Admittedly, I don’t know everything about economics. It’s true. The use of local currency was a brand new concept to me when I wrote my College of Weakonomics yesterday on Local Currency. I first heard about it on NBC Nightly News over the last weekend when they covered Berkshares. During the week while conducting research I learned there are many currencies all over of the country and the world.
We’ll only cover one here as an example, but the link above takes you to a list of many such currencies. Democracy Now featured the PLENTY which is used in Pittsboro, NC; a small town in central North Carolina. The really cool thing about the PLENTY is you can buy 10 PLENTYs for $9. What this allows you to do is buy normal items for a 10% discount. Here is a video about it, please check it out.
Now of course you couldn’t think I would talk about local currencies and not invent one of my own. So in my world we would have the Wiquet. Of course it’s an acronym: Weakonomics Intraregional Quest for Ubiquitous Economic Transactions. I spent way too much time making the Wiquet fit into an acronym. Though Wiquet would be the formal name, it would of course have slang terms. ”Dubs”, “Qs”, “Cutes”, and “Wikis” are my favorites. The way currency would be used is similar to the PLENTY above. You could exchange $19 for every 20w. Pricing for items would be the same though. So gas at $2.99 would be 2.99w. This nets you a 5% discount on everything you buy. The Wiquet will only be available as bills, and so fractions of a Wiquet will simply be paid in coins. The denominations would be 1, 5, 10, and 20. I would be on the 1 (natch), and other local important people would be on others. To raise money to fund the operation, we could auction off the rights to be on the currency for 4 years of circulation.
The really cool thing about the Wiquet though will be the tracking mechanism put in place. Each note would have an implanted RFID chip with a unique number. This would allow the local economy to monitor how a note moves through their community. When a note is inserted into the cash register the RFID chip phones home to the managing bank and it is documented where it landed. This would even help for when money is stolen. When the Wiquet is the spent, investigators know where to start looking for the thief. For privacy concerns, the Wiquet would not phone home when in the hands of a consumer, and the details of each transaction would be private, just like your bank records. To make sure Wiquets are spent quickly (frequent movement of cash is good for the economy) the note must phone home every 90 days. This means you must either spend it or take it back to the host bank for a deposit/exchange every 90 days. Each note will have an ID number that you can check on the expiration by going to a website. Failure to use the Wiquet within 90 days reduces its value by half. It if fully expired and useless after 1 year.
No currency is full-proof. Scaling this to a national level would be a disaster. But since the point is to keep things local, the Wiquet would only circulate in local economies. Also implementing this currency would be expensive, since a database and RFID software would need to be created. Part of the fundraising would by via the auctions. Either a person or a business could compete to have themselves printed on the Wiquet. Additional funding could be sourced with a tax if necessary. The improvements to the local economy should more than offset any potential tax.
If you are an individual representing your town and would like to talk to me more about implementing a Wiquet style currency I will be happy to work with you free of charge (that’s a lie). I only ask to be on the 1w note for the first 4 year term. My contact info is found here.
One final thought. Economists get a bad rep for everything that I’ve always talked about on Weakonomics. There are economists that are more concerned with specialized industries or smaller economies. Were I to ever become an economist, that is what I would want to work with. Local currencies are perhaps an economist’s dream.