1 thought on “Don’t keep it local”

  1. Posted 20/04/2016 at 17:54 | Permalink

    *Full disclosure– I work for a local currency in the US*

    The first critical flaw in this argument is that of all local currencies in existence, almost none have the goal of becoming the exclusive currency in circulation. It is for this reason that local currencies are often referred to as complementary currencies– they operate in tandem with national currency. The author even admits this but proceeds to argue the point anyway and indulges in that slippery slope argument.

    The second flaw is contained in the statement: “If buying locally was always the most efficient option, there would be no need for the Exeter Pound to keep shoppers in Exeter.” By “most efficient” the author is actually saying “most price efficient” or “cheapest”. Buying locally is often not the cheapest option because local labor may be more expensive and locally-sourced resources might come at a higher price, perhaps because of regulations that protect health or environment.

    But if “most efficient” were to take into account the velocity of money, then buying locally is often the most efficient option. Multiple studies have shown that when they are widely-accepted, local currencies circulate much faster than national ones, resulting in a much larger volume of exchanges. For the local economy as a whole, this is much more efficient.

    Lastly, free trade includes the freedom to trade in a currency of choice. Just as currency buys goods and services (which people need to live) goods and services purchase currency (which people need to trade with). Thus, currency in itself is a good– a tool for trade– and to restrict the type of currency in usage to restrict the market itself.

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