Monday, February 15, 2010

Another Sign of the Last Days: Local Currencies

See the full article at Money Central.

Last year, two Detroit tavern owners were sitting at the bar, sampling their beverages and bemoaning the local economy -- no one in the city had cash, and when they did, they spent it in the suburbs. Then the pair hit on a solution: Print their own money.

It is, after all, perfectly legal for anyone to issue currency, as long as it doesn't look too much like a U.S. dollar. Thus was born the Detroit cheer, a local scrip accepted by a handful of city businesses, including a pizzeria, an electrician and a doggy day care center.

Residents can also exchange it at a few area bars for greenbacks, but the cheer is vastly more colorful. It features a chiseled, naked Greco-Roman superhero (the Spirit of Detroit) towering Godzilla-like over the city skyline, cupping a tiny family in one hand and a sunburst representing God in the other....

In most cases, these communities are simply looking to boost local commerce. The currency has to be spent in town, obviously, because it's worthless anywhere else. But a growing distrust of the U.S. dollar is also at work.

When the Treasury prints billions to bail out banks and automakers, people look for alternatives. These folks may look nutty now, goes the quip, but wait till the dollar goes the way of the Argentine peso....

A CAUTIONARY NOTE: Several recessions and depressions were caused between 1790-1860 because banknotes issued by unregulated banks circulated as currency. If the bank failed, anyone in possession of these notes were up the proverbial creek without a paddle.

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