by Rob Higgin When you go to the bank to arrange a loan, you sit down with the loans officer and he or she decides if you’re an acceptable risk. You negotiate an amount. Paperwork is drawn up with the name of the institution, the amount and two signatures--yours and the loans officer. A $20 bill is likewise a piece of paper, with the name of the institution (Canada), an amount and two signatures. Your loan certificate, once signed, is money; it is, in fact, new money that did not exist before you signed it. This is where money comes from.
Cash and coin only account for 3.6 per cent of our formal money supply. The other 96.4 per cent is created on the spot when you or I or the government borrows from the bank. It rarely takes the form of cash or coin, it exists most often only as a bookkeeping entry on bank records. But, because it is there, you can spend it, convert it to cash or invest it. It accomplishes everything money is designed to do even though most of it will never be anything more than just a number in the books. When the loan is paid off, the principle ceases to exist.
Creating new money, by our integrity and labour, is obviously a very powerful process. By it we have built the great nations of the modern world. Notice how quickly the money supply “dries up” when people stop borrowing; how business booms and prices inflate when borrowing is easy. Picture in your mind, also, the rivers of money flowing out of town as cost of goods sold, insurance, interest and taxes. Then recognize the challenge it is for communities to keep enough flowing in.
Our challenge is to not be dazzled or duped by the size and mystery of it. We are the foundation of it, therefore we have the privilege of understanding it and deciding our part in it.
A local currency can be money, just like bank money, but without the interest charges. Local money flows more easily into the corners that get missed by bank money. Local money is especially good at keeping things going when the banks tighten up or charge too much interest.
The simplest form of local currency is an accounting system that records our promises and payments. Just like the bank. We honour our promises by providing services, goods or cash. To facilitate that, the system offers a community noticeboard. That’s it. That’s a local currency. Debiting and crediting each other, without the bank.
The power of a local currency is in the benefits: more money--confidence is improved, more gets done; more reason to shop in town--local money favours local business and brings bank money with it; more employment, more sales, more enterprise, more options, more opportunities--for everyone, but perhaps more especially for young people.
Register your interest.
Rob Higgin lives south of town and can be contacted at 604.487.1119 or through email [email protected].
