Successful investing will necessarily become more than the
science of maximizing digital wealth by anticipating technological progress
and monetary policy.
Notwithstanding apparent stock market strength, major investors
risk great loss to any extent they rely on extraction of irreplaceable primary
materials, and upon police and military to restrain the market's losers.
The global market gallops too fast to allow most investors to closely consider
the depletion of essential soils, fresh water, minerals and fuels, upon
which all commerce depends. Although dysfunctions such as pollution, crime,
famine, epidemics and war are profitable for some sectors, they damage longrange
market expansion. Prevailing narrow assumptions about profitability would
eventually impose hard discipline upon rich and poor alike.
But rather than further argue these urgencies, raising alarms
about the invasion of externalities, this article describes benefits to
the macroeconomy of community paper money, which stimulates real
growth while addressing global threats. Its main premise is that the
health of the macroeconomy depends ultimately on the vigor of city and village
economies, just as healthy lungs depend on tiny air sacs.
Replenishment of any market demands capitalization of microenterprise
innovation-- many largest corporations started in kitchens or garages. Zero-interest
community currency microloans, too small for commercial lenders, can help
start or expand promising new small businesses. Simultaneously, new local
money opens new local markets for these businesses.
The durability of money depends upon commodity backing, and
the capacity of real people to buy commodities. There is not enough real
production (97.5% of foreign exchange trade is currency futures, etc.) to
justify the volume of digital trading driving stocks up. Nor is there any
longer enough gold or silver available to provide hard money for the volume
of commodity trading needed to sustain six billion humans. The more direct
relation between community currency supply and local commodity backing can
provide stability to federal dollars.
Moreover, supplemental local cash, targeted to small businesses
and under/unemployed sectors, enables more local trading to take place,
which expands formal business activity and improves creditworthiness. Community
currency is a powerful way to bring underutilized labor and talent into
local markets, which then feed regional and global trade.
Because local currency is money with a boundary around it,
the locality gains an infinite multiplier. Yet rather than isolate communities,
local cash frees them from the isolation imposed by capital outflows and
by low service sector wages, which restrain trade. Local currency enables
cities to reach other cities from strength, by maximizing their latent resources
to export more and import more. Citizens may even travel more with extra
Especially importantly, local currency trading reinforces
direct face-to-face commerce, as at farmer's markets, where citizens learn
about one another as resources, rather than as competitors for scarce dollars.
They become friends, lovers and political allies. They make communities
while making a living.
For these reasons, since 1991, thousands of residents of Ithaca,
New York, including 500 businesses (including a bank, movie theaters, health
clubs, local farmers and the hospital), have traded several million dollars
with their own paper cash, the Ithaca HOUR (One HOUR = one hour of basic
labor or $10.00). Dozens of zero-interest HOUR loans have been made. HOUR
grants have been given to 62 local organizations. There are now dozens of
HOUR systems in North America (from Brooklyn to Santa Barbara) and worldwide
(from China to Argentina) based on this model.
Ithaca HOURS are backed by thousands of goods and services
listed in the local currency directory HOUR Town. Since the correlation
between the HOUR supply and commodity backing is direct (food is Ithaca's
largest category), we call HOURS real money. HOURS are also backed by labor,
a measure of value as steady as the clock.
Ithaca's elected HOUR
directors (Municipal Reserve Board) carefully monitor circulation to
prevent inflation. There is presently generally greater demand for HOURS
than supply, so issuance policy has changed to carefully accelerate supply.
Currently, there are agreed caps on HOURS outstanding as loans. Fourteen
percent of total HOURS issued (plus 25% of HOUR loans repaid) may be issued
as community grants. Five percent of HOURS may be issued as grants to the
system itself. The remaining HOURS are issued as modest start-up payments
to businesses and individuals who provide published backing for HOURS by
agreeing to be listed in HOUR Town. The HOUR system funds itself through
sales of ads in its directory, by repayment of HOUR loans with dollars,
and through grants.
Ithacans have even created their own locally-controlled, nonprofit,
democratically-managed health security system (Ithaca
Health Fund), using local currency. Small businesses otherwise unable
to provide health coverage have relied on the Health Fund to improve labor
Although chain stores and commercial banks have not yet chosen
to accept local cash, they've benefitted already by extra discretionary
dollars in the local market. When an HOUR is spent, for food or rent, ten
additional dollars are also available to spend.
Although it's reasonably assumed that cash trading fosters
tax avoidance, and though many people must decide whether to feed their
government or their family, overall the economic stimulus provided by HOURS
to retailers has increased local sales tax collection.
While lower wages are assumed better for business, the higher
HOUR minimum wage ($10.00) enables workers to spend who otherwise stay home.
At the same time, the HOUR is flexible: professionals may charge multiple
HOURS per hour. Yet we note that many professionals charge HOUR users less,
in the spirit of the system. More local money among the poor enables more
national money to trickle up and down, and reduces the explosive disparity
And while it's often assumed that we become wealthier the
faster we consume resources and throw them away, local currencies enable
us readily to expand ecological economic activity.
Take for example the assumption that, for construction to
thrive, our cities must build taller, consume vast hinterlands, yield to
ever-wider highways and ever-more cars, and must spread across forests and
farms. As author of the book "Los
Angeles: A History of the Future," I've offered a systematic
scenario for rebuilding Los Angeles toward balance with nature-- a massive
process requiring decades, costing trillions, and producing beautiful, practical
and profitable neighborhoods.
Replicated worldwide, such urban reconstruction would restart
markets afresh. Billions of workers now underemployed would find their creativity
engaged. Reliance on unemployment as a tool of labor control would be overridden
by realization that idle labor is idle capital, as the world approached
There is now far more money to be made, for far longer, by
replenishing the earth and its cities
than by exploiting dysfunctions. Investment in community currency systems
brings such choices alive and helps establish the conditions for unlimited
growth of a global economy.
A planet of such communities, linked by national and supranational
currencies which are themselves backed by hundreds of thousands of local
currencies (whose integrity is credentialed), will likelier maintain stable,
Such a world could still accommodate singularly wealthy people
in beautiful homes, proud of investments that have made everyone's life
easier. But they would be less pressured to consume conspicuously. They
and their children would enjoy wealth even more fundamental than their bank
accounts, and be far more secure from social upheaval.
Economic activity should be fun and beneficial. Who will lead?
Exploring beyond conventional investment
and embracing such new opportunities may be where really smart money goes.
We believe these opportunities begin with local currency.
Paul Glover <firstname.lastname@example.org>
Paul Glover is founder of Ithaca HOURS and the Ithaca Health
Fund, holds degrees in Advertising and in City Management, and founded Citizen
Planners of Los Angeles. He is author of Hometown Money.
All information posted on this web site is
the opinion of the author and is provided for educational purposes only.
It is not to be construed as medical advice. Only a licensed medical doctor
can legally offer medical advice in the United States. Consult the healer
of your choice for medical care and advice.