Local currencies cash in on recession

Communities in North Carolina, Massachusetts, Arizona and elsewhere print their own money to encourage shoppers to patronize local businesses. Local money was last popular during the Great Depression.
By Nicholas Riccardi - LAtimes August 11, 2009

Reporting from Pittsboro, N.C. - The stimulus for this mill town turned artist's colony arrived in the form of green bills bearing sketches of herons, turtles and trees.

A few dozen local businesses banded together this spring to distribute the Plenty -- a local currency intended to replace the dollar. Now 15,000 Plenties are in circulation here, used everywhere from the organic food co-op to the feed store to, starting this month, the Piggly Wiggly supermarket.

Last popularized during the Great Depression, scrip, or locally created stand-ins for U.S. currency, is making a comeback. Pittsboro, population 2,500, is one of a handful of communities that launched its own money in recent months. It reports an avalanche of calls from other communities that have lost faith in the global financial system.

"The Plenty is not going to get siphoned off to Wall Street, or Washington, or make a stop in Bentonville on its way to China," said B.J. Lawson, a software entrepreneur who is president of the board of the Plenty cooperative. "It gives us self-reliance."

Over the last two decades, a few communities have created their own cash in an effort to preserve local ties or businesses.

These whimsically named bills -- such as the "BerkShare" or the "Cheer" -- can be spent at neighborhood merchants, who then can use them at other local shops or, should they choose to, trade them in for dollars or other goods.

So far, none of them face the extreme pressures that popularized scrip during the Depression -- bank failures that dried up the supply of cash in circulation, requiring governments to come up with novel ways to keep commerce alive.

"Right now there's a lot of interest because of the economy, but a lot of these efforts come about to rebuild social capital," said Ed Collom, a sociology professor at the University of Southern Maine who studies local currencies. "There's been concern about lack of trust, neighbors not knowing each other. They see this as a way of neighbors helping each other."

In Detroit, for example, the Cheer was created not due to the city's chronic financial woes but because bar owner Jerry Belanger wanted to encourage patrons to support new local businesses. He issued notes good at neighborhood merchants, backed by a cash reserve at his bar.

The idea caught on fast, and other taverns agreed to help back the currency. There are now $3,000 worth of Detroit Cheers in circulation after about four months.

"It's like a wink or a secret handshake," Belanger said. "People want to demonstrate they care about the community."

In Mesa, Ariz., a city of 450,000 east of Phoenix, the motive has been purely financial.

The city has no property tax and relies almost exclusively on its sales tax for revenue. Receipts plummeted 12.5% in the last quarter of 2008.

Johann Zietsman, director of the city's Arts Center, noticed that only 30% to 40% of seats were selling as people tightened their belts.

Thus Mesa Bucks were born. Shoppers who spend money at stores in the city limits can bring their receipts to the Arts Center and receive a percentage of the sales tax they paid as Bucks. Right now the currency can only be spent at the Arts Center and city museums, but officials are talking with two malls about distributing them and believe some local merchants will accept Bucks.

"Everybody is having a tough time," Zietsman said. "Incentives are always popular."

The western New York college town of Ithaca is believed to be the first community in recent memory to have revived scrip by starting the Ithaca Hour in 1991. Other places, including Portland, Maine, and Traverse City, Mich., followed suit.

In western Massachusetts, activists and a local nonprofit banded together in 2006 to create the BerkShare.

Since then, 2.5 million BerkShares have circulated in the leafy towns of the Berkshire Mountains. Residents can exchange $95 for 100 BerkShares, giving an incentive to use the scrip.

Susan Witt, executive director of the E.F. Schumacher Society, which advocates scrip and other ways to build local economies, helped create the BerkShares. She said that as recently as the early 20th century, banks issued their own scrip that would be used in towns and cities across the country.

Reporting from Pittsboro, N.C. - "We gave it up for the convenience of a national currency," Witt said, adding that it remains legal to mint your own money. "Regions opened themselves to being vulnerable to the ins and outs of the national economy."

The Plenty -- which roughly stands for Piedmont Local EcoNomy Tender -- first launched in 2002 in another central North Carolina community.

