09 January 2010

Food-Backed Local Money

Excerpt from The Oil Drum, 4 March 2009

'Mendo Credits is a new food-backed local currency project...the overall goals of the project are to improve community health, economic vitality and environmental sustainability through local food system development...

Historically in the United States and elsewhere, local currencies are known to stabilize local economies when national currencies are troubled, such as bouts of hyper inflation or deflation and joblessness. This works because those accepting local money are also likely to seek out others who accept it too, creating a social dynamic that forms new, local economic associations.

As these strengthen, the flow of local money picks up and work can get done even in the face of economic disaster outside the community. Because they can only be spent locally, profits on economic transactions done with a local currency remain in the community and spur more local investment. Local governments, regional business associations, community banks, and worker cooperatives are examples of the kinds of institutions who tend to successfully issue local currency. They have the social capital to be broadly accepted, and the capacity to manage the task of issuing and redeeming money....

The asset value of Mendo Credits remains stable over a significant time period because we lock in an exchange rate for specific quantities of food for one year from the date of issue. Whereas gold and silver are inedible, Mendo Credits can be redeemed for the sustenance of life. When you hold a Mendo Credit note, you know it represents the quantity of food printed on its face and, if you want or need to, you can actually get that food...'

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