It's a cross between a game of Monopoly with friends and a Great Depression throwback: A nonprofit group in Ithaca, Tompkins County, is printing its own currency in an effort to stimulate the local economy and keep money in the area.
Residents trade U.S. dollars for[e]"Ithaca Hours"[/e] at a local bookstore and use them to pay for a portion of goods from area mom-and-pop stores or services from neighbors, who then keep the notes in circulation.
More than 900 businesses have signed on to accept Ithaca Hours, $[e]10 notes originally designed to reflect the value of one hour of work[/e], with a few employees even agreeing to accept part of their wages in the notes.
Among those who have signed on to accept the currency are accountants, architects, counselors, carpenters, lawyers and movie theaters.
"It was started in 1991 during a time of recession when upstate was getting bad," said Steve Burke, 51, president of Ithaca Hours Inc.'s board of directors and owner of a small music store. "Now in the last few months with the economic downturn, we're seeing a renewed interest."
In many ways, the Hours are just like cash; they're not traceable, Burke said, and the federal government relies on an individual "making cash transactions to report it, whether it's income tax or sales tax."
"If people treat Hours the same way they treat cash, there are no tax problems."
Unlike real money, Hours can't be used to buy stocks and are largely insulated from the worldwide banking crisis. Because they can't be invested, they're meant to be spent.
"There's about $120,000 worth out there and they are constantly circulating, so it's generated millions in economic activity," Burke said.
The board also makes loans to local businesses — in Hours, of course — at zero percent interest. Loans put more of the currency into circulation and give recipients an incentive to accept the notes, because loans can be paid back in either currency.
Hours aren't backed by gold or any government, but their stability lies in the tight-knit community, Burke said. Loan applicants list references and there is a low default rate "because of the personal connection," he added.
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Interesting idea. I wonder how they counter counterfeit notes.