by Barry Bookout
There are many models for local or community currencies, but all of them are intended to solve a single problem â€” how to make a local economy stronger, more resilient, and less affected by external investment, income, and influence. While national, debt-based currencies are based on a model of scarcity, the best of local currencies are based on a model of abundance.
Adopting a local currency does not mean that good fiscal hygiene can be neglected. Â â€śPlugging the leaksâ€ť of money leaving the community and increasing income to the community are also important. Â This article discusses some ways a community can manage its own financial health.
The amount of money available to a community equals income minus outgoings plus locally generated currency.
Conventional approaches to economic development primarily address income, asking “how can we get more money into the community?”. Exporting valuable products and attracting industry, tourism and â€śjobsâ€ť fall into this category. It is an essential part of the picture, because income in the national currency is needed for all purchases of external products.
Outgoings include purchases of imported goods and services (food, fuel, tools, mortgages, insurance) and investments outside the community such as stocks, bonds, and mutual funds. This outflow of money is often not addressed at a community level, and represents a major opportunity to improve the health of the local economy. Â Controlling outgoings may seem obvious, but most communities make little effort to maximize the spending of available money within the local economy before it is eventually spent on imported goods or captured by outside investments.
If the total income is greater than the outgoings, then the community as a whole is becoming wealthier. While the distribution of wealth may be unequal, as long as the holders of surplus money invest in local enterprises they can provide earning opportunities throughout the community.
Roles for Local Currencies
Models in which the local currency is convertible with the national currency (e.g. Salt Spring Dollars) don’t do much to change the picture â€” they are an alternative to the national currency rather than a complement to it. They do restrict the money to being spent locally, and this helps with plugging the leaks, but not with creating new wealth. The local currency is effectively less valuable because of this restriction.
Truly complementary currencies are locally generated, and backed by local value. The more service or product a person or organization provides, the more local currency they can create for their own use. Â If that currency is accepted by other providers, it serves as a medium of exchange for locally created value.
When products are sourced from imported goods, the local currency is not a good vehicle for exchange, so part of the selling price may be in national currency (to cover the wholesale cost of the imported item), and part in local currency. Â Local currencies encourage â€ślocal production for local consumptionâ€ť, which may ultimately lead to production for export.
Types of Local Currencies
One way to categorize local currencies is as Mutual Credit or Fiat currencies.
Mutual credit models allow individuals to control the supply of local currency. Â Whenever one person is willing to grant credit to another for a good or service, wealth is created. Â That credit becomes a call on goods or services from other willing providers. Prices are arranged between buyer and seller, in a free market relationship. The amount of economic activity is entirely controlled by the individuals involved.
A common fear with mutual credit systems is that someone may run up a large debt, then fail to pay it back. One way to minimise this kind of problem is transparency of account status. Â For example, before selling to an unfamiliar person, his â€śdebt to activityâ€ť ratio could be checked. Also â€śtrust ratingsâ€ť could be used, as on eBay. Â As you can see, this is a very different way to do business than the way we are used to, but has the potential to create and strengthen connections between people and improve community spirit along the way.
One type of mutual credit local currency is the time bank. Members offer goods or services priced in hours, and can request services as well, either using a computer bid system, or directly from other members. Transactions may be managed online, so little human intervention is required. Â Checkbooks could allow offline transactions to be secure and accountable. Â Each member starts with a zero balance and accumulates credits and debits as they perform services or receive them from others – called a net-zero balance system. Currency may be printed, or not, according the design of the system.
There are many different models of mutual credit systems. Another example is the Local Exchange and Trading System (LETS). Â This thoughtfully designed system has â€śequivalenceâ€ť with the national currency as a key principle, to improve its usefulness to local businesses. Yet another is the Robust Complementary Currency System (ROCS). Learn more about these at the weblinks below.
Fiat models (fiat means â€śby decreeâ€ť, or â€śby commandâ€ť) have a centralized structure, with an organization managing the supply. Â The total money supply is controlled by the central authority. Â New issues of currency are made as deemed desirable. Â Individual participants in the economy cannot create additional money, but trade the limited supply among themselves. Â The central authority also decides if the money is convertible with the national currency, and if so, how to fund the currency.
