The best currency in the world would be WalMart Bucks.   Globalization and WalMart are making more poor people rich than all the greeners in Vermont.

Sorry folks, but you can't stop progress: because it's good, it's gu-oooo-d.

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Berkshares have been around for quite a while thanks to the E. F. Schumacher Society (an organization that has been very active in creating economic alternatives for many years now), as have many of the local currencies mentioned. About twelve years ago I helped get Green Mountain Hours (VT) off the ground (modeled after Ithaca Hours which paved the way for so much of what has come since). Community currencies have many positives to recommend them such as: Since local currency can only be accepted for that portion of whatever we're buying that's local, it helps us learn what is produced locally and what is imported, then we can figure out ways of increasing the local and decreasing the imported. In most of the local currencies I'm familiar with, everyone's time is valued equally, hence the term "hours" in most currency names. Exceptions do exist since doctors and dentists expect to make more $ per hour than a babysitter, but as people get to know one another the exceptions sometimes disappear. Community currency allows those not part of the monetary economy to participate equally, such as stay-at-home moms, people on fixed incomes, etc., adding to their quality of life. It can be difficult getting businesses to accept local currency but if there's a wide variety of goods and services offered in the community businesses will participate as they see that things they need can be purchased with local money. And employees will accept local currency for a small percentage of their pay if things they would buy anyway can be paid for with local currency. The thing is to get people thinking differently about money, work, their time, and how we value ourselves and each other. The thing that amazes me is that local currencies haven't taken off more than they have.

SMLowry says: "The thing that amazes me is that local currencies haven't taken off more than they have."

Doesn't amaze me at all. Folks are rightly dubious about restricted currencies - the very first cooperative groceries were created in 19C England to circumvent the funny money monopolies created by local industry that essentially created  conditions of indentured servitude for their workers. Wal-Mart would probably like nothing better than to pay their "associates" with currency that can only be spent in their own stores.

Company store systems imposed by economic might are not exactly the same as a local currency I know, but it's suspiciously close: struggling  local businesses in small communities are particularly vulnerable to social pressure to accept more local currency than is good for them. Until your local farmer can pay their mortgage with Hours, Berkshares, or Plenties, seems to me the the best way to support local economies will be to simply buy local products and services - with real money.

And though proponents and organizers will hotly deny it, there is (ahem) a tendency for local currency transactions to go unreported for tax purposes. This I would remind Grist readers is not only illegal, but in the case of sales taxes deprives their local communities of revenue. Hardly a plus for local economic sustainability.

The true meaning of life is to plant trees, under whose shade you do not expect to sit.

"with real money"

The term "blind faith" comes to mind when I come in contact with those who are quick to dismiss anything that challenges the hegemony of the dollar or any national bank debt currency for that matter.  Faith because that is all that makes money "real," our own "faith" that others will accept it.  "Blind" because we really don't know or understand that which we are faithful to accept that it gets us stuff that we want and it isn't very fairly distributed.  And we aren't very aware of how the monetary system serves the purpose of industry and militarism at the expense of healthy community and the enviroment.  Money is not too different than religion in that we put "something" where there is in fact no thing--nothing but our own faith, trust and relationship.  We have externalized something that arises only from within.  Local currencies are at least a step to encouraging people to accept the slightly inconvenient, yet necessary work of learning how to develop healthy inter-dependent economic relationships in our immediate community.  

About taxes, i don't get your argument---the same thing is true for cash.  Should we get rid of cash?  If someone is inclined not to pay their taxes, they're not going to pay their taxes.  Don't blame it on the currency.

I could be wrong, but I think the taxes comment was directed at individuals using local currency among themselves, not necessarily currency used at stores. Like everything else, people have to decide for themselves how they're going to deal with it.

Re: rent and necessities. The more a local currency is used, the more likely it will be accepted for rent and other necessities. Everything that's offered within the community currency system is listed in a directory, so all participants know exactly what they can and can't use the money for. As it becomes more trusted and understood, it will expand. Wal-Mart dollars, however, don't cut it.

I have no doubt that printing your own money for pleasure and profit can be fun, and I can see it as a tool to help build community identity, but I've yet to see an analysis which shows an actual sustainability benefit from a local currency, a demonstrable effect as distinct from a faith-based assertion.  To borrow a concept from the carbon-trading discussion, my guess is that would be hard to demonstrate true additionality for many of the local currency transactions, i.e. most of them would probably take place anyway. Even at the level of theory, I don't see how local currency can be called intrinsically supportive of the three sustainability objectives of environmental, social and economic well-being. Putting local businesses at a trading disadvantage with their competitors in the next town through a crippled scrip is not likely to make that business prosper, nor is paying workers with money they can't use freely in the open market an obvious plus for social justice. And the environmental benefit of buying your organic carrots from the local farmer works just as well with $$$.

As for the costs: the usual costs of tokenism are likely to apply, i.e. distraction from the real issues and from real solutions, kind of like buying a Prius instead of driving a lot less. Then there is the minor inconvenience of having money in your billfold that can't be used to pay for a cup of coffee in a town thirty miles away.  And there is ultimately the risk of currency collapse, with possibly catastrophic effect on vulnerable individuals and businesses who have invested excessively in the system. "Save your Confederate money, boys, the South will rise again." Any currency can collapse, of course, not just local scrips, but as with insurance, the larger the spread, the less the individual exposure.

