Think Local First to study if local currency makes sense for Ann Arbor businesses
The idea of establishing a local money system is gaining some currency.
The Ann Arbor Downtown Development Authority has given Think Local First a $6,000 grant to explore the idea of establishing a local currency as a way to build the local economy. A series of three community meetings will be held later this month and in early March to explore the options and gain reaction.
Local currencies are a way to bring attention to the importance of buying local and keeping dollars in the community, said Ingrid Ault, executive director of Think Local First, a member organization of independently owned businesses.
There are more questions than answers about starting a local currency, from who would sponsor it to how it would work. The meetings will be the first step to gauge interest, Ault said. The study will include Ann Arbor and Ypsilanti, Ault said.
“The DDA wants to know if the community would support a local currency and, if yes, which model to use,” Ault said. “Ultimately, they want to know if it would encourage people to support local businesses.”
Four models are being explored, and each model could be tweaked to reflect what the community wants, Ault said. The four are:
• Paper currency, where local money is printed and used much like the federal currency. It could only be spent at participating businesses, could be issued at banks and could come with a discount to entice use, Ault said. For instance, $100 in local dollars could be purchased for $95. There could be local participation to develop the actual currency and it could honor local residents, a la George Washington and the $1 bill. The BerkShares program in New York state is an example.
• Time share currency, where participants would earn local currency by working - such as baby sitting for members of the time share - and then spend it at participating businesses.
• Barter currency, where participants sign up on-line for a nominal fee to list goods and services they have to offer. Goods and services could be directly exchanged or their value could be banked in the form of trade dollars for future purchases.
• Coupon currency, where currency is printed in various denominations that could be used toward making purchases at local participating businesses. Local business could advertise on the backs of the dollars as a way to raise funds for printing. Businesses that accept the currency could turn around and use the currency to pay for goods and services, keeping it in circulation.
Some of the models carry little cost and not much overhead while other models would require a heftier investment and a fair amount of oversight, Ault said. “The DDA wants to know if there would be a return on investment.”
Think Local First will present its findings to the DDA in late March.
Comments
rickfoster
Mon, Jun 7, 2010 : 6:16 a.m.
This is a wonderful opinion. The things mentioned are Great and needs to be appreciated by everyone. Best Currency Rate
Stephen Lange Ranzini
Tue, Feb 23, 2010 : 2:48 p.m.
Ann Arbor Gold Certificates were issued by a private company out of Ohio. That company declared bankruptcy and all the money invested in the Ann Arbor Gold Certificates was lost. The Chamber stepped up and absorbed the loss so that the merchants and the public could be made whole. One lesson from that is that the financial strength of the issuer of the local currency is an important consideration and that using a non-regulated entity is risky.
Nicola Rooney
Tue, Feb 23, 2010 : 8:58 a.m.
What happened to the Ann Arbor Gold Certificates that used to be issued by local banks and the AA Chamber of Commerce, and raised money for the Ann Arbor Chamber of Commerce? How widely were they used? How successful were they considered to have been? And what caused their demise? Could answers to these questions be relevant? We already have some local history to examine which may help give answers to the viability of a new scheme.
Lisa Bashert
Mon, Feb 22, 2010 : 8:12 p.m.
Local currencies in numerous areas are successful -- Berkshares & Ithaca Hours come to mine. What's great about local currencies is that no one has to learn how to spend money -- time banks, LETS, barter systems, etc., all have a learning curve which is a barrier to use. I'm surprised so many here have just rejected the idea out of hand. There's a lot to recommend it. Also annoying that everything comes down to what car you drive for so many Michiganders -- LOL. Every time you shop at Wal-Mart, every time you eat at McDonald's, every time you eat at Olive Garden, every time you spend your money at Cabela's/Lowe's/Home Depot or a host of other "big box" stores, your money goes right out of Michigan and into a corporation's pocket. I may drive a Toyota (a 12 year old one), but every dime I spend stays in SE Michigan businesses to keep us working. I tend to think it balances out. Go TLF, go!
