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BerkShares
- rurounijones 9y agoWhile not exactly an economist / finance type I would have thought the federal and state governments would have shut this down as it removes a certain level of currency control no? Can anyone explain the legalities around this?
- bigdubs 9y agoIt's pegged to the dollar.
- rurounijones 9y agoFor the moment, the wikipedia article talks about plans to not have this be the case. > but Nick Kacher of the Schumacher Center has discussed the possibility of pegging its value to a basket of local goods in order to insulate the local economy against volatility in the US economy.[6] What then?
- brianpgordon 9y agoWith a peg to the USD, banks will be happy to take your real money and hold onto it while the exchanged Berkshare remains in distribution, because they know that at worst they only have to pay back the original money. But as soon as the Berkshare is able to move against the dollar, participating banks assume some risk because they may be forced to pay out more than 1 USD for a single Berkshare. There's even some risk that the bank could run out of "foreign currency reserves" (USD deposits) to defend the Berkshare, causing it to collapse.
- jakebasile 9y agoThe funny money here is stilled pegged to the US dollar, so the Fed can still exercise monetary control over it. It's really just a form of gift certificate (or scrip) from my reading of it. Anyways, there's a history of using non-USD money in the US: see company towns that only dealt in company scrip, Disney Dollars, etc. No matter what you're making money in, the government expects to be paid, and it only accepts US dollars.
- EGreg 9y agoThe history of non USD goes back way further than that. Historically, the Federal Government was in charge of the coins but banks issued paper Banknotes which circulated. Then during the Civil War the federal government issued notes with which you could pay tariffs and land taxes. These became popular. It was only a few years later that the Legal Tender laws were passed, making the Greenback the most-accepted banknote in America. https://en.m.wikipedia.org/wiki/Greenback_(1860s_money)#Pre-Civil_War_period https://en.m.wikipedia.org/wiki/Greenback_(1860s_money)#Pre-... Having said that, most of our money today is credit money in bank networks, like VISA or Paypal. In China it had a meteoric rise with WeChat etc. My company is working on a platform that will allow ANY community to issue its own currency. And no, I don't think there is any requirement to have it pegged to the dollar.
- redblacktree 9y agoI looked at your profile and I didn't see the company you're talking about. Would you please provide a link?
- EGreg 9y agoSure. https://qbix.com/blog https://qbix.com/blog Feel free to get in touch - the email link is in my profile.
- RobertoG 9y ago"The funny money here is stilled pegged to the US dollar, so the Fed can still exercise monetary control over it." It doesn't matter if it is pegged or not to the US dollar. Nothing is going to out-compete the US dollar in USA territory while the federal government taxes have to be pay in dollars. The federal government can create demand for dollars by the simple act of taxing.
- xenadu02 9y agoI believe there is still a tax on private bank notes along with some federal regulations that make it extremely unattractive for banks to issue their own currency. State governments are prohibited by the constitution from issuing their own currency. Otherwise private entities are free to issue whatever currency they like. Nothing requires it to be pegged to the US dollar as far as I'm aware. You're effectively trading the "full faith and credit" of the US government for some pretty paper. Whether that pretty paper is worth something depends on whether you believe you will be able to purchase things of value with it, or in this case because banks guarantee a fixed exchange rate with the dollar.
- dannyw 9y agoThe ironic thing is that the US broke their faith and credit, by closing the gold window.
- sandworm101 9y agoIt is barter, goods for goods. The profit is still taxed. This is not technically money in that it is not backed by a government. It's just bits of paper. Printing your own probably isnt a horrible crime, more a copyright violation or fraud rather than a felony. That people assign value to these bits of paper is no differnt than bitcoin. If a bank wants to sell bitcoin, or buy them, it can. The regulations re whether a bank can call such holding an asset make thing complicated for the bank but so long as things remain small there isnt much of an issue. It also isnt money because people can refuse to participate. An employee need not accept these in lieu of wages. A business need not accept them. Real money cannot be avoided. All debts in the US can be settled with dollars.
- em3rgent0rdr 9y ago> "This is not technically money in that it is not backed by a government." Being "backed by a government" is not a necessary condition for something to be money. From wikipedia: "Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. ... Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money." Even though most contemporary money systems are fiat, that doesn't mean that all money has to be.
