Participating merchants have an incentive to encourage use of local currencies. They often give substantial discounts to customers to use them in lieu of U.S. dollars or credit. One reason they can do this is the local currency will increase in value over time, while fiat currencies lose value.
That means that community currency consumers are more likely to go to a locally-owned hardware store, for example, to purchase a garden tool or a fixture than to Home Depot or Lowes, which forces them to use depreciating paper currency.
Community currencies foster stronger relationships between local merchants and consumers, building a sense of community beyond the purely commercial. There is something inherently more personal in doing business with a local, hard currency than in swiping a card to transfer imaginary money to some distant, faceless corporation.
Community currencies protect individual consumers from inflation and the rising prices that accompany it. 21st century Americans consider rising prices the inescapable result of a growing economy. This is erroneous. During the 19th Century, prices fell dramatically even while relative growth was much more robust than it is today. Only since creation of the Federal Reserve in 1913 have prices generally risen over time.
Inflation lowers the purchasing power of consumers over time, lowering their living standards. Community currencies eliminate the effects of inflation and reverse that trend. Individual consumers can experience the rise in purchasing power and living standards over time that Americans experienced for the first 133 years of their history.
Consumers also face less risk of unemployment when a community currency is firmly established. By neutralizing inflation and keeping purchasing power local, capital accumulation occurs more quickly. This accelerates economic growth, creating more employment opportunities.
For environmentally-conscious consumers, community currencies are far “greener” than fiat paper. By encouraging consumers to buy local, products don’t travel as far to get to the point of sale. That means less gasoline expended and less pollution. Hard currencies are more durable than paper. They will be reused over and over. When worn, they will still retain value for industrial use, jewelry or to mint new currency. They are one of the few items for which recycling is sustainable economically.
There is no reason you can’t enjoy all of the same benefits. AOCS is currently helping many communities introduce their own community currency, based upon hard money. Find out more about how AOCS might help your community at www.opencurrency.com.