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Money vs Currency

Understanding how local currency is legal & possible in the U.S.

Carl Mullan

on 18 March 2014

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Transcript of Money vs Currency

"Oh my God, he's trying to print his own money....we are all going to jail!"
Money vs Currency: Bridgetown Bucks
A medium of exchange is an intermediary which is used in transactions or trade that allows the parties to avoid the inconveniences of a pure barter system. Currency, is anything that can be used between two parties as a medium of exchange.
Currency generally represents some form of agreed upon stated value.
What we know to be absolutely true and legal?

(1) If you owe, you can be required to pay in Legal Tender. That's a debt. You cannot pay the IRS with Disney dollars, they will require legal tender, U.S. dollars. It is within their legal rights to require you to pay in U.S. dollars no matter what denomination notes you have or how many coins you present. For a debt, legal tender is used.

What else do we know to be 100% accurate and legal?
(2) If you are out shopping around Portland and you offer that store operator something other than U.S. dollars as payment and they agree to accept it...that is 100% legal. That is a private transaction.
Currency is anything that two parties agree to accept as a medium of exchange.
Money is created and issued by the government


Local community currencies such as Bridgetown Bucks, Berkshares, ThePLENTY, Ithaca Hours and others are currency, NOT MONEY.
However, in everyday business, currency can be any accepted medium of exchange.
Try to envision the world like this....Money...is something that the government creates and the government requires us all to use their money in certain transactions.
This is called legal tender. It is illegal to try and create a copy of government money or pass something off as being government money.

Here are some examples of currency.
In most prisons, bills or coins are not permitted to circulate and for a long time, cigarettes were used as currency. Since the 1980's Tobacco products have been banned in many prisons.
When visiting Walt Disney World theme parks, anyone can buy little dollar size slips of paper displaying images of Mickey and other Disney characters on them. These are known as Disney Dollars and are used as currency inside the park. They have a value equal to $1 U.S. dollar.
Is the Disney Company trying to compete with the U.S. dollar?

Of course not...everyone recognizes the Disney characters on the fun looking notes. Visitors to the parks(Users) understand that the Disney currency only works with participating vendors inside Disney locations.

(1) The currency does not look like U.S. Dollars.
(2) The currency is only valid in the small park area.

During the Oregon Brewers Festival every July, round wooden tokens are used as currency inside Waterfront Park.
In some African countries diamonds are today used as currency.
Freshly panned grams of gold are used as currency and traded for food.
Berkshare notes are a local currency in the Berkshire region of Massachusetts. Berkshares are accepted as having a 1-to-1 value with U.S. dollars at over 400 participating local merchants. http://www.berkshares.org/
An October 2008 Wall Street Journal article tells us that federal inmates around the country have been using cans of mackerel as a standard currency. Called the "mack" in prison lingo. This was their medium of exchange inside the prison.
Today, there is a shortage of government issued money in the Solomon Islands. Consequently, dolphin teeth are used as currency.
Currency can be anything...
when both parties in a private transaction consent to accept it.

You can't force the party to accept it. The transaction must be voluntary.
Are there legal limitations on creating and using currency? YES.
These restrictions come from the Federal Government.
(1) It cannot look like government issued money
(2) It cannot be in denominations smaller than $1.
(3) It cannot be in coin form
(4)You cannot pretend that your currency was issued by the government or try to pass off as government issued money. For example you can't hold up a home made currency and say "the Treasury just minted this new currency" That is the crime of uttering.

