A local 'dollar'

Business owners have organized in a few locations throughout the country to produce local currencies, and it's something that might be an option to help revitalize downtown Colorado Springs. A unique currency for downtown could provide consumers a hedge against looming hyper-inflation, which might result from unprecedented new production of federal currency, creating an all-new reason to shop downtown.

If it sounds radical, so be it. Drastic measures may be in order, as a new Brookings Institute study recently confirmed what everyone in Colorado Springs already knew: Downtown is becoming less vital, and it faces a difficult challenge. People and businesses continue moving away from the city's core and it's not likely to change. The best hope for downtown involves a cultural shift, and a unique downtown currency could help bring it about.

"I think it's a wonderful idea that could have positive results," said Paul Prentice, a free market advocate and professor of economics at the University of Colorado at Colorado Springs.

Working through the Downtown Partnership, or an entirely separate organization, merchants should create a downtown currency known perhaps as the "PikeShare," or the "PeakShare." (E-mail opinion@gazette.com with better name ideas, or post them below this editorial on gazette.com.)

By any name, a downtown currency could be used for purchases from merchants who agree to accept it in trade. By carefully managing the supply of downtown currency, its value could be maintained as the purchasing power of the grossly inflated federal dollar dwindles.

If downtown merchants invent their own currency, they'll join a trend of urban and small-town merchants who are creating currencies to build community, encourage local consumption and trade, and hedge against inflation. As explained in the April 5 issue of USA Today, it works like this: "Businesses and individuals form a network to print currency. Shoppers buy it at a discount - say 95 cents for $1 value - and spend the full value at stores that accept the currency."

Merchants in the Berkshire Mountains region of western Massachusetts organized to print and issue currency called "BerkShares." Consumers can go to one of 12 local banks and buy $100 worth of BerkShares for $95, and can spend them at 370 businesses. Since the currency's inception in 2006, $2.3 million worth of BerkShares have entered circulation. In depressed Detroit, a handful of merchants organized recently to create a currency known as Detroit Cheers.

One of the best known local-currency programs was launched by Paul Glover, an environmentalist who wanted to encourage sustainable, environmentally friendly local trade in Ithaca, N.Y. He invented a currency in the early '90s known as the Ithaca HOUR, with each HOUR worth one hour of labor or $10 in federal currency. The HOUR can be traded for nearly any good or service in Ithaca, including plumbing, carpentry, rent, roofing, nursing, farm produce, bike repair, food, eyeglasses, and etc. Its worth is backed by the value of labor, whereas the U.S. dollar is backed by debt to foreign countries and future generations. Glover told The Gazette he established a minor emergency medical insurance organization for 700 enrollees who trade in HOURs. One Ithaca resident proved he could live an entire year spending only Ithaca HOURs.

"HOURs reinforce community," said Glover, author of the book "Hometown Money." "Our federal monetary system is anti-capitalist. It sucks the life out of local economies. The Chinese have carried us only because we inhale their crap. When China's own developing middle class begins to consume, this relationship will change and we'll see hyperinflation of the dollar."

A properly managed supply of local currency could make shopping downtown an option for countering soaring prices caused by federal inflation. A $5 cup of coffee could cost $2 in local currency if the supply is properly managed. Local or regional currencies, like federal dollars, are "fiat money" created on demand.

"Fiat currency is not a problem. It's the careless printing that's a problem," said Prentice.

The supply of Ithaca HOURs is managed by a local reserve board. Glover encourages any organization that establishes a local currency to employ a full-time "networker" to promote the currency by encouraging and orchestrating its use in trade, and to work closely with the board. The sale of currency generates revenue to fund the system.

Trade in local currency is neither a right-wing nor a left-wing idea. It confounds even some economic libertarians, who can't decide whether it's a great way to decentralize the federal government's monopolized currency production or a small-scale version of the government's fiat money scam.

In fact, it's nothing other than a simple, community-building system of trade in which buyers and sellers assign value to a limited number of paper notes. Properly managed, a local currency system encourages local consumption and trade, builds community, and frees participants from the perils of a troubled federal monetary system. Downtown merchants, who need a quick reversal of fortune, may want to study local currency systems and consider one for themselves.