Neighborhoods Propose Printing Their Own Currency To Encourage Local Shopping
Two neighborhoods in Milwaukee are considering printing their own currency, which could be bought with U.S. dollars, but would be only accepted at local businesses, in order to encourage people to shop at home instead of Walmart.
It's not a new concept — the Chicago Tribune says that lots of towns and neighborhoods relied on their own local currency during the Great Depression. It's also perfectly legal.
So what's the advantage for shoppers? Well, the currency could offer incentives — trading $100 US for $110 in the local currency would give shoppers a 10% bonus, for example.
What do you think? Would you use a local currency in order to support your community? Or are you going to shop at Walmart until they pry the cart from your cold dead hands?
Milwaukee Neighborhoods Could Print Own Money [Chicago Tribune]
(Photo: sfxeric )
Attention, Walmart shoppers! This ad is for you! Woo hoo!
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Comments:
I can see where this would have a purpose. My question is how easy would it be to counterfeit?
Only way this would work is as said, if they gave an incentive big enough to want "Local money". I'd do it if the incentive was within reason.
I can see the advantages, but I can't imagine using this regularly. It's easier to swipe a card that's linked to an account into which my paycheck is direct-deposited and never touching cash than it is to have to withdraw cash, exchange for other currency, and spend at a few particular locations.
Sounds like an excellent way for the town to make money:
1. Encourage the residents to buy lots of this fake money "at a discount".
2. Shop-keepers realize that they're, de-facto, discounting all their wares and stop taking it.
3. Town stops allowing redemption of fake money to real money, citing "financial difficulties".
So, no, I wouldn't buy any of it. Sounds like a great way to lose your money.
@opsomath: Sure, if there's money to collect. I suspect that over the next few years, there's not going to be a lot of it.
Aren't these then just glorified gift certificates that are accepted at more than one store? Plenty of stores give you discounts for buying gift certificates...
Umm... how about this totally violates the US Constitution? Wasn't there a story recently about another popular "currency" that was shut down by the Feds last year? Come on, this is no way legal!
Sorry to spoil your party, Meg, but your math is off:
110 Local dollars for $100 is (approx) a 9.1% discount
You could call it a 10% bonus/incentive/whatever, if that makes you feel better.
pretty sure the constitution forbids this, wasn't there a big article here recently about a former failed alternative currency?
Now if they call them gift cards or something like that, then maybe it'd be ok?
@graverobber- My Yugo Nova!: And I even have a special dealer I visit, known as the "double coupons every day grocery store"
But this idea sounds gimmicky enough to work, at least until the drug dealers start engaging in large-scale arbitrage on the spread.
@Krobar: Semantics, it's still technically legal as the system is the same as a gift certificate. If they attempted to use the local currency to pay taxes, that would be a whole other story.
Immediately thought of this:
Homer: One adult and four children.
Woman: Would you like to buy some Itchy and Scratchy Money?
Homer: What's that?
Woman: Well it's money that's made just for the park. It works just
like regular money, but it's, er..."fun".
Bart: Do it, Dad.
Homer: Well, OK, if it's fun...let's see, uh...I'll take $1100 worth.
[he walks in, sees all the signs: "No I&S Money", "We Don't Take
Itchy and Scratchy Money", etc.]
Aw!
So maybe I am not thinking about this right, but here goes:
A shopper spends $110 in Milwaukee Bucks (HAHA, get it?) at Bob's Lightbulb Emporium. Bob can't buy lightbulbs from his supplier in fake money so he has to convert the fake money back to real Dollars at the same exchange rate of 1.1 to 1. Bob doesn't gain anything by doing this and he is still selling $100 worth of merchandise for $100 worth of fake money. I highly doubt Bob is willing to take a $10 hit on everything he sells so he will raise prices, negating the effect of the favorable exchange rate. It would be like if everyone used a discounted gift certificate for everything.
They could use guilt and get people to buy into a program that promises to give to local charities and interests if people buy from the local business participants.
Otherwise, locking the currency is probably not the best way to go about it. You can't beat WalMart price wise most of the time, but you can sure as heck beat them in everything else (service, selection, policies, etc.). Though the bottom line is pretty important to most people... So about those coupons...
