A town issuing its own local currency

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Xan
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A town issuing its own local currency

Post by Xan » Sun Jun 14, 2020 5:42 pm

The tiny town of Tenino, Washington is issuing its own currency. This certainly has implications on a lot of conversations we've had here in the past about what makes currencies work!

The article seems to be really well done, going into detail on Tenino's plan, as well as a similar one from 100+ years ago, and other localities worldwide which have tried the idea.

https://thehustle.co/covid19-local-curr ... ashington/
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Re: A town issuing its own local currency

Post by Mark Leavy » Sun Jun 14, 2020 6:52 pm

Interesting read, Xan. Thanks for posting it.

As I was reading the article, I kept looking for one of the features that establishes "value" for fiat money. Usually, it is the requirement to pay your taxes using the fiat. Obviously, that doesn't apply to this case.

It seems that the notes are actually bearer bonds redeemable at city hall - if and only if you are an authorized person. At first I thought only merchants could be authorized - but unless I read it wrong - the town citizens could also directly redeem the wood bucks at city hall (?)

Plus, the bearer bonds seem to have an expiry. I wonder if the black market value will decay as the expiry date approaches? Or, more likely, just a run on city hall.

As you said, it appears well thought out for the specific circumstances it is intended to address. I imagine a few of the bucks will become collector's items and never redeemed.

EDIT: It looks like the wood bucks are only redeemable by merchants. And the merchants are evidently on the honor system that they only got the bucks from valid customers who weren't trying to buy booze and cigarettes and weed and hair cuts.
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Re: A town issuing its own local currency

Post by Mark Leavy » Sun Jun 14, 2020 7:20 pm

Another thought.

The merchant incurs some "cost" in accepting the Tenino wood slices. Since they have to go to the trouble to redeem them for cash, they are obviously not as desirable as genuine sawbucks.

The corporate world solves this by offering merchants more than the coupon face value when they redeem them. Stores get a hefty mark-up for their trouble when they turn the coupons back in. (This, in itself, drives a bit of bad behavior on the part of the stores...)

Tenino seems to handle the issue by not allowing the merchants to provide change. The wood wampum comes in $25 denominations and so one assumes that most purchases will not come out to exactly the face value, in which case the merchant makes up the difference upon redemption. Savvy citizens, though, will get pretty close by throwing in an extra banana or so to round up. So, this sort of requires the merchant to buy into the community spirit and suck up any extra work involved in the redemption process.
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Re: A town issuing its own local currency

Post by dualstow » Sun Jun 14, 2020 8:17 pm

Interesting! I remember Ithaca HOURS, which are mentioned in the article ( https://en.wikipedia.org/wiki/Ithaca_Hours ).
But, printing on wood is a novel idea. Fiat currency has always been just a veneer anyway.
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Re: A town issuing its own local currency

Post by Mark Leavy » Sun Jun 14, 2020 10:58 pm

dualstow wrote:
Sun Jun 14, 2020 8:17 pm
...
printing on wood is a novel idea. Fiat currency has always been just a veneer anyway.
Tally sticks are very old. You would carve the contract into the stick - via notches and symbols along the edge - and then split the stick in two along the grain. Both sides getting a copy of the notches. The matching grain was an unforgeable signature. It ensured that the "holder of the note" was entitled to the debt. Upon payment, the note holder surrendered his half of the stick.

Hawala is a more modern version of the same thing. They usually use a torn lottery ticket or something similar - where the edges have to match up.
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Re: A town issuing its own local currency

Post by dualstow » Mon Jun 15, 2020 6:21 am

Neat!
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