By David McCarthy
From a big picture point of view, there’s a clear case for a local currency system like the Hudson Valley Current: it’s a way we can work together to build a more just, resilient, and prosperous economy right here where we live. But is there a clear cut business case for using it yourself? Definitely!
The business benefits of the Current fall into three main categories, and these apply whether you are a business owner, an independent solopreneur, or even someone who has (or needs) a job.
The first key benefit is the spending power that comes from an interest-free line of credit. Typically we make spending decisions based, at least in part, on how much money we have. What’s interesting about a mutual credit network is that money is actually created when we spend in the system.
When you spend Currents, the person you buy from gets a credit in their account. You get a debit. That positive/negative pair of credits/debits actually is the money. It creates further flow in the system. The person who earned the credit can now spend it. The person who spent the Currents has further motivation to earn by selling his/her goods and services.
Of course, it is true that you have to earn Currents in your account to balance a debit. That is only logical. But the key point is around the timing. Having a credit line means you can spend now. And, the spending power actually exists on both sides of the transaction. You have increased spending power through your line of credit, but your customers also have increased spending power through their line of credit to buy from you. These two factors combine to make things possible that weren’t possible before.
With the Current, you can get the benefits of credit, without the expensive downsides such as interest payments, rigid repayment terms, and the like. Once you start using the Current actively, your credit line (which typically starts at 300 Currents) can be expanded to meet your needs.
The second key benefit of the Current is marketing reach with the expanding community of like-minded members. Being a member of the Current puts you in direct contact with other members who are automatically interested in your goods and services. And, they have Currents to spend with you.
All businesses face the challenge of marketing, and of course it would be wrong to think that just joining the Current is an automatic solution to that challenge. But it is a very significant piece of the puzzle. The fact is that the overall membership of the Current represents a strong opportunity for each member to develop new business relationships. You can access and communicate with other members on the Current website (hvcurrent.org), and each issue of the Livelihood section of Country Wisdom News has a full directory of members and their services. Our membership packages also include print advertising at very reasonable rates (payable in Currents, by the way).
Finally, let’s talk about the advantages around payment—in other words, actually collecting on the goods and services you sell. I had an interesting conversation with a very good, experienced business person recently, someone who has clients mostly in New York City, but also nationally. He told me flat out that he doesn’t do business locally. Needless to say, with my orientation, I was floored, though I appreciated his honesty.
He went on to say that his experience in this region is that he invoices people and they tend to pay very slowly or not at all. That sort of pattern tends to get the attention of a good business person! If we analyze this situation it becomes clear that if you extend credit on a one-to-one basis, you are taking on all the risk of default. You are in effect acting like a bank, but with little or no recourse—other than small claims court I suppose.
By contrast, when you do a transaction with the Current, payment to you is immediate. It literally happens in seconds. Now, if you are a sharp business thinker (and you probably are if you’ve read this far) you may ask, “What about default within the system? What about people who spend and don’t earn?” I can say first of all, after three years of developing the Current, that such a situation is quite rare. There may be a few people who are sitting on negative balances and not earning. But the interesting thing is this: that doesn’t really impact other members of the system.
The positive credits they generated by taking on debits are still circulating among other members. The only real downside is for the member who has reached his/her credit limit and temporarily cannot spend any more. So in many ways, a system like the Current, by using a network model of community credit, is highly resilient and fault tolerant. And for the individual member, payment risk is more or less zero.
The bottom line is this: though we have created the Current to benefit the community as a whole, there is a very strong business case for each of us to use it. That’s what I call win/win!
David McCarthy is the author of Civil Endowment – The Transformation of Economic Power; co-founder and board member of The Hudson Valley Current: our local currency system; and organizer of the Hudson Valley New Economy Meetup.