This type of idea is never popular with the people that have large stores of the prior government backed currency. The rich never want to have their wealth in any way threatened, and they have the reach and influence to make the government protect their assets, even if it comes at the cost of causing misery to pretty much everyone else.

There ought to be a better balance, and the US found it in the period between the end of WWII and the 1970s. High marginal taxes on extreme wealth, high inheritance taxes and zealous antitrust and anti-monopoly enforcement all kept people's wealth and power disparity somewhat in check.

That sounds like what Varoufakis planned to implement in Greece in case of a default in 2015.

” What we planned to do was this. There's the tax office website, as in Britain and everywhere else, where citizens (taxpayers accessing the website) use their tax identification number and transfer money from their bank account to their tax identification number via online banking to pay VAT, income tax, and so on. We were planning to surreptitiously create reserve accounts linked to each tax identification number without notifying anyone, simply so that this system would operate in secret. With the push of a button, we could assign PIN numbers to the holders of the tax identification numbers (taxpayers). For example, in a case where the state owed a pharmaceutical company one million euros for medicines purchased on behalf of the National Health Service, we could immediately make a transfer to the reserve account corresponding to the pharmaceutical company's tax identification number and provide them with a PIN number. They could use it as a kind of parallel payment mechanism to transfer any portion of those digital funds they wanted to any tax identification number they owed money to. Or even to use it to make tax payments.”

https://cemi.ehess.fr/docannexe/file/2911/sapir.6.nov.pdf

"the town and the community quickly went from an unemployment rate of over 30% to near zero"

According to Wikipedia the unemployment rate sank from 21% to 15%. -- https://de.wikipedia.org/wiki/W%C3%B6rgler_Schwundgeld#Auswi... (in German)

This article fails to mention why the currency circulated so fast. It was depreciating: it was defined as gradually losing value, so hoarding didn't work, and the people with money had a strong incentive to spend it. The article makes it sound like these currencies worked because they were local. They worked because they depreciated, and it's possible to do this on a national level.

Other writings about this: A book chapter, The Currency of Cooperation: https://ascentofhumanity.com/text/chapter-7-02/

And a short piece about Brakteaten money: https://wiki.p2pfoundation.net/Brakteaten_Money

> Fortunately, complementary currencies are now legal in just about every country, as evidenced by the popularity of cryptocurrencies, one form of a complementary currency.

In many countries, cryptocurrency is considered a commodity - not money - and therefore disposals (where a cryptocurrency is given up in exchange for something else) are taxable events.

This is quite inconvenient and complex compared to money, and only less so if you are fortunate enough to be using a cryptocurrency that is pegged to your local currency (eg USDC or mUSD in place of USD).

Furthermore, if I understand it correctly, the purpose of complementary currencies is to act as a form of capital outflow restriction: you have a limited amount of capital in your town, and you want it to remain in your town alone. A complementary currency, which can only be spent locally, restricts the outflows of capital and allows it to remain local and do useful work multiple times within your town rather than potentially enriching other towns.

Cryptocurrency doesn’t intrinsically do that at all, although there are certainly some tokens designs that can replicate it eg LP emissions on decentralized exchanges.

Seriously though, i doubt that "the rich across the globe" conspired to ban emergency currencies. I'd be curious to see a more in depth analysis of what are factors driving such local economies vs centralized currencies.

Is it precisely that the currency could not be exported outside the local region - that made it a barter tool vs an investment tool - that made it less affected by such external events as great depression?

What was the central government fearing? I'm sure there's a reason why it might be a less than ideal situation. Maybe because it is effectively a financial pyramid (more so than the primary currency) - a bunch of local govt making their local currencies with unclear unregulated printing schedule could result in many people not assessing their real purchasing power adequately?

This is relevant to understand this experiment:

https://en.wikipedia.org/wiki/Demurrage_currency#Other_diffe...

This has been done many times in many places.

Argentina did it last in 2001 or so (several parallel currencies were issued by different provinces: https://es.wikipedia.org/wiki/Cuasimonedas -Spanish only-).

When the central government fails, in many cases local governments attempt anything to keep functioning.

It does work, but the cleanup is messy.

That is a fascinating history, and a fun read.

It would be even better if the author addressed drawbacks of 'complementary currencies.' On that subject the author seems to have no curiosity.

It was ended by force in Tirol in 1933 though:

https://de.wikipedia.org/wiki/W%C3%B6rgler_Schwundgeld#Proze...

States are very brutal even when you show them alternatives.

There is a movie by the name Shilling From Heaven around this, you can find a link in our blog post https://grassecon.substack.com/p/worglhtml. Our initial work at Grassroots Economics was inspired by this. We even have a smart contract that implements this idea (demurrage/Gesell tax) in it https://github.com/grassrootseconomics/erc20-demurrage-token.

