Mendo Moola
Mendocino Local Smart Money
“Show me the Moola!”
Our Companion Blogs
Published by Mulligan Books
Ukiah Blog→
The Contrary Farmer→
Locally-Owned Businesses Now Issuing Mendo Moola…
Mulligan Books→
Currently circulating MM$1,000
Ukiah Brewpub→
Currently circulating MM$2,500
Locally Owned Businesses Accepting/Circulating Mendo Moola:
Audrey Ferrell, SHP/E→
Daphne Macneil, HANDLE→ Practitioner
Drafting By Sharlene
Earth and Fire Pottery
Incognito Fun Store→
Jitterbox Music→
Local Flavor Bake House→
Mendocino Greenhouse & Garden Supply, RV
Mendocino Bounty→
Mendocino Lavendar→
Mendocino Twist→
Mendo Maté→
Michael Laybourn – Artist→
Oco Time California Japanese Cuisine→
Paula’s Hair Salon→
RespecTech→
Sue Browder
Tashe Andrea Kurland, Massage Therapy
The New Settler
Westside Renaissance Market
Yemaya Seaweed Company
Money connects buyers and sellers. Communities across the country and around the world are issuing local currencies, as they have for many years, to protect themselves against recessions, depressions, bank failures, tight money, credit crunches, risk aversion, hoarding, and leakage that dries up the money supply, kills jobs, and destroys local economies. The more money that is available to be used locally and kept circulating locally, the more jobs are created and the more a local community becomes prosperous and sustainable economically.
During the Great Depression, more than 5,000 local currencies helped keep Americans alive. Over the past two decades, over 2,500 local currencies have sprung up.
Over the past 50 years, the expansion of national businesses into local domestic markets, and now the Internet, has diverted and redirected circulating money to centralized corporate coffers. ‘Leakage’ occurs when, every night, money spent that day in chain stores is sucked out of our community electronically to their headquarters elsewhere. There it is spent on large capital expenditures, overseas goods, executive salaries, loan repayments, and dividends to Wall Street investors. This colonizing and interception of funds has depleted local small towns across our nation, especially in rural areas, of an important source of money: recirculated income.
Mendo Moola is a local, self-help, complementary currency that stays home with us here in Mendocino County, issued by individual, locally-owned businesses, and circulated only within Mendocino County. It is accepted in payment, and returned as change by participating, locally-owned farms and businesses, and can be used to purchase products, buy a beer and a good meal, give as gifts, pay babysitters, and hire landscapers.
The first local business to issue its own Mendo Moola currency is Mulligan Books in downtown Ukiah using $5 wood coins as change for purchases, and as gift certificates.
The Ukiah Farmers Market began issuing its own currency, Green Bucks, in $2 wood coins in 2008 backed by locally-grown food.
In March of 2009, the Willits localization group began issuing a paper currency, Mendo Credits, 100% backed by specific quantities of grains and beans. Mendo Credits are backed by a tangible asset… that is, Mendo Credits are a reserve currency as opposed to a fiat currency like U.S. Federal Reserve dollars. Many people are familiar with money backed by gold, which was once the case with U.S. dollars, but Mendo Credits are backed by reserves of stored food.
Mulligan Books also backs its own branded currency with tangible assets: its inventory of 25,000 books. As a double insurance of safety, Mulligan Books also guarantees that it will always return $5 in U.S. dollars for a Mulligan branded $5 coin when requested.
Every time money changes hands within a community, it boosts the community’s overall income and level of economic activity, and fuels the creation of jobs. The more times money changes hands within the community before heading elsewhere, the better off the community is. And spending money at a locally-owned business has a greater multiplier effect because they are more likely to respend their dollars locally.
By using Mendo Moola in trade — face-to-face, hand-to-hand — we are using money that never leaves our community as it does when using U.S. dollars and Credit Cards, thus facilitating additional exchanges in the local economy and making it possible to match unmet needs with unused resources. And unlike plastic and checks, the privacy of transactions remains private. The more it changes hands and the faster it circulates, the more local jobs, local businesses, and common wealth are created. $5 in Mendo Moola that changes hands 10 times in a month, is worth $50 in goods and services to the local economy. That’s money being smart!
