The more I think about local currencies the more obvious it becomes that their promoters like Lietaer are entangled in a fallacy: they end up opposing local circulation to liquidity.
Local circulation is supposed to favour local commerce so they become concerned with monetary leaks.
In fact, monetary leaks are simply the consequence of liquidity which is a desirable property of a currency.
The only defect of the monetary sytem that a local currency can correct is in money creation : local bottom-up money creation can correct the imbalance of the top-down money creation by the banks.
In other words, a successfull local currency is one that is created locally in volume but can flow gradually outside of the community.
That's why bitcoin fits in the big picture and why so many local currencies today are only marginally effective because of low volumes and/or no liquidity.
Local circulation is supposed to favour local commerce so they become concerned with monetary leaks.
In fact, monetary leaks are simply the consequence of liquidity which is a desirable property of a currency.
The only defect of the monetary sytem that a local currency can correct is in money creation : local bottom-up money creation can correct the imbalance of the top-down money creation by the banks.
In other words, a successfull local currency is one that is created locally in volume but can flow gradually outside of the community.
That's why bitcoin fits in the big picture and why so many local currencies today are only marginally effective because of low volumes and/or no liquidity.
Interesting point. First, note that Ripple shares the "creation from the bottom" property without limiting the currency to a certain place.
Local currencies are based on fallacy. "monetary leaks"! aka getting stuff into your community.
Second, I think local currencies are good for their purpose, which is favor local production and trade. I don't think they're based on any fallacy.
With a "monetary leak" sure they're getting stuff into their community. They're importing goods from outside, which is precisely what many of these transition towns want to discourage.
They lack some capabilities bitcoin has. I think that's the beauty of having a currency ecosystem instead of a monetary monopoly. More currencies also means more resilience.
