AMERICA:Across America, the greenback is being replaced by Cheers, Berkshares and Plenties, writes DENIS STAUNTON
WHILE MOST Americans wait for President Barack Obama’s economic recovery plan to bear fruit, some communities are taking matters into their own hands in an effort to protect local businesses and preserve their tax base. More than 75 towns across the country have launched local currencies, reviving an idea from the Depression that helped to keep commerce alive when the banks failed.
In Detroit, you can spend Cheers; in Ithaca, New York, local firms accept Hours; and in Berkshire, Massachusetts, 370 businesses welcome BerkShares.
In Pittsboro, North Carolina, they have revived the Plenty, which comes in $1, $5, $10, $20 and $50 denominations. Right now, only a handful of businesses accept the Plenty but the currency’s backers are confident all that will change when the locally owned Capital Bank starts exchanging Plenties for dollars.
The bank will offer $10 worth of Plenties for $9 in federal reserve notes, giving consumers who shop with the local currency a 10 per cent discount on goods and services.
Lyle Estill, a Pittsboro community activist who is part of the group behind the Plenty, says the currency will help the local economy by keeping money in circulation within the local community.
“If you buy a book at our locally owned bookstore, they’re going to take that dollar, and they’ll spend it on the local bookkeeper, and they’ll buy an ad in the local newspaper, and someone will go out to dinner at the local restaurant, and the dollar will go round and round and round before it leaves town,” he told Democracy Now.
“If you take that dollar and send it directly to Amazon, it leaves town immediately, never to be seen again. The nice thing about the Plenty is you can’t spend it in China. So the only place that it circulates is in our local economy. And so, the more circulation there is, the more enriched we all are.”
The Federal Reserve and the Internal Revenue Service have no problem with local currencies as long as their value is fixed to the US dollar, the notes don’t resemble dollars and the lowest denomination is worth at least one dollar.
Shops that accept local currency must still pay sales tax on the goods they sell and many municipalities welcome the new trend as a potential boost to local tax revenue.
Some businesses in Pittsboro are wary of accepting the Plenty because they fear that the currency could be too easily counterfeited. Local currency advocates argue, however, that because they operate on such a small scale, currencies like the Plenty are scarcely worth counterfeiting.
Some economists are sceptical about the value of local currencies, arguing that you can stimulate the local economy just as well by spending dollars. Advocates claim that an economically depressed region can pull itself up by giving the people living there a medium of exchange that they can use to exchange services and locally produced goods.
Local currencies can have environmental benefits too, by encouraging the purchase of locally grown food instead of produce brought into supermarkets from hundreds of miles away.
And for consumers operating on ever-tighter budgets with less and less access to credit, the modest discount offered by spending a local currency can make a big difference.
For activists like Estill, the Plenty is part of a broader effort to make small communities more self-reliant. He’s the founder of Piedmont Biofuels, a co-operative that in 2005 bought a 14-acre industrial park outside Pittsboro. Along with a biodiesel plant, the park is now home to eight businesses, including an organic vegetable distributor, a sustainable agriculture project and a bio-pesticide company.
“You can buy your fuel and your internet service and your groceries and lunch at the general store cafe. Now that Capital Bank has agreed to exchange Plenties for Federal Reserve notes, I don’t think it will be long before every merchant in town starts taking Plenties,” he says.
“I think that self-reliance is important. And what we have been working on is trying to explore ways of being a self-reliant community. And that includes how would we fuel ourselves and feed ourselves and finance ourselves.”