It quickly folded because the bills piled up in the few businesses that would accept them, a problem that experts say dooms the majority of scrip.

Residents in Pittsboro, a collection of stately clapboard homes and repurposed brick warehouses 17 miles south of the university town of Chapel Hill, decided to try again this spring.

The new incarnation of the Plenty can be exchanged for dollars at a bank in Pittsboro, and backers say they are trying to expand the businesses that will accept the bills. Melissa Frey, who administers the Plenty cooperative, noted that a local chiropractor and aromatherapist have agreed to take Plenties, but no mainstream health providers or gas stations have signed on.

Though local activism spurred the currency's revival, Frey said businesses seem increasingly receptive because of the recession. "It does happen to be the right time to sell this program to people."

The bills are designed and printed by local artists, with a wide variety of designs and serial numbers to combat counterfeiting.

A couple of businesses in town already pay employees partly in Plenties. Proponents are most excited that the local Piggly Wiggly -- a franchise owned by a local family -- has agreed to start accepting the currency.

Owner Blake Evans said he has "low expectations, but long-term maybe it'll be something that catches on." He has been explaining the concept to his employees, some of whom had concluded that the motto on the bills, "In Each Other We Trust" (printed in soy ink on 80% recycled paper), meant the currency is anti-religious. "It certainly is not," Evans said.

One of the anchors of the Plenty is the General Store Cafe, a cavernous eatery and deli where, waiters report, customers have regularly been leaving Plenty bills as tips.

Owner Vance Remick said that when people use the Plenty it feels more like a personal transaction -- the sort that could only occur in a unique community.

"You want to feel special," Remick said, "wherever you are."

nicholas.riccardi@latimes.com Source

Copyright © 2009, The Los Angeles Times

Is America building a purely military economy?

From Rawstory:

A recent article in the New York Times, entitled "Why a Recovery May Still Feel Like a Recession," has buried in it some startling statistics about the direction of the US economy.

Floyd Norris' article points out that durable-goods shipments -- a basic measure of industrial production -- "fell by more than 20 percent during this recession, and would have declined further were it not for increased production of weapons."

The use of the military-industrial complex as a quick, if dubious, way of jump-starting the economy is nothing new, but what is amazing is the divergence between the military economy and the civilian economy, as shown by this New York Times chart.

In the past nine years, non-industrial production in the US has declined by some 19 percent. It took about four years for manufacturing to return to levels seen before the 2001 recession -- and all those gains were wiped out in the current recession.

By contrast, military manufacturing is now 123 percent greater than it was in 2000 -- it has more than doubled while the rest of the manufacturing sector has been shrinking.

But Norris adds a valuable caveat: "The United States remains primarily a civilian economy. The military now takes about 8 percent of all durable goods, up from 3 percent in 2000." While that puts the size of the military economy in perspective, it's important to note the trajectory --

the military economy is nearly three times as large, proportionally to the rest of the economy, as it was at the beginning of the Bush administration. And it is the only manufacturing sector showing any growth. Extrapolate that trend, and what do you get?

The change in leadership in Washington does not appear to be abating that trend. The military budget for 2009, not including the wars in Iraq and Afghanistan, is $651 billion, up 11 percent from the $583 billion spent on the military in 2008. (See the Pentagon's budget report here (PDF)). The Iraq and Afghanistan wars are estimated, separately, to cost $150 billion per year.

At his blog on Talking Points Memo, John Taplin argues the rapid militarization of the economy is a clear sign of a civilization in decline. Taplin cites the historian Alfred Toynbee's analysis of the decline of the Roman empire, as paraphrased at Wikipedia:

The Roman Empire produced few exportable goods.

Material innovation, whether through entrepreneurialism or technological advancement, all but ended long before the final dissolution of the Empire. Meanwhile the costs of military defense and the pomp of Emperors continued. Financial needs continued to increase, but the means of meeting them steadily eroded. In the end due to economic failure, even the armor of soldiers deteriorated and the weaponry of soldiers became so obsolete to the extent that the enemies of the Empire had better armor and weapons as well as larger forces. The decrepit social order offered so little to its subjects that many saw the barbarian invasion as liberation from onerous obligations to the ruling class.

