A licence to print money

09

“As people we have a right to make credit and loan money. We mustn’t forget that. We mustn’t leave that to corporations and the state.”

Duncan McCann, New Economics Foundation

These last few weeks I have been deeply moved by the outpouring of kindness and generosity in my local community and in communities around the world. Support hubs for the elderly and vulnerable are sprouting up everywhere, online courses are being offered for free, people are singing and applauding from their balconies and the internet is exploding with tips on how to manage physically, emotionally and spiritually during isolation. My fellow humans are, mostly, showing how much they are willing to share what they have to benefit the greater good.

At the same time I am aware that many people’s lives are becoming increasingly precarious with businesses closing, jobs being lost and rents and mortgages still to pay. A lot of these people will be the same ones that are able and willing to put their efforts towards making life more bearable and beautiful for all of us. And yet because these efforts are not considered economically useful they do not have access to the means of exchange, to credit.

Credit comes from the word ‘credere’ meaning to trust. The US dollar is emblazoned with the words In God We Trust, inserted during the Civil war as a response to heightened religious sentiment. We have historically placed our trust in banks to manage the means of exchange. What might happen if we began to build trust in our local communities and began rewarding people with credit of our own?

The miracle of Wörgl

In 1933, during the Great Depression, Michael Unterguggenburger was mayor of a small town in Austria called Wörgl. Seeing the state his town was in with 1/3 of the work force unemployed, 200 families penniless and a crumbling infrastructure, he decided to experiment. He used the 40.000 Austrian shillings remaining in the town’s coffers to back a local currency called Stamp Scrip which required a monthly stamp to remain valid. This monthly stamp cost 1% of the note’s value. What this meant was that everyone who got the money wanted to spend it straight away to prevent it losing its worth. As expected the currency sped through the local economy, enabling a variety of projects to be completed, including building bridges, paving roads, fixing streetlights, planting trees along the streets and even building a ski ramp. Once people paid their taxes in this currency it was used again, going through another cycle of enabling. It was so successful it attracted the interest of two hundred Austrian townships, but was closed down by the Austrian central bank on September 1, 1933 to ensure their monopoly control over the money supply.

Breaking the rules

As this story shows, the values of a national or global monetary system are not necessarily aligned, and often misaligned, with the needs of local people. Yet we often experience money as a natural phenomenon, rather than the set of agreements it is, with the possibility of altering those agreements. What Mayor Unterguggenburger did was to break with the common assumptions about money and used the technique of demurrage (money that depreciates over time) to link the capabilities of his townsfolk with the needs of the town.

Our own money experiment, The Totnes pound, ended last year, but its legacy remains in the imaginative channels it has opened and an infrastructure of local support. Now is the time to build on those foundations to create ways of exchanging that will allow us to meet our needs and grow our resiliency. Imagine, for example, if everyone received 30% of their income in a local benevolence currency that rewarded behaviour that benefitted the physical, social and spiritual life of our community? We would see increased social cohesion, have more money going into local businesses who in turn would hire local staff, who would be able to spend their local money in local theaters who employ local artists. We could start growing the real wealth our societies depend upon.

The current crisis is set to reshape our society. Let’s make sure we reshape our money system for the better world we want to inhabit when it’s over.

 

First published in Reconnect magazine march 2020

 

7 thoughts on “A licence to print money

  1. I’ve been thinking about these issues too, and thanks so much Inez for sharing your thoughts about this. I had not heard about the fascinating story of Wörgl before; these days interest rates are also going negative in the official economy and of course that removes all incentives for banks to lend (and as a result investment in ecologically damaging projects also has to diminish too!) as well as making the whole mechanism of fractional reserve banking dysfunctional. Understanding that our economic and financial system can only operate with collective agreement, what can all of us do to make sure things do not return to finance as usual? I think we have a unique opportunity in these times to forge new financial relationships along the lines you suggest: but maybe an even more radical realignment is possible now?

    • Hi fairflow, I am just writing an article about how we need to realign our values and real wealth with the money system. The work of Bernard Lietaer is super interesting in this respect. His work is about diversifying the money system to make us more resilient and to enable us to support social and ecological regeneration. Check out his website http://www.lietaer.com/

      • Yes, I have come across as part of my connection with Triarchy Press. He died last year. It is time I read his writing, clearly. Thanks for the suggestion, Matthew.

  2. Hi Inez, I think you and I have metaphorically brushed shoulders online a few times. Are you aware of https://opencredit.network/? They would like to support the development of local hubs for mutual credit networks (i.e. credit that is NOT tied to sterling, in order to completely detach from the destructive dynamic of debt-based currency). Essentially this would mean that we, locally, would have access to ready-made software to facilitate exactly what you’re talking about here, and could be federated with a larger network for extra oomph. I’d be glad to hear from you if this is something you’d like to discuss/be involved in. I’m not fully settled in this area and so haven’t got this off the ground yet myself for that reason, though I’m likely to be near Totnes all year this year, and now would seem like a very good moment for the wellbeing of our community. All the best, Eloise Sentito, theseisles@gmail.com

    • Hi Eloise, Thanks for connecting here. Yes I would very much like to do some more work in this area. There are a few of us in Totnes wanting to explore new models. I wrote a report on the Totnes pound a couple of years ago, which could be a starting point. If you send me your email I can send it to you.

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