COjacks, a Colorado Currency, Starts Circulating Tomorrow

CoJacksfront2.jpg
Meet Colorado's own local currency, COjacks.
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.

See also: Handmade Homemade Market joins forces with EarthLinks

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?

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.



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209 comments
DonkeyHotay
DonkeyHotay topcommenter

"$80 for one hundred COjacks" coupled with the 10% exchange limit on retail purchases means that the initial buyer of COjacks is only realizing a 2% (TWO percent) discount on their retail purchases ... and COjacks is pocketing the entire $80!


This is the perfect scam for the math-challenged under-educated brain-dead bong-sucking stoners in Colorado!


Hey Lori Midson -- how many COjacks will fit in a shipping container swimming pool??


LOL!

FakeCashInvestor
FakeCashInvestor

I'd love to buy stock in your company, and pay for it with CoJacks I received at a discounted rate.

DonkeyHotay
DonkeyHotay topcommenter

###############


The liquidity flaw in your exchange system is obvious, and will grow exponentially as businesses accumulate way more COjacks than they can exchange/spend with other member businesses, exacerbated by your 10% exchange limit per transaction.


Basically you are selling third-party  "discount coupons" -- pocketing the $$ -- and the businesses are absorbing the cost of the discount, on the hype/hope they *may* be able to exchange some of those coupons with other participating retailers, who themselves will soon be awash in surplus accumulated COjacks (coupons) they receive from their customers.


Since there is no limit on how may COjacks you -- the currency (coupon) seller will/can print, and you pocket all the U$ currency without providing any liquidity or buyback for the COjack currency / market -- this scheme will require a Ponzi level of continuous new retail members to keep it from sinking under the weight of the essentially worthless COjacks that the retailers will soon accumulate.


#################

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Grickle
Grickle

Hi, I'd like to thank everyone who has commented in this thread so far (even the really angry people with unreasonable comments, you guys make me look that much more brilliant and composed).  I've addressed most of the common concerns that people have about COjacks below.  Below you will find detailed explanations of how COjacks effects inflation (or doesn't, rather), the positive effects of reduced liquidity, and so forth.  


Thanks again for working with us to build a resilient economy for the state of Colorado.


Deacon Rodda

COjacks co-founder

Brien Benjamin
Brien Benjamin

Ithaca New York has been running a local currency for a long time with great success.

Steven M Palmer
Steven M Palmer

Nobody seems to pay much mind to that old document anymore... That's a shame because it's the original blueprint for our nation.

Liliana Pimentel
Liliana Pimentel

parecem as moedas de alguns bancos comunitários brasileiros

Scott Prather
Scott Prather

And let me guess , u have to pay real money to get the fake shit? Is that how it works?

David Brown
David Brown

I still think digital would be easier, It's very easy to download a wallet and start using it. Wouldn't be till hard to develop a wallet/coin for CoJack. Paper money seems antiquated. Is cool either way, but, I'd be more likely to use a digital currency.

Winston Smith
Winston Smith

Reminds me of MileHighHours Currency - Support Local Trade With Local Money

Forrest Calhoun
Forrest Calhoun

Printing more currency makes our money worth less...

Christopher J. Martinez
Christopher J. Martinez

Any Idea an Entrepreneur has and launches is worthy if a chance - some work - some don't - I'm gonna frame em - as a souvenir - and who knows - maybe it will catch on - The biggest risk in life - Is Not taking One -

Steven M Palmer
Steven M Palmer

It is against the law (US Constitution, Article 1, Section 10, Clause 1) for states to coin (print) their own money except in gold or silver coins to pay debts.

David Brown
David Brown

A digital currency would have been smarter.

Melissa Taylor
Melissa Taylor

There isn't a single business that accepts them that I would patronize.

DonkeyHotay2
DonkeyHotay2

@DonkeyHotay If the businesses are not treating it as real money, and not accepting more than 10% for a purchase.  Then it's not a currency.

DonkeyHotay
DonkeyHotay topcommenter

@FakeCashInvestor


... I'll sell you some coupons that you can use to purchase those COjacks ... they're called Cuckoo for CoCoJacks.

Grickle
Grickle

@DonkeyHotay Well let's see if you've got the stuff.


I'm running a dog kenneling facility, and all of a sudden I get a load of customers in who all want to use COjacks.  Let's say I receive a ten percent influx in business due to the COjacks exposure, but over all 30% of my customers are now paying 10% of their tabs in COjacks (because 20% of my existent clientele started using COjacks heavily), and my margin on sales is only 12%.  