The article mentions cathedral projects that issued their own local currencies. I guess they must have backed it with gold or silver, or some collection of valuable things donated to fund the cathedral?

The article really is light on technical details that would help one to understand how these local currencies worked.

It seems like the article is missing the central point -- namely that the currency was depreciating monthly, providing an incentive to spend it as quickly as possible.

With the amount of money which is created and transferred today it would be a task for one day to lift a whole country out of poverty. 1 million into an savings account with 4% return would be roughly 3k per month.

We have all kinds of currencies today -- gift cards, credit scores, loyalty points, forum reputation, follower counts, Pokemon/Magic cards, etc.

Some are easier to spend, but all can be traded for other goods even if they can't directly be used to pay your taxes.

This only shows, at the end, money is just a tool to move people.

It's an example of what a responsible local government working in the interest of the local community could achieve.

No wonder that the federal government did all they could to shut down this experiment. It was too dangerous to have an example of actually functional governance.

Money is a public good, its value is a social construct and its supply should be managed in the interests of society at large. The current private debt-money system is the core political and economic problem facing us.

The social credit movement (completely different than the Chinese concept) is interesting in this regard:

https://en.wikipedia.org/wiki/Social_credit

Turns out made-up money is as good as real money at motivating people to do things, and people who aren’t living hand-to-mouth are naturally interested in longer term investments.

…what’s that? All money these days is made up?!

IANAE, but besides things like the threatened oligarchs and taxes and government-monopoly on the legal use of force.. raw materials and imports/exports would seem to be an even more basic problem for an optimist that thinks the first big 3 issues can be worked around. That's why I think the dutch circular economy[1] is so interesting. Hopefully someone much more informed could opine?

It's definitely got a "degrowth" aspect involved and the captains of industry will not appreciate it. On the other hand, it's much less threatening to entrenched interests compared to a large group of people who are explicitly trying to just opt out of a system you're deeply invested in.

[1] https://www.government.nl/topics/circular-economy/circular-d...

That was, of course, another time. Doing what Worgl did today would trigger a con artist paradise. Just like everything else in this modern corrupt world.

MMT

> At this point, the central bank panicked, and decided to assert its monopoly rights by banning complimentary currencies.

Who was running that central bank?

Here is the basic theory:

Classical and neoclassical economics tells us that people always spend their entire paycheck on consumer goods (consumption) or claims to future consumer goods (savings). There is no money left over at the end of the month. Producers are notified in advance what to produce. If a worker happens to have $5 left at the end of the month and he wants to buy a car, he will use those $5 towards a non-refundable deposit, even if the car costs tens of thousands of dollars, and contractually obligate himself to spend the remaining money. No money is ever carried over from one period to another, since money is neutral and just a veil.

Meanwhile the observation in the real world is that people often hold onto enough money to make the full purchase. From a theoretical perspective it means they have found a third option: delay making decisions, which is neither saving nor consumption. This means producers are not notified of what to produce until the very moment of the purchase, which means producers have to engage in speculative production ahead of time with no guarantee of a sale. They have to hold inventories and possibly throw away unsold inventories (because no seller wants them). This holding of inventories can manifest itself in the form of idle capital and unemployment as well.

What Silvio Gesell discovered on his farming venture that this delayed decision making is incredibly wasteful, because most products (especially produce) are perishable/non-durable at long time scales, this means that waiting produces waste per unit of time on part of the speculative producers and give the seller of perishables a weaker negotiation position compared to the buyer, who is an implicit seller of money, a non-perishable good. This means buyers or generally people with money are structurally advantaged compared to those who don't. This leads to the conclusion that either money should perish as well, or a more modern interpretation: negative interest is a reflection of rising entropy.

I've seen neoclassicals reject this theory with pretty flismy reasoning, mostly based around the idea that people don't hold cash or positive balances on their account.

Now this theory isn't perfect by any means, but it is pretty interesting and the more you dig, the more it feels like it is pointing towards the correct direction. Meanwhile Keynes proposed a different theory, which is based on the liquidity of assets rather than its durability. Money is more liquid, because everyone wants money. This means you can take money and walk to any seller and buy their goods. Meanwhile as a seller, you must have the particular good that the buyer wants. This is a more general theory since it isn't biased exclusively towards money, because there is sort of a hierarchy of liquidity. Bank account deposits are as liquid or perhaps even more liquid than cash. This means bank account balances can be used for payment instead of cash. Bonds are essentially money with a duration that binds their use, which makes their market value and their nominal value diverge. Stocks are on the extreme end of liquid assets, with wild fluctuations. Meanwhile things like apples are on the lower end of illiquid assets. There is a limit to how many apples a person accepts as "payment" for parting with money.