In the last March Hare, I described some general properties I hope the Dancing Rabbit Economy will eventually have. In this article, I'll focus specifically on money.
Americans are bombarded with ideas of what money is by popular culture. American culture tells us in no uncertain terms that money IS time, it IS power, it makes the world go round, and it's the one thing that EVERYBODY wants. We pour our lives into earning it, it helps us make other people do things they wouldn't otherwise do, we see it everywhere in the world around us, so we should all want money, too.
It's not that these things are basic to the nature of money. Far from it. But these concepts are inextricably linked with money, and it takes a lot of conscious effort to separate them from the useful and important things about money.
Fundamentally, money is a medium of exchange, a system of carrying information about value. Money is important because it allows two people to trade even if only one of them has something the other wants. Money becomes the value placeholder for such exchanges. But money itself has no intrinsic value, its value is derived from the degree of trust that it can be used to acquire the things you want.
US currency is implicitly trusted in large part because of the network effect, i.e. "everyone is already using it so I guess there's no harm if I do too". Another reason US currency is trusted is that it is legal tender. This means that everyone (in the US) is legally obligated to accept it at face value. So everyone in the US is forced to trust the value of US currency. The combination of the fact that almost everyone trusts it and that it can acquire almost anything makes our currency system extremely powerful.
Until this century, US currency was trusted for another reason, it was backed by gold. Another word for this is that it was funded. A funded currency is an agreement saying that the currency can always be exchanged for some specific valuable. Again, for the currency to be valuable, the issuing body must be trusted. It is important to note that the dollar is no longer backed by gold, so it is quite possible for a currency to be successful without being funded, but funding can certainly help establish trust in a currency.
I want DR residents to trade with one another and the local community as much as possible. I'd like to see DR build a currency system that is trusted by the community, but completely optional to participate in.
Intentional Community Bookstore