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Brooklyn Starts Printing Money; Shockingly, Not the Counterfeit Kind

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Local currencies are getting popular -- but they won't goose the economy.

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There may be an ironic twist here because some say artists are the world's most successful entrepreneurs, considering the junk they sell at hefty prices to a gullible public. In any case, Andy Warhol demanded greenbacks.

The Brooklyn funny money's design will be whimsical. Suggestions include a mustache, an ice cream cone, a man with lighting bolts coming out of his eyes and a woman holding her finger over her lips saying, "Shush!"

Good silly fun, but such designs raise a basic problem: counterfeiting. The enterprise wouldn't attract Mafia heavies or international terrorists looking to finance their next attack, but it would be a good Saturday afternoon enterprise for clever kids with an Apple (AAPL) computer, a sense of design and a touch of anarchy – especially if the local currency can be exchanged 1-for-1 for dollars and then spent on important stuff like movies, t-shirts and skateboards.

The possibilities are endless for a band of kids intent on sticking it to their intellectually flatulent elders. But this hasn't been a problem in Ithaca, New York, where the Ithaca Hour has been used since 1991.

"Right now, there's a lot of interest because of the economy, but a lot of these efforts come about to rebuild social capital," Ed Collom, a sociology professor at the University of Southern Maine told the Los Angeles Times. "There's been concern about lack of trust, neighbors not knowing each other. They see this as a way of neighbors helping each other."

Maybe. But there's a proven method to goose the economy: low tax rates, low regulation, and a nod to spending restraint.

Reagan's tax cuts in the 1980s launched the biggest economic boom in history. It wasn't perfect and eventually led to the Internet bubble and had a hand in the housing bubble. However, the recent $787 billion "stimulus" bill is beginning to look like a government bubble and massive government spending could knock the dollar of its perch as the world's reserve currency. Funny money, anyone?

There's no need to fret about any of that nasty real world stuff when the romance of a local currency beckons. At its best, a local currency represents the greenest of organic economies, the romantic dreams of "community" in a world increasingly homogenized by mass marketing.

Just don't build your kids' college portfolio around it.
No positions in stocks mentioned.
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