Local Currency: A Revolution That Sounds Like a Whisper…

By Amy M. Kirschner

“When the French and Russian revolutions overthrew the established orders in their countries (in 1786 and 1917, respectively), they changed just about everything, but not their monetary systems.”
Bernard A. Lietaer, Of Human Wealth.

Vermont has a long history of challenging the status quo and being fiercely politically independent. As we look to the future, especially as the global economy forces new dependence, it is imperative that we strive for an economic independence to match our political independence.

While all can see that our governmental systems reflect our values for freedom and equality, few realize that our economic system inherently requires competition and expansion. The need for an expanding competitive marketplace necessitates never ending growth and environmental harm, constant fear of economic loss, and the sad reality that many are left with nothing. Fewer still are the people who see that we can change our economic system to reflect higher values: cooperation, stewardship of the environment, and an equal voice for all.

Revolutions happen when a group of people decide that the system they operate within no longer shares the same values they do and no longer reflects who they are or want to be. If what we seek is independence, we must move away from systems that do not foster it.

There have been a great many political and cultural revolutions worldwide, but other than the failed attempt at state-run communism, there have been no serious attempts at an economic revolution that deeply alters the underlying values of the system...

What does a revolution sound like? The United States revolution, as captured in the National Anthem, sounded like “bombs bursting in air”. What we propose is one closer to what folk singer Tracy Chapman referred to as a revolution that “sounds like a whisper.”

The most powerful revolutions have always been because of an idea whose time has come. A revolution can happen everyday and everywhere without gunshots, a new political regime, or central movement. The quietest revolutions have taken place in the hearts of people through small, decentralized actions. Ultimately, political revolutions occur when people feel powerless and when those with power are unconcerned with their fellow citizens. Economic inequities are often at the core of such frustration. By changing the parameters of our monetary system so that our medium of exchange itself breeds economic equality, political revolutions may not be necessary.

What would an economic revolution look like? It is imperative that we begin with how money works because that is a basis of what determines our economy. Greatly simplified, the creation of money occurs when banks issue loans to borrowers – the bank is not loaning money that others have deposited, as many people think, but is actually writing a check for money that did not previously exist.

Since banks can loan more money than they actually have, needing only “fractional reserves,” each loan is actually creating money. When banks issue loans, they charge interest. At current rates, for every $100 that is created, $106 is owed. Because of the economic system we have, at every moment of time more money is owed than is in current circulation. This means that there will always be economic losers and that in order for most people and businesses to meet their debts the economy must continue to grow. The never ending fear of failure to meet obligations naturally leads to competition and the belief that environmental stewardship and social equity is secondary to economic growth.

Another facet of our economic system is that money is global and can travel quickly worldwide. But with the advent of the global marketplace where dollars consistently seek out the highest rates of return, there are many projects that are in the community's best interest which are not funded because they are not profitable in the short term. Examples of these projects are investments in local food production, renewable energy, affordable housing, durable clothing, education and school infrastructure, and caring for the needy.

We have the ability to create a new system with new values inherent in it. A network of local and complementary currencies, whose money is created interest free, would dramatically alter our national behavior and culture. A wealth of dormant and disenfranchised capacity would be unleashed as citizens became engaged maximizing creative utilization of already existing local resources. This is not a dream; it has happened thousands of times in the past and today there are over 4,000 local currencies now strengthening local economies around the world.

Imagine the local pride and feeling of empowerment that would be created if communities recovering from natural disasters could start the recovery by simply facilitating the exchange of needed goods and services through a new locally-based monetary system thus harnessing contributions and abilities of their local citizens. Or imagine the boost to local farmers and merchants and the decrease in fossil fuel usage if there existed a currency in wide use that could only be spent locally.

Globalization and national currencies have tipped the balance in favor of large corporations and centralized distribution without accountability. By contrast, a local currency re-empowers a community to issue credit to local businesses, institutions, farmers and individuals to undertake projects that enhance local quality of life, reflect community values, and build long-term community wealth and well-being. Local currencies also bring back the competitive edge that favors local businesses, local decisions, and local identity.

The Burlington Currency Project, a Vermont non-profit which created Burlington's local currency in 1998, has been legally and openly managing a “complementary” currency and does not promote the abandonment of the national dollar. Local markets can not always be 100% self-sufficient. It does not meet common sense for each locality to produce its own computers or automobiles and dollars will always be necessary to buy US postage stamps.

We have gone too far in assuming that one currency and type of monetary system can fulfill ALL the needs of our community. We need multiple levels of currency for our multiple needs. We need local currencies, like Burlington Bread, to increase local transactions at the retail and individual level and to create a new cooperative economy where communities can become more self-reliant by providing for basic needs like food, energy, health care and personal services. We need a national currency to purchase items that cannot be produced here.

The Burlington Currency Project (BCP) envisions a network of local currencies throughout Vermont connected through an electronic ‘mutual credit clearing system' where businesses in Rutland or Montpelier or Brattleboro could accept their own local currency from their customers, deposit it in the electronic system, and then use that electronic system to order goods from their suppliers from other parts of the state. We envision a system to encourage informal care services which tracks hours of volunteerism (called “Time Dollars”, currently operating in hundreds of communities in 22 countries) so that a high school student who “deposits” an hour mowing a neighbor's lawn over the summer can “withdraw” an hour's worth of tutoring at exam time. We envision the community frequently issuing the currency to create interest-free loans in order to fund projects and entrepreneurial ventures and making the repayment easier than bank loans in dollars which charge high rates of interest.

We believe that in order to have a significant impact on the community, we need to dream big. We will not believe that we have arrived until 10% of all Vermont's economic transactions are conducted with local currencies and all businesses use it, until city governments accept a portion of their property tax payments in local currencies and pay a portion of their employees wages with it, and until it has become so ingrained in the local culture that citizens don't think twice about it and tourists come to experience it.

There is nothing and no-one to fight against in this movement. There is simply self-examination, education, discussion, and ultimately choice. It is a quiet and peaceful revolution one exchange at a time. It is people taking back control of their own destinies.

We are building the electronic system and strengthening the Burlington currency now.

The revolution has begun. Rise up!