According to USA Today, “the systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.
“Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.”
What this does is help keep cash flow generating throughout small businesses in need. One thing’s for sure is that Target and Wal-Mart probably aren’t accepting these scrips anytime soon. In the case of the BerkShares, the largest example of this, some $2.3 million dollars have been pumped into the Berkshire-region of Massachusetts.
During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage.
By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.
“We print the real thing,” she says.
The IRS gets its share. When someone pays for goods or services with local money, the income to the business is taxable, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. “It’s not a way to avoid income taxes, or we’d all be paying in Detroit dollars,” he says.
Pittsboro, N.C., is reviving the Plenty, a defunct local currency created in 2002. It is being printed in denominations of $1, $5, $20 and $50. A local bank will exchange $9 for $10 worth of Plenty.
“We’re a wiped-out small town in America,” says Lyle Estill, president of Piedmont Biofuels, which accepts the Plenty. “This will strengthen the local economy. … The nice thing about the Plenty is that it can’t leave here.”