Some problems with fiat currencies include inflexibility of the money supply, the need to print paper currency, and potential for lack of transparency of process.
Ithaca Hours, Salt Spring Dollars, Guernsey Pounds, Calgary Dollars, and the Canadian Dollar are fiat currencies, as was the lunch scrip once furnished here by the mill.
What About Taxes?
One common question about a local currency is â€śHow does that work with taxes?â€ť Â The Canadian Government says that taxes should be paid on income earned in local currencies just as on the Canadian Dollar. So, if a transaction would be taxable if it was carried out in Canadian dollars, it is taxable if it is carried out in a local currency. Transactions which would not normally be taxable are still not taxable in a local currency.
Income in currencies which are convertible with the national currency would be converted to Canadian dollars and taxed on that value. If there is a commonly accepted value of one â€ścreditâ€ť in the system, that would be used as a basis for calculating taxes.
For a time-based currency, goods or services are assumed to be sold at â€śfair market valueâ€ť, and taxes are due as if the same transaction Â had occurred in Canadian Dollars.
Other transactions carried out in local currencies, such as charitable and political donations, may also be tax deductible if they would be so if carried out in Canadian dollars.
When community currencies increase economic activity and income in a community, the local and national governments will benefit since their tax income will increase. So it would be in local government’s interest to accept some part of fees or taxes in a local currency.
Options for a Local Currency Project
There are many other options, issues, and concerns which come up when designing a local currency. Â In fact, a community is not limited to a single currency option. Different parts of the community may be Â best served by different types of currency, so there is no reason not to have as many as needed.
Designing an effective local currency is not a process to be undertaken lightly, but it is important to building a truly resilient local economy. Â Conventional wisdom says that a local currency is most important when the national currency is in short supply. Â When an economic shock happens, having an alternative currency allows trading and services to continue in spite of a shortage of national currency. Â The right local currency would also be useful now, to allow people whose products and services are underused to turn their abilities into credits, thus increasing local economic activity. Â Also, to have a community currency system in place when it is needed, we have to build it now, when it is not.
For more information on these and other local currency models, you can visit :
LETS pioneer and Community Way $ organiser Michael Linton from Courtenay will be in Powell River on Friday Sep 16th to give a Local Currency presentation. Join us at 7pm at the Community Resource Centre for Michael’s talk, or come earlier (from 5:30 pm) to the Meet & Greet and share information about Powell River’s local economy.
To discuss issues related to the Powell River local economy, and help design the perfect local currency for our community, please join the Transition Town Powell River local economy discussion list here:
September 7, 2011
Â· TTPR Â· No Comments
Tags: community way, economic development, fiat currency, LETS, local currency, local economy, Michael Linton, mutual credit, plugging the leaks, time bank Â· Posted in: Good Advice
Here’s the draft schedule, which is still subject to minor time changes:
Fri Sep 16th
5:30 – 7pm: meet & greet and community info fair (local economy related groups)
7 – 9pm: Local Currency presentation featuring Michael Linton (inventor of the LETS system, and one of the organisers of the Community Way local currency in Courtenay/Comox) (cost: $5 Register here)
Sat Sep 17th
9:30 – 4:30: Natural Business workshop with Dave Pollard (of Bowen in Transition, self-employment and small business consultant for many years, author of “Finding the Sweet Spot: The Natural Entrepreneur’s Guide to Responsible, Sustainable, Joyful Work”) (workshop cost:$30 Register here)
7pm – 9pm: “Plugging the Leaks” workshop (identifying where money leaves the local economy, how to slow the outflow and make it circulate locally for longer)
Sun Sep 18th
10am – 1pm: Really Really Free Market (a cross between a garage sale where everything is free, and an in-person Freecycle)
2 – 5pm: workshop “Save Money and put your Debt on a Diet” (getting out of debt, reducing expenses, frugality, etc) (cost: $5 Register here)
Sep 10 – 18: local business “treasure hunt” sponsored by PR Sustainability Stakeholders. Get your entry form here and return it by noon at the Really Really Free Market on Sunday 18th.
