looks to me like it is the foolish businesses who accept this crap at par get screwed.....
“One day, you decide to go out for a nice dinner. You go to the bank to purchase BerkShares to spend at a local restaurant. You go in with 90 federal dollars and exchange them for 100 BerkShares. You go to dinner, and the total cost comes to $100. The restaurant accepts BerkShares in full, so you pay entirely in BerkShares. Therefore, you’ve spent 90 federal dollars and recieved a $100 meal - a ten percent discount for you. The owner of the restaurant now has 100 BerkShares. They decide that they need to deposit them for federal dollars and return them to the bank. When they bring them to the bank, the banker deposits the 100 BerkShares you spent on dinner and gives the restaurant $90 federal dollars, the same 90 dollars that you had originally exchanged for BerkShares. The end result? You recieve a ten percent discount because of the initial exchange, but the same $90 you originally traded for BerkShares all goes to the business where you spent those BerkShares.”
found at
http://www.berkshares.org/localcurrency.htm
I'm not so sure. For simplicity's sake, let's say there are two restaurants in this town: a local eatery and a Ruby Tuesday. The Ruby Tuesday, being a national chain, will naturally get a lot of business, probably at the expense of the local eatery. So, in an effort to attract more business, the local guy decides to accept BerkShares, knowing that customers might be more likely to eat there if they get a 10% discount. Ruby Tuesday, being a national chain, probably won't accept BerkShares.
So the local guy figures that he'll forego 10% of his profits for additional business. Seems like a straight-forward calculation, but not so fast: let's assume that for a $100 meal, most people would pay by credit card, not cash. The restaurant pays a fee for accepting that credit card transaction, and, depending on the card you use, could be as high as 4% or 5%, not to mention the fixed cost he pays for the equipment that handles the transactions.
So when he accepts BerkShares, which are "cash," he only loses maybe 5%-7% on the meal, rather than the seeming 10% because he's not paying merchant fees to the credit card company.
Seems to me like it's a reasonable calculus for the business owner: they'll make up the discounts in volume. Same idea as a business that prints coupons.
“looks to me like it is the foolish businesses who accept this crap at par get screwed.....”
LOL! You’ve never worked in “retail” have you? :) Actually, it’s the poor customer who pays in “cash” that gets taken. ;)
it seems that the point is that regardless - the money stays local.
Only in the sense that businesses "get screwed" when they print coupons, give premiums for gift cards, or offer discounts to certain groups (for example, most motels have a AAA rate, and many tourist attractions offer a discount to local residents). There's nothing new about offering a discount -- and 10% is a pretty modest one -- to bring in business.