Tag Archives: finance

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More alternative currency news: Monbiot on stamp scrip

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During the last decade, I could have counted the number of times I saw alternative currencies mentioned in a positive light on one hand and still had enough fingers free to flick the bird at the nearest futures trader.

But the last few months has seen them being mentioned all over the place – the latest being George Monbiot’s blog column at The Guardian, where he talks about the demurrage currencies – or “stamp scrip” – that enjoyed brief success in Europe during the inter-war recession.

Demurrage meant that the currency lost value the longer you held on to it:

The Austrian town of Wörgl also tried out Gessell’s idea, in 1932. Like most communities in Europe at the time, it suffered from mass unemployment and a shortage of money for public works. Instead of spending the town’s meagre funds on new works, the mayor put them on deposit as a guarantee for the stamp scrip he issued. By paying workers in the new currency, he paved the streets, restored the water system and built a bridge, new houses and a ski jump. Because they would soon lose their value, Wörgl’s own schillings circulated much faster than the official money, with the result that each unit of currency generated 12 to 14 times more employment.

It sounds like a crazy idea, but that may simply be because we’re so used to the system we’ve already got. And, as Monbiot points out, when our governments seem to think that the best solution to a financial crisis caused by ridiculous levels of lending is to encourage yet more ridiculous levels of lending, maybe the devil we know is best left behind this time round. [via Bruce Sterling]

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While the economy falls, local currencies rise

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Is the local currency an idea whose time has come – or rather, has come back? In the Berkshires of Massachusetts, a local currency called Berkshares is being buoyed up by the current economic crisis, and receiving a lot of enquiries from other communities interested in replicating its success:

Since the currency’s launch two years ago, five local banks have printed more than 2 million paper notes. About 185,000 are currently in circulation, according to Susan Witt, a Berkshare co-founder.

It’s in no way ready to replace regular money just yet, but it seems to work well as a supplementary system during hard times. The problem is the admin – there’s a lot of work involved for what is usually a small volunteer organisation, which is why the Toronto Dollar is moving to an electronic version to simplify the management procedures.

As the strength of the nation-state concept atrophies, will we see an increase in local communities making their economies more sustainable and autonomous? Given the rising cost of transportation for both people and goods, it doesn’t seem too implausible.

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Nobel laureate Paul Krugman discusses interstellar trade

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Recent recipient of the Nobel Memorial Prize in Economics Paul Krugman wrote a humorous academic paper on interstellar trade back in 1978:

This paper extends interplanetary trade to an interstellar setting. It is chiefly concerned with the following question: how should interest charges on goods in transit be computed when the goods travel at close to the speed of light?

This is a problem because the time taken in transit will appear less to an observer travelling with the goods than to a stationary observer. A solution is provided from economic theory, and two useless but true theorems are proved.

…

It should be noted that, while the subject of this paper is silly, the analysis actually does make sense.

This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.

Beautiful. The paper itself is full of zingers and whatnot, and is well worth a read.

[via the FT and David Friedman’s blog][image from Gaetan Lee on flickr]

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1337 in 2012 – a free story by Jason “Strange & Happy” Stoddard

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If you need something to stop you hitting refresh on the Financial Times frontpage as the stock markets do their best impression of the North face of Everest, maybe you should try reading “1337 in 2012”, a story that Jason Stoddard has just thrown up for free on his website.

It’s about financial meltdowns and elections, so it’s more than a little topical. Plus it’ll give you the chance to see how Stoddard walks the Positive-sf walk after hearing him talk the talk…

Here’s the opening few paragraphs:

“I want to know how she did it,” Alexandra Jetter said, almost pushing Gary McCabe down the narrow hallway with her refilled-from-the-lunchroom-for-a-week grande Starbucks. Not a single thank-you for calling him in at midnight.

“Doing it wasn’t hard,” Gary told her.

Alexandra snapped around to look at him, baring yellow teeth. “You didn’t vote for her, did you?”

“Of course not.” Though it had been really, really hard to vote for their pet candidate who promised the Bureau more funding, more growth, good times for everyone again, go back to buying Starbucks every day, hallelujah.

“Then how’d she do it?”

“She ran it like a campaign.”

“Of course it’s a campaign!”

“Not that kind of campaign.“

A snort. “She rigged it.”

Gary just shrugged.

Go read!

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The future of banking

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As the current financial crisis unfolds, I’ve been wondering how it will affect me as an individual in the future. Hamish McRae reckons it’ll be like it was in the sixties (but not in a good way 🙁 ):

It is easier in a way to see the situation in a year or two’s time than it is to call the detail of the next few weeks. What we can see is a world where it will be much more difficult to borrow money.

For those who can remember, it will be more like the 1950s and 1960s. Then, if you wanted a mortgage, you had to have built up a deposit in the building society or bank that might lend you the money.

People would open an account with two or three societies and stick as much money as they could in each so that if one would not give them the loan they could try another.

Other interesting speculations on the future of banking can be found in Casino Capitalism, on the BBC’s iPlayer service, available until the 5th of October. One conclusion from that programme is that banks will become more like utility companies, and the idea that banks can be innovative businesses in their own right is wrong – banks should provide basic financial services based on sound risk management (see below).

It’s worth listening to. Also if you haven’t read Charles Stross’ thoughts on the banking crisis, go do so:

…banking is the art and science of risk management. (You have a pot of money. You want to use it to get more money.

Do you lend it to person A, who you figure has a 25% chance of defaulting on the loan but is willing to pay you 1% per month in interest, or person B, who has a 1% chance of defaulting but can only pay you 0.5% per month?

If you picked person B, congratulations: you’re a good banker. If you picked A, you’d better hope there’s a government hand-out in your future.)

[image from Odalaigh on flickr]