We have always had a policy of local authority issued currencies and whenever we have put out media statements they seem to have been picked up by at least some media.

The idea of a currency issued by a local authority for me is so exciting I can barely contain myself when talking about it. We have been working for some years with LETS systems and Timebanking and have in some cases been talking about a local currency sold into existence, modeling on Wara in Germany, Worgl in Austria in 1932-3 or the various German versions of this led by the Chiemgauer currency. Each has had a negative interest rate so there is an incentive to get rid of it.

I have recently re-read Silvio Gesell’s book The Natural Economic Order, or at least parts of it. Someone gave it to me when I was on a speaking tour of Australia a few years ago.  The book is online in English nowadays, which is great, because Gesell is a brilliant thinker and many have predicted he will have a huge influence in years to come. Gesell argues that in order to put money on the same basis as goods, it has to decay, rot, go out of date or rust at the same rate as goods. Then holders of money will no longer have an inordinate amount of power and withhold money when it suits them, while holders of goods are stuck with rusting iron, out of date newspapers, or rotting fruit.

So designing a currency with a negative interest rate will create money which a causes humans to act in entirely different ways. It turns money on its head. People will need to spend it and paradoxically, according to Bernard Lietaer, the author of many books on money, they tend to spend it on long term investments. Weird eh? But true. In the years between 1040 and 1280 Europe had such local currencies, (acting alongside a long distance currency for trading other goods). What happened was that they built cathedrals which turned out to be an investment in tourism for centuries to come.

The idea of a local authority issued currency isn’t new. The Mayor of Hamilton tried to introduce Rates Vouchers in the late seventies, but was thwarted. Nowadays if we issued such a currency we would have to decide whether it would be spent into existence, whether it could be bought with national dollars (monetary dialysis) or lent into existence from a council associated bank. Or could it be issued with a certain expiry date? Or a combination of all these? How in each case would inflation be managed? What would people spend their local dollars on if there was a penalty for hoarding it? Imagine you had sold your mother’s house, lived outside the area, but had to spend $200,000 in the area because it was in local dollars. Whew. That is an exercise for you.

So I will be taking a workshop on this topic at the upcoming Australasian Permaculture Convergence in Turangi and I have just uploaded a short video describing the issues we need to face. http://vimeo.com/39162430. Hope this works!