Currency as a way of development

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Hello I would like to talk about a very interesting concept- currency as a way of development for small communities. First some history:

The year was 1932; the world was gripped by the greatest economic depression that it had ever known. One man in a small town decided to try something new to help the people of his community. In doing so the town made economic history. The town was Wörgl in the Bavarian province of Austria.

The mayor stated that slow circulation of money is the principal cause of the faltering economy. Money as a medium of exchange increasingly vanished out of working people's hands and accumulates into the hands of the few who collect interest and do not return it back to the market. He proposed that in Wörgl the slow-circulating National Bank currency would be replaced by "Certified Compensation Bills". Wörgl money was a stamp script money. The Wörgl Bills would depreciate 1% of their nominal value monthly. To prevent this devaluation the owner of the Bill must affix a stamp the value of which is the devaluation on the last day of the month. Stamps were purchased at the parish hall. Because nobody wanted to pay a devaluation (hoarding) fee the Bills were spent as fast as possible.

Unfortunately, the Central Bank of Austria then forbid the currency due to its huge popularity and the town then fell again in the depression. But while it had the currency they paid their taxes with punctuality and built many buildings and roads, getting the town out of the Great Depression. And most importantly, they directly attacked unemployment.

One of today's world biggest problems is unemployment. But also the fear of future unemployment causes the money to stop moving, the ones who receive interest keep the money and the economy stops, just like the Wörgl example.
Aspies are a small community of people just like Wörgl. They face unemployment issues too. In the advent of many alternative digital currencies (Bitcoin, Litecoin, etc.) it seems like the whole monetary system is changing. But these currencies are not regulated, which creates an unsafe environment and not a wider acceptance. If there could be stable acceptance there could be more safety of the system in general. A currency that has huge popularity could be a threat, just like Wörgl money. But a more local and organized one, that has stable points of acceptance, could be very safe and in fact succesful to boost economic activity and prosperity in that community. It would be based on increased velocity of money, which could protect and avoid many crisis that currencies face nowadays. A system based on the concept of devaluation or demurrage for fast spending.

What do you guys think? Please I need opinions.

It's a very interesting story, there are many webpages with info available.

If you can get people behind you, go and start one. That's the only reason that currencies work, because people want them. If no-one is willing to exchange anything for whatever you're using, be it gold pieces, bitcoins, or scraps of paper, then your currency is useless.

But do remember that you're going to go up against the state if you try using a different currency seriously. It happened in Worgl, it happened in America, it happened all over the world. One does not simply challenge the powers that be. The great eye is always watching.

As for new currencies, I'm thinking of implementing a share currency (where the currency are shares in a company) using the Bitcoin protocol - each Birchcoin (named after Paul Birch, who developed the share money concept) would be exchangeable for a single share in a company (which would be legally bound by its laws to do so). The company would probably be one which owns and rents houses, retaining the profits - the important thing is that it would own property, and post the total value of the company daily. Other than that, it wouldn't be interacting with the Birchcoin economy, unless someone wishes to trade for a share. Hopefully, more share currencies would start up, and we'd soon be able to implement another currency based on a basket of the most reliable ones - eventually without having to involve the state at all (much as the Merchant Law system worked without the state).

[Moved from Autism Politics, Activism, and Media Representation to PPR]

Well, it was bound to go that way anyway...

I get your point Magneto. Yes, the only thing that makes a currency valuable its people acceptance, nothing else. A new currency is also a threat to the government. But I consider however that if it has a controlled popularity and emission in a small community it could be less threatening and more organized.

Why do I consider small communities? Think of the European Community. Most of the crisis its countries face nowadays is because they're tied to the euro and they can't devaluate. Small community currencies give you more versatility and control over your finances. And the Worgl experiment gives also a hint about the power of demurrage, which is that currency loses value with time unless you pay for a stamp. This increases the velocity of money. Keeping a stable velocity is critical for avoiding crisis. Those are the key features: you spend fast what you earn so you estimulate economic activity and you can control better inflation/deflation with small emission.

I like your idea of a share currency. With Worgl money it's impossible or very difficult to save, so I think the only way you can save it's through shares. And a currency that is backed fully in shares seems an excellent idea. But I have a few questions though: How can you control the emission of shares to avoid inflation/deflation of the currency? Also why does the company has to own property?

Well, it doesn't have to own a particular kind of property, but it needs something that gives the company worth, otherwise there is nothing backing the money.

As for the creation of new shares, that could be done by issuing them and using them to buy property to back them - as long as the total value per share is unchanged in the transaction, no-one loses. Or, of course, a set amount of shares could be issued, and the currency allowed to depreciate. Say we opted for a division down to 1/10^8 of a share, in the way Bitcoins are divisible, and when it was set up 10 shares were worth a dollar. That means it would have to become 10 million times as valuable before the smallest subdivision was equal to a cent - something that is going to happen in over 300 years, if you're growing at 5% per year.

Here's the essay by Paul Birch.

I read the essay, very interesting. It talks about what fails in currencies and the banking system in a very detailed way. However I can imagine an intermediate monetary system that uses both currencies. Birchcoins would be backed in bearer shares, which are emited only by "banks" with permission to hold deposits and make loans. The latter ones could be only made in birchcoins, because you can't use freigelds (Worgl money) to save or earn interest. The so called "banks" will have many assets and investments (including land and property) that when they gain value its customers and the birchcoin holders would gain too. I like the fact that this currency reflects the real value of bank assets, that avoids speculative bubbles.

Freigelds would keep velocity of money for consumption (not savings or loans) stable and very high, so that the small economy doesn't falter and keeps going. They could be used in normal transactions (including portfolio investments and direct investing), while the others in bank ones or for saving purposes. Birchcoins have positive yields, so people prefer to keep them.

The perfect division system you ask for could be achieved if both are e-cryptocurrencies. And I think this system can be stable as long as both currencies are for a small community, not full scale. That way it doesn't threaten anyone and it can be fully and easily protected too. It would come handy for the "banks" too to have a nice team of wealth managers that control the investments and seek yield growth. And yeah, some regulation too, we don't want too many risky investments that can blow up anytime.