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:
- Use sound money (gold/silver/copper) and not unbacked fiat paper.
- Boycott the Federal Reserve completely by avoiding income taxes.