These are first steps taken by locally-owned businesses that hopefully lead to producing our own paper money.
We encourage locally-owned farms and businesses to accept in payment, and give change, in Mendo Moola. Local currencies work best with continued use in local transactions between locally-owned businesses and neighbors. Ask local shops to accept it, ask for it in change, give it as gifts, and spend it first when you have it.
Make your money count… more than once.
“Show me the Moola!”
~
In this difficult time of failed public expectations, when thoughtful people wonder where to look for hope, I keep returning in my own mind to the thought of the renewal of the rural communities. I know that one resurrected rural community would be more convincing and more encouraging than all the government and university programs of the last fifty years, and I think that it could be the beginning of the renewal of our country, for the renewal of rural communities ultimately implies the renewal of urban ones.
But to be authentic, a true encouragement and a true beginning, this would have to be a resurrection accomplished mainly by the community itself. It would have to be done, not from the outside by the instruction of visiting experts, but from the inside by the ancient rule of neighborliness, by the love of precious things, and by the wish to be at home. ~Wendell Berry
~
We all think about money in very narrow terms. We believe that money is something our national government controls, and determines what we can use as money.
But the truth is that money is anything that people agree to use as a means of exchange, like the local money shown on this page that is produced and circulated by other communities like Salt Spring Island. If we choose to accept Mendo Moola in face-to-face, hand-to-hand payments, we will make it become real money in our community as they have done. Mendo Moola is not intended to replace our national currency, Federal Reserve Notes, and is not alternative money, but is rather complementary money that stays in our community rather than leaving it. The more often it circulates (changes hands) in our community, the more prosperous local farms and businesses become through The Local Multiplier Effect.
Mendo Moola can be issued by local merchants. Each participating merchant can issue its own currency with the full faith and credit of its own business. Want to know what backs the currency so you can be assured of its value? Look in the window of the issuing merchant. The goods and services of the merchant and service provider community backs the currencies… and they can be exchanged for Federal Reserve Notes at any time.
Mendo Moola Proposed Rules:
1. Mendo Moola (MM) as a Local Currency can be issued by any business, farm, or service organization. Initially, it is being issued in wooden coins and paper by merchants with a store front that stocks inventory. It is then backed by the full faith and credit of the merchant’s inventory and cash flow, and by the health of the community’s local trade.
2. MM is guaranteed by the issuing merchant to always be redeemed for regular money upon request by either customers or other businesses… although using MM to purchase products is preferred.
3. MM will only be issued by the issuing merchant into circulation as change, direct exchange for cash (not sold), or as “gift certificates”.
4. MM will not be initially issued into circulation by being “spent” by the issuing merchant for products or services, i.e. merchants will not use their own stored currency to purchase products themselves to introduce it into circulation. Rather, it will only be put into circulation by Rule 3. Rules 3 and 4 are to protect local currencies from inflating. MM accepted in payment can be used for any purpose once it has come back to the issuing merchant.
5. When accepted as payment, MM will be treated as cash in payment of a taxable or nontaxable product or service.
6. Merchants may treat their own branded MM on their books as Gift Certificates. Production of local currencies may be expensed as an Advertising Expense. Check with a CPA on these issues.
Circulation: MM can be put into circulation by exchanging $5 for a MM coin (not purchasing it as a product) at Mulligan Books, or accepting MM in change when purchasing books, and then using it to purchase at participating businesses and restaurants, or giving it to someone to be used like a gift certificate, or paying a babysitter or landscaper with it. It can also be accepted as change from participating merchants to be used again at another locally-owned business. Don’t “bogart” that coin, my friend. Keep it moving. We build local jobs and common wealth by using local currencies again and again.
