Texans usually come to Santa Fe to buy silver, not sell it.
But earlier this month, a Frisco, Texas-based outfit called the American Open Currency Standard approached the Santa Fe Alliance—which represents local businesses—hawking silver coins as a form of local currency.
AOCS claims its coins have “intrinsic value,” unlike the weakening US dollar, which is paper backed by “faith and credit” in the government.
The Texans sent pictures of what they have to offer: A 1-ounce copper piece bears a stamp that says it’s worth “2 private issued [sic] community dollars.” A ½-ounce silver coin, stamped “twenty-five,” says “barter is better.”
Though prices fluctuate over time, the numbers stamped on AOCS coins bear little relation to the value of those metals in US dollars. Last week, for example, silver was selling on the New York Mercantile Exchange for approximately $18 an ounce; copper was more than $3 a pound.
In its pitch, AOCS suggests its coins be resold at a premium. As an example, the company says, you could sell a 1-ounce silver piece to the public for “only” $40. But because the coin (really worth $18) is stamped with the number 50, AOCS claims, the transaction creates an “increase in their spending power—and an incentive to get involved and support the local community!”
Of course, the plan only works if AOCS’ customers can convince enough people to buy silver from them at more than double the market value, then convince others to accept the coins in barter. They could cut out the Texas middlemen entirely by writing “100” on a slip of paper and trying to sell it for $90.
When she got AOCS’ email, Santa Fe Alliance Executive Director Vicki Pozzebon smelled a marketing scam.
“Maybe if you peel back the paper there’s chocolate in the middle,” she says.
While the Texas coin company borrows the rhetoric of the growing buy local movement, Pozzebon cites it as a new—if somewhat convoluted—example of “localwashing.” AOCS, she says, is “ripping off the entire ‘buy local’ campaign.”
Last year, the city’s Economic Development Department teamed up with the Alliance, the Santa Fe Chamber of Commerce and local media outlets for a “Buy Into It!” campaign intended to support local businesses (SFR is an advertising sponsor of the campaign).
The danger of “localwashing” schemes is they potentially create confusion for well-meaning consumers who have been encouraged to shop at brick-and-mortar shops instead of online retailers—or, in AOCS’ case, among bank-shy local tradespeople who really do believe that “barter is better.”
Adding to the confusion, AOCS pushes gold, silver and copper coins on a “go local, buy local” website with a logo almost exactly like that of the American Independent Business Alliance, the umbrella group for local independent business associations like the Santa Fe Alliance.
(AOCS Executive Director Rob Gray tells SFR in an email, “[No] one on my team has heard from [the American Independent Business Alliance] or received a notice of claim regarding a rights infringement.”)
AOCS charges a fee to “fabricate” its “community currency”—profiting perhaps $1 per ounce of silver, according to its international currency director, Eddie Allen. It’s then up to buyers to find people willing to take the custom-minted coins in trade.
Experts say that’s not barter—it’s business.
“As soon as commodities are involved, like gold and silver, it’s not what I would consider a community currency,” Ed Collom, associate professor of sociology at the University of Southern Maine and an alternative currencies expert, tells SFR.
Collom had never heard of AOCS, but says its business model sounds similar to Liberty Dollar, a private currency operation raided by the FBI and Secret Service in 2007. Allen says the difference is, unlike Liberty Dollar, AOCS doesn’t claim that its notes are legal tender.
AOCS’ intended customers, apparently, are associations like the Alliance, which represent people interested in the buy local movement, as well as off-the-grid types who plan to hoard precious metals. The company mints coins bearing the faces of Ron Paul and Ayn Rand’s fictional hero John Galt, plus “2nd Amendment Silver” and “Surround Money”—a play on Fox News host Glenn Beck’s declaration that “they don’t surround us…we surround them” (whoever “they” are).
“It’s all part of the liberty movement that’s springing up all over the country,” Allen says.
Indeed, many things could be springing up, given how deeply the US is covered in fertilizer. Nearly 1 in 5 civilians over age 16 is either out of work, scraping by on part-time gigs or so discouraged as to stop job-hunting.
If those national trends hold true locally, then the number of unemployed in Santa Fe County is not 5,000, as officially reported last month, but closer to 8,600—or 11.2 percent of the local labor force.
Should those people listen to federal officials who say economic recovery is underway? Or to pessimists like New York University economics professor Nouriel Roubini (aka Dr. Doom), who last week advised the unemployed to “hunker down,” because their “jobs just are not coming back”?
Either way, AOCS has a point about what Allen calls the “fiat currency,” better known as the US dollar: It doesn’t go far these days.
While some are exploiting the situation, others are trying to create legitimate economic alternatives. Turns out not all “alternative currencies” are bunk.
According to Collom, the US local currency movement peaked in 1996; by 2004, nearly 65 local currencies had failed, 17 were still active and only a few were at all popular.
“Coordinators got burned out after putting a couple years of their lives into these systems,” Collom says.
Among the failures: The “Santa Fe Hours” system run by the local Green Party. More recently, Gregory Crabtree researched local currencies for the Santa Fe Alliance. His efforts came to naught.
“It’s not something that one person can do,” Crabtree, who works as a warehouse manager for local solar installation company Positive Energy, says.
One promising model is the Massachusetts-based “BerkShares,” co-founded by Susan Witt. BerkShares are like coupons on steroids. Participants trade US dollars for BerkShare notes, which are good for a discount at local merchants (this is the model AOCS borrowed for its coin-selling business).
Collom says another model, “time banking,” is gaining traction in this recession. A time bank offers a virtual way to account for the value of labor.
“A lawyer who provides an hour of legal advice would earn the same as someone who shovels snow,” Collom says. “It’s very egalitarian.”
Portland, Maine’s time bank has 700 members, Collom says, most of whom are low-income. “It increases their standard of living,” he says. One popular purchase: health care.
Successful local currencies often have institutional backing and startup funding (in US dollars), Collom says. Crabtree says a few Santa Feans are considering a time bank—but aren’t ready to put their money where their mouth is.
According to Pozzebon, past local currency efforts lacked leadership; she recalls being deluged with contradictory ideas.
“I said, somebody needs to go figure it out and come to me with a proposal,” she says. “I never heard from them again.”
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