COjacks, a Colorado Currency, Starts Circulating Tomorrow

When the phrase "buy local" is uttered, what does it really mean? Friends Deacon Rodda and Brok McFerron spent a long time thinking about the concept and saw many opportunities within the local business community to make "buy local" a true reality. So on Friday, August 22, Rodda and McFerron -- along with an ever-expanding network of businesses -- will launch COjacks, Colorado's own local currency.

Working in conjunction with the U.S. dollar, COjacks is an alternative currency that will circulate only within businesses in its network, providing the groundwork for a truly regional-specific, sustainable local economy. To find out how, exactly, this new currency will work, Westword chatted with Rodda about the vision behind the creation of COjacks.

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Westword: What is COjacks?

Deacon Rodda: It's really simple in terms of the premise: It's a localization incentive. We have a lot of "buy local" campaigns that are done by different organizations and networks that are (represented by) stickers and T-shirts. But none of those actually create an incentive system, so we are still in a situation where big-box stores always have the price advantage. We've created a system that gives anyone who is privy to it or exposed to it a mechanical reason that their life can be immediately improved by supporting local businesses. That's the idea.

It's a currency, backed by a business-member agreement. Any business that decides to become a COjacks member can agree to accept just 10 percent of any given transaction in COjacks at face value; prices don't change. By becoming a COjacks business member, that business can buy COjacks at face value for their own spending, but they also get services from COjacks. They are also plugged into this network where anyone who has COjacks on them has the incentive to spend with their business or any other local business in the network.

So it's not a direct replacement of the government-issued dollar?

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It is a currency unto itself, but it is not a replacement for the U.S. dollar at all and has no intention of replacing the U.S. dollar. It is an augmentation. The U.S. dollar works for what it was meant to do -- it was designed for a purpose, which was to stimulate growth. The only reason for the issuance model for the dollar was to stimulate economic growth. There's a lot of collateral damage when you have a system that is just designed to add rocket fuel perennially. It is designed to drive consumption.

It has a lot of problems; it only incentivizes the profit motive. Because dollars are issued as debt and interest, every dollar that comes into the economy is married to two or three dollars of debt. So there is always more debt in the economy than there is credit, which is what stimulates growth. If people have debt to pay off, they need money. Money is always scarce because it is issued at a deficit. More people take out more loans to cover more needs, but if people have needs and debt, then we always have to be adding more and more of this fuel.

The net result is that people just pass it -- it creates this rat race thing that we accept as a given. It's that whole thing like, a fish doesn't really know it is in water. We feel like it is a given that the economy is always a rat race, but actually the only currency type we have is one that is married to a lot more debt. With the COjacks system, there is no debt involved. It actually augments a bit of how a dollar works.

This system says you are a business who is providing goods and services to people, so you should be able to get more credit without taking on more debt burden. A business can buy COjacks at half of face value and what that does is take one dollar that was married to two to three dollars of debt. It's like throwing extra chairs into musical chairs. Those extra dollars only recirculate within this one network. Anyone can accept the cash currency, but with COjacks, since we are only giving membership to local businesses, the incentive to use COjacks is that it keeps it local. Keep reading for more on COjacks. It's interesting how we function daily with money -- I myself don't even think about where it comes from. I guess I think about it from the rat-race system perspective you're describing.

When we think about the birds and bees of money, it gets a little fuzzy, right? Where does money actually come from? How does it get into the economy? Look at your paycheck -- how did you get your paycheck? Your business or whoever you work for made some amount of money. Where did it come from in the beginning? Well, it came from a commercial bank that made a business loan or issued a mortgage or student loan. That's where that money actually got created.

Even with credit cards -- you swipe a credit card and the money that goes into that business's account actually was created when you swiped the card. It didn't exist; it didn't come out of an account anywhere. It's created at the point of purchase. Now what that does is it gets new money into the economy. You get a student loan, that money gets created for the sake of covering that loan -- but what do we know is the counterpart to that?

When you look at a chart of how many countries are in how much debt, every single country in the world is in trillions of dollars of debt. How can they all be in debt? How can everybody be in debt? That doesn't make sense. But it does because that is where money comes from -- it comes from getting $100,000 to buy a house, but you have to pay back $200,000 over the lifetime of the loan. Where does the extra $100,000 come from? It comes from somebody else's mortgage. Where does the extra money to pay off their mortgage come from? Somebody else.

So from the consumer's perspective, why would someone want to participate in using COjacks and how would they want to do it?

A couple of reasons. If you live in Colorado and can show that you live in Colorado, you can buy COjacks at a discounted rate. You can buy COjacks at a four-to-five ratio, so if you give us four bucks we give you five COjacks or say $80 for one hundred COjacks, like that. That's one reason -- and of course that reason only really applies to an initial purchase of COjacks. Once you start spending them and if you're receiving them for one-to-one services, then that doesn't do it anymore.