Sound familiar?

-- Daniel Tencer Source

The Pentagon Wants Authority to Post Almost 400,000 Military Personnel in U.S.

By Mathew Rothschild | The Progressive | Aug. 12, 2009

The Pentagon has approached Congress to grant the Secretary of Defense the authority to post almost 400,000 military personnel throughout the United States in times of emergency or a major disaster.

This request has already occasioned a dispute with the nation’s governors. And it raises the prospect of U.S. military personnel patrolling the streets of the United States, in conflict with the Posse Comitatus Act of 1878.

In June, the U.S. Northern Command distributed a “Congressional Fact Sheet” entitled “Legislative Proposal for Activation of Federal Reserve Forces for Disasters.” That proposal would amend current law, thereby “authorizing the Secretary of Defense to order any unit or member of the Army Reserve, Air Force Reserve, Navy Reserve, and the Marine Corps Reserve, to active duty for a major disaster or emergency.”

Taken together, these reserve units would amount to “more than 379,000 military personnel in thousands of communities across the United States,” explained

Paul Stockton, Assistant Secretary of Defense for Homeland Defense and America’s Security Affairs, in a letter to the National Governors Association, dated July 20.

The governors were not happy about this proposal, since they want to maintain control of their own National Guard forces, as well as military personnel acting in a domestic capacity in their states.

“We are concerned that the legislative proposal you discuss in your letter would invite confusion on critical command and control issues,” Governor James H. Douglas of Vermont and Governor Joe Manchin III of West Virginia, the president and vice president of the governors’ association, wrote in a letter back to Stockton on August 7. The governors asserted that they “must have tactical control over all . . . active duty and reserve military forces engaged in domestic operations within the governor’s state or territory.”

According to Pentagon public affairs officer Lt. Col. Almarah K. Belk, Stockton has not responded formally to the governors but understands their concerns.

“There is a rub there,” she said. “If the Secretary calls up the reserve personnel to provide support in a state and retains command and control of those forces, the governors are concerned about if I have command and control of the Guard, how do we ensure unity of effort and everyone is communicating and not running over each other.”

Belk said Stockton is addressing this problem. “That is exactly what Dr. Stockton is working out right now with the governors and DHS and the National Guard,” she said. “He’s bringing all the stakeholders together.”

Belk said the legislative change is necessary in the aftermath of a “catastrophic natural disaster, not beyond that,” and she referred to Katrina, among other events.

But NorthCom’s Congressional fact sheet refers not just to a “major disaster” but also to “emergencies.” And it says, “Those terms are defined in section 5122 of title 42, U.S. Code.”

That section gives the President the sole discretion to designate an event as an “emergency” or a “major disaster.” Both are “in the determination of the President” alone.

That section also defines “major disaster” by citing plenty of specifics: “hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought,” as well as “fire, flood, or explosion.”

But the definition of “emergency” is vague: “Emergency means any occasion or instance for which, in the determination of the President, Federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.”

Currently, the President can call up the Reserves only in an emergency involving “a use or threatened use of a weapon of mass destruction” or “a terrorist attack or threatened terrorist attack in the United States that results, or could result, in significant loss of life or property,” according to Title 10, Chapter 1209, Section 12304, of the U.S. Code. In fact, Section 12304 explicitly prohibits the President from calling up the Reserves for any other “natural or manmade disaster, accident, or catastrophe.”

So the new proposed legislation would greatly expand the President’s power to call up the Reserves in a disaster or an emergency and would extend that power to the Secretary of Defense. (There are other circumstances, such as repelling invasions or rebellions or enforcing federal authority, where the President already has the authority to call up the Reserves.)

The ACLU is alarmed by the proposed legislation. Mike German, the ACLU’s national security policy counsel, expressed amazement “that the military would propose such a broad set of authorities and potentially undermine a 100-year-old prohibition against the military in domestic law enforcement with no public debate and seemingly little understanding of the threat to democracy.”

At the moment, says Pentagon spokesperson Belk, the legislation does not have a sponsor in the House or the Senate.