How Do You Print Your Own Money?


Can you create an alternate currency and use it to actually buy goods and services? Yes, you can effectively print your own money, and do so without worrying about counterfeiting laws. Tax laws are another matter though, and there is a catch if you want to try this. The catch is that you have to have or start a business of some sort. Let me explain...

I first saw one of these alternate currencies many years ago when I worked at a small pizza restaurant. I saw the orange "pizza dollars" come in occasionally, but I didn't think much about it at first, because they seemed like nothing more than coupons customers could use. But I did notice that some people had enough to pay for their pizza in whole, so I realized that these were not being used as mere coupons.

Then one day a man came in to pick up his pizza, and the Hank, the owner, came out from the back to greet him. The man was Hank's family dentist.

"How much do we still owe you on that bill," Hank asked him at some point. The dentist told him they owed a balance of about $95 for whatever dental work he had done. "How about I pay you $100 in pizza dollars?" Hank suggested. The dentist thought about it for a second, mentioned that they always liked the pizza here, and agreed to the deal. Hank took out a stack of 20 of these orange "bills," each worth $5 each, and handed them over.

This was essentially a pizza-backed currency (who needs a gold standard)! Finally it struck me how powerful this concept really was. If the dentist was going to buy all that pizza in the future anyhow, it didn't make much of a difference to him to be paid in this way. Whether Hank paid him with cash or this special currency the restaurant would get it back in time. Of course there would be an obvious tax advantage if he didn't count the "pizza dollars" as cash income, but that would be illegal.

On the other hand, maybe the dentist might have started buying pizza someplace else. Who Know? By paying the dentist this way Hank guaranteed himself $100 worth of business, and that is the important point here. The dentist might even order more pizza than normal since he has the pizza dollars.

Consider another example. What if Hank paid for yard work with this "money" he has printed, and the landscaper didn't normally order pizza from Hank's place. He would again be guaranteeing himself entirely new business since the pizza dollar couldn't be used at any other pizza places.

Now let's analyze this in more detail with one more example. Suppose Hank needs his house cleaned, and Mary, the cleaning person, says it will cost $100. Hank offers to hire Mary if she'll take $100 in pizza dollars. They are good for pizza and anything else the restaurant sells, and they never expire. Mary wants the business, so she agrees. She orders pizza at times anyhow, so the value is almost the same as cash in the end.

In fact, Mary might realize that she would lose $30 of that $100 to taxes if she was paid in U.S. dollars, and she might have no intention of reporting the pizza-dollars as income. This is illegal, but it isn't up to Hank to worry about her compliance with tax laws. The bills really do replace the cash she would normally spend on pizza, so she may actually come out further ahead this way. Certainly she is further ahead if this is the only way she can get the job from Hank.

Meanwhile Hank, who wanted his house cleaned, can just hire whoever will take the pizza dollars as payment for their services. He pays $100 in his "special currency" to Mary or to someone else, but what does it really cost him? His fixed costs for providing the pizza (rent, utilities, insurance) don't go up. His "food cost" runs around 28% of retail, and there might be extra labor cost if he does this much. Labor costs normally run around 24%, but efficiencies go up with more business, so we'll figure an extra 20%.

In other words, the cost for providing the pizza that backs that $100 in special currency is just $48 (a little more after printing costs for the bills). Assuming that Mary is a new customer, Hank just got $100 of cleaning done for $48. Additionally, he introduced Mary to his pizza. She might continue to buy it after the pizza dollars run out.

Printing Other Currencies

You need to have a business of some sort to print your own currency, but not just any business. This works best if you sell products or services that are commonly purchased and not very expensive. Nobody is likely to take "auto dollars" if you sell cars, because if you pay them $100, they can't get anything for it without adding thousands of their own money. On the other hand, if you have a hardware store a plumber may be more than willing to take $200 in "hardware dollars" for fixing your sink and toilet.

Printing costs are minimal if you do this right. You can design the bills to fit four to a page make photocopies for about six cents each in bulk. That means they'll cost you less than two cents per bill - and they are reusable as long as they're in good shape when you get them back. Small bills (worth one and five dollars) are a good idea, and you have to decide whether to make change in regular currency or print on them "no change made" or "change made only in additional business currency," or something similar.

Yes, you are effectively printing money. But what you really do is increase business. Imagine if Hank paid for everything he needed, right down to rent and flour, with pizza dollars. Not possible, of course, but if it were, Hank would need no regular cash, and the bills themselves would basically guarantee all of the business he needed to "pay" for everything.

Depending on the nature of the business, you might get a alternate currency like this to circulate among third parties. For example, suppose you had a gas station and paid for things with "gas dollars," redeemable for gasoline at your station. Everyone needs gasoline, so perhaps the dentist you paid in gas dollars could pay his gardener with them.

Now what if you eventually had $20,000 in gas dollars out there in the community? Since you used these bills in place of regular cash, you could have that much more in dollars earning interest in the bank. This is another benefit to printing your own money. When I worked at a small casino many years ago, they regularly had many tens of thousands of dollars in chips unaccounted for in the building; they were in the pockets of customers who planned to return and gamble. I even saw a man pay another with the chips once, with both obviously trusting that they could be cashed in for regular dollars any time.

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