@Zeniq:
I thought this same thing until I saw how much money I was spending due to the ease of use of plastic. I decided to use cash or a credit card that gets points. Either way I see what I'm spending. Cash is physical while the credit card will have an interest rate soon after the intro period. More thinking involved.
@wgrune:
Oh and not to mention how pissed Bob gets when he tries to cash in his $10,000 in fake money and no one will trade him for real money.
I think this is an all-around bad idea.
Whatever happened to the good old-fashioned practice of making a better product for less money? Is there some reason "local" businesses can't do this?
Our town tried a local currency. It failed very, very badly.
@wgrune: That is an extremely good point. I would be interested in hearing their counter point to that.
Not a bad idea at all. In fact, I'm often amazed by "free market" anti-monopolists who, after praising the virtues of "competition" and "choice" then defend the Federal Reserve, a private corporation given a government-enforced ... you guessed it ... MONOPOLY over money.
"Do as I say, not as I do."
@The Name's Ash78, Housewares: But just imagine using your coupons on top of paying with 10% discount local currency! Who doesn't want Cheap(er) groceries?
@robdew2:
It's hard to run a competitive business when you can buy something from a supplier for a cost and the Walmart (or Target, Lowes, Home Depot, Best Buy, etc) can buy the same thing for 30% less because they are buying millions of units at a pre-negotiated price from the same supplier.
lol... this reminds me of a Dave Chappelle standup routine about being in DisneyLand with his kids (apologies for the mild profanity).
Disney Employee: "Welcome to Disney World Mr. Chappelle, can we interest you in some, Disney Dollars?"
Dave: "No man I'm cool, I can't buy weed and p*ssy with Disney Dollars.
@robdew2: It doesn't always have to be about less money. Sometimes it's is about a better service or experience.
When we do landscaping in the spring, I usually buy our flowers from the local garden center as opposed to Home Depot. We pay a little more, but get much better quality and the staff is very knowledgeable and helpful.
@MartaAnchises: The Federal Reserve isn't private.
If Congress ever chose to do away with the Federal Reserve, they could.
As for its monopoly over money - well, most all governments have a monopoly over currency creation.
@wgrune: I just assumed that the city government would take the hit, not the merchants, though perhaps splitting it would be viable as well.
The merchant gains because locals stay in town and shop at his store instead of driving to the megamart in the next town. Also it serves as a promotion driving more people from outside the town there looking to save a bit, thus the merchant makes more sales overall.
The city gains because there is more people buying local and outsiders buying local - thus more tax revenue, and the city becomes more attractive to new businesses increasing tax revenue even more via the new stores and new jobs.
So it seems like a win for everyone except for the surrounding towns.
Yeah! Take that Federal Reserve!!!!!1!
So Milwaukee is planning on becoming prostitution central since this "currency" won't really be trading cash for sex.
I have a better idea. Issue a credit card to everyone and a credit card scanner. THEN, barter for cash equivalency. So, my neighbor agrees to give me 100$ equivalent cash in exchange for painting the shed. The barter is done and the neighbor swiped the card and enters 100$.
In reverse, I want to give 100$ to someone for a lawn mower they have for sale. So, I swipe my card through their reader and give the 100$ back...
Wait a minute...This sounds really familiar... LIKE THE CURRENT SYSTEM. WTF!
Marco: Fuck your Hippie remark.
Even if there were local stores in my area stores to suppliment what I purchase at Wal-Mart and Shop-Rite, often the variety is lower, and the prices are higher. They would have to be VERY large discounts to compensate.
I could only see this working for things like local reasturants and attractions (like a local movie theater, or zoo).
@wgrune: My guess is that the community sponsoring it could supply a seed budget to start the system. Much of that initial money would go into some manner of CD/time deposit, and the interest for some term would be the "discount" the consumer sees. Or maybe businesses dealing in local currency would get some sort of local tax breaks.
The only alternative currency we need to be concerned with is the barter system, as paper money will only be glorified T.P. when the financial apocalypse occurs... just think of Mad Max - the only thing worth anything was gas and gear.
Ok, maybe that's a bit excessive, but seriously, why would anyone want something that has limited use, and why would businesses take it unless there was a strong incentive plan for them? I don't know how a local government could cover the cost of the currency creation AND make it lucrative for consumers AND retailers to use. This is lamer than gift cards.
