Frequently asked questions.

I have so many questions that I don't know where to begin. Any suggestions??

Community currency is a completely new idea to some people, while others have spent years working in the field. There's lots of information out there on the internet. I recommend that you visit the Complementary Currency Resource Center to get started.

I've been working on alternative currency in my community for a long time, and I've learned that we are only beginning to know what questions to ask, let alone the answers. So how can I know that your "answers" make sense for my system?

Even the pros have plenty of questions, and that's why I cite leading experts on the SunMoney page - so that you can be confident that top people have been willing to go on record with their support. You're also welcome to write to me with specific issues, and I especially appreciate debate.

I like your concepts very much, but why not discount everything when purchased with local money, wouldn't that make it irresistible to everyone?

The catch with discounting everything, or even a broad range of items, is that it would only change the "exchange rate". For example, if I can buy everything that costs $10 with $5 of local currency, then the $5 scrip becomes equivalent to $10. It would then be no harder or easier to get the $5 local currency, it just becomes another name for $10, and so the local $5 scrip would not be preferred to a ten dollar bill and visa versa. A broad discount turns out to be no discount at all! The key is to find a way to get a slight edge and then let the system transform slowly, at a pace that fits the individual situation.

Another similar seeming but very different approach is being tried in Great Barrington, New York - Berkshares local money. Berkshares are sold by banks and give a 10% discount at many local merhants. The merchants then redeem a $1 Berkshare for 90¢ at the banks. In this way, Berkshares are worth LESS than national money, rather than more, and the result is that almost all are redeemed at banks by merchants rather than circulating and growing the local marketplace. The Berkshares experiment may succeed over time because they're supported by a determined non-profit organization within a progressive community. The SunMoney strategy is designed to work everywhere with less support because SunMoney is worth MORE than national currency and so will circulate more easilly.

You write that SunMoney is "one way to give preference to local money". What other ways are there?

Great question! Employing the intrinsic value of essential commodities is the strategy suggested here. But, yes, there are others. For example, is there something unique in your region about your community, such as a hot spring spa, that you can discount with local currency? The key is to avoid giving your currency a bonus value that can be underpriced. For example, if your currency offers a discount through local retailers then non-local businesses, such as Walmart, can still underprice you, feeding a competitive cycle that makes irresponsible exploitation more affordable than sustainable use while forcing your members to absorb the loss.

Why doesn't backing local money with a valuable commodity, rather than discounting the commodity when purchased with local money, give the local money preference?

It can, if the commodity is unique to the community, so that it can't be had for ready money elsewhere. For example, a local currency backed by a local energy resource by guaranteeing to redeem it for the same value in that energy, can easily be underpriced by other energy providers. In contrast, guaranteeing to discount that energy (SunMoney) when purchased with your local money can never be underpriced. In addition, systems that back currency must overcome the fundamental problem that the value of the precious commodity is described by global currency in the first place so that its value varies on the global marketplace, making it difficult to use as money. For example, the value of precious metals varies every day, so when it's rising then consumers hoard it, but when it's dropping the merchants take a loss if they accept it. And the community system must sock-away enough of that precious resource to redeem the local currency, such that most communities today can not afford to launch a system of that type, and none can afford to redeem much of that currency if the resource value drops dramatically.

Most of the people I talk to tell me they would trust the value of our local money if it were backed by a valuable resource. Are you saying that won't work?

Resource-backed currencies have been and are continuing to be introduced on the assumption that local money will fly because it's a good thing that only needs some way to assure its value. In fact, resource-backed currency does tend to be easier to introduce, but experience informs us that such backing isn't enough. After all, resource backing doesn't make the local stuff more valuable than the global money, only perhaps equal - except for convenience. This point has sometimes been obscured by the fact that local scrip does well when global money is scarce, for it has sometimes been supposed that it's success proceeded from it's backing; but such local scrip has always withered when prosperity returned. The temporary scarcity of global money served to make the local money more convenient. Also, take a look at Paul Glover's brilliant Hours system, which backs local currency with local labor. Mr. Glover has toiled for years to build his local currency system in Ithaca, New York, and you can learn most of what you need to know about resource-backed systems, and local money in general, by studying his work. His Hours strategy has done great things for Ithaca and many are copying it. But visit Ithaca and you'll discover that most people are barely aware of his work. Why should they be, when most of what they want and need is more readily accessed with global currency and relatively few businesses accept the local scrip? The answer that many in the local currency movement give is that people ought to want to be involved because local money does good things, but the question that most ask is, "What's in it for me?"

If local water providers must accept local money, then they must increase their price to compensate. Doesn't that impede development of the local water resource and make it more profitable to export than sell locally?

No, not at all. Keep in mind that water importers must also discount their product to compete, and they accept local currency but they can't spend it easily locally because they have more non-local expenses. Consequently they must either boost their price to afford to accept local money, which gives an advantage to local suppliers, and/or limit the quantity of water they provide at a discount, creating more demand for local supply and so further supporting its development. If there is local water in excess of local demand, then of course that can be exported, but it isn't likely to garner a better global-money profit than will exist locally, and so local resources tend to stay local where responsible stewardship is more practical.

This local-money vs. global-money debate has always sounded to me like the classic debate between open and closed marketplaces. What's the difference with SunMoney?

Open marketplaces provide access to the riches of the entire globe, but also open the community to irresponsible global exploitation. Closed marketplaces protect local resources (including labor), but close the community to the advantages of the global marketplace. Using global currency and SunMoney together retains access to the global marketplace while protecting local human and other natural resources. That's all the difference in the world.

Can I get more help with this?

Sure, write to me at peoplepower@me.com