- littlestymaar 9y ago> Even though most contemporary money systems are fiat, that doesn't mean that all money has to be. If you want to avoid deflation you need a supply of money that grow at least as much as total wealth (otherwise the relative value of money is increasing => deflation). That's why gold-based currency are now considered a bad idea (and crypto currencies also, see [1] for illustrations about the deflationnist situation in bitcoin). [1] http://avc.com/2017/08/store-of-value-vs-payment-system/ http://avc.com/2017/08/store-of-value-vs-payment-system/
- em3rgent0rdr 9y ago
- benmowa 9y agohow is this different than a coupon? or a store branded Gift card? .. funds available for redemption at a subset of merchants. Edit: I see now that its considered the same for tax reporting purposes. https://en.wikipedia.org/wiki/BerkShares#Taxation https://en.wikipedia.org/wiki/BerkShares#Taxation
- bigdubs 9y agoGrew up in a town that used these (a town in berkshire county, ma); I thought they were a novelty and didn't really buy or use any (or see anyone use them). Just a single datapoint.
- xemdetia 9y agoYeah this is not a common denomination. I never saw any of these in the 5 college areas. It just looks like the common chamber of commerce local business promotion scheme than anything too serious.
- ethnic_throw 9y agoAgreed; grew up in the Berkshires and these were just a gimmick. I never saw them.
- arjie 9y agoIt reminds me of the https://bristolpound.org/ https://bristolpound.org/
- ceejayoz 9y agoIthaca, NY has (had?) a similar system: https://en.wikipedia.org/wiki/Ithaca_Hours https://en.wikipedia.org/wiki/Ithaca_Hours
- oatsandsugar 9y agoA superior system. 1 hour = 1 hour of work (rather than a USD equivalent). Or at least, that is how it started.
- seangrogg 9y agoAnd everyone's hours are treated interchangeably?
- gertef 9y agoThey are HOURs, not "hours" > One Ithaca HOUR is valued at US$10 and is generally recommended to be used as payment for one hour's work, although the rate is negotiable.
- Simon_says 9y agoYea, that's the idea, and why I never touched it when I was living there.
- kijin 9y agoThere seem to be a lot of these "community currencies" in circulation throughout the United States. I wonder how much economic activity actually takes place using them, though. Millions of dollars? Billions? https://en.wikipedia.org/wiki/List_of_community_currencies_in_the_United_States https://en.wikipedia.org/wiki/List_of_community_currencies_i... Meanwhile, up north, there's Canadian Tire Money.
- andybass 9y agoMy company (Conpoto), runs a local currency/gift certificate platform that is purchased with regular dollars, but is only redeemable at local merchants participating in the program. We're in a bunch of states and Canada. We'll do hundreds of thousands of dollars in currency purchases annually in some communities. It's used quite a bit by employers who want to keep money local (rather than sending it to Amazon or Target).
- rocqua 9y agoOn the face of it, that feels like companies issuing their own currency to control their employees. If leaving the company means moving somewhere your money isn't accepted, you won't leave. If you won't leave, the companies can screw you and you have to take it or lose all your savings.
- andybass 9y agoSorry - I should have clarified more. These companies are using the currency for small rewards, holiday gifts, etc - as opposed to as a salary.
- TACIXAT 9y ago>Nick Kacher of the Schumacher Center has discussed the possibility of pegging its value to a basket of local goods in order to insulate the local economy against volatility in the US economy. Is there a name for pegging a currency to a basket of goods? I can't find any examples online.
- EGreg 9y agoIf it's a local currency this can be considered a local Consumer Price Index. If you peg the local currency to it, the local currency is always available to buy the food, based on the local CPI of necessary goods, regardless of shortages etc. (if the pegging is daily). I had a similar scheme for local based UBI here: https://qbix.com/blog/index.php/2017/09/the-future-of-money/ https://qbix.com/blog/index.php/2017/09/the-future-of-money/
- TACIXAT 9y agoAwesome, thanks. It sounds like you're working on some of the ideas I've been mulling over this week. I like the idea of localizing the currency and having immigration restrictions. Localizing helps solve the problem of scaling pseudonym parties. Finding a world-wide, or even nation-wide time where everyone can show up in a group in order to verify their personhood would be tough. I guess the next issue is how do you take that CPI, adjust, and issue currency in a decentralized / consensus way. Also, how susceptible to manipulation would these schemes be. I would love to see a more economically sound cryptocurrency, rather than the deflationary mess that is Bitcoin.
- cobber2005 9y agoRelated to deflation - I believe there are demurage schemes for local currencies where the value of a particular bill lessens over time. It incentivises circulation instead of hoarding.
