Why a small town in Washington is printing its own currency during the pandemic | Hacker News Reader

Why a small town in Washington is printing its own currency during the pandemic

thehustle.co

29 pointszenit-mf-119 comments

It's an interesting economic phenomenon, trying to keep your generated economic output of labor local. Always seems to be done by relatively isolated sub-communities (socially or geographically), where, let's call it, artisan shopowners seem to be the beneficiaries. Usually not where there's a whole lot of meaningful industrial activity to begin with...

https://en.wikipedia.org/wiki/Local_currency

https://en.wikipedia.org/wiki/Local_exchange_trading_system

https://en.wikipedia.org/wiki/List_of_community_currencies_i...

Extract from the article "But why print the money on wood? Why not just give residents $300 worth of federal dollars?

The answer is simple: By creating its own local currency, Tenino keeps the money in the community. As Fournier puts it, “Amazon will not be accepting wooden dollars.”

“The money stays in the city. It doesn’t go out to Walmart and Costco and all those places,” says Joyce Worrell, who has run the antique shop Iron Works Boutiques for the past decade.

[deleted in shame]

The article is very clear about this. The store can take the currency to the town government and redeem it for USD. They can then use that USD for restocking.

The goal isn't some circulating currency: it's just a stimulus that has to be spent locally.

The article explains this. The business can convert the local notes to cash on a regular basis. The point is to give those in need a cash substitute that enables purchasing essentials locally. Seems like a great idea to me!

I wonder how well something like this will do compared to Ithaca hours [0] where one unit of currency is equal to an hour’s worth of work. It’s been around for a long time, but they don’t give free money to people like they do with this local currency in WA…

[0] https://en.wikipedia.org/wiki/Ithaca_Hours

I'm curious if anyone has opinions about the legality of this? Why can a town do this but cryptocurrencies have to be so cautious about the way they present themselves to the market?

I think the reason is that there is no interfacing between federal money and their currency, it's the equivalent of bartering only with the agileness of currency notes instead of cows, lamb and sheep. To your question, if cryptocurrencies stayed in cryptocurrencies with no interfacing to fiat, it would be the same with no government having any ability to govern it aside form outright banning by force.

That makes sense, except that I don't understand this: doesn't all currency eventually "leak" via exchange into federal currency? Won't someone accepting a wooden note eventually need to give a wooden note plus $1 for the milk they need? Isn't it all going to get mixed together at some point?

There is interfacing, the town government directly exchanges the wood money for US money twice a month.... The real argument would be these are essentially redemption tokens with equal value to US money, you can't speculate or invest in them because they will only ever be worth the same amount in US money.

You could speculate on them based on the value of what you can buy in town. Maybe they’re worth more if a business would only accept fake fiat over dollars, or worth less because you can only spend this currency in this one geographic location.

Like osmosis, if there is a value gradient, you can arbitrage it given a means to exchange that value.

This isn't too far from Olympia. I wonder if there are some opportunities to buy things cheaper for cash than with the script dollars. I guess they address that by letting businesses exchange them back for the same. Still that's a tiny bit of overhead and there's a tiny chance making them less than equal to dollars because of the exchange. It's really a great idea for a small town.

There is an interface, at time of creation when the town sets aside money to back then, and at redemption when the town takes them back and pays out cash. They feel more like gift cards with most local businesses participating.

Similar to what some are doing in Korea: issue gift cards that can only be used in local markets to local people: in that way one can ensure the money goes to local business rather than imported goods/internet shopping/whatever.

Another policy in Korea (which is more direct and bigger in scale) is: issuing people money directly via online banking (about a few hundred dollars per person, maybe more depending on your wage status), but put constraints on credit/check card usage such that the money can only be used in certain businesses (mostly shops and local restaurants).

Slightly related. Auroville [1] in South India has tried its own monetary system (Aurocard). But over time that didn’t catch up much. There are some businesses that will accept only the Aurocard and not any other form of payment (like government issued currency notes or bank issued cards).

[1]: https://www.auroville.org

Semi related, in Pismo Beach (California), shop owners used clamshells as proof-of-purchase / an alternative currency during the Great Depression

https://www.si.edu/object/nmah_1066284

Very sparse on details.

What gives these wooden dollars any value? Why would I, as a local business owner, accept them?

How do I pay for supplies and stock I get from outside the community, if all I have are these wooden dollars and no federal dollars?

The article has this information.

> The spending comes with a few restrictions: Residents can’t use the money to buy cigarettes, lottery tickets, or alcohol. The currency is designed for the essentials, including food, gas, and daycare. Almost every business in town accepts the wooden notes, and twice a month, they can submit redemption requests to the city to turn the notes into cash.

Thanks, I missed that.

It was at the end of a section that started with "Fournier isn’t your cookie-cutter politician. A firefighter since the age of 18, ..." so I assumed the whole section was going to be a backstory on the person and skipped it.

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