During Trying Economic Times, Some Small Towns Turn To Their Own Currency

Who hasn’t grabbed a handful of Monopoly money and just wished it could be used to purchase things in real life? A few towns are doing that with their own currencies, and it’s helping to keep things bustling within their communities.

CNNMoney looked at 11 such places and how their local money works for residents. Of course, one should not take special cash from one town and try to use it elsewhere, but some of these systems seems pretty neat.

“BerkShares,” Southern Berkshire, Mass: Started in 2006 in this small mountain town, Berkshares can be used by residents at more than 400 local businesses. For $95 in U.S. currency, locals get $100 in BerkShares. Businesses exchange the money at the bank for a 5% fee, which keeps circulation going.

“Ithaca Hours,” Ithaca, N.Y.: This town’s been doing its own money thing since 1991, and has been pretty successful at it. More than 900 participants accept Ithaca Hours locally for goods and services, and some employers even give them as part of their wages. One Ithaca Hour, symbolizing time spent helping the community, is $10 U.S. bucks.

“Cascadia Hour Exchange,” Portland, Ore.: Known as CHE, this Portland-based system has been around since 1993 but gained a lot of steam in the last year. Its aim is to increase bartering among the locals. They also represent hours, with each one equaling 10 U.S dollars.Members pay $50 to join, and then can negotiate prices for goods and services with other people or businesses that accept them.

For more examples of these pioneering programs, check out CNNMoney.

Funny money? 11 local currencies [CNNMoney]

Comments

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  1. ThatTastesTerrible! says:

    Bring back dubloons! I want to spent dubloons!

  2. Tim says:

    “Southern Berkshire” is not a town, it’s just the southern part of Berkshire County.

    • rmorin says:

      +1

      Additionally where is the author from that the 44,000 people in Pittsfield is considered a small mountain town? Where was the fact checking on the article? Just go to the Berkshares website and you get the accurate facts about the program.

      http://www.berkshares.org/index.htm

      I guess anyone can be a CNN Money writer?

  3. frank64 says:

    This should be taxable. I didn’t see it addressed there. It may be because it is obvious? Probably not to some though.

  4. ARP says:

    Is there any Federal preemption issue when it comes to this currency? Or is it just that this money isn’t backed by the full faith and credit of the US?

    How would sales/income taxes work? It is a form of income, which should be taxable. If they’re buying goods at a store, it would seem they would need to charge sales tax on it.

    Good concept though, a good way to keep spending at local businesses.

    • Happy Tinfoil Cat says:

      OR may not have sales tax but NY certainly does. If the state doesn’t have sales tax, then the problem is far diminished.

    • A.Mercer says:

      I also question which laws do you prosecute under for people who counterfeit the fake money. If it were real money then it would definitely be federal laws. I can see someone arguing that counterfeiting this stuff is no more than fraud kind of like counterfeiting coupons or something like that. Also, I bet there are a lot less anti-counterfeiting technologies applied to these things.

      If it has lesser laws protecting it and lesser technology protecting it then crooks will eventually try to take advantage of it.

      • rmorin says:

        Think of this as a giftcard that nearly everyone in town accepts and if I don’t spend it, I can turn it back into cash.

        You’d get in the exact trouble you would for forging gift certificates/fraudulently obtaining gift cards. People are gonna be criminals no matter what the method of payment it is.

        • A.Mercer says:

          There is a difference between counterfeiting money and counterfeiting giftcards. I have never heard of the Secret Service being called into investigate people making fake giftcards. Unless it crosses state borders I believe it is investigated by local authorities. There is a difference in the criminal prosecution here.

          • rmorin says:

            You can’t counterfeit what is not legal tender. Thus, people “counterfeiting” alternative money would be charged with fraud. How hard is this for you?

    • AcctbyDay says:

      Barter income is income according to the Federal government. Good luck on the Feds trying to enforce it though.

  5. vastrightwing says:

    I expect that once the bankers (behind the Federal Reserve) find this out, that will be the end. They don’t want any competition with their currency. Personally, I love the idea of local currency. I mean, look how badly the Euro is doing to many countries, that can’t work. Only keeping a sovereign currency will work for most countries.

    By the way, has anyone noticed how Iceland is making out? They’ve taken control back of their own currency and got rid of their debt. This is something the banksters sure don’t like. Image if all countries did this.

  6. SporadicBlah says:

    We have “Adventure Bucks” at a local water park. They are made of waterproof tyvek and are an awesome way to keep money in your pocket and not have it shredded on the Wahee Cyclone. The only down side is they WON’T buy them back from you if you don’t spend them all. The rate is dollar for dollar.

    • raydee wandered off on a tangent and got lost says:

      Disneyland does a similar thing–their dollars seem to be made out of normal materials, but they’re *collectable*!

      • El-Brucio says:

        That reminds me of Itchy and Scratchy money. I didn’t think they were lampooning a real thing. That is mildly depressing.