How much money in USD and COjacks did COjacks make my business?  What's the opportunity cost on the lost liquidity?  And what is my profit margin now, in USD and COjacks?


Here's another one.  You just started a web development company.  80% of your costs are either sunk or fixed.  You're at -2% profitability, and you have 47% excess capacity.  How can COjacks hurt your business.


Here's another.  You're running a small neighborhood non-profit that helps at risk youth.  You're struggling to make ends meet consistently.  And you just found out that your federal funding is being cut dramatically from the previous year right after you signed on as a 30% acceptance member with COjacks.  How are COjacks going to hurt your organization?  


What do you got?  Break it down.


D.R.

Grickle
Grickle

Please clarify your point of concern.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Please be more specific.  We'll answer all the questions we can.


D.R.

Grickle
Grickle

Hi Scott,


I'll thoroughly answer pretty much any question that wasn't exhaustively answered in the article.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Hi Eric,


I'll thoroughly answer pretty much any question that wasn't exhaustively answered in the article.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Hi Tony,


Was there more to that?


D.R.

Grickle
Grickle

Hi David, you're not wrong.  Digital would be easier in many respects.  We decided to go paper to start for a few reasons.  One of them is that there are a lot of antiquated things that we (all of society) really might have given up on a little prematurely.  Namely, doing business with one's neighbors, and using cash.  It's a strange thing to think about, but have you ever considered how much money leaves the local economy just through card swipe fees?  Using debit cards, which are less costly to the economy than credit cards, money has a half life of a little less than thirty transactions.  What that means is that if a group of people who only did business with each other had $500, and they all spent that money with each other using debit cards, after thirty transactions (of the entire amount of money) they'd only have $250 left.  That's just from swipe fees, and doesn't include taxes, or other expenses.


Cash spending is good for the local economy.


Also, we're all very isolated and individuated from each other right now.  A person using COjacks via a phone app doesn't end up talking to the person behind them in line who saw them pull blue money out of their wallet.  So, yes, there's a big marketing benefit for us in the exposure.  But our benefit is directly married to everyone else's, and the community conversation that this cash currency can spark will help us all to question some of our base assumptions about economics, and how isolated we can really afford to be.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Hi Stephen,  see the above reply to David about cash spending is actually much better for the economy.


Thanks for your interest.

D.R.

Grickle
Grickle

Hi Winston,


Yes, Hours are another form of complementary currency, and they're probably a little better at giving people a taste of community organized monetary systems, because they have virtually no barriers to participation.  That's something that the Hours designers really did well.  

Of course, every currency design comes with tough decisions about priorities.  When Hours were designed ease of adoption was gained at a sacrifice for credit creation capacity, and other systemic concerns.  This doesn't mean that either currency is better than the other, only that they solve different problems because they were designed to address different economic problems.  Think about medicine.  People have always wanted a cure-all solution, and have always been taken advantage of by people offering just that.  This is where we are now with money.  If one was to think that the Hours model, or the COjacks model, alone was the solution for all of our monetary needs they'd be making the same mistake that got us into this dismal state in the first place.  (If you don't think that we're in a dismal state you're not focusing on the magnificent world we could have if we solved our silly problems.)


We have a very unhealthy monetary ecosystem right now.  We have different currencies in circulation, with many different mechanics (gift certificates, postage stamps, cigarettes, reputation), but they're mostly very small and all dominated by the dollar.  The dollar's mechanics aren't really the best for connecting all of the unmet needs with untapped resources.  The dollar stimulates growth, at any cost.  That's the only thing it does.  It doesn't care who or what is crushed in the process.  Sometimes you need growth.  Sometimes you need a safe and healthy environment.  The dollar is a little clumsy when it comes to safe and healthy.  It's like trying to treat all illnesses with only steroids.


The Hour model can solve, to a certain extent, the dis-empowerment that people feel about money.  But it can't solve under employment as address in the above article.  It can't do this because addressing under-employment requires large amounts of money.  Hours are issued to businesses at an equivalent value of $100/3 month period.  That's like adding one new customer to a restaurant who only visits once a month, and tends to eat alone.  That doesn't even keep up with our 2% inflation rate.  It doesn't hit the bottom line, and thank goodness it doesn't, because Hours are printed in composite CMYK ink on 32# text weight paper.  If there was ever any significant liquidity built into the Hours system it would collapse under the the insecurity of being the most easily counterfeited currency since  . . .  actually I don't think there's ever been a currency as easily reproduced in the entire history of money.  And that's okay, for what the hour is.  The founding principle of the Hour is that people should recognize that the power to create credit comes from them, so counterfeit away, but I don't think you're ever going to be able to pay for newspaper advertising, or your internet bill, in a currency that anyone can make in any quantity. 