You can also create and circulate your own branded Mendo Moola currency as Mulligan Books has done. It will get passed around the community, with your business or farm name on it, into and out of restaurants… into and out of local shops… and the more it is used to purchase local food and products, at your business, farm, and elsewhere, the more local jobs it creates, building our local community sustainability. You back your own branded Mendo Moola by promising to always exchange it back for regular cash when requested.
Why the ‘Local Multiplier Effect’ Always Counts
The Local Multiplier Effect (LME) is a very valuable, hidden feature of our economies. The term refers to how many times dollars are recirculated within a local economy before leaving through the purchase of an import. Famed economist John Maynard Keynes first coined the term “Local Multiplier Effect” in his 1936 book The General Theory of Employment, Interest and Money.
A Hypothetical Example
Imagine a hypothetical influx of money, say one million dollars, entering a local economy. Now imagine these dollars are spent on local goods and services. Imagine that each of the local vendors who earned those dollars then re-spends that money on more local goods and services. Envision this cycle happening several times before this money is finally spent on imports – goods or services from outside the region.
In this case, those one million dollars recirculating eight times would act much like eight million dollars by increasing revenue and income opportunities for local producers.
Now another scenario: picture that same amount of money being spent immediately at stores (or online) with businesses headquartered in other regions on imported goods. These transactions would add very little or no value to the local economy; one million dollars would act just like one million dollars instead of several million dollars.
History and Impact
Over the past 50 years, the expansion of national businesses into local domestic markets has diverted this vital monetary stream and redirected it to centralized corporate coffers. There it is spent on large capital expenditures, overseas goods and all too frequently inflated executive salaries. This interception of funds has depleted local towns and cities across our nation of an important source of funds: recirculated income.
It has been estimated that about a century ago, thriving industrial communities had a LME in the high 20s or low 30s. Today it’s estimated to be in the single digits. This reduction in the number of rounds that monies make has had an extremely negative effect on our local economies. All areas of community life are affected by this deficit. This lost treasure of local economies was never measured, monitored, managed or even acknowledged.
Besides the obvious poverty-related problems of unemployment, underemployment, homelessness, and lack of funds for social and public health needs, there is also the issue of creating an unhealthy reliance on a vast commercial network of imported goods. Many areas of life become vulnerable to natural or man-made disasters which can interrupt this flow of goods. Securities as diverse as food to homeland could be greatly compromised by this kind of dependence.
Two Studies of the Impact of Buying Local
Two recent studies–one in Austin, Texas, the other in Maine–compared locally owned businesses with nationally owned book stores as far as their impact on their local economies. They reached very similar conclusions: $100.00 spent at a national retailer yielded a return of about $15.00 to the local economy. However when that same $100.00 is spent with a local retailer it returns about $45.00 or 3 times as much income to the local economy. When further defined, these returns from the national chain store were usually in the form of lower-level service job wages.
Many factors are at work here. The large national chain store doesn’t buy local services or goods in most cases. On the other hand the local store does use local services such as accountants, bookkeepers, advertising, legal services, possibly office supplies and many other small incidental expenses.
Here’s what other communities are doing:
A shortage of the national currency (credit crunch), which is based on debt and endless growth, may occur — which many say caused the 1930s depression — or its mismanagement may inflate it to worthlessness. (Shortages are also caused by ‘leakage’ of our money when, every night, money spent that day in chain stores is sucked out of our community electronically to their headquarters elsewhere.) But as long as there are real needs to fill, food to grow and buy, work to do, stuff to make, and things to trade, there never needs to be a shortage or inflation of local money circulating in our community. Whether inflation (net increase in money supply and credit) or deflation (net decrease in money supply and credit), if pegging its value to the national currency becomes problematic, the backing of a local currency can be additionally strengthened. The more Mendo Moola gains in circulation as a percentage of currency used in the community, a multiplier effect kicks in that creates more wealth in the community. Following some of the links provided, you will read stories of how communities in bad financial times, when access to the national currency dried up, were able to recover and prosper with complementary currency while nearby communities floundered.
