Another argument for buying local is that it enhances the "velocity" of money, or circulation speed, in the area. The idea is that if currency circulates more quickly, the money passes through more hands—and more people have had the benefit of the money and what it has purchased for them. "If you're buying local and not at a chain or branch store, chances are that store is not making a huge profit," says David Morris, Vice President of the Institute for Local Self-Reliance, a nonprofit economic research and development organization based in Minneapolis and Washington, D.C. "That means more goes into input costs—supplies and upkeep, printing, advertising, paying employees—which puts that money right back in the community."
One way to really make sure money stays in the community is through creating a local currency. Christian Gelleri, a former Waldorf high school teacher in the Lake Chiem area in Germany, has launched a regional currency, the Chiemgauer, equivalent in value to the Euro. According to Gelleri, the Chiemgauer, accepted at more than 600 businesses in the region and with about $3,000,000 Euros worth in circulation, has three times the velocity of the Euro, circling through the economy an average of 18 times a year as opposed to 6. One reason for the fast turnaround is that the Chiemgauer is designed to encourage spending: there is a 2% demurrage fee for holding onto the bills beyond three months.
http://content.time.com/time/business/article/0,8599,1903632,00.html