As several commentators have correctly pointed out, my note about tax reporting applies equally to cash and barter transactions, those other time-honored opportunities for cultural creatives (as well as mobsters) to avoid giving money to The Man. As enhanced opportunities for tax evasion are probably the most significant, though dubious, user benefits to be gained from local currency that I am aware of, I'm just pointing out that such personal benefits are illegal and may actually work to the detriment of the local economy. And while I hate paying through my taxes for guns, bombs and warplanes as much as anyone, I don't see tax evasion as an honorable path to expressing that objection.

The true meaning of life is to plant trees, under whose shade you do not expect to sit.

Spaceshaper, no one has to accept local currency. No one is forcing any business to participate or any workers to take it instead of federal dollars. It's totally voluntary. If a business feels that it's 'crippled' skript then they won't participate. As simple as that. Local currencies encourage people to pay more attention to the goods and services offered by local folks rather than simply looking for the cheapest or most convenient. The relationships that develop among the community are what we need to deal with the many serious issues facing us now and down the road, economically and ecologically. Re: "additionality", I absolutely used Green Mountain Hours for things I couldn't afford otherwise. Several wonderful massages come immediately to mind, a real luxury to a single mother.
Coming down on local currency because you see it as a tax evasion scheme makes no sense to me. Obviously you would chose not to participate in a local currency if one was available to you. That's your right.

I do have a local currency available to me and it is the direct experience of this that raises my concern. I am not coming down on on local scrips because of potential tax evasion, that's a minor issue. And as a formalized medium of local barter which represents just a small element of an individual's total economic picture I have no problem at all. In a connected community people barter all the time - I look after my neighbor's dogs when she's on vacation, she lets me use her beach house on odd weekends when it's not rented, etc. etc. This is a valued part of the rich tapestry of relationship which makes community something worth working to preserve and enhance. Naturally the payback is often not direct or measurable, which is OK with neighbors and good friends but begins to get problematic beyond that immediate circle. Authors of local currency schemes feel that herein lies an opportunity to expand this informal arrangement beyond immediate relationships to a wider network.

And this has got to be a good thing for a sustainable community, right? Not necessarily. The problem lies when false claims are made for the scrip's value, such as that it's a sustainability tool. Local experience as a case in point: my local food coop is a mainspring of the local economy, deeply committed to the sustainability elements of its clearly-written mission statement. A local currency was authored a few years ago by an independent group and the coop of course was one of the first local businesses to sign up. Within a short time the coop found itself holding an accumulated balance of over $100,000 of unsecured local currency which couldn't be used to pay its rent, its taxes, or its non-local suppliers, couldn't be held as a reserve in an interest-bearing bank account, couldn't be used to pay dues to national coop organizations or to regional buying consortia, to guarantee loans from the National Coop Bank to new coops in other states which will in time become anchors of their own local economies, or to send aid to hurricane-ravaged communities on the Gulf of Mexico. Too few customers responded to the appeal to accept it as change, and the coop was taking in more than it could spend. Ethical considerations prevented the coop from pressuring employees and local producers to accept the surplus, and at this point the coop wisely chose to severely restrict the amount of local currency it would accept.

Had the coop continued to take unlimited scrip would it have gone belly up? Almost certainly not. Would it have compromised the coop's pre-existing local sustainability efforts? Probably. As it is the coop is thriving and last year spent nearly $2M with local producers, a number which has been growing steadily as percentage of total purchases over the last five years or so. This is not by accident but in accordance with a predetermined program of local farm support which has clear goals and measurable outcomes, and which offers a demonstrable correlation to the sustainability of the local economy that is conspicuously lacking in the program of the local currency. Tom Philpott and other Grist writers have made an outstanding case for local food supply being treated as the core resource for sustainable local economies, and our farmers cannot pay for seed, equipment, livestock purchases with local currency any more than they can with monopoly money or poker chips; nor does it enable them access to financial markets for needed investment. So long as the scrip proportion of their income stays small they can probably handle it (though ironically they will probably use it at the coop to buy imported non-local goods like coffee, bananas, oranges, and toilet paper) but a growth in local currencies presents a clear peril for small producers whose "voluntary" choices are made in limited local markets.

This post has already gone on way too long so I won't even talk about the inflationary dangers of large amounts of self-minted money in a small community, or the destructive potential for balkanization and fragmentation of intricate networks of adjacent, regional and national local economies if these schemes ever became pervasive. Local currencies are harmless enough as a species of regularized barter of minor peripheral services. Let's just make sure  they are not oversold to environmentalists as a spurious path to sustainability.

The true meaning of life is to plant trees, under whose shade you do not expect to sit.

When we approached businesses to participate in our local currency, we made it clear that they should only accept the currency for a percentage of what people bought, 5% maybe or 10%, to prevent them from accumulating more than they could realistically expect to spend. And we were also careful not to dump too much of the currency into the community for just the inflationary concerns you mentioned. Organizers of projects have a responsibility to be open and honest with all participants about the advantages and disadvantages of the currency.