The purpose of community currency is to function on a local scale the same way national currencies have functioned on a national scale — building the local economy by maximizing circulation of trade within a defined region. Widely used in the early 1900s and again in the 1930s, local currencies are once again being recognized as a tool for sustainable economic development, and is in use by various communities all over the world. Local currency distinguishes the local farms and businesses that accept the currency, building stronger community relationships and a greater affinity between the farm and business communities, and the citizens of a particular place.
We, the people who choose to use our own community currency, make a conscious commitment to buy from locally-owned and regional farms and businesses first. We are taking personal responsibility for the health and well-being of our own community by laying the foundation for a truly vibrant, thriving local economy. Our use of Mendo Moola will help strengthen the regional economy as it has elsewhere, favoring local family farms, locally-owned enterprises, local manufacturing, and local jobs, by reducing the region’s dependence on an unpredictable global economy.
This is an invitation to create a community currency. Local money will only have value if the communities in Mendocino County decide to use it. We invite all of you, our neighbors, to join this new game creating our own local money, making a difference, and having fun doing it.
Triple Our Money Mendo Moola will be an initiative of Mendocino County localization groups, business enterprises, and financial institutions working together. Economic localization and community currency systems provide the opportunity to strengthen the local economy by promoting locally-owned farms and businesses, while preventing our money from leaking out of our community to parts unknown. Studies over the past ten years show that one hundred dollars spent at a chain store leads to only thirteen dollars staying in the local economy, while one hundred dollars spent in a locally-owned store leads to forty-five dollars circulating locally. Spending locally results in three times the income effects, three times the wealth effects, three times the jobs, and three times the tax income, before it leaves the community. And what if that money never left the community and kept circulating indefinitely, one hundred times, five hundred times, and more?
A local complementary currency encourages and rewards local spending, by local people and visitors, in local businesses. The anticipated benefits of Mendo Moola are:
- To build resilience and safety in the local economy by keeping money circulating in the region and building new relationships, creating more sustainable, independent communities.
- To promote our own locally-owned farms and businesses.
- To provide more local work.
- To get people thinking and talking about how we spend our money, and who we spend it with.
- To encourage more local trade and thus reduce food and trade miles.
- To encourage tourists to use local businesses.
- To support local food banks and homeless garden projects.
As MM picks up velocity it is making the economy of the community energetic and abundant in exchanges. A MM 5 dollar coin that changes hands 50 times in a month is responsible for generating $250 ($5 X 50) worth of trades. (also see The Velocity of Money.)
What about taxes?
Like U.S. dollars, local currencies are a legal form of taxable income. The Federal Reserve and the Internal Revenue Service have no prohibitions on local currencies, as long as their value is fixed to the U.S. dollar, the minimum denomination is worth at least $1, and the bills do not look like federal money. A well-developed, sustainable, regional economy which produces more for its own needs first is possible only when control of its resources and finances lies within the region itself.
Sales taxes are charged by merchants in product transactions using Mendo Moola just like any other sales transaction. Think of it as a gift certificate you buy from a merchant. No sales tax is charged on the gift certificate itself… it is an exchange of a $20 bill for a $20 gift certificate. But sales tax is charged on the product when the gift certificate is used to purchase it.
By accepting Mendo Moola, merchants are helping to establish markets for locally grown and made products, providing an incentive for the growth of small farms and locally-owned industries, while creating opportunities for those underemployed and unemployed to turn latent skills into local business ventures. A local currency that undergirds and builds the local community is only successful when it is consistently circulated, traded and valued locally. Whether times are dire, or times are good, a local, Mendocino County currency is an idea who’s time has come. What goes around, comes around.
Dave Smith – Mulligan Books, UkiahBlog.org
Does this mean if I use Mendo Moola at the local businesses listed they wont charge me sales tax.
Sales taxes are charged by merchants in product transactions using Mendo Moola just like any other sales transaction. Think of it as a gift certificate you buy from a merchant. No sales tax is charged on the gift certificate itself… it is an exchange of a $20 bill for a $20 gift certificate. But sales tax is charged on the product itself when the gift certificate is used to purchase it.