(Yes, you can pay for internet access in COjacks - today). 


Deacon Rodda

COjacks co-founder


Grickle
Grickle

Hi Forrest,


Thanks for your interest.  Inflation is a kind of complex issue, but it actually isn't possible for COjacks to devalue the dollar.  There are several ways of explaining this.  The best is to look at how inflation happens at the M1 level, as a result of commercial bank and Federal Reserve interactions.  But the simplest way to explain it is that COjacks are issued in astronomically low quantities compared to the growth of the global supply of USD.  Also, total COjacks issuance is capped at 10% of Colorado GSP.  When you think about that compared to the total monetary supply the threat of inflation becomes somewhat laughable.  - even though it doesn't seem intuitive at first.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Thank you, Christopher!


This bun has been in the oven for a long time (a little over three years right now), and if it works out we all win big, even the vitriolic trolls in this thread will reap the benefits of an enriched local economy.  If it fails completely no one really loses but us.  If a member business buys a few COjacks, and gets few new customers, and the whole system breaks down in three years, than they've still won out, but we're out of an enormous investment, and many years of our lives.  


It's always nice to see that some people recognize what that means.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Steven,


COjacks are a privately organized currency, not a project of the state of Colorado.  


D.R.

Grickle
Grickle

Thanks Becca,


We're going to put a lot of thought into that valuable, and insightful critique.  If you have any further thoughts or concerns we'd love to hear them.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

We get this question a lot.  Obviously, it's intuitive to think that a Colorado based currency would be tied to marijuana.  At the moment I don't know of anyone who sells marijuana and accepts COjacks, but it's cash so anyone can accept it.  


Unfortunately, all of the agencies that really manage currency and trade are federal.  This means we have to play by Uncle Sam's rules, so COjacks cannot at this time accept marijuana related businesses as members of the network.  The flip side to that is that COjacks really isn't well suited to help grow houses and dispensaries very well.  Those businesses are all inundated with cash, and looking for a place to put it.  COjacks doesn't offer deposit accounts, so we can't do much for the main financial issue that is really hurting that industry.


I hope you found this helpful, and when you do find someone who sells weed for COjacks let us know.  That would allow me to shorten the answer to this question considerably.


Deacon Rodda

COjacks co-founder

Grickle
Grickle

Sorry Melissa,


I'm guessing - then - that you took the time to look through all of the businesses listed on the business member page of our site.  So thank you very much for spending that time considering COjacks.  The network will grow, and there may be someone at a latter time that interests you.  


Thanks again,


Deacon Rodda

COjacks co-founder

DonkeyHotay
DonkeyHotay topcommenter

@Grickle ... your hypothetical and completely fictitious micro-examples do not address the macro-liquidity problems of rapidly accumulating and nearly worthless COjacks in the back offices of the retailers who take them in way faster than they can possibly re-spend them at other retailers -- further subject to your arbitrary 10% exchange limits.


You're selling third-party discount COUPONS, pocketing all the real $$, and hyping the possibility that some initial early retailers might be able to re-spend a small portion of them at other retailers ... until the limited market is soon flooded with more COjacks -- that you've sold at nearly 100% profit -- than can possibly be spent.


Have you checked with Mr. Ponzi on this? You may owe him a royalty.





Grickle
Grickle

@DonkeyHotay Well, if you're not going to answer - or even explicate - the question, than this conversation may no longer be of any value to the audience of readers other than yourself.  The questions I posed was a direct response to your concern about this "mounting pile of coupons", which - by the way - coupons are also technically a form of currency.  If we can't discus the finer points of that concern than we can only digress to direct contradiction, which does not make for much of a debate.  


Thank you, though, for helping with the hype over that last couple of days.  Now that it is officially Monday I need to get back to the real work of COjacks.  This thread did prove very helpful.  With all of this attention, and clarification of minor details we managed to add a law firm and a commercial farm to the network just today.  


We have a speaking engagement this Thursday, 6pm at the Grow Haus.  Please come and shout angrily from the audience.  It will help to make the evening more interesting.


Deacon Rodda

signing off 

DonkeyHotay
DonkeyHotay topcommenter

@Grickle "which - by the way - coupons are also technically a form of currency."


Sure ... so are sea shells.



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