idea of local communities having their own economic system would sit ill with politicians, whose control of the levers of power would be loosened, but when those politicians are offering no alternative, it must be worth exploration.

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