As you can see, we have a pretty ambitious weekend laid out with segments of interest to lots of different people. Some will be free, others will have a small cost attached. Everything will happen at the Community Resource Centre on Joyce. We’ll be needing volunteers for several jobs but especially for setup and rearrangement of the venue between segments. If you can help, even just for an hour, please let me know by replying to this email.
We’ll also be needing a few in-town billets for our speakers and possibly out of town visitors who don’t bring cars: many thanks to those who offered billets already but who live out of town making the no-car option a bit difficult.
There will soon be a registration page on the TTPR website for you to sign up to attend those segments you’re interested in. You don’t need to come to everything: just whatever piques your interest and fits with your schedule.
August 2, 2011
Â· TTPR Â· One Comment
Tags: debt, economic development, frugality, local currency, local economy, plugging the leaks, presentation, start a business, workshop Â· Posted in: Event notices
Here are a few things coming up soon which may interest you…
Sat Aug 6th: documentary by Avi Lewis – “The Take”
6:30 pm,Â Cranberry Hall, 6828 Cranberry St
In suburban Buenos Aires, thirty unemployed auto-parts workers walk into their idle factory, roll out sleeping mats, and refuse to leave. All they want is to re-start the silent machines. But this simple act – The Take – has the power to turn the globalization debate on its head….
Sun Aug 7th: Edible Garden Tour
Don’t miss these 10 all-new food gardens, in a wide variety of styles and sizes. Here are the details:
Sat Aug 13th: Cook with the Sun, an alternative cooking demo
3 pm, Lund Community Centre, Hwy 101 & Larson
If the power went out for more than a short time, energy costs became outrageous, or there was a disaster or emergency, how would you cook your food? Come to that, how can you cook your food right now in ways that use no fossil fuels or electricity, and are easy on the planet?
Join Jack Anderson for a demonstration of alternative cooking methods. We’ll be able to see solar ovens, a rocket stove, and haybox cooking all working away producing delicious food. All three “appliances” can be homemade, and there will be handouts telling you where to find information to do just that.
The Kyoto Twist Solar Cooking Society is holding its AGM at 7pm the same day and location, preceded by a potluck that you are welcome to attend.
Admission by donation.
Carpool from the City of Powell River: for details call 3 9052 or contact us
Take Powell River’s Vital Signs Community Survey and make your views and ideas known.
Powell River’s “Vital SignsÂ®” reports on the vitality of our community by measuring the quality of life and identifying trends in 12 key areas from many official and trusted data sources.
In addition to analyzing the data, Vital Signs uses a community survey to find out how residents rate their quality of life and what they say are the top issues for Powell River.
Click here to start taking the survey.
Additional information on Powell River’s Vital SignsÂ® and a link to the survey can be found at www.prvs.ca.
Want even more information about Vital Signs and the survey?Â Attend an information open house on Wednesday, July 27, 2011, 4-5 p.m. at the Town Centre Hotel.
Powell River’s Vital SignsÂ® is produced locally by the Powell River Community Foundation under an initiative of Community Foundations of Canada.Â The survey results and the full-colour reader friendly report will be available on October 4, 2011, the date all participating communities across Canada simultaneously release their local reports.
Please circulate this message as widely as possible to your organization and personal distribution lists in the Powell River community so that all residents can give their opinions.Â We apologize for duplicate postings.
To help safeguard the results, the survey can only be filled out once on any computer.Â If more than one user on a computer would like to complete the survey, please contact firstname.lastname@example.org.
Paper copies will be available at the open house, the Powell River Library and other locations. All online and paper surveys must be completed by August 24, 2011 to be considered.
Here’s what’s coming up in July and August. We also have some really exciting stuff planned for September and October, so stay tuned for more on that
- Food Dryer show-and-tell and Picnic Social Jul 24th
- Edible Garden Tour Aug 7th
- Alternative Cooking Methods demo Aug 13th
All three of these events are co-organized by the Food Security Project and TTPR.
