books economics poverty wealth

Funny Money, by David Boyle

A few months back I wrote about local currencies and the Totnes pound, and then last month Lewes launched it’s own currency too. With the financial system in disarray at the moment and recession on the cards, local currencies come into their own. They are counter-cyclical: when the mainstream economy falters, the alternative economy soars. 

So, I picked up a copy of David Boyle’s ‘Funny Money – in search of alternative cash’ on Bookmooch to see if I could learn a bit more about the phenomenon. The book charts the author’s visits to various projects, mainly in the US, meeting the organisers and the beneficiaries. He visits Ithaca Hours, Edgar Cahn’s Washington time bank, and the Schumacher Society’s Berkshares programme, among others. Each is an intriguing experiment in finance, often run on a shoestring or by volunteers. The community around the project is always as important as the project itself. 

The basic principle behind all of these is that money is actually a very simple thing – it’s just an agreed mechanism of exchange. Bank notes and coins have no intrinsic worth, it’s all about what you can get with them. If a community agrees to use seashells or salt, as they have done in times past, or monopoly money or an invented currency as some projects do today, that’s a perfectly valid form of money. What matters is the social agreement. “If its creation is so simple that banks and governments can do it”, says Boyle of money, “we may be entering a world where we can all do the same thing for ourselves.”

Why would you want to create your own money? Firstly, because a lot of people are frozen out of the mainstream economy, but still have time and skills to offer – the elderly for example. The MORE time bank in Washington started among urban retirees, unemployed, but still very useful to the community. The system works by earning and spending time credits – you list your skills and allow people to call on you, and you call on others in turn. (So you might give an hour of your time to do the shopping for a housebound member, and get an hour of gardening from another member in return.) An alternative money gives value to skills that are no longer valued by the mainstream economy.  

In times of recession, it is hard to generate new cash for investment, especially for local businesses or small initiatives. Alternative currencies can create new opportunities in the same way that banks do, but much more organically. For example, Boyle mentions a deli that wanted to move to a new premises. When the bank refused the $5000 they needed to do this, the deli owner invented his own currency – the ‘deli dollar’. A deli dollar was simply a voucher, bought for $8, that could be redeemed at $10 later in the year. The owners sold $5000 worth of deli dollars to regulars, and in this way essentially created a loan for themselves from their customer base. As customers brought the vouchers in over the next year, the loan was re-paid in food. 

Another reason to create your own money is that it keeps money in the local economy. This is the philosophy behind the Totnes and Lewes projects, and I have explained this in a little more detail in my previous post

While alternative currencies are fascinating, to me anyway, ‘Funny Money’ itself is a somewhat frustrating book. Boyle has chosen to write it partly as a travelogue, so there are digressions into descriptions of his accommodation, or mundane observations on American life. He gives detailed accounts of conversations, and while these do give a flavour of the people behind the projects and the kind of offices they work in, I’d rather he’d edited them down a little to get to the point. The book is also ten years old now, and many of the projects will have grown or folded. But, it remains a good introduction to pioneering new currency, and a real insight into the nature of money.  

I’m going to have to do some more research into this, as I agree with Boyle’s conclusion: “DIY money should not be expected to do everything which dollars and pounds can do. But there are many areas where dollars and pounds are simply not effective: they do not build communities, they do not respond to needs, they do not build families, they do not tackle poverty. Local money does, and for that reason, I believe it will work.”


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