Printing Christchurch Dollars - A Wacky Idea? Some say not!

Towns in Ireland and Britain are using alternative currency schemes to put

wealth in their pockets. Why not Christchurch?

Shop owners in the small town of Clones began accepting the old Irish pound, the Irish Punt, last March

to help local business. At first even the originator of the idea of using old Irish notes in addition to Euros

to expand the money supply thought the idea quirky, echoing Prime Minister Key’s comment recently

about the Christchurch dollar being “wacky.” “It’s been out of circulation for 10 years,” said Morgan. “

And we thought it would be a quirky idea initially.”

While Ireland austerity spurred shop keepers in Clones to begin accepting old Irish notes and coin in

addition to the increasingly scarce Euro, the success of using the Punt in Clones itself encouraged Ciaran

Mundy’s efforts to launch The Bristol Pound, a totally new currency issued by member businesses in the

British city of Bristol this past September.

The new money has “captured people’s imaginations”, said Mundy. “Its tapping into a different set of

values about money.” Hundreds of businesses have joined in along with the Bristol city council. The

launch of the Bristol Pound had to be postponed from May to September of this year because of the level

of interest according to Mundy.

The ambitious Bristol Pound scheme far exceeds the one at Clones Ireland since it allows businesses to

pay local taxes in the new currency. The council even offers its staff pay in the forgery-proof currency.

Mundy, a software engineer, has designed an electrronic system to let people send payments by text

message. The local Credit Union trades the local currency for legal tender for a three percent charge.

Less cost than shop keepers pay when settling accounts with credit cards.

Mundy believes the Bristol Pound will help Bristol. “Eighty percent of the money leaves the area if it is

spent with a multinational - but eighty percent stays if it is spent at a local trader,” he said.

According to Professor Steve Keen the author of “Debunking Economics” the amount of cash in

circulation within a community helps determine prices and wages along with levels of employment. At a

Just Banking Conference held last April in Edingburgh Professor Keen, who is a professor in economics

and finance at the University of Western Sydney said, “banks put new money into circulation every time

they make a loan.” This adds to the money supply. In fact, according to Keen’s figures New Zealand’s

private debt of $1.1 trillion swamps its public debt which is only four percent of the private figure.

Conversely when banks make fewer loans to businesses money is taken out of circulation leading to a

credit crunch.

According to Keen today’s financial crisis is caused by banks following an inaccurate financial model that

causes them to loan for speculation at the expense of loans to real world businesses who are given a short

shrift. This produces the worst of all outcomes. One where large amounts of money flow to speculators

which devalue the currency used by businesses and families, workers and farmers, day to day. “The

neoclassical model” Keen says, “doesn’t distinguish between debt used for investment finance which is

good and debt used for speculative finance which is bad.”

In today’s economic environment where excessive investments in speculation undermine the value of

traditional currencies while at the same time taking money out of real physical businesses it makes sense

for business to take control of the money making process and put it to productive use.

The island of Guernsey has kept its money creating process out of the hands of central banks. To recover

from the damage of the Napoleonic wars that British Bailiwick began issuing its own interest-free money

in 1822 and accepts the Guernsey Pound alongside the British Pound to this day. According to the

island’s Chief Minister Peter Harwood issuing interest-free money stimulates growth of the economy

without creating public debt and without increasing taxes.

Compared to the economy of Geurnsey, and even to the economy of Iceland, which kicked out central

bankers and went its own way in 2008 following that country’s economic collapse, Canterbury and South

Island ranks as an economic power house that could have its own money supply if it wanted to and could

certainly issue its own Christchurch dollar to help with the earthquake recovery.

How Christchurch Stacks Up

Area (km2)

Population

Density (/km2)

GDP (billons)

Canterbury South Island Iceland Geurnsey

45,346 150,437 103,001 63

560,700 1,038,400 320,060 66,000

12 6.9 3.1 992.4

$15.074 $27.800 $43.088 $2.100

A resident of Sumner, and early supporter of the Christcurch dollar idea is Shirley Marshall. Ms. Marshall

believes creating debt-free currency is something Christchurch should do to help families and businesses

today. “If Bob Parker, or anyone, wants to get re-elected, they should do something like this.” she says.

“Who would borrow money and pay interest if they could print the money they need themselves?”, she

asks. “Especially if those you borrow it from are doing nothing more than printing it as well? At least if

we print our own money we can regulate its value and what it is used for. There’s plenty of work that

needs doing and we need the money to pay for it. If others won’t help, we should help ourselves.”

According to Professor Keen, “Banks don’t have to cause crises.” Back in the 19th century in the days of

free banking banks routinely issued notes and kept deposits for the local economy. Properly run by local

business a local currency is stable in value. Our interpretation of data supplied by Professor Keen show

Canterbury could easily support the creation of three hundred million dollars of notes and up to three

billion dollars of deposits and loans based on those notes A quantity of money that if used exclusively to

finance real world investments instead of speculation would end the economic conundrum caused by the

costs of the earthquake, while reducing or eliminating local taxes as in Geurnsey.