Read on for details…
Food Dryer show-and-tell and Picnic Social
Sunday July 24th, noon-2pm
Lindsay Park, Cranberry St (on Cranberry Lake, a few blocks south of the Cranberry Hall)
Bring your lunch and something to sit on, and if you have a food dryer/dehydrator, bring that too! We’ll show and tell about the different kinds of dryer (solar, electric, combo, other?), pros and cons of different designs and models – and eat lunch together in the park. If you need transport to get your dryer to the park, please reply and we’ll organize a dryer carpool
Nearest bus stop: Route #1, Cranberry and Marlatt. Buses leave at 40 minutes past the hour from the Town Centre Mall, so you will want to catch the 11:40 AM bus from there.
Rain location: Cranberry Hall, 6828 Cranberry St.
Edible Garden Tour
Sunday Aug 7th, 9am – noon and 1pm – 4pm, with a picnic from noon-1pm.
The final details of the actual gardens, picnic location, carpool, and whether the hoped-for bus will materialize are still being pinned down, but the garden tour will be as wonderful as always. For full details as they appear, check:
Alternative Cooking Methods demo
Saturday Aug 13th, 3 pm
Lund Community Centre, Hwy 101 & Larson
How can you cook your food right now in ways that use no fossil fuels or electricity, and are easy on the planet?
Come to that, if the power went out for more than a short time, energy costs became outrageous, or there was a disaster or emergency, how would you cook your food?
Join Jack Anderson for a demonstration of alternative cooking methods. We’ll be able to see solar ovens, a rocket stove, and haybox cooking all working away producing delicious food. All three “appliances” can be homemade.
The Kyoto Twist Solar Cooking Society is holding its AGM at 7pm the same day and location, preceded by aÂ potluck that you are welcome to attend.
Carpool to Lund! We’ll have a page set up nearer to the time where you can link up with others to carpool to this demo. Let’s not have a dozen people in a dozen separate cars driving up the highway to Lund!
TTPR and the Food Security Project are working on a series of food-related workshops during the rest of 2011 and into spring 2012. Our first is Sunday June 26th: Winter Food Growing with Rosie Fleury.
- Now is the time to plant!
- The right location in your garden for a winter bed
- Which plants to choose
- What to plant and when
- Row covers or not?
- Start plants or choose the right starts.
Sun June 26th, 2 – 4pm
Community Resource Centre, 4752 Joyce Ave
$5 at the door
Indoor/Outdoor: dress for the weather!
Thursday June 16th, 7pm: Join us in Wendy and Barry’s living room to watch “Fresh: the movie”
From the movie website:FRESH celebrates the farmers, thinkers and business people across America who are re-inventing our food system. Each has witnessed the rapid transformation of our agriculture into an industrial model, and confronted the consequences: food contamination, environmental pollution, depletion of natural resources, and morbid obesity. Forging healthier, sustainable alternatives, they offer a practical vision for a future of our food and our planet. Among several main characters, FRESH features urban farmer and activist, Will Allen, the recipient of MacArthurâ€™s 2008 Genius Award; sustainable farmer and entrepreneur, Joel Salatin, made famous by Michael Pollanâ€™s book, The Omnivoreâ€™s Dilemma; and supermarket owner, David Ball, challenging our Wal-Mart dominated economy.
Please callÂ 5 6664 to get the address and make sure there’s room for you on the sofa – or the floor!
Join us to watch “The Economics of Happiness” in Rob and Janet’s living room on May20th, 7 pm! CallÂ 485 4123 to RSVP.
Fed up with high gas prices? Come and explore the ways you can get around Powell River without a car. Includes demos of electric vehicles, bus tour, bike maintenance, bike skills class, and more! Bring your own electric vehicle to show and tell if you have one.
May 5, 2011
Â· TTPR Â· No Comments
Tags: alternative transportation, bike maintenance, bike rack, bike workshop, biking, bus, buses, community event, electric bike, electric scooter, electric vehicle, ev, public transit Â· Posted in: Event notices, workshops
Great video from Robert Bateman on the possible results of an oil spill here on the BC coast…