[Tlc] T-economics

[justinm at ucr.edu]

Forwarded from Al Valentine.
Thanks,
justin

http://online.wsj.com/article/SB123128312320458913.html?mod=googlenews_wsj
By JAMES HOOKWAY
SANTI SUK, Thailand -- One way to beat the world's credit crisis: Start printing your own money.
The villagers of Santi Suk began creating their own cash here on the sun-bleached plains of northern Thailand following Asia's financial crisis a decade ago.
Decorating their money with children's sketches of water buffaloes and Buddhist temples, the villagers conceived it as a do-it-yourself attempt to protect themselves from the whiplash of vast outflows of speculative money which undermined local currencies and threw Thailand -- and much of Asia -- into recession in 1997-98.
View Slideshow
[SB122907431457301509]
James Hookway/The Wall Street Journal

Children's sketches of water buffaloes and Buddhist temples decorate Santi Suk's currency.
At the time, some villagers faced questioning before Thailand's central bank and were accused by local government officials of plotting a secessionist revolt.
Now, with Thailand's economy slowing sharply, the DIY cash is beginning to flow freely again.
"We need our own money more than ever now," says Phra Supajarawat, the wiry, orange-robed abbot of the local Buddhist monastery, who doubles as a "governor" of Santi Suk's tiny, one-room bank. "Things are turning bad in Thailand and people need something they can believe in," he says.
Homemade currencies, sometimes known as community or complementary currencies, have a habit of popping up during economic crises. Some towns in the U.S., Canada and Germany introduced their own scrip during the Great Depression. Similar schemes have emerged more recently in Japan, Argentina and Britain.
One of the more successful programs has been in Berkshire County, Mass. Residents there pay $10 to get 11 "BerkShares," which are widely accepted in local stores, encouraging people to shop at home instead of using dollars to buy goods online or at large retail chains. Launched in 2006, BerkShares are still being used.
The idea is that by using local currencies, residents don't spend so many dollars, Thai baht or euros, thus helping to keep more resources within their communities. And because local currencies can't be banked away to earn interest, users keep spending it, providing a boost to their area's economy.
Pattamawadee Suzuki, an economics professor at Bangkok's Thammasat University, has studied the phenomenon closely. She says she is unsure whether there really is a significant financial benefit to using local currencies such as that used in Santi Suk. "When times are good, villagers prefer to use Thailand's national currency," she says. "But there is a very strong social benefit to using local currencies," Ms. Pattamawadee adds. "That place, Santi Suk, is more self-reliant than other rural areas of Thailand. They don't depend on remittances from relatives in Bangkok."
Many villagers -- who use the local notes as a means to barter for everyday goods -- corroborate Ms. Pattamawadee's analysis. A visit to the village's early morning market reveals a brisk trade in freshly harvested vegetables and a couple of butchers are hard at work selecting cuts from a side of beef. Shoppers haggle and gossip, clutching scrip depicting local rural scenes.
"We've learned to depend on our own work," says Buasorn Saothong, a robust 54-year-old rice farmer, who also dabbles in creating herbal hangover cures. ("Just chew on this paste and five minutes later you'll throw up and feel much better," she says.)
Over the years, there has been stiff opposition among Thailand's authorities to the Santi Suk villagers' experiment. The central bank, the Bank of Thailand, declared the villagers' currency "a threat to national security" in 2001 and brought Phra Supajarawat and other villagers to Bangkok for a scolding. "If groups in the country issue something that might become a currency, it's not allowed," says Chatumongkol Sonakul, who was governor of the Bank of Thailand at the time.
The villagers of Santi Suk launched their currency, which they called "bia," the local dialect word for "seedling," in the wake of the 1997-98 crisis. At the time, many were struggling with debt problems and were receiving fewer and smaller remittances from relatives working in the Bangkok area because of the financial crisis.
Two young foreigners from international volunteer organizations, Canadian Jeff Powell and Dutchman Menno Salverda, visited the area and suggested the villagers adopt a local currency to better manage their problems.
The villagers agreed. They approached Phra Supajarawat, now 68, to be the governor of the new village bank, which still consists of a safe housed in a hut that the villagers are happy to open up for anybody who wants to see the stacks of local currency piled inside. A competition was held among the local children to see who could come up with the best designs for the village's new money.
A few months later, in 2000, local government officials and police officers arrived in the village. Phra Supajarawat went along to see what the fuss was all about. Government officials told him he was treading on the toes of the central bank. "I thought, 'Oh no, the police are going to arrest me for counterfeiting,'" he recalls, laughing.
That didn't happen. But over the following months villagers, including Phra Supajarawat, were regularly taken to Bangkok to explain their rogue currency to the authorities. In the meantime, Santi Suk's "bia" notes went underground, used in secret by a handful of families.
In 2001, Nakorn Chompoochart, a lawyer with Thailand's Law Society, offered his services to help the villagers start circulating their currency again. "I told the villagers that people in other countries also had their own local currencies, and that if anybody tried to prosecute them, I'd defend them," he says.
Phra Supajarawat says Mr. Nakorn's offer of legal support gave people of Santi Suk the confidence they needed to persevere. To this day, no legal cases have been filed against them, although to make their currency absolutely legal, Thailand's Ministry of Finance would have to officially authorize its use. That still hasn't happened. A spokesman for the Finance Ministry declined to comment.
A breakthrough came when Phra Supajarawat learned from the central bank that one of its biggest objections to the villagers' currency was its name. The term "seedling" -- "bia" -- was the same as the word for "money" in the central Thai dialect used by the central bankers in Bangkok.
So the villagers changed the name of their currency to the Thai term for "merit" instead, and circulation began to steadily increase. The government dropped its objections, and Santi Suk-style currencies have since begun to slowly spread across the rest of northeastern Thailand as neighboring villages adopt the idea. Other villages are switching to barter trade for business instead of using Thailand's national currency, says Ms. Pattamawadee, the economics professor.
Today, interest in Santi Suk's monetary experiment is picking up again. Visitors from other parts of Thailand and nongovernment organizations are streaming into Santi Suk to see how it works, despite the currency's murky legal status.
"It was a big coup for us when the local rice mill began accepting it," says Ms. Buasorn, the hangover expert. "The mill is the focal point of the local economy. It means other people now realize our money is a real alternative."
Write to James Hookway at james.hookway at awsj.com

______________
Dr. Justin McDaniel
Dept. of Religious Studies
3046 INTN
University of California, Riverside
Riverside, CA 92521
951-827-4530
justinm at ucr.edu