Stephen Lange Ranzini
Mon, Feb 22, 2010 : 5:33 p.m.
At an earlier time in my career when I lived in Sault Ste. Marie, I set up a Local Currency for the community issued by my bank. It was successful and both the merchants and the local residents were very happy with the results. I have an open mind as to whether or not this could be successful here in Ann Arbor. As pointed out above, there are many other examples where this has worked and in my experience there are ways to address all of the issues that have been raised so far.
bunnyabbot
Mon, Feb 22, 2010 : 1:11 p.m.
@John, sure barter systems charge a nominal fee (yes 8% is nominal, if you are retail a 10% discount is nothing if you still get 90% b/c someone walked in the door) additionally 8% to cover their administrative fees AND advertising isn't that much when you reach THOUSANDS of potentially new customers most of whom would never have found you had you not been in the barter network. and their already is a local free barter system, its called making personal connections, you got a business and know one of your customers does than broach the subject of trading, or introduce yourself to another business. I have also bartered on craigslist. I got some painting done at home and gave them a gift certificate to my business, same with my lawn service, graphic designer and my granite countertops, all off craigslist.
quitelistener
Mon, Feb 22, 2010 : 12:49 p.m.
Wow, this sounds great! I hope my employees don't mind getting paid in Ann Arbor bucks, and my landload in Bloomfield takes Ann Arbor bucks. Maybe DTE will start taking Arbor bucks. Also, my food supplyer in Canton can pay the farmers on the other side of that state in Ann Arbor bucks. Only if their was enough farmers in Ann Arbor to support the community, or if my buisness didn't have real bills to pay. Think Local First is a joke. I went to a meeting once, and there were more foriegn cars in the lot than American. So I just left.
John Turmel
Mon, Feb 22, 2010 : 9:47 a.m.
Janet Miller: "The Ann Arbor Downtown Development Authority has given Think Local First a $6,000 grant to explore the idea of establishing a local currency as a way to build the local economy. A series of three community meetings will be held later this month and in early March to explore the options and gain reaction." Jct: Good. I hope they set up both the cash-buy-in and time-buy-in community currencies. bellboz: "Yet another reason not to live in Ann Arbor. I think local first and use my funds in the area whenever possible. I don't need another type of currency to do this. I'm embarrassed to think this might catch on. How moronic." Jct: Better to do nothing or bellboz's idea. Of right, he doesn't have any of his own. Phillip Farber: "Always thought this was the "People's Republic of Ann Arbor." Now I'm sure it is. Whose head will they print on the funny money? Chairman Mau? Lenin? Marx? Or the mayor?? LOL!" Jct: Another laugher with no ideas of his own. Ingrid Ault: "it is a dumb idea. there are already ways to keep business local...its called a barter network. tradefirst.com is one such network. There are already thousands of businesses involved that barter between each other. this would be a waste of money to have a local currency." Jct: Barter systems are only used by businesses that pay an 8% commission on each trade. LETS community currencies let you make trades for free, all for a one-time service charge or printing fee. I think paying 8% all. your life when you could be paying a 1-time service charge is a "dumb idea." bunnyabbot: "of course there is always the backstop of trading 2 backyard chickens for 10# of potatoes. which one is the local currency now?" Jct: Sure, it's amusing to think that when banks withdraw money from circulation to bust out the debtors, there is always the backstop of chickens and potatoes. But we've discovered a better numeraire for our money, TIME. The UNILETS Millennium Declaration C6 to governments is for a time-based currency to restructure the global financial architecture. In 1999, I paid for 39/40 nights in Europe with a timebank IOU for a night back in Canada worth 5 Hours. Timebanks are spreading around the world. So local currency is cheaper than barter networks, and can be traded world-wide with already existing timebank databases.
Snarf Oscar Boondoggle
Mon, Feb 22, 2010 : 3:40 a.m.
