Prince Of Petworth » Blog Archive » What the Helen of Troy are Potomacs?

What the Helen of Troy are Potomacs?

24 November 2009 3:00 PM | By Prince Of Petworth in Random

This is pretty wild, I saw it at Qualia Coffee and was put in touch with the organizer. He explains Potomacs in an email:

“Briefly, it is a local (complementary/alternative) currency to encourage more business activity while ensuring that profits remain here. It gives small business, individual entrepreneurs an edge over big box and corporate retailers by indicating they belong to and support the community by participating. It also engages residents to get out more in their communities, builds relationships and it makes people think more carefully how and where they spend their money.

Any local business, individual trader or professional in the Greater Washington Area can accept the Potomac simply by accepting it in full or partial payment. Registration is optional but those who register:
* receive an information and signage kit
* are included in our promotions and directory
* access training support

Folks can purchase Potomacs at the rate P1 = $0.95
In person: at Ecolocity meetings, events, Saturdays 2-5 pm at Qualia
By mail: P O Box 3183, Washington DC 20010-0183 enclosing Money Order
By Paypal: GreaterWashingtonExchange@gmail.com
Minimum order online and by mail: P10 plus $2 handling

Residents can also ask for Potomacs as change when they shop at businesses that accept Potomacs:
Ellen’s Nutrition Counseling
www.ellenkittredge.com

Gnosophia Publishers
202 545 0869, www.gnosophia.com

Qualia Coffee
202-248-6423, 3917 Georgia Ave NW
www.freshofftheroast.com/qualia.html

The Potter’s House
202 232 5483, 1658 Columbia Rd NW
www.pottershousedc.org”

This is wild. Do you guys think it’s a good idea?

24 November 2009 3:07 PM | Anonymous Said:

i think this sounds like great fun. something the neighborhood could really use. more places should get involved!

24 November 2009 3:19 PM | Anonymous Said:

There was a story about Potomacs on NPR a week or two ago…

24 November 2009 3:19 PM | Ragged Dog Said:

…It’s also a tried and true way for small businesses to try to avoid paying taxes and to piss off the IRS once the catch wind. Small towns all over America have tried this before only to fall afoul of the IRS. It’s a too-clever-by-half tax avoidance scam.

24 November 2009 3:23 PM | EB Said:

WAMU had a story on these the other day.

24 November 2009 3:31 PM | AA Said:

reminds me of a “Its always sunny in philly” episode. They give away all of their fake $ for free the first time to get patrons in the bar, then they run out of booze and have no real $ to buy new booze with… ha ha!

24 November 2009 3:46 PM | IMGoph Said:

the dupont current covered this a couple weeks ago.

24 November 2009 3:49 PM | jamie Said:

These currencies aren’t unique but I seriously doubt that there’s any significant benefit to them. Google a bit if you want to read about the almost certain devaluing of any such currency that gets used more than a typical wooden nickel.

They’re also probably really easy to counterfeit.

Bottom line is, if they catch on enough to make any kind of difference, they’ll get abused and go away.

24 November 2009 3:52 PM | The Centzon Totochtin Said:

It is nice to hear that other sources covered this topic already, but WTF did they say about it anyway? I am lazy dammit- I dont want to go to like 5 different places to get the scoop!

I like this idea, but I agree with RD- it could raise the ire of the taxman!

24 November 2009 3:56 PM | KBO Said:

I kind of just think it’s dumb. I mean, really? Potomacs? Come on.

24 November 2009 4:01 PM | K Street Said:

Well, I guess that makes two stories today that are a day late and a Potomac short … meanwhile, I’ve been watching this craziness out my window
http://www.wusa9.com/news/local/story.aspx?storyid=94171&catid=158

24 November 2009 4:15 PM | Prince Of Petworth Said:

I don’t think this is a day late and a Potomac short. That’s wonderful that others have mentioned. I’d never heard of it and assume lots of other readers hadn’t. I saw the sign at Qualia Coffee and was lucky enough to have the organizer email me. I think this is interesting. That’s all. IMGoph is, well, a very special lad.

Though that WUSA story is crazy!

24 November 2009 4:24 PM | Kathy J, Washington Gardener Mag Said:

I think it is a terrific idea to keep our buying truly local.

24 November 2009 4:27 PM | Divine Said:

I saw that sign at Qualia last weekend, but I was in a hurry, so I didn’t stop to ask about it. Seems like a great idea. I hope it works out.

Oh, and POP, love the site overhaul.

24 November 2009 4:39 PM | Zee Said:

Well said @4:15 POP. I hadn’t heard about either story and appreciate both of them.

24 November 2009 4:42 PM | Larchie Said:

It’s an interesting idea, but I just don’t see how people aren’t getting scammed or just printing their own Potomacs. And who IS printing Potomacs and selling them for real money? Where does the real money go when you buy Potomacs?

Oh, and how many Schrute-bucks does it take to equal one Potomac?

24 November 2009 4:56 PM | Mark Said:

I do wonder which local coffee plantation Qualia is buying its beans from.

