Everett, Wash.
Published: Sunday, September 28, 2008

Fourth Corner Exchange does away with cash

For members of the alternative currency system, 'Life Dollars' are as good as gold when buying goods and services.

By Debra Smith
Herald Writer

 Karen Erickson has scored fresh vegetables for her kitchen, found plants for her garden and learned to make cheese -- and she didn't spend a dime.

She did pay, but she didn't use money.

The Snohomish woman is part of a fledgling alternative currency system that has its members get goods and services by giving them. The system, called Fourth Corner Exchange, is based in Bellingham and it includes more than 600 members, most in Northwest communities. About 35 members live in Snohomish County and the number is growing.

Here's how it works: Members bank "life dollars" for the goods and services they give other members. Members can post what they want in an online forum as well the services and goods they have to offer. A life dollar is worth about $10, and sellers set the price at whatever they think the service or item is worth. No physical currency is exchanged; life dollars earned and spent are tracked online.

Members pay a $45 annual fee to join and Fourth Corner, a registered company, wants that in dollars. The money is used to administer the site.

Erickson is making a dress for another member. She helped clear land and taught someone else how to maintain a computer. She sold a dozen hand-made wooden cutting boards.

"Sometimes you don't have the money but you want to learn how to do something," she said.

Erickson preferred this system to bartering, which she said left her shortchanged in the past. Fourth Corner allows her to bank hours and spend them as she wishes. She also likes how the system forms a community.

"The best part is you have the opportunity to know the people you trade with," she said.

The Fourth Corner Web site includes dozens of offers, some mundane and others creative. Offers include use of vacation houses, handyman services, belly-dancing lessons, tools to make fishing lures and acoustic guitar lessons. One person offers to teach how to navigate the Bellingham public transportation system. Under the "Freebies" section, someone else offers the filbert nuts on her tree to anyone who wants to gather them.

Francis Ayley, a native of England who worked there as a psychotherapist, started Fourth Corner in 2002. The first members began trading in 2004. Ayley has no formal education as an economist but he said he spent years boning up on economic theory and local currency systems. A conversation with his grandmother about the Depression inspired him to question how money and the economy work. A conference in Scotland introduced him to the idea of local currency systems.

Not long afterward, Ayley founded an alternative currency system in London called North London LETS (Local Exchange Trading System) in 1991. When he left for America in 1999, LETS had about 600 members, and it remains active.

The problem with dollars, or any other traditional money system, is dollars are a scarce commodity, he said.

"We've been told a pack of lies by economists about who we are and how we function," he said.

Myths about how monetary systems work and Americans' stalwart independence are hurdles for any alternative currency system succeeding in the United States, he said.

Most Americans believe that the federal government creates money, he said. The government prints dollars and mints coins, he said, but under the fractional reserve system, banks also create money by offering loans that aren't necessarily limited to the bank's reserves. In essence, banks can loan money they don't have, and that creates a situation where there is always more debt than dollars.

Large corporations and financial centers drain money away from local communities, Ayley said. This stifles trade in small communities and leads to a host of problems, including unemployment.

The fractional reserve system used in the United States has served modern economics well, said James McCusker, an economist and a columnist for The Herald. The Federal Reserve keeps commercial bank reserve requirements higher than would be needed to take care of withdrawals, and the requirement allows banks to make loans to individuals and business owners to increase the level of economic activity, he said.

"Think of Jimmy Stewart's building and loan in 'It's a Wonderful Life,' " McCusker said. "The depositors' money wasn't in the safe but invested in the homes and businesses of Bedford Falls."

People commonly believe money is "value neutral," meaning it doesn't affect people involved in its exchange, Ayley said. He doesn't buy it. He said dollars promote anti-social behavior because the money system is based on competition, greed and individual gain.

In contrast, he said a local currency system promotes cooperative values, goodwill and altruism. There's always enough to conduct all the exchanges anyone wants to make and life dollars are immune to inflation and recession.

It's perhaps a radical idea for many Americans but not a new one. People have bartered for ages. In more recent times, others have tried local exchange systems. Ithaca Hours, a time-based scrip system, started in 1991 in and around Ithaca, N.Y. Since then other similar systems have popped up in other cities including Fort Collins, Colo.; Flagstaff, Ariz.; and Lawrence, Kan.

The problem with the Ithaca system is all activities are judged equally, Ayley said. An hour of weeding is given the same value as an hour of work by a skilled carpenter or a software designer. That type of system tends to cut out professionals and others in specialized trades, he said.

Since 2004, members have traded 50,000 life dollars. Ayley bought his car using life dollars. However, no one using Fourth Corner Exchange is using life dollars exclusively. The network of members isn't large enough.

That's one of Erickson's only complaints about the system. With only about 20 families to trade with in the area, it's difficult to find the things she'd like. For instance, she wants to find someone to replace her car windshield but so far no one has stepped forward.

Reporter Debra Smith: 425-339-3197 or dsmith@heraldnet.com.
© 2009The Daily Herald Co., Everett, WA