A return to the Wood Standard? local currencies and covid
A small town (pop >2,000) in Washington State is experimenting with an idea which last took hold during the Great Depression: printing their own currency. In the dark days of the 1930's, the town of Tenino printed "wooden dollars" which could only be redeemed at stores located in Tenino, keeping any stimulus money only for spending within the town.
It's a simple idea:
Citizens below the poverty line can apply for grants (in this case) from the local government/council (a max of USD$300 per month);
Physical "wooden dollars" are issued to those citizens who can then use them at local businesses (but not for alcohol, cigarettes or lottery tickets);
Twice a month, the businesses can cash in the wooden dollars for US dollars.
The benefit to the Mayor of Tenino is clear:
Amazon will not be accepting [our] wooden dollars
The idea of local currencies isn't new, during the Great Depression multitudes of local towns around the world issued their own private money for use only within their towns, with varying levels of complexity. One town in Austria was praised for pulling themselves "out of the Depression in a matter of months" using local scrip instead of Austrian shillings, which at the time were impossible to obtain.
These issuance changed over time to include loan arrangements, weighed baskets of value underpinning local currencies and local bank issued scrip.
There are a remarkable range of similarities to the issue of local currencies and the evolution digital currency and the DeFi world of today. In some ways it is surprising that a town like Tenino is using physical currency when it would be so simple to have a digital currency wallet system operate to provide the exact same usage as physical wooden dollars, but without the need for social interaction and risk of counterfeiting.
It's not all pancakes and maple syrup however, with many economists saying that the value of a local currency has no measurable impact over a long period of time. However it's unclear whether this is because the impact cannot be measured so easily when the currency is physical (say versus digital).
The world of private money is fascinating economically, and it may just have a larger purpose as the world moves through the current uncertain financial times.