24 November 2009 5:13 PM | the_matt Said:

I did about five minutes of googling, and here’s what I came up with:
The website of the group promoting this, provides really very little information about the thing. The WAMU story can be found here.

I’d like to reiterate the point above about tax evasion, and make a couple of other observations:
1) local currencies limit economies of scale; true, there are a lot of folks that hate big boxes, but back in the ‘Ssipp, I knew a lot of folks that wouldn’t be able to make their paychecks go very far were it not for the Super Walmart – labor practices, fair trade issues, and environmental concerns aside, we’ve got to just, you know, recognize that there’s a balance is needed.

2) Its hard for me to imagine a local currency actually taking off when there’s a national one that is just as readily accepted at these businesses. The businesses would be committing suicide to not accept $$$. Without a critical mass of businesses, it seems hard to imagine this will go anywhere. Its hard to imagine this getting a critical mass of businesses without it having already established itself though.

3)The dude with the inkjet isn’t backed the full faith and credit of the U.S. Government. In the end, they’re like casino poker chips – they don’t have any real value on their own – they’re pretty much like clay chips at a casino.

4)They make the accounting difficult for the local businesses (I doubt that even with the best of intentions – see point about tax evasion above) that many small businesses have the wherewithal to add to their litany of accounting headaches a currency conversion algorithm (albeit a simple one, you still have to account for sales in two different currencies. It’d be a b*tch)

Which basically leads me to the conclusion that this is an interesting, but misguided attempt at encouraging folks to shop locally. Great goal, but maybe better achieved in other ways, like these folks did back in the day with all those “Keep Austin Weird” stickers you see all over the place (and subsequent Keep {CITY OF CHOICE} Weird stickers that cropped up after the Austin campaign got big), and continue to do with a lot of different types of activities – listed at the link above.

24 November 2009 5:15 PM | the_matt Said:

Man, I really should copy-edit my comments. Sorry for the redundancies and whatnot.

24 November 2009 5:41 PM | Potomac (Patawomeked) Indian Said:

I’m sticking with wampum.

24 November 2009 6:20 PM | Andrew Said:

The NW Current article also mentioned that they’ve got the “Anacostia Hour” over in Hyattsville ($1 US = 10 Anacostia hours). It seems like you can’t go two stops on the Metro without having a different local currency to use.

Here’s the issue of the Current with the article:
http://www.currentnewspapers.com/admin/uploadfiles/NW%20Nov.%204%201.pdf
Turn to page 13.

24 November 2009 7:00 PM | Skeletor Said:

Forget dollars! Forget Potomacs! Use Skelobucks! Legal tender throughout Eternia!

24 November 2009 10:14 PM | tegwar Said:

On a credit card transaction, a merchant loses several percent vs. a cash transaction (can’t charge card payers different amounts; Visa won’t allow it). When it’s BigCorpRetailer, who cares. When’s it LocalShop that’s money which is leaking out of the local wage / entrepreneur pool and off to points unknown.

So the Potomac is an attempted solution to an actual issue. But customers can do just as much good for LocalShop by paying in cash as they can by paying in Potomacs. And with a lot less hassle. Of course, LocalShop can’t really advertise that fact w/o pissing off Visa.

24 November 2009 11:00 PM | Larry Chang Said:

Thanks for the exposure, PoP. There are a few points i’d like to address:

“It’s a too-clever-by-half tax avoidance scam.”
Participating merchants are liable for all taxes. Gross sales are not reported separately but are treated all the same.

“They give away all of their fake $ for free”
ALL currencies are “fake” in that they are mere symbols and rely on public confidence. Potomacs are not given away but are purchased into existence, the equivalent dollar amount placed on deposit. It is therefore fully backed, more than can be said of the US$.

“the almost certain devaluing of any such currency”
Currencies are devalued when the supply exceeds production (too many dollars chasing too few goods). Paying interest increases money supply (see Money as Debt). Potomacs have a built-in mechanism to maintain value (discount to purchaser/demurrage or negative interest to seller), encouraging circulation and penalizing hoarding aka saving.

“businesses would be committing suicide to not accept $$$”
Potomacs are an alternative or complementary currency are are not meant to replace $

“hard to imagine this will go anywhere”
Not meant to go outside of the Washington region. Ithaca Hours is the oldest and most successful system since 1991. Ithaca banks trade in Ithaca Hours. Next best known are BerkShares after which Potomacs are modeled.

“clay chips at a casino” can be cashed in.

“accounting difficult for the local businesses”
The units are equivalent so not differentiation necessary in accounting except breakdown of daily cash float.

““Anacostia Hour” over in Hyattsville ($1 US = 10 Anacostia hours)”
These are modeled after Ithaca Hours and 1 is equivalent to $10, the average hourly wage.

http://ecolocity.ning.com/group/communityexchange
http://www.facebook.com/pages/Potomac-Local-Currency/331720845556

24 November 2009 11:05 PM | Larry Chang Said:

“It seems like you can’t go two stops on the Metro without having a different local currency to use.”
Precisely why Potomacs are a regional currency for the Greater Washington Area, treating it as a bioregion and economic zone. Potomac goes where Metro goes.

