On Saturday May 3rd, the 25th St. Collective hosted an arts and music bazaar featuring local artisans and entertainment. Almost no U.S. legal tender cash-money traded hands. The whole thing went down using Bay Bucks. Because the New Economy is here to stay, this will not be the last time you hear about Bay Bucks, but I am so excited to make it your first.
If you know anything about our debt-based, private bank-owned monetary system (or just have a healthy, unsubstantiated distaste for money deep in your stomach) you know that our country’s money is created on a for-profit basis. The whole business of money-making is itself a money-making business. As Bay Bucks co-founder Chong Kee Tan explained, banks loan us money that doesn’t actually exist and we pay them interest (and compound interest) back. The whole system creates so much debt for individuals, businesses and governments that it has all of us working furiously to grow the economy faster than the pace of growing interest “just so we can stave off the collapse of foreclosure until next year,” said Tan.
The aim of complementary local currencies is to allow an insulated portion of the economy to operate outside of the problematic universal system. Bay Bucks allows people to trade their goods and services using an agreed upon credit system. The currency is backed by whatever product or service the BB member provides, and the value of that product or service is the same as whatever price the member charges in dollars.
BB serves the same function as conventional money in that, as economists would say, it frees users from the double coincidence of wants that exists in the barter system. In other words, you are not limited to only buying from those who buy from you. Unlike the dollar, it is debt- and interest-free. The complementary currency is not meant to replace the US dollar. However, the more our money shifts to Bay Bucks, the less our local economy is vulnerable to the volatility of the larger economy.
Basically, any local business can be a member of Bay Bucks. Auto mechanics, hairdressers, non-profits, day care centers, doctors, accountants, hot-dog vendors; theoretically there is no limit. In the year and half since it’s launch co-founders Tan and Kendra Shanley say that they have recruited over 200 members who’ve spent over 30,000 Bay Bucks.
“Recruiting the first fifty members took a lot of time and lot of work,” said Tan, “but in the last year we’ve watched it pick up.” He thinks this is because “critiques of the monetary system are becoming mainstream, so the benefits of an alternative currency are becoming easier for people to recognize.”
Chong Kee Tan doesn’t mince his words. “There isn’t enough money in the whole economy to pay off the debt that’s owed,” he said, “banks only create the principal amount of money, not interest, so it becomes a game of musical chairs, (where) someone is going to be foreclosed.”
Even if you are not the individual taking out a loan, virtually all of the money in circulation was originally loaned into existence. These debts need to be paid back with interest, Tan explained, and interest can only be created- let alone paid for- by someone putting the economy further into debt by taking out another loan.
If this language boggles your mind you are not alone; it’s the unfathomable nature of currency that has enabled critiques of the monetary system to go so unnoticed.
Tan has been an equal rights and sustainability activist for twenty years. He earned a PhD in Chinese literature from Stanford and a BA in Computer Science from Cambridge. After the 2008 collapse he became so frustrated with the wastefulness of the monetary system that he was moved to do something about it. “We’ve designed misery and failure into the system so it creates the sort of collective anxiety that forces everyone to make decisions based on money, without regard for anything else,” he said.
Kendra Shanley has a background in Public Health but quit the field upon becoming convinced that “many of the needs of the community, including access to health services, could be most readily and sustainably addressed through a flourishing local currency.”
One of the oldest complementary currencies based on a mutual credit system (like Bay Bucks) is the Swiss WIR which continues to thrive today and, by some calculations, makes up 40% of the Swiss economy, one of the most stable in the world. “It’s not a new idea,” said Tan, “it’s very basic.”
Proponents of a Public Banking system are natural allies for the founders of Bay Bucks. Public banks act as an antidote to the debt-based monetary system because they can make loans at cost rather than at a profit, freeing them to invest in community development according to democratic directives. Further, they can cancel debts owed to them when necessary- a critical contrast to our private, for-profit banks which insist on being made whole. Tan is now working on a plan for a public bank that would accept Bay Bucks, thereby amplifying the scale of the currency’s impact.
These kinds of actionable ideas are the subject of the first annual Living the New Economy Convergence, organized by Bay Bucks. “There’s so much talk and not enough action,” said Tan explaining the impetus for the event which will take place October 23-26th here in Oakland. “Anyone who is dedicated to building a sustainable local economy should come.” Some of the authors that were most influential in the development of the idea of Bay Bucks will be at the conference, including Charles Eisenstein and Thomas Greco.
Bay Bucks doesn’t have to convince you to have confidence in its currency, Tan explained. It doesn’t risk popping because it’s not a bubble, the currency is backed by a real product or service.
For many of us, complementary currencies represent a solution to a problem we didn’t even know existed. But as critiques of the monetary system become more mainstream, perhaps that will change. And like they say, the best ideas come ahead of their time.