How Do You Print Your Own Money?
By Steve Gillman
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
"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
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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