24 November 2009 11:10 PM | Larry Chang Said:

“customers can do just as much good for LocalShop by paying in cash as they can by paying in Potomacs.”
Dollar profits can leave the area. Potomacs can only remain here and be circulated. Studies have shown that one unit of local currency circulates upwards of five times more than a dollar. Customers therefore do more good using local currency.

24 November 2009 11:20 PM | Larry Chang Said:

“They’re also probably really easy to counterfeit”
They are easy to counterfeit but so are most paper currencies if someone wants to badly enough. But it’s not worth the bother. How much can they buy and where? In most local currency transactions merchant and customer are known to each other so there is a degree of mutual trust. It’s all about building community relationships.

25 November 2009 9:27 AM | Lee Watkins Said:

Alternative currencies are reported to work as a counterbalance for the local economy. They increase in activity if the local economy slows down, and decrease in activity if the local economy goes up.

The use of local currencies only increases the local economy temporarily. Longer lasting use of local currency results in a decline and stabilization of the economy. This as the increased rotation speed of the money is eliminated by the decrease in the amount of money (as currencies as Freigeld reduce in value rapidly).

Local currencies and have received criticism for a failure to address the needs of the wider population, especially lower socio-economic groups.

25 November 2009 9:41 AM | Larchie Said:

I appreciate that Larry Chang is directly engaged in this discussion. I’m aware of EcolocityDC and the ideas behind this whole project are very compelling. There is one thing that I just can’t wrap my head around, though:

“…the equivalent dollar amount placed on deposit. It is therefore fully backed”

Where is the oversight of this deposit? I suppose the most reasonable answer is that it would be counterproductive to Ecolocity’s mission to not do as it promises, and so we should trust them to keep their word. However, to take the most cynical position, how do these businesses and individuals know that it will not become part of Ecolocity’s operating budget in a lean year, or worse, fund trips to Rio for the staff. Is there transparency to this backing of funds with federal dollars? How was this done with other currencies after which the Potomacs were modeled?

25 November 2009 10:09 AM | Larry Chang Said:

There is presently no oversight of the reserves which sit in an envelope on my desk. Scrupulous records are kept of each Potomac issued. (I’m anal about this, having nothing better to do.) Right now it is all based on trust, the building block of community. The intention is to incorporate a 501c3, separate from Ecolocity (which remains unincorporated since many members are wary of being co-opted into the non-profit industrial complex). Board members will selected from alternative economics, social justice and philanthropic fields. Any volunteers to help this process along?

25 November 2009 10:17 AM | Ragged Dog Said:

“Keep DC GHETTO!” Is our motto over in the 20002.

25 November 2009 10:24 AM | Larry Chang Said:

“failure to address the needs of the wider population, especially lower socio-economic groups”
Local currency systems are ideally suited to include economic activity that is not normally recognized or accounted for in the formal economy: neighbors trading services, such as baby- or elder-sitting, hair-braiding, home-baking, yard-care, etc. The challenge is to market it to these demographics.

Longer term plan is to incorporate Time Banking, created by DC resident, Dr Edgar Cahn as the virtual credit system of the Greater Washington Exchange. Time Dollars are now is use in the DC Youth Court where offenders are judged by their peers, and assigned community service for which they earn Time Dollars.

25 November 2009 10:51 AM | Ragged Dog Said:

Oooh! Finally! A frequent flier program for youth criminals! Just the business model I was looking for…

03 December 2009 10:57 PM | ishi Said:

—regarding qualia’s coffee plantation—-its not well known but there actually is a very small bioregion similar to central american, west african, and southeastern asian coffee growing countries just around the corner.
similarily, many people do not know of the rare (endangered) species which live locally in rock creek park and along the potomac—but they are there.
like all coffee plantations, this one does have the ‘labor issues’ (eg should people be paid more than to work for food so they can work for food, or not? they might waste the money.)

some may argue, following david chalmers, that this coffee plantation is a ‘qualia’ or an emergent mental phenomena, but what isn’t?

———an interesting feature of Ithaca Hours, is they actually have a ‘microcredit’ and also ‘welfare’/tanf type program—-people without IH’s can either get a loan, or even an outright grant, just to get started.

—-from a purely DeCentra-list view, i can imagine keeping things local, like growing your own food in a garden, and printing your own ‘homespun’ potomacs. i like the idea—there is value in the community. you might get interesting things, like some dollars being worht more than others. ‘wampum.’

—as a fact checker, the potomac bioregion actually extends beyond the Metro.
where does all that water come from? i hear its unexplored—be the first to get on i-66, and ‘ go west, young man’ (name of a book by supreme courth justice william o douglas—who helped save the C%O canal).

—–i do like that idea of having the ‘reserve’ on my table. i was thinking some of this could be done by ex-offenders, or even as employment while in jail. Madoff seems a good candidate, since he knows how to cook the books.

———-its interesting the reaction here. i do wonder whether the alternatives have stability, and whether they can really create an alternative to TINA.

——–’keepin it gangsta, la la la la’