Paul Jacob

When times get tough, the tough . . . switch currencies.

A fascinating report by Eric Garland in The Atlantic tells of the upswing in “local currencies.” In the United Kingdom, the Brixton Pound is being floated, engraved on its paper notes the likes of “David Bowie in his Ziggy Stardust era.” Pegged to the British pound, it serves mainly as a scheme to promote local business and trade, though maybe it’s a tad more than mere boosterism.

Bavarians are also “enthusiastically using the local currency as a protest” — the local currency being the “Chiemgauer.” And “similar currencies have popped up around the world,” including in Canada and the United States.

The Atlantic story also mentions the idea of a “time bank,” a one-step-up-from-barter method based on labor hours and (in some cases) accounting for a variety of skill levels. Such “systems are in use all over the world . . . though the organizers are careful to make sure that the time is never given a specific value in a hard currency, which would open the door to taxation from governments.”

That caveat shows how barter and labor time exchanges might seem the more “revolutionary,” from, say, an establishment point of view. Governments don’t like it when folks evade taxes, at least when normal people do it. (Established rules for offshore accounts, on the other hand, help keep funds safely away from the prying eyes of IRS agents, and that is something common amongst the American wealthy. Just ask Mitt Romney. After all, who wants to pay more?) Government officials get awfully upset when they find someone systematically evading taxes by avoiding “legal tender.”

And, contrary to Garland’s Atlantic article, a number of the time bank buck upstarts do establish exchange rates with official, government-supervised money, allowing taxing authorities to skim from gains made through the trades figured in these offbeat media-of-exchange.

Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.