Private Currency Could Cushion Collapse of Dollar

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What if everyone just stopped using U.S. dollars? Could this possibly solve the economic crisis if people could participate in a barter system free from government intrusion? Amazon has announced that it will start using Amazon coins for purchases, beginning by giving away 500 Amazon coins to every Kindle owner to be used on apps and books. Each Amazon coin is worth one cent, and the money will soon be able to be used on the entire website to purchase anything that you could buy with cash. Amazon will even be offering the coins at a discounted price, for instance 10,000 coins would cost $90, according to the Daily Mail. Even then, customers will get an additional 10% off any purchase bought with Amazon money.

So imagine if all these Amazon coins became so widespread that other people began accepting them, because of the discount that you could get on Amazon. Let’s say a house cleaner decides that instead of accepting $50 to clean a house, 5,000 Amazon coins (the equivalent in U.S. dollars) would also be acceptable. This means that the person paying for a house cleaning can get a 10% discount based on the price he paid for the Amazon coins. The house cleaner will then get a 10% discount when spending the money on Amazon. Both people have now benefitted from using an alternative currency because of the discounts offered, and Amazon has benefitted because the home owner converted his cash into money that had to eventually be spent on Amazon.

But let’s say that because people started using Amazon coins, the local retailers were having trouble competing with Amazon. A local electronic store then decides to accept Amazon coins in order to better compete with the online retailer. People in the community are happy because they can now save 10% when shopping at their local stores, because they can buy Amazon coins for a 10% discount. The local electronic retailer is happy because he now has more business, and when spending the Amazon coin online his money will go even further based on the 10% discount.

But everything he needs for the store cannot be found on Amazon, so he strikes up a deal with the company he buys supplies from to pay part of the price in Amazon coin. Even if this company cannot get all it needs from Amazon, they could begin paying employees part of their salary in Amazon coin, which would now be accepted at many local retailers, in addition to the fact that many employees could substitute some of their shopping to buy on Amazon (with the 10% discount which means if $10,000 of the employee’s salary was converted to 1,000,000 Amazon coin, they would be able to buy $1,000 more dollars worth of goods on Amazon than with the $10,000). Amazon still benefits since the currency is backed by the business, the money must eventually be spent on Amazon, even if it goes through other economies in the mean time. The value of the currency will rise or fall with the success of the business, which would make strong companies like Amazon’s currency a more reliable money.

I had an idea that all currencies could be private, to stop the government from being able to bring on massive debt by just printing more money, and inflating the currency, which takes value from already printed money, and from anyone who has a savings account. Individual banks and stores could issue their own currency, which would have to compete on the marketplace for value. Maybe a local bank wants to profit off of exchanging currency, so they buy up many different store currencies, which are used to back their own currencies. [For example, a local bank buys Amazon coin, and other stores’ coin that are not accepted everywhere, and issues their own currency that all local retailers accept]. Then the stores could begin accepting the bank currency which could be easily exchanged for other currencies, or would become so widely accepted that the bank currency is as good as gold. There could even be more successful, though more volatile currency if say, Stop and Shop currency came to be accepted everywhere, with the knowledge that it would translate into more bank dollars or other business dollars per unit.

This sort of alternative currency is already being used in some parts of the country, including the Berkshires in Massachusetts, which has a local currency called BerkShares that you can read about on the official website of the non-profit group which issues the currency.

BerkShares are a local currency for the Berkshire region of Massachusetts. Dubbed a “great economic experiment” by the New York Times, BerkShares are a tool for community empowerment, enabling merchants and consumers to plant the seeds for an alternative economic future for their communities. Launched in the fall of 2006, BerkShares had a robust initiation, with over one million BerkShares circulated in the first nine months and over 2.7 million to date. Currently, more than four hundred businesses have signed up to accept the currency. Five different banks have partnered with BerkShares, with a total of thirteen branch offices now serving as exchange stations.

I think that these sorts of alternative currencies are a safety net to ensure that the economy continues to function in the event of the collapse of the dollar. If the government keeps printing money, it is only a matter of time before inflation hits severely economically damaging levels. If there is already a system in place of alternative currency, people can still get the products they need, and food they need to live. Obviously a transition to alternative currency in the event of a collapsed dollar would still be a tumultuous transition, but it would be better than a complete lack of a functioning economy. Decentralizing the economy in a way of competitive private currencies would allow regions and industries to be sheltered from the destructive financial decisions of the federal government. If the U.S. dollar collapses, we don’t all have to go down with it.

One thought on “Private Currency Could Cushion Collapse of Dollar

  1. Pingback: Would the Fall of the United States Government be as Tumultuous as the Fall of Rome? | Joe Jarvis

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