- tanderson92 9y agoUnits of account: http://www.econ.yale.edu/~shiller/online/uf-usa4.html http://www.econ.yale.edu/~shiller/online/uf-usa4.html Shiller is a fan of interesting financial engineering of this type which he discusses in his books "Finance for the Good Society" and "Macro Markets". For example, he also proposes a US bond which pays out interest fixed relative to GDP.
- colanderman 9y agoNote that the manufacturer of the paper used in US currency (and many others around the world), Crane, is located in the Berkshires. Hence part of the reason why the currency looks so good.
- busyant 9y agoI grew up in the Berkshires and worked at Crane (making paper for the currency of several countries). Strangely, I've never heard of BerkShares.
- awojtasz 9y agoNever heard of them either - from north county.
- cowabungabruce 9y agoGrew up in Pittsfield. Went to South Berkshire schools. Also never heard of them. But I still have a Berkshire Bank card in my wallet!
- deleted 9y ago[deleted]
- JustAnotherPat 9y agowhy not create a crypto version that would be distributed to current currency holders? Get rid of the costly cash and you can sell it worldwide if you want to, while Berkshire residents control voting rights on the blockchain. With current crypto prices going sky high, bring some real money into the economy.
- userbinator 9y ago...and thus begins BerkCoin... a name which surprisingly hasn't already become a cryptocurrency.
- stdclass 9y agoWe had something similar in Tyrol, Austria called Freigeld (1) (1) https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W.C3.B6rgl_Experiment https://en.wikipedia.org/wiki/W%C3%B6rgl#The_W.C3.B6rgl_Expe...
- valuearb 9y agoVirtually all the wealth created in the world is because of unfettered trade. Trying to create an insular economy is just a path to poverty. Are they going to build their own iPhones, Teslas, LCD screens and microprocessors? Obviously not. When a local consumer decides to pass on buying a local good for a substitute made far away, it's because they believe they benefit economically from doing so.
- skrowl 9y agoThat would be true if currencies couldn't be converted / traded. Nothings stops you from trading Berkshares for USD or vice versa the same way you would Euros / Bitcoins / etc.
- valuearb 9y agoThe 5% discount does.
- deanCommie 9y agoThis only applies in a market where consumers always make objectively ideal decision. This applies to smart phones, electric cars, and CPUs. (mostly, see post-script) But for most goods, there is no such thing. What is the "best" tomato or a jar of honey for a consumer to buy? Is it the cheapest? The brightest? The most delicious? Yes, all those things. But the evaluation of them is subjective for most. A tomato from a local farmer you see on the street every weekend will look brighter and taste better and feel healthier to a lot of people than one coming across the world from Peru. Regardless of the truth or economics of scale. Also why is it a zero sum game? If some consumers choose to spend more to support local producers, is that not just a form of local subsidy which rebalances the wealth slightly from consumers to local producers? *Actually iPhones and Tesla are also emotional decisions. For some people an Android or a Chevy Volt are better decisions for factors beyond financial yet for emotional reasons they want the entire package that comes with the top brands.
- valuearb 9y agoConsumers always make objectively ideal decisions. What you think the best good for them to buy is not necessarily what they think, and they are the ones who are right.
- TuringNYC 9y agoVery similar to Ithaca Hours (https://en.wikipedia.org/wiki/Ithaca_Hours https://en.wikipedia.org/wiki/Ithaca_Hours) which were sparsely used in Ithaca at the farmer's market while I attended Cornell
- lxmorj 9y agoSparsely used, but talked about ALL THE TIME
- brwnll 9y agoThere was a good Odd Lots podcast covering this: https://www.bloomberg.com/news/articles/2017-03-27/odd-lots-what-the-berkshires-learned-by-launching-its-own-currency https://www.bloomberg.com/news/articles/2017-03-27/odd-lots-...
- fiatjaf 9y agoSince it is pegged to the dollar why doesn't it qualify as pure waste of time?
- okreallywtf 9y agoThis is interesting, thought I am having a hard time determining what make this different enough from Liberty Dollars [1] which made a splash in NC years ago. Liberty Dollars were supposed to be worth the metals they were constructed of, so they were not pegged to any currency but their intended use was much the same (finding local businesses that would accept them). It seems odd that the purveyors of liberty dollars were arrested and other private currencies are allowed? The main complaint I saw was that they were too similar to "real" US currency, but the response seems exaggerated if thats all it really was. [1] https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency) https://en.wikipedia.org/wiki/Liberty_dollar_(private_curren...
