Sunday, May 3, 2009

Buried in the back pages of the Sunday Globe was an interesting article about the state of the Federal Government’s relationship with the states and cities in this country.  It wasn’t phrased that way, but here’s what I saw.  The IRS has issued a formal warning to the city of Burlington, VT telling them to crack-down on a local currency system that has grown rapidly in the city and surrounding area — even reaching up into Canada.

The system, exchanging “champies” started out as a barter system for local crafts and food at various street fairs.  As more local businesses started accepting — and paying — in champies, the notes changed from rough IOUs to more of a currency.  When Ben and Jerry’s got involved, the whole system went digital — almost no paper money, just swipe cards working on the city’s wifi network and stored on the B&J donated servers.  The city has accepted champies to pay traffic tickets, the new digital parking meters can be paid by champiecard.  The mayor of Burlington claims that areas that have started using champies have seen fewer runs on grocery stores when shipments arrive, probably due to better use of local resources.

Here’s where the IRS comes in.  Since champies are really a barter system at their base, the value of a champie is always negotiable.  The exchange rate to the US dollar, Canadian dollar, and even the Euro are always floating, based on local supplies and needs.  Therefore businesses haven’t been taking out income tax out of champie paychecks.  Apparently champie sales of gasoline and cigarettes have avoided federal sales taxes as well.  The Feds are pissed that they aren’t getting their cut.

The whole local currency thing isn’t new.  Our CSA accepts payment in BerkShares as well as US dollars.  The increasing inflation and devaluation of the dollar overseas has lots of people worried about their money and looking to alternatives.  On the opposite end of things from champies and BerksShares is the idea of larger currency for all of North America (the Amero).

Both of these movements are showing a fundamental distrust in the power and responsibility of the Federal Government.  Yes, champies are seeking to keep money in the Lake Champlain valley and promote local ties, but that idea of the importance of the local is in many ways an outgrowth of lack of trust the people of Burlington have in the government in DC.  They’d rather have their own monetary policy based of the output of local cows and sales of Ben & Jerry’s ice cream than wait for the Bushies to drive them, and the rest of the country, into the ground.