The number of times a single dollar bill changes hand is the velocity of money....the greater the velocity of money, the greater any economies efficiency

Increasing the velocity of money is the only way to increase the gross domestic product of any economy without inflation.  

There are no efficient ways yet known to increase the velocity of money through National Monetary policy.  

Community currency has one purpose, to motivate persons to spend the same dollar as often as possible within the same community

until it is no longer practical to do so....this increases the velocity of money, retains community wealth, promotes jobs, lowers costs of living,

and increases economic prosperity.  On a small scale, this can be done efficiently.  On a large scale, it cannot.  

Community currency is legal if it does not resemble national currency, and if its intention is not to replace the federal currency.  

The IRS requires that printed or hard local currency be equated to a dollar value in terms of Federal Currency.  

Income in the local currency is taxed the same as income in the Federal Currency.  

A business that accepts local currency can deduct the difference in exchange rates as a promotional cost for the business.  

An individual must either spend the local currency at face value with local merchants or exchange income in local currency for Federal Dollars,but cannot

deduct the 5 cent difference in exchange rates from their taxes.   

In the Suburbs of Boston, the Berkshare model has a proven track record of success.  Its only purpose is to motivate an increase of patronage

of local businesses.  Accepting the local Berkshire currency is optional, backed by Federal Currency , and can be exchange out

for Federal Dollars at any time with local bank branches or non profit currency exchanges handling the currency conversion.  

 The "Berkshare" model is is still in operation in the suburbs of boston and all other communities that have adopted it

 even after increased banking regulations following the subprime fallout.  

with over 12 branch banks in the berkshire area of boston exchanging berkshares, it has averaged an increase of over $200,000 in liquidity per branch 

without one cent of bailout fund.  more info on community currency is available at the following link. 

Rough Logo design for MKE Exchange with an awful background