The Ithaca Times sat down with Scott Morris at REV, Ithaca’s startup incubator, to talk about the new local alternative currency that Morris is promoting: Ithacash. Morris talked about how he got interested in alternative currency, how he plans on promoting Ithaca dollars, and what social goods an alternative currency can help to bring about.
Ithaca Times: What first got you interested in alternative currency?
Scott Morris: After graduating from college I started looking into the financial collapse of ‘07, ‘08, and after I kept asking why I eventually ended up at the money supply. The way we have our money system configured creates a lot of conflict, socially, environmentally, and economically. So I asked myself, “If my dollars were no longer useful, what would I do?” I started studying a lot of different currency models worldwide. We will have another 2008-style event. I don’t know how that will manifest, but it’s a matter of when, not if. And even in the meantime, we can use [Ithacash] to maximize all the benefits it can deliver.
IT: How do you think an alternative currency can be used to promote local business to help the local community?
SM: What I want to showcase with this currency is it’s not just currency for the sake of currency, but with a deep connection to purpose. And that is what will help us make good on the commitment we’ve made to being a benefit corporation. That means an explicit commitment to generating a materially positive benefit for the community and society. This doesn’t mean “corporate social responsibility.” This is in our DNA—they’re flicking a quarter over there and calling it corporate social responsibility. It’s the middle ground between a nonprofit and a for-profit.
IT: And what types of benefits do you think you can generate with Ithacash?
SM: One of the big topics is food security. There are 1,300 food insecure families in Tompkins County, and that number is getting larger, not smaller. What would it be like if we grant 250,000 Ithaca dollars to the Food Bank of the Southern Tier to expand operations?
IT: So non-profits or businesses can just ask for Ithaca dollars, and they get some?
SM: There are different ways for people to get currency depending on who they are. They can buy them, or they can earn them. They can earn them by working for the system, or they can win them by participating in various promotional challenges. There were 175 people in the presence of the Commons scavenger hunt in December who earned over 32,000 Ithaca dollars. Businesses can apply for a zero percent line of credit, and a nonprofit can accept donations and apply for grants.
IT: So where do Ithaca dollars come from? Are they connected to any standard, like gold or U.S. dollars?
SM: [Dollars are] like, poof, there it is. You create them from nothing. And that’s a “fiat currency.” The trick is striking a balance between the value of real goods and services the currency has access to relative to how much currency is out there. One Ithaca Dollar is worth one US Dollar, as a rule. Our strategy for that is to be transparent and accountable. There’s no cashing out—that’s a big nasty, hairy ball of worms when you set an exchange rate. That’s a bad habit in terms of local currency, being 100 percent backed by national currency as if that provides some sort of safety net. It puts people at ease because they think if this local currency system goes bad, I can get cash out. But it’s more likely there would be an international economic crisis, and people would flee into the local currency, which is based on a network of trust.
IT: So what is the Ithacash strategy for launch? How do you get people to use the currency, whether they believe in helping out the local community or are just looking out for their own bottom line?
SM: We’ve designed the system to prioritize the medium of exchange function of money. We want it to be out there and flowing. The key factor is velocity. That’s really the utility of money—how useful is the currency? What helps is a direct partnership with the government, partnership with banks. Those provide a lot of legitimacy. Banks can be a vendor of the currency—they can issue blended loans, which have U.S. dollars and Ithacash. And it’s a way to expand government without increasing the tax burden.
IT: So how does a business that needs to pay its bills in U.S. dollars benefit from Ithacash? How does the community benefit from having this extra money supply?
SM: We know there are an abundance of goods and services that are available. We know there’s a host of people who want to enjoy those good and services. There’s a bottleneck effect, where the amount of money available locally impacts how much people are able to afford. An auxiliary money supply helps widen that bottleneck. There’s an abundance of money that's not accessible to us on Main Street. There’s an ocean of money, but it’s all stuck in orbit around what some people call “Planet Finance.” And when it starts going up there, it doesn’t come back to Planet Earth. Ithacash is for real goods and services all around America, and not a bunch of speculators.
IT: So what should businesses know about joining Ithacash, and when will it launch?
SM: Ithacash will help you make more sales and help you afford things you want. It’s good so far as advertising goes because you know exactly how much you get back from a cash outlay because people are coming back with Ithaca dollars. Businesses can define what is and is not on offer depending on what makes sense for their business. We’re aiming for a launch in late May, with 100 offerings, mostly businesses and a couple nonprofits. The physical notes, the ones and fives, will come in June, the 10s and 20s afterwards. We’re launching Ithacash.com this line but people can still find us at ithacash.org, and our text-based mobile payments will be TXT2PAY. •