I have been lately courting the Green and Libertarian parties about my running for Congress in NY District 19.  Recently, I attended a NY state Libertarian monthly meeting.  When the topic of the possible collapse of the U.S. petro-dollar came up, many people said that they had invested in gold or other commodities–or Bitcoin–in preparation for such an event.   That’s fine and good for them, but if I were an elected official, I would be called upon to say something about what all the people, who had not had the foresight to make such preparations, should do to eat and keep roofs over their heads.

As part of my desire to bring together Greens and Libertarians, I offer this solution for the small towns that make up District 19.  You have a wonderful rich resource you may not know about. It’s called community.  (Community is not communism because it comes from you, not from government.)  During the Great Depression, when banks failed and there was not enough money in circulation to enable the easy exchange of goods and services (there was plenty of labor available and plenty of people in need of that labor), the exchange of IOUs kept local economies moving. IOUs are just like alternative currencies.   Like the U.S. dollar, an IOU is a promise to pay.

But since the time of the Great Depression our small towns have gotten to be a lot bigger and we don’t all know each other well enough to circulate IOUs.  There are some good alternative currency programs available nearby, such as Berkshares, Ithaca Hours, and Common Good. But what if a depression hits tomorrow? How fast can we organize in District 19 to get a local currency going?

Maybe we don’t have to.  Let me relate a story to explain. A few months ago a neighbor paid my husband for some services with a check, made out to “cash,” which someone else had given my neighbor in exchange for some goods.  (I guess my neighbor just didn’t have time to get to the bank to deposit or cash it, so he passed it on.) It so happened that I was on my way to pick up my son from his tutoring lesson. I owed the tutor the same amount of money written on the check.  I considered that if I passed that check off to him, and he passed the check off to another person, and she/he to another and to another, then the original check writer would effectively have “created” a local currency, enabling potentially thousands of dollars in exchanges of goods and services. Maybe eventually the check would get back to the original check writer and she could tear it up.   Or, if she has an interest earning checking account, she may realize it makes sense to pass it again.

A check made out to cash is a legally binding promise to pay.  Using a check made out to “cash” could then function as an instant form of alternative local currency that would be guaranteed under the law.

One of the nice things about living in a small town is the big corporate-owned stores don’t want to bother setting up shop here.  I spend, if not most, certainly a lot, of my money in locally-owned businesses. The money I spend keeps circulating locally because it doesn’t filter up to multi-national corporation stock holders. This circulation makes my town richer even if no new money is coming in from any where else.

Now imagine that, as some payment, I get a check made out to “cash,” from my neighbor who plows the roads for the town, written on the town’s account. The town might want to pay its workers like this, as a way of earning interest off deposited funds while paychecks given to town employees keep circulating locally. I might use a check that was originally issued to a Highway Department worker to pay my property taxes and then the town could either tear up the check or use it to pay the Highway Department worker again.

Now let’s imagine the zombie apocalypse never happens; the U.S. government or the IMF manages to find yet another way to prop up the U.S. petro-dollar, and we don’t need to take such drastic (and small-townish) measures. What have we learned from this exercise of thinking about a NeoGreat Depression and a check made out to “cash” as a different form of currency?  We have learned that “job creators” are those people who need services or need goods.  We have learned that these “job creators” can also create a currency if they also have goods and services to offer.  We have learned that YOU are the job creator and YOU can function just like a government issuing currency.

We have also learned that small town governments can be “job creators” and “currency creators” without help from any entity outside the small town.    This is essentially what is behind the idea of what’s called Public Banking.  Every little hamlet and municipality could create currency simply by paying for goods and services with exchangeable IOUs.

The Federal government could also End the Federal Reserve (fractional reserve) banking system, and operate this way instead.   The U.S. government could create IOU U.S. dollars to build and repair infrastructure and could accept these dollars back as payment from citizens for the use of this infrastructure.  The government would not have to tax or borrow first and then build infrastructure.  A U.S. dollar that is backed by the value of public infrastructure is like the check made out to “cash.” It is a promise, not to pay but, to provide services.

Oh, but I am over-simplifying the complex problem of money creation involving the Fed, Treasury Bonds, interest rates, fractional reserve amounts, FDIC insurance, taxation of all kinds, foreign exchange rates, tariffs, the GDP, stock markets and etc.  I don’t usually defer to Wikipedia for reliable information, but in this case I will direct you to its entry on the Federal Reserve, so that you can learn just how complicated our monetary system wants to be so that you will become so confused you will just go along with it.  But I think it’s fair to ask, Is this system working for us? Or would we be better off with a national currency–not one that’s created by private banks–and as many local and alternative currencies as the people want?