- rothbardrand 9y agoIt was exagerrated-- the "crime" of liberty dollars is that one of the distributors in NC was the ex-husband of an FBI agents sister, who was bitter about the situation and the FBI Agent decided he could make a terrorism case out of it and in the process steal a great deal of money via Asset Forfeiture-- which they did, including tens of thousands of Ron Paul Presidential Campaign Copper pieces (literally presidential campaign propaganda stolen by the FBI, in violation of the First Amendment and making all involved at the FBI felons under USC 18-242) not to mention something like $6M in Gold, Silver and Platinum pieces. Then they railroaded the Liberty Dollar defendants with fraudulent (in my opinion) jury instructions telling them that a silver piece 10 times the size of a dime that also has a picture of the statue of liberty's torch was "identical" to US Currency under the law... despite Liberty Dollar having letters from the Secret Service, federal reserve, etc, expressing the legal opinion that they were legal and the like. It's just a joke. This case is the one that proved to me that not only is government corrupt, and will steal money, but that it doesn't even follow its own laws, and a large portion of the population will cheer on this corruption (the issue when it got posted to HN was met with a lot of liberals cheering it on because liberals are in favor of the inflationist fiat monetary regime and think that "kooks making money out of silver" should somehow be prosecuted.)
- tanderson92 9y agoFascinating! Thanks for the post, this is why I come to HN. Can you share some more sources from sources you consider reliable and not biased against Liberty dollars, so that I can read more?
- tudorw 9y agoAs an aside, the Transition organisation here in the UK back a few currencies, the https://en.wikipedia.org/wiki/Totnes_pound https://en.wikipedia.org/wiki/Totnes_pound is well supported, this is not new, here's a good piece on 'time based currency' https://en.wikipedia.org/wiki/Time-based_currency https://en.wikipedia.org/wiki/Time-based_currency and https://en.wikipedia.org/wiki/Local_exchange_trading_system https://en.wikipedia.org/wiki/Local_exchange_trading_system which has some traction in the UK, though their website could do with a little help, http://www.letslinkuk.net/index.htm http://www.letslinkuk.net/index.htm
- ww520 9y agoSo the issuing banks print a BerkShare, sells it for $.95US to the public, and got to keep the $.95US. Hmm, anything that I missed that would dampen my enthusiasm to be an issuing bank?
- united893 9y agoHow is that different from what you did as a founder? Say you create a company and issue 100M shares of worthless stock. Then after some time you end up selling 1M shares at $10/each. You get to keep $10MM that you created out of thin air? Truth is, by creating the company, you created value. And the bank, by providing liquidity and reducing transactional friction does the same.
- fny 9y agoNah, you're required to exchange one for $0.95 later. Taking printing and other administrative costs into account, you definitely lose as the bank.
- s17n 9y agoThey are pegged against the dollar, meaning that the bank agrees to buy it back for what they paid for it. So basically, the issuer is taking out a zero interest loan from the users of the currency. Not a bad deal considering that the bank doesn't have to do any of the work involved in their typical source of zero-interest money (checking accounts).
- clhodapp 9y agoIsn't it the other way around? The bank is issuing a zero interest loan to the currency user? What benefit does the bank get from there being more Berkshares out in the world?
- function_seven 9y agoThe public can also sell a BerkShare to the bank for $0.95. I don’t see how the bank makes a profit from this, other than using it as a way to acquire customers. (EDIT: Or some interest on the float, I guess)
- outsidetheparty 9y agoGreetings from Berkshire County! BerkShares don't actually exist, as far as I can tell. I occasionally run across news stories about them, but I've never seen one and have never met anyone who's ever seen one (and I've asked around, because it's weird seeing news stories about things in your hometown that as far as you can tell don't actually exist.)
- frikk 9y agowhat the hell? this is more interesting than the Berkshares themselves.
- outsidetheparty 9y agoI mean, I'm not claiming it's a fraud or anything like that; I'm sure they actually did print these and that some business probably do accept them, like any other kind of coupon. Just that they're, well, not much more than any other kind of coupon. According to their list of businesses, apparently my ex dentist accepted them. Missed opportunity there I guess. ¯\_(ツ)_/¯
- johnfn 9y agoHow can this be possible when the Wikipedia page has pictures of them..?
- cloakandswagger 9y agoThere are also pictures of Bigfoot and the "moon landing", doesn't mean they exist.
- solidr53 9y agoThe moon landings also have videos of them. Also of the astronauts moon driving, which is pretty cool.
- binarray2000 9y ago
- 92eaglesfan 9y agoThis cannot be true. Jews would not allow for this to exist, because the idea would spread, and the United States may actually regain some influence over it's currency.