BerkShares

what the hell? this is more interesting than the Berkshares themselves.

How can this be possible when the Wikipedia page has pictures of them..?

For the real thing, Brazil have Local Currencies that are used to foster money lending by banks to small and poor communities. The idea is that the money lent in better terms than elsewhere, will not be used outside of the community.

https://en.wikipedia.org/wiki/Banco_Palmas#Local_Currency

more sources in portuguese (in case anyone want pictures)

https://solidu.wordpress.com/2009/03/27/41-moedas-sociais-ci...

http://g1.globo.com/economia/noticia/2014/04/numero-de-moeda...

This is very common with those kind of experiments, nobody cares and nobody uses it.

If Berkshire County wanted BerkShares to be used they have a very 'easy' solution available: they should accept BerkShares and only BerkShares for the payment of taxes and others liabilities with the county.

Then, as the only BerkShares issuer, they would be able to mobilize any resource that they needed in the county.

Of course, that it's not without its problems, because in order to acquire resource from outside the county they would need 'foreign money'.

Umm, not sure what to say here other than "yes they do". Do you shop at the co-op market in Great Barrington? They were readily available in the past few years (I've since moved out of town). Specific local businesses provide a discount if you shop with BerkShares.

Yeah this is not a common denomination. I never saw any of these in the 5 college areas. It just looks like the common chamber of commerce local business promotion scheme than anything too serious.

Agreed; grew up in the Berkshires and these were just a gimmick. I never saw them.

It was exagerrated-- the "crime" of liberty dollars is that one of the distributors in NC was the ex-husband of an FBI agents sister, who was bitter about the situation and the FBI Agent decided he could make a terrorism case out of it and in the process steal a great deal of money via Asset Forfeiture-- which they did, including tens of thousands of Ron Paul Presidential Campaign Copper pieces (literally presidential campaign propaganda stolen by the FBI, in violation of the First Amendment and making all involved at the FBI felons under USC 18-242) not to mention something like $6M in Gold, Silver and Platinum pieces.

Then they railroaded the Liberty Dollar defendants with fraudulent (in my opinion) jury instructions telling them that a silver piece 10 times the size of a dime that also has a picture of the statue of liberty's torch was "identical" to US Currency under the law... despite Liberty Dollar having letters from the Secret Service, federal reserve, etc, expressing the legal opinion that they were legal and the like.

It's just a joke.

This case is the one that proved to me that not only is government corrupt, and will steal money, but that it doesn't even follow its own laws, and a large portion of the population will cheer on this corruption (the issue when it got posted to HN was met with a lot of liberals cheering it on because liberals are in favor of the inflationist fiat monetary regime and think that "kooks making money out of silver" should somehow be prosecuted.)

Berkshares appear to be a glorified version of Amazon vouchers, exchangeable at participating stores for a fixed dollar value. Except you can probably buy more with Amazon vouchers, and they probably look more like dollars.

On the other hand, the creator of Liberty Dollars campaigned for the abolition of the Fed whilst minting coins which were arguably similar to rarely-circulated commemorative dollar coins also called Liberty Dollars, and stamped a dollar value on them (which of course was in excess of the bullion value he was supposedly backing them with). Then when the US Mint issued warnings about "illegal coins" he took the suicidal decision to sue it to try to force it to withdraw them. Not a surprise that the government eventually found grounds to prosecute him under relatively obscure constitution-linked statutes covering exclusivity of coin mintage. (They also confiscated a lot of coins, most of which were eventually returned by courts. They're worth more now than when they were minted due to rarity value, looking pretty, and coin collectors and libertarians wanting them to show off)

There's a cautionary tale for the crypto-world there, probably.

Sparsely used, but talked about ALL THE TIME

and http://brixtonpound.org/

I grew up in the Berkshires and worked at Crane (making paper for the currency of several countries).

Strangely, I've never heard of BerkShares.

It's pegged to the dollar.

The funny money here is stilled pegged to the US dollar, so the Fed can still exercise monetary control over it. It's really just a form of gift certificate (or scrip) from my reading of it. Anyways, there's a history of using non-USD money in the US: see company towns that only dealt in company scrip, Disney Dollars, etc.

No matter what you're making money in, the government expects to be paid, and it only accepts US dollars.

I believe there is still a tax on private bank notes along with some federal regulations that make it extremely unattractive for banks to issue their own currency.

State governments are prohibited by the constitution from issuing their own currency.

Otherwise private entities are free to issue whatever currency they like. Nothing requires it to be pegged to the US dollar as far as I'm aware. You're effectively trading the "full faith and credit" of the US government for some pretty paper. Whether that pretty paper is worth something depends on whether you believe you will be able to purchase things of value with it, or in this case because banks guarantee a fixed exchange rate with the dollar.

