| http://project.cyclos.org/
(Lets put this discussion on the front page.)
Cyclos is a mechanism for an alternative currency. You are correct that there is no physical currency, unless you count the north and south divides on the magnetic strip of a piece of plastic card stock. Physical money in circulation is the tip of the iceberg of economic money. Almost all money is in accounts of one sort or another. I invoice you and wait on your check or Paypal addition to my account. Neither of us uses or sees actual "currency". And the amount is very large especially compared to what is in our wallets or pocket at any give time.
So what units of value have you and I exchanged. Typically the unit of value of the society we live in. But every now and then a foreign coin can appear in our change. Typically we treat it as the same value as "our" money. A Canadian quarter will be used just like a U.S. quarter and treated as if it contains the same value.
But that cannot be done at the electronic level. Well, of course it can. When in a foreign country you insert your debit card into a machine and out comes the local currency taken from your account storing your home currency with various fees and exchange rates applied.
Once a currency is established then an exchange rate system will naturally arise. The trick is getting your currency established. To do that you need a community willing to use it. There must be enough people willing to spend it and earn it. I read that the biggest problem with local currencies is that they tend to be easier to earn than to spend. We tend to want to buy physical things with our ephemeral work. And the physical things we want in this case are usually things from foreign economies, in this case the "outside" dollar economy.
But I am imagining a fractional economy. We already have merchants offering a discount to locals who possess a card that identifies them as locals. But what if instead of a discount they offered to allow you to spend some of your local currency on your purchase. 85% dollars and 15% local to buy some object. And what if as an incentive for their clerk who they pay minimum wage, they offered to pay an additional amount in the local currency. $8.50 and hour plus $1 local. You get the idea.
How does one get such a thing started. The same way as the feds do it. You loan it at cheap to zero interest. Or you give it away and tax it back. A government's roll in this is to stir economic activity, especially during a capitalist depression. A government must be prepared to inject in down times and withdraw during "inflationist" times.
Since some "we" are creating this currency then this "we" becomes the government. In this case we might do both give away a starter amount of money to everyone and loan larger amounts to others.
The simple goal is to generate economic activity locally where the federal government, the one that controls the larger economy, is mired in political gridlock and cannot follow the correct economic course of stimulus during a depression and is rather doing just the opposite of austerity which makes it worse. |
