Hi Max,

Thanks so much for that article. I especially love the dramatic and poetic quote to market the money:

“To all whom it may concern ! Sluggishly circulating money has provoked an unprecedented trade depression and plunged millions into utter misery. Economically considered, the destruction of the world has started. - It is time, through determined and intelligent action, to endeavour to arrest the downward plunge of the trade machine and thereby to save mankind from fratricidal wars, chaos, and dissolution. Human beings live by exchanging their services. Sluggish circulation has largely stopped this exchange and thrown millions of willing workers out of employment. - We must therefore revive this exchange of services and by its means bring the unemployed back to the ranks of the producers. Such is the object of the labour certificate issued by the market town of Wörgl : it softens sufferings dread; it offers work and bread."

Thanks Meena!! I just started using OpenIDEO and I LOVE it!! Can't wait to explore it more!!

I was just thinking about different ways that Detroit could get suburb money to stay in the city limits. Basically the suburbanites descend on the town for food, entertainment, and little else. Getting those busiensses to offer Detroit money for incentives, and then send them back to the 'burbs with basically a promise to spend more money downtown... and get them to open their eyes to other businesses where they can spend money that they may not have thought of before.

Hey Anthony,

Love your enthusiasm! The funny thing with all the local currency ideas that have been tried to date is that they have been done on a pretty small scale in very hippy places. They have been extremely well intentioned, but not especially professionally executed. But if you brought in some economists who really understood how to structure a Detroit Central Bank that could develop a city wide monetary policy, you could spur growth. You effectively insert capital into the system and spur ONLY local growth. The limits of the currency are what gives it power.

I too am not a huge fan of the name Hours. What would you call them for Detroit?

cream (dolla dolla bill yo). or not. :)

I like it! How about we shorten it to the Detroit Dolla?

Hi Jarred,

Thanks for your comment. People choose to accept a more limited currency for more than one reason.

Some simply support the intent of the mechanism. They know they will spend a certain portion of their earnings in their town and so choose to ensure that these earnings stay in town. For an inter-related local economy, this is actually a form of job security for these people.

In other cases, employees may earn slightly more by accepting hours. For example, an employee making $9.00 an hour makes $72 for 8 Hours, which trade at a total value of $80).

Finally, businesses could run lower price promotions for Hours as a way to show community support. Besides making the business look like a real member of the community in the eyes of people who pay with dollars and Hours, this can also provide incentive for people to accept and use hours.

Currency is a promise – either dollar or hour. This is just a promise that is kept in a community instead of on increasingly shaky, self serving, and speculative currency exchanges around the world.

As a current resident of Ithaca, I can share a few more insights on Ithaca Hours and its functionality as well.

One of the factors behind its success maybe the relative isolation of the city of Ithaca from other major cities - 4 from NYC, 6 from Boston, and smaller cities nearby including Syracuse, Buffalo, Rochester are struggling to get back on their feed. A local currency would seem to be more secure, valuable and useful when you're stuck in one place where it's accepted and honored.

Another factor maybe the relatively healthy local economy- there are a wealth of businesses that accept the currency and support it. Ithaca is home to two major economic drivers: Cornell University and Ithaca College, which bring in major sources of government, foundation and corporate funding to support staff, faculty and students. Additionally, students (and their parents $) bring in additional funds to help businesses stay vibrant.

Seth- I'd love to hear your thoughts on whether you think Ithaca's ongoing healthy economy and vibrant community is a cause or an effect of Ithaca Hours?

The Berkshires in Massachusetts, another isolated, relatively healthy, local economy with many small businesses that has seen a recent revival also has a local currency that has not really taken off...
http://www.berkshares.org/

Hi Natalie,

Thanks for commenting. Great to hear from someone in Ithaca!! I think you are hitting on a couple really important factors that drive the success of Ithaca Hours.

Ithaca’s relative isolation keeps a certain amount of its economy within city limits, which makes a good platform for a local currency. The reality is that most people trading hours are Ithacans. (I spent 5 years at Cornell and never saw an Hour).

The way I see it is that local people trading a local currency is a closed system. No system growth occurs unless outside capital is introduced into that closed system. But any outside capital that is introduced into the system, stays trapped there and eventually spurs growth for participants of that system.

As an illustrative (and completely made up) example, let’s say 10 local businesses come together and each invest $10,000 (for a total of $100,000) into a trust that is the asset base backing their newly printed of 10,000 Ithaca Hours. They pay some of their employees with these Hours, they accept the Hours and they use the Hours to buy goods in the community. The main point is that this $100,000 that can only be used in Ithaca.

As the popularity of the Hours in our example increases, other local businesses want to buy Hours. Lets assume we only print new Hours when a purchaser pays hard currency (dollars) at the same $10 per Hour rate. The more businesses that buy into the system, the more capital is dedicated to Ithaca. We could go to the extreme that every Ithaca to Ithaca transaction is done with Hours. Once this state is achieved, growth in the captive capital base occurs only when capital is injected into the closed system from outside sources. For example, when Ithaca Bakery starts buying Ithaca Hours with dollars earned at Collegetown Bagels from Cornell students. Once those dollars, which come from all over the world, are injected permanently into the Ithaca economy in the form of Ithaca Hours, they will spur local economic growth.

Sorry for the long answer to your question, but I think the relatively large pools of outside capital from the universities combined with local businesses that provide a conduit for that capital to migrate into Ithaca Hours is a big reason for the currency’s success. It may also explain a reason why other local currencies (like perhaps the Berkshires) are not performing as well.