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Wednesday, August 13, 2008

The Problem With Ithaca Hours

There are several problems with the "Ithaca Hours" currency.

It has an "official" exchange rate of $10 Federal Reserve Points for 1 Ithaca Hour. The "Ithaca Hours" currency is still tied to the Federal Reserve. Using a half ounce of silver as the monetary unit would be superior.

It is superior to use sound money (silver, gold, or copper) to an hour as the unit of currency. The "Ithaca Hour" creates the illusion that everyone's labor is valued equally. A clerk working in a store is not worth the same per hour as a doctor. People can charge more than one "Ithaca Hour" per hour worked, but that sort of defeats the purpose of the monetary unit.

Ithaca Hours ares still dependent on a centralized issuing authority. If the issuing authority prints too many or too few Ithaca Hours, then the currency does not work. The issuing authority still recognizes seignorage income as new money is printed.

If the issuing authority ever goes bankrupt, then the Ithaca Hour is worthless. If sound money were used instead, your money would keep its value no matter what. Further, Ithaca Hours are only usable near Ithaca. If you use sound money, your purchasing power is kept no matter where you travel.

The transactions are still reported as taxable. Federal income taxes are paid on all transactions made with Ithaca Hours.

Half-hearted "alternate monetary systems" like Ithaca Hours or Liberty Dollars give alternate monetary systems a bad name. Why not just use real money (gold/silver/copper)? Unbacked fiat paper entirely defeats the purpose of an alternate monetary system. Further, as long as you're paying income taxes on your labor, you're still supporting the Federal Reserve.

The only way to true monetary and economic freedom is:

  1. Use sound money (gold/silver/copper) and not unbacked fiat paper.
  2. Boycott the Federal Reserve completely by avoiding income taxes.
Also, you should trade with actual physical metal instead of paper. This way, you're protected against a default. The State could raid anyone who issues metal-backed paper, making that money worthless. People holding paper or electronic Liberty Dollars lost their money when the FBI/IRS raided the Liberty Dollar's offices; the property was seized and sold without a trial.


Anonymous said...

time, like money is a very variable concept. Several years ago i spent a lot of time with a lot of data mixing money, with time, with the risk exposure of the people consuming the time (not traded financial risk). The ebbs and flows of the numbers were very interesting, as i was able to crunch years worth of task records for almost 3000 people.

i created a synthetic unit of account to act as a base for analysis. The question was, how many units to issue for each year - fixed, floating, indexed etc. After much playing i settled on indexed to average salary as the most useful indication of relative rises and falls between departments. This is by popular terms non-sound money. Through this work i came to revise my opinion of sound money, and inflation. i was a gold-bug, but its very hard in a practical sense to make systems work with a constrained base, when what you need is liquidity (i worked for a bit on a liquid concept of risk transfers, but it was not a core requirement). Unless liquidity matches the rate of underlying potential asset-exchange growth you will have a fiscal constraint on economic activity. This constraint is in favour of the conservation of genuine assets, but not in the overall development of the system.

I agree that non-backed money enables the controllers of that money to pick from its users pockets in many ways each day, but i now believe that the time and magnitude of mis-match of market adjustments between fiscal and economic requirements makes the loose money pragmatically better on balance.... with the exception that we currently do not have sufficient accountability in the system to ensure the moral corruption that the system allows is controlled.

The system is pragmatically useful on balance for society, reduces the individuals grasp on their wealth, but needs a lot more openness to cleanout those who are feasting on fiscal wealth creation without adding products and development to the economy.

Peter Piper said...

We are looking at Time Bank in NE Ohio. Time Bank sponsors have told me that they do offer products as well as services through the bank. For example: a pot of Chili may have taken 4 hours to prepare and resulted in 8 jars produced, therefore one jar of Chili would be worth 1/2 hour in the Time Bank.
With what's coming down the barrel, it may be the only "legal" form of exchange we can manage to put together for products and resources - that, and the black market.
Finally I wanted to mention that there is a big rally coming up in 34 locations in the US on 11/22/08 called ENDTHEFED.

GOD bless Americans.

Anonymous said...

What is the point of having a central authority issuing "Ithaca dollars"? Why not just let everyone issue "gift certificates" backed by their own services? A doctor could issue a certificate worth 1 hour of his time, a lawyer could issue a certificate worth 1 hour of his. One side effect is, if their customers are happy, their currency goes up in value.

Scott Keller said...

Whenever anyone says "the only way" or in this case "the only true way" then you know the person isn't thinking or is trying to divert you from trying to think for yourself or at a bare minimum just doesn't understand reality. There is never only one way.

The value of any "money", including in the form of metal coins, is arbitrary. It is set by the group of people using it. The only way that gold or any other "precious" metal has value is if we say it does.

Money is a means of exchange only. Anything that serves as a means of exchange for any particular group of people serves the same purpose. Some methods are more efficient than others of course and I can show a method that uses no cash at all and provides the most incentive of any that I've heard of for contributing to society and doing the best possible to come up with better ways of doing things and where hard work truly means something and manipulation of the "money" is not possible.

Scott Keller
Candidate for Congress, 2010

Anonymous said...

Using metals as currency is just as arbitrary as fiat money. Fiat money runs the risk of poor management by the governing body, but metal currencies run risks too. When you peg your currency to gold, you are completely at the whim of the international gold market. Gold has no inherent worth; it's worth is set by the intersection of demand and supply and both these forces can change dramatically leaving your currency vulnerable. No system is perfect, but in a growing economy using actual metals means that prices will constantly need to depreciate which will hinder further growth.

Paul Glover said...

For Ithaca HOUR information from the source:

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