The UMKC Buckaroo: A Currency Model for World Prosperity

It's been more than 10 years since the economics department at UMKC (University of Missouri at Kansas City) introduced its own currency. It's called the buckaroo, named in sync with the school mascot, the kangaroo.

It all began when the department indicated a desire to have students contribute their time to community service. I suggested they do it by introducing a new currency, which would both, for the most part, accomplish the intended purpose and give the students and up close and personal knowledge of currency dynamics.

It works something like this (with variations by specific class):

• All students are required to submit 20 buckaroos by the end of the semester to get their grades. Buckaroos can be earned by doing designated community service jobs.
• There is no limit to how many buckaroos a student may earn.
• Buckaroos are freely transferable.

First, a bit of history. In the late 1990's, when the program began, it was reported that students had exchanged buckaroo with each other at a price of $5 each. More recently, buckaroos have been reportedly exchanged for $15 each. Therefore, by that measure, the buckaroo has probably been the strongest 'paper currency' in the world, outperforming the S & P and most other investments.

There has always been 'full employment' in that any student can work for and be paid buckaroo at the designated community organizations without limit. There has been a zero interest rate policy since inception, in that the UMKC does not offer interest bearing buckaroo deposits.

The UMKC has run a continuous fiscal buckaroo deficit in that, from inception, it has always spent more buckaroos than it has collected. The value of the buckaroo has been 'internally stable' from inception, in that one buckaroo has always been able to purchase one hour of student labor.

The buckaroo has been operating continuously in a small, open economy, with multiple other currencies trading around it simultaneously. There has been continuous full employment with no capital controls, no trade restrictions, and no banking arrangements.

Furthermore, it has been obvious to the students that:

• The buckaroo is a (simple) case of a public monopoly;
• The UMCK's buckaroo fiscal deficit is exactly equal to the buckaroos saved by the students and their associates;
• The value of the buckaroo is a function of what the students have to do to earn a buckaroo from the UMKC work doing one hour of community service;
• The buckaroo functions first to move student labor from private to public domain and
• The buckaroo has operated and sustained its public purpose independently of foreign central bank policies.

Additionally, the students have recognized how variations in outcomes from the utilization of other currencies can be traced directly to variations in the policies of the issuers of the various currencies. For example, it's obvious to the students that if the UMKC attempted to run a fiscal surplus -- spend fewer than the 20 buckaroo per student it requires as payment to get one's grades -- the results would be highly problematic and counter to public purpose.

It's also obvious to the students that if, for example, the UMKC started paying 2 buckaroo per hour rather than 1, the buckaroos would probably exchange for $7.50 each rather than the current $15.00 each. They also recognize how problematic it would be if UMKC limited its total buckaroo spending to anything less than what the students wanted to earn to be able to both pay the required tax of 20 buckaroos and save buckaroos as they may desire.

The students also recognize that if the UMKC decided to buy other goods and service with buckaroos from willing sellers, they could do that, but that said purchases would tend to reduce the student labor that the community service providers would attract. The UMKC, as well as the students, have failed to identify any public purposes that may be served by having the UMKC pay interest on buckaroo savings, so the zero interest rate policy remains in place.

The students fully recognize that if the UMKC ends the 20 buckaroo tax, the buckaroo will have no further value. The students have gained an awareness of how, for example, wealthy students can opt out of community service by purchasing buckaroo from more needy students. They have recognized how the issues of theft and corruption influence the currency and people's lives.

In general, the buckaroo has been a fully functioning currency that has directed student labor to community service, and at the same time, provided an invaluable educational experience to the students. It's also has made it obvious that the world's leaders and their economists are necessarily subversive and/or ignorant.

 

 

 

Follow Warren Mosler on Twitter: www.twitter.com/wbmosler

Comments

[Feliperezende]

04:05 PM on 09/26/2011

While I taught at UMKC in 2008-2009, I adopted the Buckaroo program. It represented a valuable opportunity to show students how modern monetary systems work and the implications for public policy while introducing a service-learning component. It debunked myths and students could actually experience the known effects of a type of fallacy of composition, that is, that the federal government, just like a household, must balance its budget. Among other things, students learned that the imposition of taxes (and that the tax obligation be settled in Buckaroos) creates demand for the UMKC's currency (i.e. “tax-driven money”). The program's insights are useful to understand how our economic system actually operates and by understanding its operation policy-makers can develop proposals to deal with policy issues such as unemployment and inflation.

