Livelihood Local Economy New Economics

Local Currencies and the Current

Mar 07, 2016 Anne Pyburn Craig

by Anne Pyburn Craig

The Hudson Valley is well positioned to generate enormous wealth. Natural beauty, fertile soil, hard workers, abundant creativity—all these things should add up to widespread prosperity. Yet a lot of people are struggling, due to forces that seem beyond our control. Landlords raise rent because property taxes are high because school district budgets are carrying massive debt. It’s a situation that sets us against one another.

Becoming a member of Hudson Valley Current is an effective way to get out from under at least some of the load and shelter your finances from the unpredictable fluctuations of the fickle beast they call the economy. Like buying healthy local food, participating in a nontoxic local currency exchange helps to increase your real, personal wealth—what you get in return for what you produce.

Toxic Money

As an abstract representation of the value of the work and things, money should be fairly straightforward: produce value of some sort and then you will  be able to acquire food, shelter, clothing, health care, and more.

But dollars are created as interest-bearing debt issued by the Federal Reserve. The cost of interest is built into the price of every product and service we buy with dollars. So ultimately, when we want to borrow some money for a while, we pay banks back several times what they pay us when we let them use our money for a while.

Money, as it is commonly understood, keeps us susceptible to forces we can’t control—fluctuating interest rates, inflation, and currency issuance to name a few. Dollars flow directly out of our local communities and into corporate headquarters, where they have very little chance of returning to us.

Organic Money

Interest-free local currencies are neither brand new nor unusual; they were popular during the Great Depression as a way to help struggling communities survive, and are in use in many places around the world. They’re based on the simple understanding that money is just a way to store value and facilitate exchange: to trade with your neighbor when he needs a can of coffee and all you have is a dozen eggs, but what you really need is to fix your lower back pain or your screen door.

Instead of being tied to interest-bearing debt, local currencies gain their value directly from the goods and services exchanged. Over the last decade or so, they’ve been growing in a lot of places. A 2012 article in Forbes magazine identifies a dozen, ranging in size from the 100 residents of Traverse City who exchange Bay Bucks to the Life Currency Cooperative exchange, which was founded in 2004 with a modest 12 members and has now grown to an international system through which the equivalent of about $1.5 million has been exchanged in over 16,000 transactions.

The Current

Founded in 2013 by Chris Hewitt, David McCarthy, and Maria Reidelbach using a startup grant from the Local Economies Project, the Hudson Valley’s own local currency has facilitated over $150,000 worth of exchanges during its development and testing phase alone. Using an all-digital model (one can pay with Currents via web platform or text message) in which one Current equals one dollar, members  can use Currents to purchase goods and services. You can hire an electrician, get your car fixed, see a doctor, or take music lessons.

At press time, there were 205 members: indie business owners, nonprofit organizations, social entrepreneurs, artists, health professionals, students, retirees, and service people of all kinds, as well as informal groups such as the permaculture movement, and the growers, suppliers, distributors, and restaurants that make up the area’s food network.

Business members start with an interest-free credit line of 300 Currents, which can be used, among other things, to purchase advertising in four popular local publications (Chronogram, Country Wisdom News, Shawangunk Journal, and VisitVortex). Plus the Hudson Valley Current gives new members a free signal boost by featuring them lavishly on the Hudson Valley Current website and Facebook page. Employees of member businesses can elect to receive some of their pay in Currents. Active users can apply for higher credit lines.

It’s a strong start and to make the Current stronger, organizers are networking with local currency experts from around the world. “Our main focus right now is signing up core business, which offer goods and services that everyone uses,” says Hewitt. “Food, for example. Farm-to-table is such a big movement, and every time one of those transactions takes place in Currents, the big banks and usurers aren’t getting a cut. The money stays local and is subject to the multiplier effect.” In this case, the multiplier effect describes the increased likelihood of capital circling back to an individual or business, when the currency has geographic bounds, as the Current does.

Quite obviously, the more people get involved, the wider the variety of available goods and services will be and the more useful the Current will become. Hewitt and his collaborators are targeting potential “anchor communities” where membership is already strong, working to diversify revenue streams, localize supply chain loops, and enhance the Current’s visibility with nifty visuals, such as maps of Current businesses and window stickers touting “Currents Accepted Here!”

“People sign up because it’s a good idea and then forget to actually use them and reap the benefits,” says Hewitt. “Education, marketing and promotion will overcome that. When we had the Common Ground Festival [in October 2014], where people could use Currents for everything there, they were amazed at how well it works and how pleasant it is.”

Currents cannot be converted to dollars, as this would remove the guarantee that the wealth stays local. But transactions can be “split” between dollars and Currents. Hewitt notes that one area landlord has begun accepting Currents as partial rent payment. Currents can be used to back any agreed-upon good or service under the sun. However, as a legal form of barter exchange, money earned in Currents is taxable income (the organization issues 1099B forms to members to make things simple with the IRS).

With a strategic plan in place and their fingers on the pulse of the economy, both local and national, organizers are building a sustainable local exchange system that favors cooperation over competition, distribution of wealth over concentration—a rising tide that can truly lift all boats. No matter what the Fed or the Dow does, your Currents will retain buying power among your neighbors—and that, along with the cooperation factor, is priceless.