8 § DGC Magazine February 2009 Issue

slE

aBElor

Hat

PEnd

old

sland

laire

olfe

Once again reporting from the near future and from that fabulous oating

center of commerce somewhere on the ocean

...

I closed the cash drawer on a proliferating polyglot ofcurrencies, thanked the buyer, handed him his bagof souvenirs, and sent him on his way. He exited thelittle shop a happy customer and went on about his no-doubt more serious Gold Island business.Then, peeking to ensure that neither boss nor anothershopper was entering the little store, I slipped thedrawer open again and admired its contents.Wow. I never saw so many different kinds of money inone place. There were fat gold Rothbards, sleek silverLiberties, and even a few tiny graceful copper Divas.There were Goldoons and Silverinos, Half Hours,Hayeks, SeaBux, Bronx Cheers, Emir8s, Humboldts,and even a few ordinary old Swiss Francs.You might ask how one little souvenir shop couldaccept and keep track of so many different currencies.Actually, though, its pretty easy.One compartment each for silver ounces and halves.One for gold halves, quarters, and tenths. One forcopper … well, you get the idea. Once you stop thinkingof it as this currency or that and measured it its metalworth, it was all simple. Well, except for the currenciesthat complicate things by being delineated in grams.But easy or complicated, it was plenty impressive toa girl who grew up on an unnourishingly monotonousdiet of wrinkly green Federal Reserve Notes, spicedonly by bland pot-metal coins.But what was I doing here, you might ask? (Assumingyou care.) What was I doing working in a souvenir shopon Gold Island? Am I not supposed to be a writer?Well, yes. But after coming to the marvelous manmade

oating commerce center for a transaction a few

months back, I got the gold bug. I really wanted to stayand get a better look at how everything here worked.Without much money, I had precious few ways to dothat. That meant – uh oh – a job.So, with some … ahem, careful editing of my resume(that is, I failed to mention that the last time I sold stuff

to the public, aged 18, I got red from the Dairy Belle

for throwing a banana split in the boss’ ugly face), Imanaged to get a clerk’s position here at the Shoppe& Au.Yeah, after years of striving for success, I was … ashopgirl.But what a shop. And what an amazingly beautifulbabel of cash.-----Spotting a hand-holding couple ambling along theplaza in the general direction of Shoppe & Au, I curbedmy drooling and discreetly slid the cash drawer shut.You could tell … you could tell just by casually glimpsingthem, that these customers (for yes, they were headedhere to our not-so-humble Shoppe) weren’t going topay with jingly stuff. These were the sorts of peoplewho Never Carried Cash, and did so in capital letters.It would be e-payments only, and not merely withsome platinum-colored card, but from an accountdenominated in platinum. Or oil. Or diamonds. Or whoknew what.They were clearly members of that class sometimesknown as The Beautiful People. That is,

she

wasbeautiful.

looked like a tree sloth walking on its hindlegs. But even I could see that he had what it took tomake him “beautiful” in her eyes and the eyes of muchof the world.Such people were a rarity in a global economy stillrecovering from a cascading series of economic shocks,a world where it had become fashionable to downplay

10 § DGC Magazine February 2009 Issue

one’s wealth and pooh pooh one’s possessions. Buthere on Gold Island the wealthy were common andunashamed.Sure enough, they came in. They browsed. She cooed

over a kaleidoscope lled with gold, silver, and crystal

baubles. He pursed his lips over the special 22k GoldIsland commemorative Rolex. She got a little giddyover a thong woven with real gold, silver, and copperthreads – and so did he for that matter. They put theirheads together and giggled loverishly at … well, anitem I’d best not describe in a family magazine, exceptto say that in other parts of the planet such objects areusually made with rubber, not precious metals. (See,I told you this wasn’t the sort of souvenir shop whereyou buy tee-shirts saying your granny came to GoldIsland and got you only this crummy tee-shirt.)Those two bought a boatload of stuff. And theytransacted their transaction with a few taps on a screenwhich revealed absolutely nothing to my cat-curiousself about their “home” currency. All I know is thatseveral ounces came into Shoppe & Au’s account froma numbered account … somewhere.Whether their “home” currency was Silver Stars, All-Arabias, Petro-Gelt, CelticTorcs, or Cannabeans I wouldnever have the fun of knowing. I only knew my bosshad been paid in electronic gold, and that somewhere,either actual bits of metal or the accounting for themwould move from there to here in mysterious ways.Now, you might think that all of this taking of strangemonies willy nilly is confusing and risky. But really, notso. It’s certainly less risky than accepting … say, creditdefault swaps, Fannie Mae stock, Federal ReserveNotes, or Bernard Madoff’s sterling reputation.And with the E=Money Matrix now online worldwide,well …But you know, I’m getting ahead of myself. I can’ttalk about the E=Money Matrix without talking aboutcommunity currencies. So let me back up a bit and dothat.-----It’s kind of ironic. The current global babel of privateand alternative currencies actually started with peoplewho never intended their “money” to be useful outsidethe borders of their very own city or small town. Farfrom imagining themselves as founding fathers ofa global money grid, they wanted to get

out

of andprotect themselves from the global FRN-based gridthat existed back then. Back before the Great Crash,I mean.So they went out and created local currencies like IthacaHours or BerkShares with the main purpose of gettingtheir local carpenters to buy from their local farmers,who would in turn buy from their local veterinarians whowould in turn not buy so much, so the currency-creatorshoped, from Wal-Mart or McDonalds or Monsanto.Many of them were dreamy left-wingers who wouldn’tknow Ludwig von Mises if they stepped on his foot andwould fall asleep or maybe even become outragedas soon as words like “convertible currency” or “gold-backed” entered the discussion.In turn, plenty of libertarians, Austrian-economicsbuffs, and advocates of sound money sometimesgot outraged the moment community currency wasmentioned. They sneered at what they perceived asthe high-handedness, economic ignorance, and andshort-sightedness of the “localvores.”Who knew how nicely the twain would eventuallymeet?Let me go back even further in time for a second. Thenotion of a local or community currency might, for allI know, have originated in the cave-dwelling days. Or

at least the days of the rst agricultural settlements.

