More Money, More Problems

Local currency can be a great way to keep money in your community and support the amazing businesses that make your town unique. However, every alternative economic system comes with its own legal considerations.

Enter Bernard Von NotHaus, the architect of the Liberty Dollar, a private currency. Last year he was convicted of counterfeiting and labeled a “domestic terrorist,” by the FBI. Since the Liberty Dollar is an alternative currency, akin to the BNote, Bay Bucks, and other local currencies, several have raised the: “Are we doing something illegal too?” question.

Most local currencies have nothing to fear, but here are a few legal guidelines:

1. Don’t make coins: While there isn’t explicit law forbidding communities from circulating paper currency, the law is pretty clear on the subject of coins. “Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.”
2. Make your currency unique: Part of the case against the Liberty Dollar was its perceived similarity to U.S. coins. Despite the fact it does not look like any of our circulating currency, prosecutors pointed out the use of the statue of liberty, an American icon, and the fact that each coin bares “Trust in God,” a play on our currency’s “In God We Trust.” If you’re planning on making your own currency stay away from national imagery and don’t use or mock anything that actually appears on the real greenbacks.
3. Keep it Local: The entire idea behind local currencies is that it is local. An Ithica Hour does not have value outside of Ithica. That means it is not a threat to the national US currency, as the Liberty Dollar is accused of being.
4. Don’t Expect Protection: While this was not brought up in the Liberty Dollar case, it’s important to know that there are no laws that forbid counterfeiting local currency. While I would hope no citizen is forging BNotes in their basements, it’s not illegal for them to do so. Though I hope those reading this blog would never undermine our local economy in this way.

Legalities aside, some question the need for a local currency to begin with. Dollars may be universal, but they don’t do a great job of building relationships. Local currency not only ensures that you are spending in your community, but it ensures your shopkeeper is doing the same. Every time that money is exchanged it is building your community, it is creating local supply chains, and it is increasing economic opportunity in your area.  You can’t counterfeit rewards like that.