It is barter, goods for goods. The profit is still taxed. This is not technically money in that it is not backed by a government. It's just bits of paper. Printing your own probably isnt a horrible crime, more a copyright violation or fraud rather than a felony.

That people assign value to these bits of paper is no differnt than bitcoin. If a bank wants to sell bitcoin, or buy them, it can. The regulations re whether a bank can call such holding an asset make thing complicated for the bank but so long as things remain small there isnt much of an issue.

It also isnt money because people can refuse to participate. An employee need not accept these in lieu of wages. A business need not accept them. Real money cannot be avoided. All debts in the US can be settled with dollars.

how is this different than a coupon? or a store branded Gift card? .. funds available for redemption at a subset of merchants.

Edit: I see now that its considered the same for tax reporting purposes. https://en.wikipedia.org/wiki/BerkShares#Taxation

If it's a local currency this can be considered a local Consumer Price Index. If you peg the local currency to it, the local currency is always available to buy the food, based on the local CPI of necessary goods, regardless of shortages etc. (if the pegging is daily).

I had a similar scheme for local based UBI here: https://qbix.com/blog/index.php/2017/09/the-future-of-money/

Units of account: http://www.econ.yale.edu/~shiller/online/uf-usa4.html

Shiller is a fan of interesting financial engineering of this type which he discusses in his books "Finance for the Good Society" and "Macro Markets".

For example, he also proposes a US bond which pays out interest fixed relative to GDP.

A superior system.

1 hour = 1 hour of work (rather than a USD equivalent). Or at least, that is how it started.

My company (Conpoto), runs a local currency/gift certificate platform that is purchased with regular dollars, but is only redeemable at local merchants participating in the program. We're in a bunch of states and Canada.

We'll do hundreds of thousands of dollars in currency purchases annually in some communities. It's used quite a bit by employers who want to keep money local (rather than sending it to Amazon or Target).

Nah, you're required to exchange one for $0.95 later.

Taking printing and other administrative costs into account, you definitely lose as the bank.

They are pegged against the dollar, meaning that the bank agrees to buy it back for what they paid for it. So basically, the issuer is taking out a zero interest loan from the users of the currency. Not a bad deal considering that the bank doesn't have to do any of the work involved in their typical source of zero-interest money (checking accounts).

How is that different from what you did as a founder? Say you create a company and issue 100M shares of worthless stock. Then after some time you end up selling 1M shares at $10/each. You get to keep $10MM that you created out of thin air?

Truth is, by creating the company, you created value. And the bank, by providing liquidity and reducing transactional friction does the same.

The public can also sell a BerkShare to the bank for $0.95. I don’t see how the bank makes a profit from this, other than using it as a way to acquire customers. (EDIT: Or some interest on the float, I guess)

You just described cryptocurrency.

you pay $0.95 but it is accepted as $1 so you effectively get a 5% discount. This is done to incentivize spending locally.

That would be true if currencies couldn't be converted / traded. Nothings stops you from trading Berkshares for USD or vice versa the same way you would Euros / Bitcoins / etc.

This only applies in a market where consumers always make objectively ideal decision.

This applies to smart phones, electric cars, and CPUs. (mostly, see post-script)

But for most goods, there is no such thing. What is the "best" tomato or a jar of honey for a consumer to buy? Is it the cheapest? The brightest? The most delicious? Yes, all those things. But the evaluation of them is subjective for most. A tomato from a local farmer you see on the street every weekend will look brighter and taste better and feel healthier to a lot of people than one coming across the world from Peru. Regardless of the truth or economics of scale.

Also why is it a zero sum game? If some consumers choose to spend more to support local producers, is that not just a form of local subsidy which rebalances the wealth slightly from consumers to local producers?

*Actually iPhones and Tesla are also emotional decisions. For some people an Android or a Chevy Volt are better decisions for factors beyond financial yet for emotional reasons they want the entire package that comes with the top brands.

I agree with what you said, mostly.

I say mostly because the world is complicated, and economics is something that applies at the it's complicated end. I think we do tend to go a little bit overboard about economic ideas. Local iPhones, Teslas, LCD screens and microprocessors is absolutely a path to poverty. Cultural and economic (I think these closely related) isolation is a path to poverty, of several kinds. Our isolationist instincts are often wrong, and closely bound with our xenophobic instincts. All else equal (including whatever you consider to be important), why buy local? Are faraway people not brothers and sisters? I am very comfortable making the case for openness.

Yet... There is still lots of room for experimentation, and oddities, and places where the rules are bended. There's some food bank collective that hired an economist to invent a fake currency and auction market for them. It needs some part time central banking, but supposedly works well. The market & currency has all sorts of quirks like negative prices to help with their specific needs.

Messing about with 5c on the dollar locally is totally fine. It's more than fine if it has a positive effect, and I wouldn't be surprised if that effect is something we'd see as "cultural."

...and thus begins BerkCoin... a name which surprisingly hasn't already become a cryptocurrency.