      • Murph1908 says:

        I wish I had an E-ticket from my first few visits when I was a lad. That would be a pretty cool collectable.

    • BettyCrocker says:

      Regular money doesn’t get ruined in water. I see little advantage to using theme park funny money when they won’t buy it back. What is the advantage if it’s dollar for dollar?

      • Nighthawke says:

        But the bill changers get jammed when someone crams a wet bill into them, not to mention being messy and a pain to sort and count.

        • Murph1908 says:

          Valid points.

          However, I think it’s the park that is affected by those issues more than the guest. This makes me feel the park is a bit doushey for not giving any kind of discount on the bucks, or buying them back.

          One or the other would be fine.

  7. Agozyen says:

    Sounds like Bitcoin but on a global scale.

    • Agozyen says:

      Bah, global = local.

    • rmorin says:

      You have no idea what you are talking about.

      These are basically a gift card that can be redeemed back to U.S. tender if you choose not to spend it locally. There really is no negative here for the consumer, you can support local businesses, but if they can’t meet your needs/do not honor them, you can still return them to a bank for legal tender.

  8. Happy Tinfoil Cat says:

    I wish we could all go back to the silver dollars the Las Vegas casinos used to use (before they all got melted down for silver). If only our dollars were worth an ounce of silver nowadays.

  9. Daggertrout says:

    Would you like to buy some Itchy & Scratchy money?

  10. econobiker says:

    And this will result in no retail strip mining by big box stores…

  11. framitz says:

    What I see is an organized ‘trade/barter’ system for the most part.
    A good way to trade skills, goods, and services to everyone’s benefit.
    I needed a new dishwasher, the appliance store owner needed some televisions fixed.
    I spent about 5 hours fixing 4 TVs and my dishwasher was delivered the next day.
    I got what I needed and the appliance store got 4 TVs repaired to sell.
    Technically I gave more than I got, but we’re both happy. I might come out ahead next time… He has a new refrigerator we’re negotiating on right now.

  12. Cyfun says:

    It’s perfectly legal for parallel currencies to exist, it’s just that the state or government can’t be the ones creating them. Apparently cities and other such smaller agencies can, though. And best of all, it’s also legal to not have such parallel currencies taxed.

    But this is a great idea for keeping money flowing locally, creating somewhat of an extended bartering system. Typically, these currencies are offered at a slightly better value than dollars, and merchants often give you a better deal if you pay in the currency. Methods like this are actually a great way to boost the economy while soft of sticking it to the man.

    What I wonder is how these city and county governments feel about not getting taxes on these transactions. Apparently it must even out somehow if these have been thriving for a decade or two.

    • Snowblind says:

      Yes, the kicker is the fact that no one “has” to take the currency.

      Only the Feds can do that, enforce Federal Notes as “Legal Tender”.

  13. axolotl says:

    But do they have PENNIES?

  14. TravelWithDignity says:

    How are these local monies treated at tax time? I’m sure the IRS hates to not have a cut of the action.

  15. alexwade says:

    If only I can find some place to take my 100 Gribble bill …

    (And if only I can remember which episode of King of the Hill that came from.)

  16. SarasiPolyxena says:

    Canadian Tire Money for this, and every other, win!

  17. Maltboy wanders aimlessly through the Uncanny Valley says:

    I have a bunch of Paddy Bucks I’m looking to spend next time I’m in Philly.

  18. shea6408 says:
  19. Snowblind says:

    CHE.

    How quaint.

    As a consequence of his position at the head of the central bank, it was now Guevara’s duty to sign the Cuban currency, which per custom would bear his signature. Instead of using his full name, he signed the bills solely “Che.” -Wikipedia

  20. GoldVRod says:

    I’m am thoroughly confused by folks here asking about the legalities/tax time and all that nonsense. Have you naive lot never heard of a discount coupon? A gift card? A DEBIT CARD?

    What do you think they are and how do they differ from this?

    Answers on a postcard please.

    • Nigerian prince looking for business partner says:

      I was wondering the same thing. The idea of merchants banding together and accepting a standardized gift certificate really isn’t anything new. It’s usually in the form of “downtown dollars” or a mall that recognizes the same certificates.

  21. Conformist138 says:

    I’m from Portland (born and raised, never lived anywhere else) and I have never heard of Cascadia Hour Exchange. So, I’m not sure how widespread this is.

  22. PadThai says:

    I’ve lived in Ithaca, NY my entire life. Ithaca hours are well known around here, but not a lot of people actually use them.

  23. code65536 says:

    The same sort of thing is happening in Greece, too. If anyone needed any more proof that this recession is largely a monetary issue that could be fixed with the right kind of central bank intervention (forcing the redistribution from an increasingly concentrated and hoarding group of people who are “clotting” the flow through measures like inflation), this is it.

  24. xanadustc says:

    We have chamber gift certificates, but every time I want to use them, the stores do not know how…