Milwaukee also makes and assumabley drinks a lot of alcohol, don't they? That would make sense.
I don't shop at Walmart, EVER, so that's not a consideration. This local currency idea makes me a little uneasy, though, because it seems to indicate a trend of isolationism that I associate with the breakdown of civilization (hey, I read lots of science fiction and have a vivid imagination). I think neighbors will have to help neighbors as the econonmy gets worse (and I think it will get MUCH worse), but I also think we need to pull together as a country.
This system only works for me if I can somehow be paid in Neighborhood dollars without those Neighborhood dollars being taxed. If I'm paid in Neighborhood dollars, how can I enter an amount on my tax return?
@josephbloseph: I think the point is to support the local economy. Ideally, the government takes the hit in order for the local businesses to flourish. Since the money stays in the local economy, the government then generate more tax revenue or something of the sort, which then goes to fund the program. At least, that's how I'm understanding it.
@robdew2: Well, that theory works in principle, except for that pesky thing that western nations seem to have called minimum wages...I'm sure once China mandates $6-7/hr for all workers your idea will work splendidly.
The article is light on info, but I think the model is: The town will sell you $100 in funny money for $90 in cash, and buy $100 in funny money for $100 in cash. So the town loses $10 on every $100 transaction. This money eventually comes from the taxpayers. But more money is being circulated in the community instead of being shipped out, so local residents will be earning more money. The tax on the extra income cancels out some (but not all) of the town's loss.
If people can buy and sell funny money whenever they want, the town will go bankrupt. They can keep the losses under control by limiting the amount of funny money in circulation...maybe it's only given out as welfare, or as payment for work on community service projects.
The end result is that people who are allowed to buy funny money make a profit, local stores make a profit, chain stores take a loss, and other local residents take a slight loss from increased taxes.
So it has come down to this. Understand paper money and coin are only worth what someone else will accept for goods or services rendered. Your house you bought for $200k in 1997 and have basically put next to nothing in improvements into the last 11 years now has a market value of $360K. Why? Well, if someone is willing to pay $360K for your house today that is what it is worth. If you can't find a buyer at that price, you must lower the price (i.e, value) of the house. The marketplace flows up and down in cycles. Just like currency. So get over the financial madness, it is what it is. The natural flow of things. No matter how much taxpayer money the feds want to pump into the system. It will make no difference long term.
Good point... although those are obviously limited to those that take them. But still, it's pretty close.
-- How many people use Visa/Master today in 2008 vs 1929? It would not be possible to spend this currency via typical Visa/Mastercard system
-- How is a 10% discount using local currency any different from the local retailers simply offering a 10% discount across the board on all their products/sales? It isn't, so why add that much complexity? It would be better to create a "Local Retailer Discount Card" that you show at these retailers to get the discount
-- Presumably you will not be able to withdraw this local currency from an ATM which means transactions would need to occur by hand at either a bank or other authorized exchange station. How many people these days rely almost exclusively on ATMs for cash? Nearly everyone I know does, now you're add addition steps to get your normal business done
-- The fact that this currency is going to be linked to a dollar means that you can never increase the discount exchange rate without pissing off everyone who ever bought dollars before that point
This might have worked 80 years ago, but it just isn't going to work now...
If you are a retailer the plain fact is that Wal-Marts are in your neighborhood and they probably sell the same brands/goods for less money you do.
In terms of selling those products you really only have a few choices:
* Lower your cost to match/beat Wal-Mart, that might mean selling at your cost, or possibly even below your cost for certain items
* Bundle the goods w/ other goods (possibly not offered by Wal-Mart) to beat the overall Wal-Mart price--i.e. offer up a 20% discount (so possibly below your cost) on national brand spaghetti if it's purchased with $20 or more of local produce, etc
* Bundle the goods with services that Wal-Mart does not offer--i.e. if Wal-Mart sells a lawn mower for $200 and you sell one for $300, you need to offer free tune ups and blade sharpening for 3 years
* Hope you can get enough people to pay more at your store just for the sake of keeping your business alive and fighting against Wal-Mart (sadly, this is probably the only option that will really work very well in the long run)
We already have local currency, it's in the Sunday papers, and is called COUPONS.