But the main reason for an individual is actually the "rising tide" principle; it's the same reason a person wants to wear a "Locavore" T-shirt or go to their local farmers' market. If we create and encourage local spending amongst people we do business with and people we interact with, everybody has more money. If the money moves around fast enough and in a tight-enough circle, everyone gets their needs met.

One of my favorite examples of this is from Bernard Lietaer, a transition economist -- (paraphrasing) a guy walks into a hotel and says he's going to be in town for the evening and he wants to look at the hotel room, but he's not sure he wants to stay there. He throws a hundred dollars on the counter at the hotel and tells the hotel manager that he's going to walk upstairs and check out the rooms. The hotel manager grabs the hundred dollars, runs into the kitchen and pays his cook. He says, sorry this is late. The cook says it's okay, runs to the back door and pays the grocer and the cook says hey, sorry I'm late on the grocery bill. The grocer says thank you, turns around and pays the prostitute standing on the corner and says thanks for last night. The prostitute runs back into the hotel and puts the hundred dollars back on the counter and says this is for my room.

The original guy walks back down the stairs, decides he doesn't like the room, takes his hundred bucks and leaves. Everyone in this group has things they can do to meet everyone else's needs. But we basically live in a situation where we've agreed that we will only meet each other's needs if we have money. But none of those people actually needed money to do things for each other, but the money showed up and cleared all the debt and everyone went back to zero, right?

The problem would be if someone (was involved in this circle from) completely outside the community. The hotel manager would look awkward in front of the guy who doesn't want a room (because the money would be gone). So if we have a system where we can create recirculation loops, then we can meet all of each other's needs with a small amount of money. Let's just say that we only ever issue $100,000 in face value of COjacks -- what it would do is put a few COjacks in everybody's pocket along with all of your dollars or whatever. Then everybody in that network who has a few COjacks might look inside their wallet and say, I'm going to go out to the bar and I have a few COjacks, so I'm going to go to the bar where they are accepted. It keeps on going around and everyone's needs are met. That's the idea.

So when a consumer buys COjacks, where does that money go to?

It goes to COjacks. COjacks is an LLC, a business. This is one of the funniest questions for me, because people assume that we are making a ton of money, which is a great pun. We've been working on this for three years (and not making any money in the process), so when people ask, "Where does the money go?" We're like, "There is no money!" (Laughs.) But of course we launching on Friday, so it hasn't even really started yet. With the money that comes to COjacks, we spend a lot of it with COjacks members, like for our launch, which is in a COjacks venue. The DJ playing is a COjacks member; the food is from a COjacks member. We will take that money and spend it with COjacks members to buy things that we need and you know, pay ourselves, so we can keep doing this.

We also offer a concierge service to all the COjacks members, so it also pays for that. Any COjacks member can call COjacks and ask for, say, a bushel of organic strawberries. We do our best for them -- we don't have any guarantees. We aren't as immediate as, say, a hotel concierge. But we try to help everyone with whatever they need; it creates a symbiosis. Then we can call around to a bunch of farms and say, hey, we're calling with the COjacks network and we're trying to source something for our members and then we can tell that farmer, if they aren't in the network already, about COjacks.

What is the ultimate goal for COjacks overall?

The COjacks goal really is to ease the debt burden and to make communities more self-sufficient. We are looking at a lot of projections made by economists and scientists that show a very grim economic future. Right now, unemployment is on the rise but it kind of gets covered up by the Department of Labor, because it is mostly underemployment. Most people in the economy aren't working at their full capacity in terms of time or training. Many people are overqualified for their jobs.

What that means is, somebody pays for a law degree but they are working at a bookstore. So they have law degree debt and bookstore income, which is kind of the norm right now. It's going to get a lot worse. I was watching a documentary recently and there are studies showing that we are going to lose about 40 percent of jobs in the next twenty years -- total jobs lost just to machines and robots. That is not including off-shoring, not including economic problems. That is just in terms of computers and robots taking over the labor force.

So we look at things like that, which are very bleak. But at COjacks, we have policies in place about the kinds of local businesses we accept into the network. Say a franchised McDonald's wants to join the COjacks network -- they are a Colorado-owned company, technically, but they pay people minimum wage and they make the community poorer. So if we can get people involved with each other in a network where they are used to spending in a tight-knit community, that community will be a lot less affected by this decline in the job market.

Someone might say, hey, I want to go to the grocery store and check out from the self-checkout machine. Or, I can go to the GrowHaus (and work with real people) and spend COjacks there. We get people used to spending with businesses that aren't impoverishing their own community, which will ease the burden on everybody involved. It's very simple -- it is just about economics.

COjacks officially launches this Friday, August 22. For more information on how to be a part of the COjacks network, visit the COjacks website and Facebook page. Be my voyeur (or better yet, let me stalk you) on Twitter: @cocodavies

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