Plan: Building Local Education Wealth
How can we keep the positive aspects of financial investing while also lifting up local communities and making currency more resilient?
Public school districts across the United States experience significant wealth extraction through contracts with large national education vendors (Which are frequently actually healthcare vendors). While these vendors often deliver necessary services (e.g., special education, curriculum, consulting), a substantial portion of public funding leaves local economies, weakening community economic resilience. Additionally overall costs have grown exponentially due to the aggressive and binding nature of these arrangements.
School districts receive public funds intended to educate children and support communities.
Yet a growing share of those funds:
Flows to large national vendors
Is converted immediately into external profit
Leaves the local economy with minimal reinvestment
And the share has grown exponentially in recent years
How Money Works: The Need for Flow
Historically, carrying gold and silver was impractical, so Alexander Hamilton helped formalize paper credit and debt through a national bank. Early colonial land laws focused on use: land only held real value (In their system) when people lived on it, built on it, or rented it.
Currency works the same way. In order for it not to be "dead stock", It must keep moving.
Every loan creates both a credit and a debit on a ledger. Interest incentivizes people to lend, multiplying the money in circulation. In fact, our entire money system is built on an active imbalance: you borrow money, pass that credit along to someone else, and owe the original lender before you are paid back. If every single debt were settled tomorrow, the system would collapse. Currency is circulating credit.
Hamilton says "the borrower frequently transfers his credit to another person to whom he has a payment to make, who in turn is often content with a similar credit, because he is satisfied that whenever he please he can convert it into cash"
The Local Solution: A County Points System
In the small rural town where I grew up, called Point Reyes Station in Northern California, there have been conversations and systems enacted to create local currencies, which are largely symbolic, but they've influenced my thinking Over time on this subject.
We can apply Hamiltons same principle locally using community points instead of plain dollars:
Local points replace cash for daily needs. Schools account for the majority of the state budget in California. The state pays LCFF revenue to school districts via the local control funding formula, so by using local points for each county instead of directly using dollars, school districts can distribute points that can convert directly to dollars at the choice of the individual being paid (with zero fees for normal amounts).
They work anywhere locally. Spend them at grocery stores, laundromats, and local shops just like a debit card. Most of our money is already digital. This is not a cryptocurrency but it functions similarly, more like a point system on a credit card for an airline
A built-in "use it or lose it" rate. Unlike regular savings, these points lose value over time (a negative interest rate, “demurrage”). This nudges people to spend them quickly (say, quarterly) on everyday necessities rather than hoard them.
Keep what you spend locally, convert the rest. You keep enough points for your weekly living expenses, and convert the rest to hard dollars to invest in stocks, buy real estate, or travel, or shopping on Amazon. This is free and easy. It's a matter of clicking a box on your credit card form so the power lies within the individual to keep the points local or to convert them to dollars without any cost.
Protection against wealth extraction. Large corporations cannot simply extract tens of millions out of the local community without penalty. The point system has two qualities: the negative interest rate and the cap on conversions. If the cap is $100,000 a month of free conversions to dollars, for instance, then a company is disincentivized to come into a local school community and try to corner the market to leverage multi-million dollar contracts, as they have been. (Remember, we’re seeing a 300% rise in costs for private-equity temp staffing agencies over 5 years, that is not justified by increase in needs or services provided). These companies wi'll be faced with a choice:
Keep the millions of dollars they make in local points, which lose value over time and are of no use to them.
Extract it into dollars for their investors, which has a cost because high-volume conversions of millions of dollars at a time have a lower conversion rate to dollars.
Why This Helps Everyone
When the stock market crashes, investors pull back, money stops moving, and basic necessities become scarce. The need for constant growth in the economy is based on these aspects of the system, which makes it systemically impossible to address things like climate change: the system must keep flowing at every moment or it collapses.
A local point system untangles everyday survival from the creative activities in the stock market. I say “creative” because the ecosystem of investing is a highly creative system which has been an essential part of the foundation for today’s abundance.
But when national investment dries up, local points keep circulating where it matters most. Investors can still build wealth unimpeded, but a neighborhood's access to basic necessities will be disentangled from the price of tech or energy stock.
A deeper dive, for those who want it:
The key Hamilton parallel: soft currency keeps circulating "performing in every stage the office of money" until someone — a national contractor — chooses to collapse it into hard dollars to extract value out of the county. That conversion is the extinguishment event, just like paying off the loan extinguishes the need for currency in the regular system. The state absorbing SPED obligations (And all education costs) in soft currency is analogous to Hamilton's federal assumption of state war debts — it looks like a cost but actually creates a unified, self-reinforcing local system.
the thing that made Hamilton's proposal stick was this: “hence, it is even in the interest of the creditors of the Union that those individual states or the general population, any attempts to secure either exclusive or particular advantage would materially hazard both of their interests". in other words, it serves everybody to adopt a system that puts the federal government at a disadvantage to the states. It even benefits the Federal government. it's a win-win situation.
In the analogy here, the federal government becomes the state government paying education obligations, in local points rather than dollars, and what was the states is now the counties. It's all one currency. It's just a matter of how it's treated in different jurisdictions at different stages, like any Financial instrument.
Just as Hamilton's credit circulated because every holder knew they could convert it to coin at any time, Points currency circulates because no one is trapped. The option to convert removes the anxiety. People hold it not because they're forced to, but because they don't need hard dollars for what they're about to spend it on.
A national contractor can still win SPED contracts. They just have to either spend their soft dollar revenue locally (hiring local workers, local office) or convert to hard dollars and absorb the friction. Either way the community wins: either the contractor localizes, or the conversion friction stays in the local system.
