From DAVE SMITH
August 17, 2009 Ukiah Valley, Mendocino, North California
The more money is used locally and kept circulating locally, the more jobs are created and the wealthier a local community becomes (see Why NOT To Shop In Santa Rosa below).
Mendo Moola is smart money… a local currency, issued by locally-owned merchants and circulated only within Mendocino County. It is accepted in payment by participating, locally-owned merchants. The first merchant to issue its own currency is Mulligan Books in downtown Ukiah using wooden coins as change for purchases, and as “gift certificates”.
By using Mendo Moola in trade – face-to-face, hand-to-hand – money does not leave our community as it does using Federal Reserve Notes and Credit/Debit Cards.
Communities across the country and around the world issue local currencies to protect themselves against “tight money” and “credit crunches” that kill jobs and local economies. See Mendo Moola website for more info and a growing list of local businesses and services accepting it.
Mendo Moola Proposed Rules:
1. Mendo Moola (MM) as a Local Currency can initially be issued by any merchant, in branded wood coins or paper, with a store front that stocks inventory. It is then backed by the full faith and credit of that particular merchant’s inventory and cash flow, and by the health of the community’s local trade. (Eventually, any business or service could issue its own currency.)
2. MM will always be redeemed for cash by the issuing merchant upon request by either customers or other merchants, although using MM to purchase products is preferred.
3. MM will only be issued into circulation as change, direct exchange for cash (not sold as a taxable product), or as “gift certificates”.
4. MM will not be issued into circulation by being “spent” by the issuing merchant for products or services, i.e. merchants will not use their own issued currency from storage to purchase products themselves. Rather, it will only be put into circulation by Rule 3. Rules 3 and 4 are to protect local currencies from inflating.
5. When accepted as payment, MM will be treated as cash in payment for taxable or nontaxable products or services.
6. Merchants may treat their own branded MM on their books as Gift Certificates (a non-taxable Accounts Receivable). Production of local currencies may be expensed as an Advertising Expense. Check with a CPA on these issues.
Circulation: MM can be put into circulation by exchanging $5 for a MM coin (not purchasing it) at Mulligan Books, or accepting MM in change when purchasing books, and then using it to purchase at participating merchants and restaurants (see list at Mendo Moola), or giving it to someone to be used like a gift certificate, or paying your babysitter and landscaper with it. You can also accept it as change from participating merchants to be used again at another locally-owned business. Don’t “bogart” that coin, my friend. Keep it moving. We build local jobs and common wealth by using local currencies again and again.
Merchants: We encourage you to accept and give change in Mendo Moola. At any time, you can take Mulligan Books branded MM to Mulligan Books and get cash back for it, but we would rather you keep it in circulation. Don’t stop there. You can create and circulate your own branded Mendo Moola as Mulligan Books has done. It will get passed around the community, with your business name on it, into and out of restaurants… into and out of local shops… and the more it is used to purchase local products, at your store and elsewhere, the more local jobs it creates, building our local community businesses. You back your own Mendo Moola by promising to always exchange it back for regular cash when requested.
“Show me the moola!”
Why NOT To Shop In Santa Rosa – A Valuable, but Hidden Economic Reality
From Tricia Truit, Earth and Sky
Why the ‘Local Multiplier Effect’ Always Counts
The Local Multiplier Effect (LME) is a very valuable, hidden feature of our economies. The term refers to how many times dollars are recirculated within a local economy before leaving through the purchase of an import. Famed economist John Maynard Keynes first coined the term “Local Multiplier Effect” in his 1936 book The General Theory of Employment, Interest and Money.
A Hypothetical Example
Imagine a hypothetical influx of money, say one million dollars, entering a local economy. Now imagine these dollars are spent on local goods and services. Imagine that each of the local vendors who earned those dollars then re-spends that money on more local goods and services. Envision this cycle happening several times before this money is finally spent on imports – goods or services from outside the region.
In this case, those one million dollars recirculating eight times would act much like eight million dollars by increasing revenue and income opportunities for local producers.
Now another scenario: picture that same amount of money being spent immediately at stores (or online) with businesses headquartered in other regions on imported goods. These transactions would add very little or no value to the local economy; one million dollars would act just like one million dollars instead of several million dollars.
History and Impact
Over the past 50 years, the expansion of national businesses into local domestic markets has diverted this vital monetary stream and redirected it to centralized corporate coffers. There it is spent on large capital expenditures, overseas goods and all too frequently inflated executive salaries. This interception of funds has depleted local towns and cities across our nation of an important source of funds: recirculated income.
It has been estimated that about a century ago, thriving industrial communities had a LME in the high 20s or low 30s. Today it’s estimated to be in the single digits. This reduction in the number of rounds that monies make has had an extremely negative effect on our local economies. All areas of community life are affected by this deficit. This lost treasure of local economies was never measured, monitored, managed or even acknowledged.
Besides the obvious poverty-related problems of unemployment, underemployment, homelessness, and lack of funds for social and public health needs, there is also the issue of creating an unhealthy reliance on a vast commercial network of imported goods. Many areas of life become vulnerable to natural or man-made disasters which can interrupt this flow of goods. Securities as diverse as food to homeland could be greatly compromised by this kind of dependence.
Two Studies of the Impact of Buying Local
Two recent studies–one in Austin, Texas, the other in Maine–compared locally owned businesses with nationally owned book stores as far as their impact on their local economies. They reached very similar conclusions: $100.00 spent at a national retailer yielded a return of about $15.00 to the local economy. However when that same $100.00 is spent with a local retailer it returns about $45.00 or 3 times as much income to the local economy. When further defined, these returns from the national chain store were usually in the form of lower-level service job wages.
Many factors are at work here. The large national chain store doesn’t buy local services or goods in most cases. On the other hand the local store does use local services such as accountants, bookkeepers, advertising, legal services, possibly office supplies and many other small incidental expenses.