Detroit was one of the epicenters of the 2008 financial collapse. While its economic problems were decades in the making, the failure of two of the three largest automakers and the largest financial and housing crisis since the Great Depression combined to make a perfect storm, leaving the city in ruins. Unemployment is rampant, housing prices have gone subterranean and the city just announced that it will file for bankruptcy.
The news is not all bad. Like any other economy, the bottom formed by a depression represents an opportunity for assets to be purchased cheaply and managed better by new owners. Local writer Karen De Coster has kept a record of the many new projects underway, including an urban agriculture project, building preservation projects and even private police forces. These and a hundred other grassroots efforts are slowly rebuilding the city.
In order for the recovery to take hold, Detroit needs what every economy needs to grow: capital accumulation. That’s where Open Currency can be a game changer. Instead of accumulating U.S. dollars that are losing value, Detroit’s recovery could accelerate geometrically if built upon sound money.
Capital can only come from one place: savings. When a recession hits, bad debt is liquidated, unproductive employment is eliminated and consumers reduce their consumption and rebuild savings. This only works if the accumulated savings retain value and is not eroded by external forces through inflation.
The Federal Reserve’s quantitative easing and other inflationary programs retard that effort. The new money created is promoted as “stimulating” production and providing the capital for new production and employment. But the purchasing power must come from somewhere. Free market economists argue that it comes from those holders of existing dollars. It comes from savings.
What the Fed is really doing is directing purchasing power away from those who saved it and towards those who get the new loans. It’s central economic planning and the plan doesn’t include Detroit at the moment. That’s why a precious metal Open Currency can help Detroit keep purchasing power in Detroit, where it’s needed most.
CNN reports: Mo Charbonneau, the administrator of “Bay Bucks,” a paper currency started in Traverse City, Mich. in 2006, said the currency is the community’s “own local stimulus program.”
“With everything happening in the economy and the banking sector, people are paying more attention to their local communities and there’s more awareness of keeping money in our community,” said Charbonneau.
AOCS’ mission is to expedite the implementation of metal as money by assisting local communities develop their own currency based upon sound money. Its five-step plan to introduce a local currency takes the mystery out of money and keeps local organizers on track to a more sound, more prosperous future.
Detroit’s rebirth is happening at the local level, without help from Washington or even top down planning by local government. It’s the market at work, from private buses to farmer’s markets to private security. A local currency based upon sound money is the next logical step.