"oh, good grief, charlie brown." aside from the fact that only the federal gummint can produce legal tender, all this is is a phony barter system. there would be no 'full faith & credit" behind any local fiat (let it be done) script... unless (!!!) it is shaving & weighing 4-9s gold bullion for transactions. pieces of eight anyone? of course there is always the backstop of trading 2 backyard chickens for 10# of potatoes. which one is the local currency now?
bunnyabbot
Sun, Feb 21, 2010 : 7:59 p.m.
sorry this is the link I meant to post, from msn... http://articles.moneycentral.msn.com/Banking/BetterBanking/struggling-towns-printing-their-own-cash.aspx?ucpg=2
bunnyabbot
Sun, Feb 21, 2010 : 7:56 p.m.
I just read an article on mlive yesterday about a local currency in detroit this is the link: http://www.mlive.com/business/index.ssf/2009/03/companies_issue_own_money_detr.html it is a dumb idea. there are already ways to keep business local...its called a barter network. www.tradefirst.com is one such network. There are already thousands of businesses involved that barter between eachother. this would be a waste of money to have a local currency.
Ingrid Ault
Sun, Feb 21, 2010 : 2:10 p.m.
Think Local First of Washtenaw County (a local organization that supports locally owned independent businesses) has been awarded the grant to report the findings to the DDA. Anyone who has an opinion is welcome to participate. You might be surprised to learn what it already in place around the world and in Michigan. The purpose of this meeting is to explore what is in place and what might work in our community. There are different models discussed beyond what has been mentioned in the comments thus far. We hope you will come and learn what the possibilities are before making a decision about whether this may be a good fit for our community or not. Please don't dismiss this before learning what the options are. Ingrid Ault, Executive Director of Think Local First www.thinklocalfirst.net
John Galt
Sun, Feb 21, 2010 : 1:27 p.m.
Always thought this was the "People's Republic of Ann Arbor." Now I'm sure it is. Whose head will they print on the funny money? Chairman Mau? Lenin? Marx? Or the mayor?? LOL!
Phillip Farber
Sun, Feb 21, 2010 : 11:48 a.m.
I don't think this proposal should be rejected out of hand. There are a number of successful local currencies in circulation that benefit their local communities. Readers of this article may want to educate themselves about local currencies. The Wikipedia page (http://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States) lists over 100 local currencies in the U.S. alone. It is a worldwide phenomenon with a long history. It impresses me to see the DDA undertake this study.
Judy S
Sun, Feb 21, 2010 : 10:14 a.m.
Yet another reason not to live in Ann Arbor. I think local first and use my funds in the area whenever possible. I don't need another type of currency to do this. I'm embarrassed to think this might catch on. How moronic.
belboz
Sun, Feb 21, 2010 : 8:03 a.m.
Are these the same people driving around in Honda's, Toyotoa's, and Subaru's - wondering where all the money is going? Local currency - come on. What is a $6,000 study going to show - that we don't know how to best use $6,000? Hope they are using a local person for that study!
Technojunkie
Sun, Feb 21, 2010 : 7:33 a.m.
Waste of money. The security demands alone would be oppressive. Granted the feds are doing their best to crash the dollar but I don't think that another fiat currency is the answer. Getting merchants used to accepting silver in various forms for purchases might be a good idea. Junk silver coins (pre-1965 coins are 90% silver), silver Eagles, optionally silver bars and rounds. Silver dimes are currently worth $1.178 and quarters and half dollars proportionally more. It might even be fun to advertise, say, a loaf of bread for 30 cents in "real money". The markup on junk silver is minimal, unlike bullion, and it's the most familiar. It would give local merchants an advantage and local shoppers security. Given the volatility of fiat money compared to silver it might be best to focus on smaller, high margin purchases to start with. Buy your Fair Trade coffee for mere dimes? Modern nickels are, surprisingly, actually worth a nickel though expect that to change soon. The tax implications could be tricky. Someone got in trouble for paying their employees in gold coins and only reporting the face value of $50. But "local currency" has a similar set of problems. At the very least you can't spend silver online.