[Si1ver1ock]

07:56 PM on 09/23/2011

Great story, well told.

[smcconnell]

11:24 AM on 09/22/2011

This program broadens the students understanding regarding the operations of modern money. It seems many colleges and universities advocate a greater involvement with the local community. This program kills two birds with one stone. I am currently using a variation of buckaroos at the small liberal-arts college where I currently teach. This is an excellent pedagogical tool and promotes community service. Thanks Warren!

[chris wroth]

12:02 AM on 09/22/2011

So, if the US gov desired income tax collections of 4 trillion, and accepted tax payments only in tax credits, and offered training and work (paid only in tax credits) to all willing and able workers, at the level of the local living wage, and those workers sold their surplus tax credits on the open market - what would happen? Full employment? Would the market price of tax credits go so high as to make the living wage workers rich workers? Have any UMKC students written about the buckaroo system as a macroeconomic idea? Or is that what MMT is all about?

[Warren Mosler]

09:35 PM on 09/22/2011

The dollar is already the nation's buckaroo

all we have to do is offer a federally funded job at a fixed wage to anyone willing and able to work and the deed is done.

see my proposals at www.moslereconomics.com thanks!

[triggeraway]

10:49 PM on 09/21/2011

Can we make Congress use the Buckaroo program in DC? Maybe this will help them understand how money really works.

[umkcsteph]

12:38 PM on 09/21/2011

I also have had great success with the buckaroo program. My students started trading buckaroos for US dollars (establishing their own little foreign exchange market). It was a great way to integrate civic engagement with academic learning. Warren is one clever guy!

Prof. Kelton, UMKC

[Yeva Nersisyan]

11:16 AM on 09/21/2011

I got my introduction to the buckaroo program as a graduate student at UMKC and since then I have used it in every class that I taught. It helps students understand that government spending has to come before taxation. The tax is imposed at the beginning of the semester but they can't pay it because they don't have buckaroos. They are only able to pay their taxes once they earn the buckaroos, i.e. once the instructor has paid out (spent) the buckaroos. Great teaching tool that can be modified to also demonstrate how monetary policy, treasury bond sales and quantitative easing work.

[sienaa]

10:53 AM on 09/21/2011

this is very interesting.
A great test of full employment idea and spending-on-demand policy - and their consequences: limiting demand and need of borrowing; allowing to concentrate on public purpose, instead of made-up concerns like "balanced budget".

[Oliver Dreher]

10:03 AM on 09/21/2011

Yes, it is true that the buckaroo program is a very nice working MMT model, and I have enjoyed being a part of it. !!! But now is the time for the formation of the great amalgamated RSLU, local 1 (Roo Student Labor Union) and we have a list of demands !!! We want first to be recognized, we want to collectively bargain the buckaroo wage and benefits of our fellow student workers, we want a say in the scope of work responsibilities and availabilities, and we want our own Roo Labor Credit Union!

"The power of the Buckaroo issuer concede nothing without a demand !!!, there will be power in the roo-student-labor-union"

[jown]

12:08 AM on 09/21/2011

A dingo told me that there is a large synthetic buckaroo shadow banking system. All sorts of instruments: Cassowary Commercial Paper, Quokka Swaps, Brolga Bonds, Tasmanian Tiger T-Bills, Yabby Equities, Frilled Dragon Futures; you name it, they'll make it.

Also heard reports of counterfitting, a.k.a. the "Wallaroo"

(yeah right, okay ... there was no dingo ... )

Warren, thanks for all your work (MMT and other) and your continued relations with UMKC.

Yeah, this semester I get the opportunity to get some Buckaroos. Such good options for service, hard to decide! (bake, food pantry, literacy, art fairs, etc.; I'm excited, as it's nice to be engaged and part of)

[ptcherneva]

11:45 PM on 09/20/2011

I ran this program in every one of the classes I taught at UMKC during 2003-2006. It provided invaluable economics and civics lessons to my students. Most importantly it demystified modern money. Students immediately grasped how taxes create demand for a seemingly useless 'paper currency' and how that currency can be managed for the public purpose in a way to maintain 'full' employment of labor resources at stable prices.