[EdSharkey]

Sounds like a stimulus sugar rush to get them out of a funk.

When national currencies collapse, local communities that issue scrip to facilitate ongoing commerce fare well.

https://en.wikipedia.org/wiki/Scrip

[imtringued]

It's not a stimulus or sugar rush at all. The effectiveness depends on how much the government is artificially constraining liquidity. If the government is massively intervening with austerity policies, then the effect will be large.

You should think of it more using the transaction cost based approach. Government money is artificially scarce, therefore it has high transaction costs, therefore it hinders trade instead of facilitating it.

The purpose of the scrip is to issue a money that isn't artificially scarce so it's transaction costs are low. In this way you don't get a stimulus, rather you are getting rid of dead weight loss. A guy pulling a rickshaw is naturally going to fall behind someone who can walk without baggage. The point isn't to make the runner faster or stimulate his performance via some sort of doping.

[EdSharkey]

> Government money is artificially scarce

Wot? Not sure how to respond to something so silly. I hope you mistyped. From whence does one derive their "money supply"?

Scrip is a placeholder for value like any other printed currency. It works well in place of debased government fiat, at least in times of trouble, because the web of trust at the local level is strong enough to back individual transactions.