In Hamilton's model, credit circulates until someone in the chain owes a debt back to the bank — that's when it collapses into coin.Similarly here, local points circulate until someone chooses to extract value outside the county. That choice is the extinguishing event.
Points paid by the state to a district, spent on a local contractor, paid to a local worker, spent at a local business, potentially re-deposited or re-spentIs all local economic activity that wouldn't have happened if the money was just paid to a national vendor, right away.
How this disincentivizes mass contracting and private equity investment in schools
Because there's a cap on how much and how quickly you can convert large amounts of points into spendable dollars outside the county, and because the negative interest rates devalue the local currency gradually over time, large companies doing business within a county have a choice:
keeping the money local and paying the devaluation fee of the currency
converting the Local points to dollars and paying the conversion fee for breaking the cap
This points mechanism disincentivizes large-scale extractive education investments, making it not worthwhile for large private equity companies to come in and try to capture the market, while it keeps things the same for everyone else. It's not a legal system. It's not a law that they have to follow, It's not exclusionary ; it's simply an accounting mechanism that has costs and benefits. It's an added feedback to the system that they now have to navigate and decide how they want to respond to in the free market. It's a free market with more feedback
Potential flaws
Is it legal?
If it's going to work, Has to be treated like the points on a credit card Which are obviously legal
Is it communist?
Cash itself is a form of rationing Already in place. We can't all have what we want all the time. It's just the illusion of free choice. It gets rationed
Can it be manipulated to create a second-class lower-class system?
This seems like a significant concern. If lawmakers in the future decided to change the rate of conversion so that the value of the points was not equivalent to our dollars, people who are paid in points (such as the entire education system) could become an under-class group of citizens financially
Can people speculate on it and make it basically a cryptocurrency?
I don't know. That would not be good. That's not the goal !
What would be the impact on other industries that are also extractive, like big box stores, Walmart, Costco, Petco? Most of our stores are chains these days and would be affected by this but only if they were part of the school system. That's why this is only implemented as a school-based initiative. It has a big impact because schools are such a huge part of the economy in the state
Does this have unintended consequences on inflation of the dollar's value?
Hamilton’s words:
Hamilton: Exchange of precious metals or exchange of debt can both serve as effective currency.
1. Dead money vs. active money
"Gold and Silver, when they are employed merely as the instruments of exchange and alienation, have been not improperly denominated dead Stock; but when deposited in Banks, to become the basis of a paper circulation, which takes their character and place, as the signs or representatives of value, they then acquire life, or, in other words, an active and productive quality."
(In other words: “Give us all the stuff that’s actually valuable, we’ll keep it safe. You can have paper. And, so long as we haven’t promised it to other people, we’ll give you back your gold back when you turn in your paper money.” We, the banks, set the rules on how and when to limit withdrawals. The number one rule is we must stay solvent (i.e. we may not be able to give you your money back), and we’ll convince you this is to your own benefit because if we go bankrupt paying you back, then the whole ship sinks.)
2. Hoarding produces nothing; deposits yield returns
"the money, which a merchant keeps in his chest, waiting for a favourable opportunity to employ it, produces nothing ’till that opportunity arrives. But if instead of locking it up in this manner, he either deposits it in a Bank, or invests it in the Stock of a Bank, it yields a profit, during the interval."
3. Liquidity preserves optionality
"when any advantageous speculation offers, in order to be able to embrace it, he has only to withdraw his money, if a depositor, or if a proprietor to obtain a loan from the Bank, or to dispose of his Stock; an alternative seldom or never attended with difficulty, when the affairs of the institution are in a prosperous train."
4. Deposits become a multiplied fund
"His money thus deposited or invested, is a fund, upon which himself and others can borrow to a much larger amount. It is a well established fact, that Banks in good credit can circulate a far greater sum than the actual quantum of their capital in Gold & Silver. The extent of the possible excess seems indeterminate; though it has been conjecturally stated at the proportions of two and three to one."
5. Credit circulates without coin changing hands
"Every loan, which a Bank makes is, in its first shape, a credit given to the borrower on its books, the amount of which it stands ready to pay, either in its own notes, or in gold or silver, at his option. But, in a great number of cases, no actual payment is made in either. The Borrower frequently, by a check or order, transfers his credit to some other person, to whom he has a payment to make; who, in his turn, is as often content with a similar credit, because he is satisfied, that he can, whenever he pleases, either convert it into cash, or pass it to some other hand, as an equivalent for it. And in this manner the credit keeps circulating, performing in every stage the office of money, till it is extinguished by a discount with some person, who has a payment to make to the Bank, to an equal or greater amount. Thus large sums are lent and paid, frequently through a variety of hands, without the intervention of a single piece of coin."
(This is the definition of “cash”.)
6. Deposits as an “effective fund” — the confidence multiplier
"There is always a large quantity of gold and silver in the repositories of the Bank, besides its own Stock, which is placed there, with a view partly to its safe keeping and partly to the accommodation of an institution, which is itself a source of general accommodation. These deposits are of immense consequence in the operations of a Bank. Though liable to be redrawn at any moment, experience proves, that the money so much oftener changes proprietors than place, and that what is drawn out is generally so speedily replaced, as to authorise the counting upon the sums deposited, as an effective fund; which, concurring with the Stock of the Bank, enables it to extend its loans, and to answer all the demands for coin."
(Note: Currency is a form of rationing — it actually moderates who gets what, when. Since currency is based on confidence, we must move slowly in order to build trust and adoption of the currency.)
7. Confidence must be built gradually
"These different circumstances explain the manner, in which the ability of a bank to circulate a greater sum, than its actual capital in coin, is acquired. This however must be gradual; and must be preceded by a firm establishment of confidence; a confidence which may be bestowed on the most rational grounds; since the excess in question will always be bottomed on good security of one kind or another."