Local money not just paper dollars

Loss of Faith in USA Money

Some people are “FED up” with the US dollar.

“We trust in each other”

There is an increasing loss of faith among grass roots in the US dollar by many communities in the USA. Since printing local money, is not a felony or crime according to Federal law, they do so. The mottos in these bills are rather funny: “In Ithaca we trust” reads one.  Another says: “In each-other we trust." The deep US and world recession –the worst in 80 years-- has meant millions of lost jobs, thousands of business failures, the collapse of tens of local Banks and big ones. Many economic calamities hit people in the US during and after the recession like: house sales under their market value, foreclosures, heavy penalizing for unpaid credits, bankruptcies of people and business, and other economic calamities that affect people in the US and the world over.

            In the US and the world, all this was no accident or lack of knowledge. After the collapse, the US government called the G – 7 or group of seven highly industrialized nations, this was then complemented by the G-20 countries or group of twenty nations that former President Bush and other European nations considered vital for the financial world recovery. The G-20 accounts for 90% of al GDP output, and include, of course, China, India, Brazil, Mexico, Indonesia, Argentina and countries with sizable production and economic power. So a painful lesson was that even the big and “powerful” G- 7 nations could not manage a world crisis of this magnitude alone. We were all near a world depression similar to the 1929-1933, the first Wall Street stock collapse.

The root of this economic financial malady was all in place many years before; it had been gaining momentum at least for three years. The FED and other institution were aware of a coming and impending catastrophe. In his recent book, the former US secretary of Finance Henry M. Paulson wrote a book called “On the Brink: Inside the Race to Stop the Collapse of the Global Financial System” discloses some of these details.  In his book Paulson comments  interesting facts and events of this crises. Similarly the former FED Chairman Alan Greenspan, titled his book “The Age of Trubulence” he had some candid remarks concerning the world financial setting previous to the recession  

The US and world recession, was a collective  frenzy of speculation, greed; anxious and well planed search for increasing profits and stretching all limits of institutions –and people who harnessed big bucks who invested and gambled—beyond what was was and is  desirable and advisable. When investors, banks and millions of people who have stocks are wining and making “big bucks”; it’s like a party in which everyone is drunk and having a good time and feeling rich: nobody wants to listen neither to warnings nor to bad news. This is a simile of how the crisis was breeding.  Almost no respected institution wanted to really hear was coming.

After the hangover, --the near collapse of the financial order -- reality sets in, of course. Something similar happened in the 2006 to 2008 period. All the “yellow and red lights” were avoided and ignored. Only a handful of economist and academics predicted the crisis, they are well renowned now. Most economist and “financial specialists” failed to foresee or predict the trouble. Very few did, and have a good reputation for service. Although the causes for the economic collapse are complex, they are well known to learned people and institutions. No more than three or four well-known causes account for the major part of the collapse. Finger pointing and blaming is not very encouraging.  Now that the debacle is over we start to see clearly. The effects and consequences of the crisis will loom for some years. Employment—it is forecasted—will take years to pick up to pre-crisis levels. Many pre crisis jobs were literally ”wiped out”  and some new will emerge.

Nevertheless, some Wall Street executives and big hedge funds execs have received a sizeable responsibility for the collapse. What has angered many American people is that their tax money has helped not only recover from the total collapse, but that their money (in the (February 2010) the “Wall Street Journal”, reported that some WS executives had received a watered-down bonus for performance of “only” US $ 60 million, accepting a downgrade form some US $ 200 million bonus or more, for their performance. Of course this is tax money and people in the USA are starting to get fed up.

A few years ago several US local communities started printing their own money. This has a low key, low profile media coverage in the USA. Two south American newspapers “La Nación” from Buenos Aires and “El Mercurio” from Santiago, Chile published  an article by an Argentinean journalist Silvia Pisani stationed  in Washington DC commenting the issue.

Then a Blog reproduced this

This local money printing and use has increased and even some local banks in the US accept this form of payment.  It does have some drawbacks and limitations. At this point there are only bills, and no coins, so people loose small amounts of money or make a difference in their favor.  But these are not big nor sizable institutional, they are not even state run, just local, county level efforts, supported by some local business and even local banks.

This makes a lot of commercial sense. Their “local” money does not go to buy Chinese or Indian goods (sorry folks), which only accept hard-currency like dollar. So community-wise it is totally fit.

Several prominent thinkers have said the crisis was the result of this loss of faith in paper dollars, like the Peruvian sociologist Hernando-de-Soto, head of a Think Tank in Lima, Peru, helping the local poor achieve a formal well-being through their self-employed entrepreneurship.  He even published an article in the “Wall Street Journal” in 2009 named:  “Toxic Assets were Hidden Assets.” 

None of this is accident, but an epochal change. The governments the world over saved a collapsing market. As in other times, “the market” had saved the governments. They need each other and protect each other’s interest. Before the recession and during it some countries were calling for the dollar to open the way for a new currency. The 1944 UN Conference at Breton-Woods (New Hampshire) US was an agreement to set a Gold standard for international trade and world market that supported  the US dollar, after World War II, has gone  into oblivion many years ago. Now communities at the grass-root level seem to be on the rise. People either fed up by economic abuse or in hard times need to “do”. They are simply are loosing faith in big financial institutions then they act: this is the best of the American resilience and mentality. The government is supposed to support and protect people, as people support the government with their takes. Apparently this is going down the drain.  

People suffer and organize.  Protests usually take a lot of effort and seem to achieve little. So people, this time, act.

There used to be a saying in America that runs like this “Whatever is best for General Motors in best for America.” No more General Motors went bankrupt during the crisis. It was “saved” again by tax money until it could evolve out of bankruptcy into profits. So in this area it is difficult to find a “happy end.”

Perhaps the “happy” news is what grass root community people are doing now. Print their own money in agreement with community members, local business and organizations.

So as the old motto says something like: “Think global, act local”.

Now people in the US add:  “Buy in your own town.”

“We trust in each other.”

Gustavo Jimenez Lagos

Feb. 2010

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