85. For Local Currency

For Local Currency
Bob Komives
::

...

If we wish to pass power and  function back to states and localities we may have to give them some of the fiscal irresponsibility that national government has. We may have to let them mint money. This may seem odd, but consider that banks are allowed to mint money when they lend out most of the money that they are supposed to be holding for depositors. Individually we mint a sibling of money when we take out a loan guaranteed only by our promise to pay it back. Corporations mint a fraternal twin of money when they sell common stock. Perhaps it is more odd that state and local government are left out of the minting business. They can issue bonds, of course, but these must be backed with solid guarantees; money is not so backed.

Where I offer fewer answers
may I proffer one more question?
Could your local government
(your community)
mint its own money?
    Miami Marks?
    Saint Paul Dollars?
    ...
I leave it to you
to tell us how to make it work.

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The USA has tried “revenue sharing” as a way of channeling money and responsibility back to state and local governments. “Mint sharing” would be the correct approach to such a policy, since the federal government raises no true money-revenue. Local governments could share minting privilege as banks do. The challenge would be to induce each jurisdiction to mint money in proportion to how much wealth it is creating. Absent such inducement, not responsible for the national economy, each local government would always have an incentive to print more money. The European Union faces a challenge as it develops a common currency. Will member nations get no local rewards and incentives for creating the economic growth that allows more currency to be minted? Internationally or intra-nationally, with good carrots-and-sticks to keep local production of currency coincident with local production of wealth, mint sharing could be an exciting evolution in our use of money.

:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 85.  For Local Currency  ::
With attribution these words may be freely shared, but permission
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