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Hullcoin: an open letter

Dear Hull,

Congratulations on your courageous and historic decision to issue a new currency. In the little world of complementary currency geeks, which I inhabit, this is very big news besides which the Bristol pound pales. The last comparable initiative in Europe was in 1934 Austria; in the midst of a depression which gave succour to National Socialism, the town of Worgl issued its own currency which brought unprecedented prosperity to the town for 13 months before being pronounced illegal by far-off Vienna. A monetary museum in the town gives modest testimony to that moment of enlightenment.

Monetary activists agree on few things, but we are all celebrating your decision. We believe that what you are doing is a simple and obvious remedy for this perma-recession that makes it less and less possible for you to meet you commitments to your constituency.

I have no way of knowing the paths taken to arrive at your proposed methodology. There is clearly some 'outside the box' thinking, so I wonder: Do you believe that crypto-technology itself creates new economic possibilities? Do you wonder why no-one has done this before? how will you deal with concerns like, 'There must be a catch, otherwise the government would be telling everyone to do it!

Esteemed former central banker and Euro-deisigner Bernard Lietaer has spoken out about how alternative economists are professionally shunned and the subject of money issuance is relegated to the outermost margins of the internet. His design for a 'Civic' currency, similar to yours, is touted only by a few naive bloggers; the kind of credulous fools who rave about world peace, alternative cures for cancer, and false flag terrorism!

You have grasped that local authorities absolutely do have the capacity to issue credit and redeem it in payment of taxes and rents, in a way that individuals and businesses practically cannot. The Bristol and Brixton pounds mentioned in the media are actually doing something very different, and much less radical. They are not creating credit, only ring-fencing national money for the local economy, and the benefit is so slight it has yet to be quantified. What you are proposing is entirely different: creating new credit against your own reputation. It can be argued that credit creation is the ultimate economic freedom, so expect some pressure from the sanctioned credit creators who profit from booms and busts alike, and whose toes you are treading on.

This is why I call you 'courageous'.

I would like to share some other thoughts with you about your specific currency design.

I can argue strongly that cryptocurrency is the wrong approach for you. The intention behind Bitcoin is to remove the need for an authority who decides how much credit to issue and who is responsible for account-keeping. In contrast, your intention is to be a credit issuing authority. The cryptocurrency technology will, if you will pardon the pun, undermine your ability to control monetary policy and will leave your accounting system wide open to attack from other credit issuers who have, for the sake of argument, infinite resources for dealing with competitors. They only have to fork your blockchain, smear you and your incompetence in their media, and it could be many more decades before the next local authority dares to act upon such an idea.

Fortunately, you don't need anything so complex as a cryptocurrency to issue and redeem 'vouchers' to yourselves. Neither do you need Sterling reserves, because your ability to collect council tax and rent on council houses mean the vouchers can be redeemed by any householder. All you need is a ledger, (backed up of course), a basic online payment service, a simple smart-phone app and maybe some point-of-sale technology involving plastic cards. Such technologies are commonly used for local transport systems, time banks, or reward points, or local voucher schemes. In fact you might wish to look into how Curitiba, Brazil solved a garbage problem with trolley bus tokens, and even standard ideas of coined money are not the whole universe of possibilities.

I understood that you intended to stabilize the value of Hullcoin using some sort of backing. This is completely unnecessary. Your currency derives its value from the local authority's guarantee to accept it in payment and from the fact that every householder has to pay the issuer every year. You should simply say that one Hullcoin is accepted by the City as one pounds worth of services or taxes. The value can then fluctuate only according to the value of the pound, which is not your concern, or the confidence users have that your promised holds good. Merchants looking to pay their rates with Hullcoin will be very happy to accept it because it will require no extra accounting complications.

Another consideration is the meaning of volunteering. Doing work to pay the rent is not, morally speaking, volunteering, but servitude. Volunteers rewarded by Hullcoin may be exempt from income tax, but they will pay no National Insurance, no pension contributions, and have no job security. You can imagine the capitalists, considering the rising cost of Chinese produce, rubbing their hands with glee. Be aware you are opening up a new economic space which could be used to justify shunting people into a lower economic bracket. Social stratification has been reinforced when rich and poor used different currencies at many times in history. It is better than throwing the poor onto the sodden streets, but there is a risk of exacerbating the problem you are trying to solve.

In conclusion, I hope you will count me amongst your most ardent supporters, but hear me when I urge you to:

  • Retain control of your currency by keeping it centralised, flexible, and protected from the free market.
  • Use technologies and technology partners that you know and trust.
  • Educate your users how national money is made scarce in order to maximise profits for banks, and how Hullcoin serves the people of Hull.
  • Consult alternative economists to reduce your risk and improve your rhetoric because success or failure will likely have wider repercussions for the poor everywhere.
  • HM Treasury are surely unimpressed to read that "we're printing money I suppose". Let us work towards a happier outcome than befell Worgl.

In solidarity
Matthew Slater & friends



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