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Adam I. Gerard
ISU
NIU
CS MS TBD

Community Currencies

I'm keenly interested in the conceptual intersection of money and value.

I've previously described how I think modern monetary value diverges from more fundamental value (which transcends purely monetary value).

I'm also not a fan of metaphysical materialism as stated. However, I now think most economic criticisms about wealth, consumerism/consumer materialism, etc. are well-intentioned but misplaced (e.g. - I am against metaphysical materialism but don't agree with most critics of consumerism). In fact, I now think it's probably less about these intangible sources of frustration (metaphysics, social virtues, etc.) and more about how money is engineered.

I think these kinds of debates have obfuscated the underlying problem which is a lack of creative financial engineering by government.

I recently encountered the great news that a small town in Washington state has begun to experiment with a wooden community currency - issuing thousands of dollars to help their community survive the economic crisis!

I've written several previous posts about this topic and would like to dive into this deeper here:

  1. Future Governance
  2. Alternative Money Systems
  3. Toward Gift Economics #1
  4. Toward Gift Economics #2

Caveat: I'm a little out of my area of "expertise" here. So, as always take what I say with a grain of salt.

The United States Federal government retains a monopoly on the issuance of legal tender which is mostly defined in the Coinage Act of 1792 (and its revisions).

Legal tender is a sovereign currency that must be accepted (is universally required to be accepted) as a form of payment (with some nuances in the specifics).

The United States does not deny (non-governmental) banks, corporations, or technologies from issuing notes.

Cryptocurrencies and Notes

I maintain that cryptocurrencies are better thought of as permission-commodities:

  1. Commodities that are bought and sold at Fair Market Value.
  2. That also entitle someone to use a service or good.

Examples of permission-commodities include redeemable rewards points, gift cards, laundry tokens, arcade tokens, etc.

This point is somewhat moot though, call them a currency or a commodity, cryptocurrencies are decidedly legal in the United States (in tandem with, I think, healthy levels of regulation). A few examples:

  1. https://gemini.com/about
  2. https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory
  3. https://www.sec.gov/ICO
  4. https://dfi.wa.gov/bitcoin

Notes are still issued by banks (despite a recent change in how the Federal Reserve apparently handles banknotes and currencynotes) and other institutions:

  1. Convertible notes are often issued to startups to provide seed funding.
  2. Promissory notes are used to grant student loans.
  3. Checks are used to make payments and are backed by money in account.
  4. Equity notes (of various kinds) to designate ownership over some commodity, equity, or other asset.

Here, the general recipe is:

  1. An approved written contract or agreement (issued by a legally-acknowledged institution or group).
  2. Backed by or convertible into some more fundamental currency.

Generally, a group who organize their business practices under a certain kind of corporate or limited body can, in virtue of their business classification, issue appropriate notes in the ways described above.

To clarify a few surrounding legal notions:

  1. Fraud is theft, robbery, or the acquisition of money through illegal or misleading practices.
  2. Counterfeiting (the unlawful printing and use of fake notes).
  3. The United States Federal government retains the sole right to issue legal tender.

Note: it's both possible for a company to issue notes that are fraudulent. A note itself is no guarantee that the business practice is lawful.

Generally, I'm a big fan of well-regulated financial instruments. If finance isn't regulated enough, the financial system as a whole loses meaning and relevance.

As a consequence, one of the most interesting places for fruitful, well-regulated, and beneficial financial engineering technologies to naturally emerge is within government itself.

Community Currency Comments

Essentially, I think it's a shame that many cities, states, and jurisdictions are struggling due to budget shortfalls. It's become all too common to hear stories about cuts to infrastructure, police departments, schools, etc.

  1. https://www.king5.com/article/news/gov-jay-inslee-cuts-millions-from-state-budget-due-to-coronavirus-crisis/281-62715915-7830-41b7-84b3-d1d7e5ca3147
  2. https://crosscut.com/2020/06/was-coming-budget-cuts-could-dwarf-those-great-recession
  3. https://www.cnn.com/2020/05/14/politics/california-budget-deficit-federal-funds/index.html
  4. https://www.latimes.com/california/story/2020-05-15/california-schools-face-deep-coronavirus-cuts-as-they-struggle-to-reopen

Just a few randomly-selected examples.

What's the best way to address these problems?

  1. Is it about increasing taxes?
  2. Is it about balancing the budget?
  3. Is it about spending more to stimulate growth?

These answers used to indicate the fundamental points of disagreement between Democrats and Republicans (and, clearly the fact that both parties feel the need to address this problem means it's a problem that transcends political affiliation). I think a mix of those approaches is probably best. But there is a fourth option, rarely considered:

  1. Use advanced financial engineering technologies to supplement existing budgets.

Consider the following American jurisdictions that have explored 4 (in both Republican and Democratic-led regions):

  1. https://www.governing.com/topics/finance/gov-berkeley-bitcoin-cryptocurrency.html
  2. https://www.foxnews.com/us/washington-town-prints-wooden-currency-coronavirus-relief
  3. https://bitcoinmagazine.com/articles/new-sovereign-cryptocurrency-will-be-legal-tender-marshall-islands

Mad props and kudos to those visionaries in civil service!

Previously, I walked through a few ways I thought such systems might be implemented in the future (drawing on those examples above as sources of inspiration):

  1. Alternative Money Systems
  2. Toward Gift Economics #1
  3. Toward Gift Economics #2

Why are cities, states, and other jurisdictions still struggling with debt and budgeting shortfalls?

It seems to me that many governmental bodies have become fixated on their own (financial) creations rather than creating new ones.

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