Printing Money

How would you like to start printing money to generate more income? There is a legal way to do so, and I am not using the expression metaphorically. I am talking about printing bills that can be used to pay for things you need. The catch? You have to have a business of the right kind.

I first saw this done when I worked at a pizza restaurant. I had seen the orange "pizza dollars" come in occasionally, but I didn't think much about it. They seemed like nothing more than 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 at some point. The dentist told him they owed around $95 for whatever dental work he had done. "How about I pay you $100 in pizza dollars?" The dentist thought about it for a second, mentioned that they always like pizza, and agreed. Hank took out a stack of 20 orange "bills," worth $5 each and handed them over.

A pizza-backed currency! Finally it struck me that this was a powerful concept. Now, if the dentist was going to buy all that pizza in the future anyhow, it didn't make much of a difference. Frank pays with cash or his special currency and gets it back either way. There would be tax advantages if he didn't count the "pizza dollars" as cash income, but that would be illegal.

The Advantage Of Printing Money

On the other hand, paying the dentist this way did guarantee $100 worth of business. That is the key here. The dentist may order more pizza since he has the pizza dollars. If Hank paid for yard work with them, and the landscaper didn't normally order pizza from Hank's place, this would mean entirely new business, again guaranteed, since the bills can't be used at other pizza places.

Now let's analyze this with an example. 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 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 realizes that she would lose $30 of that $100 to taxes if she was paid in U.S. dollars, and she has no intention of reporting the pizza-dollars as income (illegal, but it's her business). They really do save her the cash she would normally spend on pizza too, so she may actually come out further ahead this way. Certainly she is further ahead if this is the only way she gets the job.

Now, Hank had to get his house cleaned, and could just hire whoever would take the pizza dollars as payment. He pays $100 in his "special currency" to Mary, 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.

Other Currencies

This works best if you have something that is commonly purchased and fairly low-priced. 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 handyman may be more than willing to take $200 in "hardware dollars" for fixing your fence.

Printing costs are not a big deal. You can design the bills to fit four to a page make photocopies for eight cents each in bulk. That means they'll cost you about two cents per bill - and they are reusable as log as they're in good shape. Small bills are a good idea, and you have to decide whether to make change in regular currency or print on them "no change made."

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 the business he needed to "pay" for everything.

Depending on the nature of the business, you might get a "special 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.

If eventually you had $20,000 in gas dollars out there in the community, you would have that much more cash earning interest in the bank - another benefit to printing money.