Thursday, 3 January 2013

What is "money"?

It's a question I ask every intro tax class, and so I am always on the lookout for stories like this one, about a small city in Greece developing an alternative currency. The headline has it wrong--this is not bartering, rather it is substituting one exchange medium (Euro) for another (tem); either currency could fail, both are subject to inflation, etc. Also I don't get the impression that these are desperate people bargaining over staples, even though the headline calls them "impoverished"--but I could be wrong. Whether intended or not, the use of alternative currency is likely a tax dodge since no one is presumably collecting VAT in Euros on a sale in tem. So it is surprising that the mayor is encouraging this.

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