Did you know it's legal to print your own money? You can't print money that looks likegovernment money, of course, but as long as it looks different, you're clear. Why would anyone do this? Just ask the hundreds of communities all over the world that print their ownlocal currency.At first sight, local currencies are just plain fun. Anyone that's ever playedMonopoly remembers the thrill of handling those colorful little dollars. Imagine being able to make your own money! Now you find that grownups are actually doing just that.Upon reflection, of course,fun isn't exactly the recompense for a hard day's work. In fact, "Monopoly money" is a term that already carries certain negative associations in the world of finance. Money has to be based (in one way or another) on real wealth or it breaks. Most of us have a deep mental image of some German somewhere (in Germany, 1922-1923) pushing a wheelbarrow full of nearly useless cash. Won't a "local currency" suffer the same fate?In a word, no. In fact, local currencies are often begun precisely toavoid that fate.One of the longest and most successful local currencies in America is the Ithaca HOUR, based in Ithaca, NY. As has always been the case, Ithaca HOURS aren't backed by gold, silver or any other commodity. "Ithaca HOURS is backed by our relationships," said Rebecca Nellenback, HOURS board member. "That's what we want our town and our community to be."http://ithacahours.org/pressmedia.phpSound impractical? Consider: what is the national currency based on, but our relationship with the national government? We get paid in piles of green paper because we trust that if the Federal government says it's worth something, it is. Unfortunately, that same government is now intrillions of dollars in debt.U.S.A. National Debt on February 4th, 2011: $14,099,823,671,305.http://www.treasurydirect.gov/NP/BPDLogin?application=npThere's enough talk in the major media about looming recession (or worse) that I'll skip all that; the point is, there's nothing conspiratorial about questioning whether the current national government is the best place to invest your work.(Incidentally, that debt works out to about $44,900 per American. Apparently including each of my kids.)http://en.wikipedia.org/wiki/United_States_public_debtWhen people consider alternatives to money, their minds seem to run to gold and real estate. In researching this article, I found a website where you could buy about 10 gold coins for—about $2000. The site had a lot to say about inflation, and Germans wheeling around their life savings to buy a loaf of bread. What I didn't find was any mention of what the smart Germans did with their 10 gold coins apiece when hyperinflation struck. Try to buy bread with a gold shaving? Use one coin to buy the whole town?In the real world, I'm not sure that 10 gold coins, or 1000, will get you very far in an emergency, unless you figure out how to ingest metal. Local currencies are one way of considering the whole picture; we need each other to survive, not to mention flourish. No matter what happens in Washington, you and your neighbors can still produce, and trade the fruits of your labor. You can still trust each other.Local currencies are more than a hedge against disaster; they're another tool that communities can use to weave connections among themselves and flourish. Here I've spoken mainly from the "looming disaster" perspective, because that's the tone the media's taking, but your loss of local freedom is always a disaster, whether the numbers are going up or down.I don't mean that distributists are against having a national currency. Of course we also need ways to trade with those outside our town. So why not have both currencies? Right now, the American economy is still functioning well enough that local currencies in this country are still "complementary"; I don't know of anyone getting paid exclusively in Ithaca HOURS. But many people do choose them as part of their paycheck, and many Ithaca businesses accept them. And Ithaca is only one of hundreds of such currencies around the world.Whether or not all this recession talk comes true, we already have this little-known mechanism for beginning to take back control of our cash, which is to say, our work and our time. Let's use it.
FAQs
Why can't the government just print more money to get out of debt? ›
The bottom line
Printing more money is a non-starter because it'd break our economy. “It would take care of the debt but at a price that's far too high to pay,” Snaith says.
The U.S. federal government has the exclusive authority to print or coin United States currency. Currency produced anywhere other than the two U.S. Mints operated by the Department of the Treasury, along with any valid currency that has been fraudulently altered, is considered counterfeit.
Why can't we just print more money and not tell anyone? ›It's a simple science of demand and supply. Printing more money leads to the price of items increasing by five times. If everyone had money, prices would go up, which is rarely good for a country's success.
Why did the Fed print so much money? ›Consumer demand and trends in payment methods are not the only reasons the government continues to place print currency orders. Another reason is to replace money already in circulation that has been destroyed.
Can the US government print money to pay debt? ›The money for the debts we are talking about has already been appropriated by Congress meaning approved by Congress. Yes the US can print its own currency. It always does. But printing too much leads to inflation and a weakening of the dollar.
Who can legally print US money? ›The Treasury Department's Bureau of Engraving and Printing handles the printing of currency bills in the U.S., as directed by the Fed. Correction—Sept. 19, 2023: A previous version of this article incorrectly associated Quantitative Easing with the Federal Reserve's normal open market operations.
Who can legally print money? ›The Secretary of the Treasury shall engrave and print United States currency and bonds of the United States Government and currency and bonds of United States territories and possessions from intaglio plates on plate printing presses the Secretary selects.
Who owns the US dollar? ›The monetary policy of the United States is conducted by the Federal Reserve System, which acts as the nation's central bank.
Why can't we just print less money? ›Most money is actually created by private banks and so attempts by the central bank to limit the money supply are doomed to failure. The bank can influence the demand for money by increasing or decreasing interest rates, but does not control the money supply itself.
Why can't we just print money? ›It wouldn't be historically unprecedented. In fact, it's been done many times in the past. But nothing comes free, and though printing more money would avoid higher taxes, it would also create a problem of its own: inflation. Inflation is a general increase in the prices of goods and services throughout an economy.
Why can't we print your own money? ›
The deeper reason for this is that money is really a facilitator of exchange between people, a middleman in a trade. If goods could trade with goods directly, without a middleman, we would not need money. If you print more money you simply affect the terms of trade between money and goods, nothing else.
Is inflation due to printing money? ›Are Money Supply and Inflation Related? Yes, the money supply and inflation are related. To combat unemployment, the Federal Reserve increases the money supply, promotes economic growth, and makes debt cheaper; however, these policies have the potential to cause inflation.
How much debt is the US in? ›The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.
Can banks create money? ›Banks create money when they lend the rest of the money depositors give them. This money can be used to purchase goods and services and can find its way back into the banking system as a deposit in another bank, which then can lend a fraction of it.
How can the US get out of debt? ›Tax hikes alone are rarely enough to stimulate the economy and pay down debt. Governments often issue debt in the form of bonds to raise money. Spending cuts and tax hikes combined have helped lower the deficit. Bailouts and debt defaults have disadvantages but can help a government solve a debt problem.
What happens when the government continues to print money? ›Instead of tightening the money supply to stop inflation, the government or central bank might continue to print more money. With too much currency sloshing around, prices skyrocket. Once consumers realize what is happening, they expect continued inflation. They buy more now to avoid paying a higher price later.
What is the obstacle to getting out of debt? ›A debt spiral can be a significant obstacle to reaching your financial goals. If you have a variety of debt, like credit cards, student loans, car loans, and mortgages, you may find yourself trapped in an ongoing spiral of debt as your payments go toward growing interest.
What would happen if everyone stopped paying bills? ›Without lending, businesses wouldn't have any money to run their business. Once cash flow stops, it only takes hours before the entire system crumbles. We are just one step away from anarchy if we didn't have some order to our monetary system. This is a common objection that people raise.