Government issues money
Anything else that is used as a medium of exchange we can call currency
Restrictions and limitations on making & using your own currency but they are pretty much common sense.
Main Presentation & Examples
Berkshares are CURRENCY not money.
What do Berkshares have in common with Disney Dollars?
The notes do not look like U.S. dollars (gov. money)
The value is of one unit is equal to one U.S. dollar
The notes only circulate within a small area
Portland, OR-- It's 10:30 am, I walk down to a pod of food carts, some are just opening and I want a sandwich. I order my favorite turkey sandwich and the vendor says, "that will be $10 dollars."
=10 $
Yesterday, I had just flown in from vacation in Europe, I reach into my pocket and take out some loose cash and it's a wad of Euros, so I offer to pay him with 10 euro.
He says NO, we don't accept that money, that is European money, this is America I only accept legal tender U.S. dollars."
I say to him, "Ok, let me check my pocket again." and I find a crisp new $100 dollar bill.
I present the $100 bill and say,
"here you go, $100 U.S. dollars, take it out of this."
He says, "are you crazy, I've just opened and I don't have change for that, you can't have this sandwich" and cancels the order.
I say, "but this is $100 U.S. Dollars, legal tender you have to accept this, the government says so and prints it right here on the note, ...this note is legal tender for all debts, public and private." You wanted dollars and I'm paying in legal tender U.S. dollars you are required by law to accept it.
Can he decline the transaction and turn me away when I'm paying with government issued legal tender U.S. dollars?
He says, "this is NOT payment of a debt, this is a private transaction.
Both parties here don't agree on the terms
I don't want your big bills, I disagree with your terms.... go away."

The vendor is correct and well within his rights.
Can I force him to accept the $100 bill legal tender U.S. currency?
Private transactions are entered into voluntarily.
Each party must voluntarily accept the terms of the agreement.
Either party can terminate the transaction if they are not happy.

This is not payment of a debt.

In a retail sale like this, if the vendor demands I pay him in $1 dollar bills and I can't, he can terminate the transaction.
We use U.S. dollars to pay for everything. At present, U.S. dollars are the most widely accepted currency in the U.S. and the world. When paying with dollars, both the store operator & consumer agree on its value. However, at the checkout counter, you may have coupons, gift cards, food stamps, in store certificates, S&H Green stamps, debit cards, credit cards, checks, dolphin teeth....whatever....you can use these because the store owner has already agreed to accept the terms. In other words, both parties agree.
What does this mean,
"....all debts, public and private."
What is legal tender?
Do you have any credit cards? When the bill arrives, you owe a debt and the company can require you to pay them in legal tender which is U.S. dollars. This is payment of a debt.
You have a VISA charge card, during August you ran up $1000 dollars worth of purchases (charges), when your bill arrives, you owe a legal debt of $1000 to the bank. This is a debt and they have the right to demand payment in legal tender, which is U.S. Dollars.
These are all debts.

Electric bill
Car payment
Home mortgage
Hospital bill
IRS Taxes
Personal IOU loan

A sum of money is owed and needs to be paid in legal tender.
When you visit a restaurant, eat a meal and get the check.....you now owe a debt because you already ate it, you completed the transaction. They can legally demand that you pay them in U.S. dollars.
Let's go back to the food carts. I still want a sandwich but the first vendor turned me down. So I walk one cart over which is the Egyptian food guy and he has just opened. I order a gyro and he says, $10 please. I still have a pocket full of euros, so I offer him 10 euros
He thinks about it for a moment.....
(10 euro is worth about $12.81 USD)

Knowing the exchange rate, he say, "ok I'll take 10 euros and you may have the sandwich."
Why didn't he demand U.S. Dollars, legal tender government money?
How can he legally accept any other type of currency other than of U.S. dollars?
Is he working for the Taliban?
This is a private transaction and we know that legally anything can be used as currency
as long as both parties agree.
There is no federal law which states that a private business, a private person or any organization engaged in a private transaction, must use U.S. legal tender currency or coins as the method of payment during a voluntary private transaction. Private persons and companies are free to create merchant policies detailing what methods of payment they will accept.
United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues. -31 U.S.C. § 5103
This is the basis for the legal use of an alternative currency. If you engage another party in a private transaction and they agree to accept payment in whatever you are offering, that's legal.
Currency vs Government Issued Money
Where can you spend Berkshares?
Participating Merchants in New Hampshire, Massachusetts, Connecticut, Vermont &
New York
Berkshares was launched in the fall of 2006.
That is six full years this local currency has been in successful operation without any legal issues from the U.S. States or the Federal Government.
Over one million BerkShares circulated in the first nine months and over 2.7 million have circulated to date.
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