Property tax assessments are translated into escrow accounts as bids for the properties. These bids are denominated in the county’s currency. This establishes the county’s monetary base. Property owners have the option of accepting the bid and transferring the property right to the county in exchange for the escrowed bid. This imposes market discipline on the property tax assessment. The county can withdraw some money from one or more escrowed bids and spend it — which is to say transfer the money to an account owned by business providing goods or services to the county. When this is done, the tax base is slightly shifted from the assessed properties to the recipient of the funds, whose account is charged demurrage equivalent to property tax. The account holder can escape demurrage charges by placing that money in an escrowed bid, as a property tax assessment but only if it is the high bid for that property. Lower bids for the same property are charged demurrage.
There are existing open source solutions for local currency banking that include point of sale electronic transactions. The best known is Cyclos.
In the event that someone would find it tempting to go to the trouble to attack the small economy of a county, there are a variety of methods available to combat counterfeiting such as encrypted, optically scanned serial numbers combined with expiration dates. Nowadays a simple iPhone or Android app can take a picture of the serial number to verify it against the county’s computer, as well as the customer. The moment a counterfeit shows up, the investigation can begin.
An alternative is to simply go to an electronic point of sale system, sort of the way you use a credit card.
Counties are the smallest jurisdiction likely to contain substantial agricultural lands for the support of towns.
In the United States, the US Constitution prohibits States from issuing any form of currency except gold and silver. If a State has substantial gold and silver deposits, it may prefer to issue its own currency but few States are in this position.
Local currency without substantive backing always has difficulty with the essentials of life, and tend toward marginal services such as massage, acupuncture, horoscopes, etc. A county government can make its currency good for payment of taxes, which makes it valuable to providers of essentials in the local economy, such as grocers, land lords, etc. This, in turn, makes it easier for grocers to pay their employees, who need essentials, in county currency and for land lords to pay carpenters, grounds keepers, etc., who also need essentials, in county currency.
The county government would be able to expand the local currency “money supply” roughly as fast as its local economy grew without inflation. Thus if a county government could identify extremely high “return on investment” infrastructure investments it could help fund those by essentially printing money. If the county used that privilege of money creation irresponsibly, its currency would rapidly find itself “devalued”.
One major difference today is that the internet makes “currency exchanges” of county currencies much more practical than in the past. Also, currencies could be rated like local bonds are rated. Together these would mean it would be easy to spot problems with administration of county currencies rapidly.
The Nobel Prize winner Frederich von Hayek from the University of Chicago argued that citizens should be allowed to make transactions in any currency they choose. Von Hayek hoped there would be competition selecting the “ideal” currency.
Basically because, “It just isn’t done!” However, it has been done by towns with spectacular success. The most famous example is called “The Wörgl Experiment“. Why haven’t you heard of The Wörgl Experiment? Most likely you’ve been getting your education from the wrong sources. Much of what is written on the issue of money and banking is funded directly or indirectly by the Federal Reserve and other national central banks that have a strong vested interested in preserving that status quo. A de facto privilege on money creation is enormously valuable-and folks will work hard to maintain their special privileges.
With few exceptions* internal transactions within major corporations are free from taxation. Many of these corporations have economies far larger than most counties. Similarly, transactions within families are often exempt in practice(children don’t pay taxes on allowances given in return for doing household chores). The county currency approach simply makes the law correspond more closely with actual practice and gives local communities privileges similar to what major corporations have.
*For example, a furniture company may, in some jurisdictions, be taxed for taking office furniture out of its inventory for use in its own offices — as though a taxable sale had taken place.
The way the Federal Reserve issues currency is to make very low interest loans to favored banks. These banks in turn loan to other banks at higher interest, and so forth. If your county is far from the centers of power, it is at a disadvantage. A prime example of this occurred when, under the TARP bailout, the US government gave $700 billion to a number of favored central banks with the expectation that the money would be loaned out at low interest to keep struggling businesses afloat. Instead the central banks kept the money. Some of them even went so far as to buy assets at fire sale prices that were a consequence of the rising business failures resulting from those businesses being unable to find low interest rate loans. The motives may or may not have been greed, but the result was the same: People far from from the centers of power suffered needlessly. This situation can get so bad that some of the more marginal regions get depopulated or inevitably fall into dependency on the central government.