How to save Greece from the technocrats

A year or so ago, an internet joke dropped into my inbox about a man who goes to a motel and asks the manager to put a $100 bill in their safe.

While he’s out, the manager uses it to pay off some bills, and it circulates rapidly around town paying off more bills, before it is used to pay a bill at the motel and it goes back into the safe.

“That is how a stimulus package works,” says the joke.

Maybe it does and maybe it doesn’t, but I recognised it immediately as the story a travelling salesman called Charles Zylstra used in the USA in the early 1930s to popularise the Depression-busting stamp scrip currency. 

Zylstra’s version is slightly different (the man burns the $10 bill, as it was then, and thanks goodness it wasn’t used, because it was a forgery).

The re-emergence of the ‘joke’ from eight decades ago is a sign that the lessons of stamp scrip need to be revisited. It was hugely popular in the USA, when over 4,000 communities launched versions of a local currency which lost one per cent of its value a month.

This was to encourage circulation. You had to buy a stamp to keep its value.

The most famous example was in Worgl in Austria, where people paid local taxes in advance to avoid the stamps.  I went to Worgl the first time I ever went abroad, on a school ski-ing trip, so it is strange that I find myself talking about it so much now.

What is important about all this is that currencies like stamp scrip can bypass conventional money when it is scarce. As it is in Greece.

There is a huge vacuuming sound heard across southern Europe as the bankers extract their debts. Yet nothing has changed about Greece since before the crisis. There is still the same population, the same sun and the same fields – the same people who need things done and the same people who are available to do it.

What they don’t have, and increasingly don’t have, is the means of exchange to bring those together.

This is how Charles Zylstra’s story has become urgent again. Something along the same lines in Greece, and other indebted countries, would not interfere with the business of repayment, but it allow economic life to continue.

Now the Greek government has passed an emergency law encouraging new forms of exchange. The Volos networks are growing there too, but it is tiny compared to what it needs to be.

This is pretty extraordinary. Here are these powerful models of parallel currencies emerging in Latin America.     The C3 model in Uruguay which takes bills owed to small business hem and factors them in return for local currency.

The community banking model in Brazil, providing low cost or no cost loans to the poorest neighbourhoods, to individuals and businesses.

Both are learning the lessons from two decades of development in Latin America, both with support from the European Commission. Yet here we are, on the Commission’s own doorstep, and the Greeks have to laboriously reinvent the tools of exchange, just like the beleaguered and indebted people of Argentina ten years ago.

What can Greece do, in that case?

They can borrow from Senator Bankhead’s Stamp Scrip Bill in 1933 which would have injected $1bn in to the US economy (it was vetoed by Roosevelt). 

They can borrow from Shann Turnbull’s proposal for ‘emergency money’. 

They can borrow from Christian Gelleri’s proposal for ‘express money’.

But, either way, this is a critical part of a new economics solution to the predicament in Greece. It will become increasingly urgent as we watch Greek democracy being demolished and its people impoverished and disempowered by the new European settlement to save the euro.

If we do nothing like this, the Greeks must look forward to what Keynes called “a peregrination in the catacombs with a guttering candle”.