Before there were central banks and departments ofthe treasury, people still needed a medium of exchange,something that would enable them to go beyond crudebarter. Parties had to mutually agree on something

they could trade with. No doubt a lot of substances rstlled that role -- pebbles, seashells, clay tablets, cloth

-- who knows? Whatever worked.Soon after getting the “medium of exchange” bit down,there also came the “store of wealth” function that

money also fullls. And while it’s theoretically possible

for “store of wealth” money to remain local -- Yappesestone currency being a prime, if rather weighty, example-- that’s one place where strictly local currencies startto break down. Being a millionaire in seashells, rocks,feathers, or colored beads might be just dandy -- if youdidn’t turn into a pauper the moment you left your hometribe or territory.Unfortunately, you probably did.

But when they settled on small, transportable, sufciently

rare, relatively easy to identify precious metals, people

DGC Magazine February 2009 Issue § 11

everywhere had a medium of exchange

and

a store ofvalue they could agree upon.So far, so good (unless the coins got clipped by privatesharks or debased by government ones; but that’sanother story). But with a strong, agreed-upon mediumand store, who needed local currency any more?Mostly, they died out.Then (we’re skipping a few centuries here) camethe twentieth century with that bizarrest of bizarreanomalies, the “strong, agreed-upon medium” madeout of paper and backed by absolutely nothing but ...faith. Faith in

government

, if you can believe it! Faithin corrupt, secretive, economic prestidigitating

central bankers

. Oh man. Whatever were we thinking?Well, I guess it was good (for somebody). For a while.Not as reliable a currencies as feathers or seashells inthe long run. But great stuff while it lasted.But with

that

kind of exchange medium, money tookon a couple of functions it never really ought to havehad: a) exceptionally good tool for bubble speculations,

b) enabler of various inationary Ponzi schemes,

and c) tool of empire building (with both political andcommercial empires as closely entwined as a pair ofcontortionists making the two-backed beast).Empires, though they may make great miniseries andhistory books, Aren’t Nice. And while you could countthe myriad ways they aren’t nice and go on countinguntil the entire universe of stars burned out, one of theways in which empires are so Not Nice is that they suckpower and wealth from here, there, and everywhere

and centralize it in the hands of a few. Oh yes, at rst

they give back in the form of infusions of money andshiny new goods to the hinterlands. But eventually,

as the empire calcies, then begins to weaken, it just

sucks, all one way.At that point, even before most people understoodthat they were living in the colonies of a vast political-corporatist empire, modern local currencies started upas a sort of self defense -- a means (so their creatorssaw it) of keeping the sucking power of centralizationfrom getting out of hand.

But heck, at rst most local currencies were just paper,

too -- even though they might be paper backed by anhour of time, entitling the bearer to an hour’s worth of... something or another. But only within the borders ofPodunkville or Exurbia.So how on earth did those hopeful little local currenciesget from there to ... well, everywhere, including GoldIsland?-----It all started, as so many things do, with the Internet.And it got a boost, as so many things did, from theGreat Crash of Ought-Whatever.As the FRN-built empires wobbled, as jobs shriveledaway and businesses shuttered their windows, as

deation preceded hyperination, and hyperination

eventually turned paper money into a topic of late-night comedians’ Top 10 lists, more people in morecities, towns, counties, and regions started up localcurrencies, just to keep their world alive.I mean, if a whole town full of people doesn’t have anymoney, but it still has skilled people and the same old

needs for folks to eat, get the plumbing xed, and fuel

up the family sedan ... what else are you going to do?Suddenly, local currencies make a lot more sense.They weren’t just for idealists any more.But if many local currencies began with (you’ll pardonthe expression) liberal air-heads, it was hard-headedlibertarians (and free-market anarchists, and just-plainsavvy hard-money advocates) who took the steps thatenabled currencies to be both local and transcendent.The process required just two steps -- although thosetwo took a lot of time.First, back your newly created currency with somethingtangible, preferably a precious metal. Second, buildan online exchange system -- or a number of them --where Seattle’s SeaBux could be measured againstand automatically converted to Tacoma’s Aromas,where Cheyenne’s Windollars could be swapped withChicago’s even windier Windollars, and ultimately wherethe local currencies of Marseilles, Shanghai, Rotorua,Capetown, Thunder Bay, and McMurdo Station couldall be measured and exchanged with each other.

Sounds simple. But at rst, frankly, it was a mess.

Back in 2009 or thereabouts, when all this was justbeginning to get seriously started, there were about10 bazillion theories of how a currency should beconstructed. Should it be interest-bearing or should itcarry a demurrage charge? How should the makers ofthe currency be compensated for their efforts withoutthe users of the currency getting screwed? Shouldthe metal backing be 100 percent or some lesser