In 1932, a small Austrian town pulled off what historians would later call the Miracle of Wörgl. It solved its unemployment crisis in thirteen months. The central bank shut it down anyway.

Wörgl had around 1,500 people out of work. The town was going bankrupt. The mayor, Michael Unterguggenberger, had read an obscure economist named Silvio Gesell, who believed economic collapse wasn't caused by too little money. It was caused by money that stopped moving.

Unterguggenberger believed the same thing: the town didn't need more money. It needed money that moved. So he designed a local currency that penalized hoarding, went door to door explaining it to his neighbors, and then printed it.

32,000 labor certificates, accepted for local taxes, rent, and goods. The catch: they depreciated 1% per month. Hold them and they lose value. Spend them and they don't.

The certificates circulated dramatically faster than the national schilling.

Unemployment in Wörgl fell 16% while the rest of Austria's rose 19%. Tax revenue went from 2,400 schillings in 1931 to 20,400 in 1932. Irving Fisher, Yale economist and one of America's most prominent monetary theorists, studied the results and lobbied Washington to copy the model. Two hundred Austrian cities were preparing to do the same.

Austria's central bank shut it down in September 1933. The objection wasn't economic. It was jurisdictional. Printing currency was a bank's job, not a mayor's. The certificates stopped. The unemployment came back.

Every party in the court filings agreed that the Wörgl economy was performing. Wörgl proved that money can be designed to move. The central bank decided that wasn't the point.

This week, April US inflation came in at 3.8%. Real wages just went negative for the first time in two years. The debate will be about interest rates. It is always about interest rates.

Worth asking what else we decided to leave alone.

Image: The actual Wörgl labor certificate, 1932. The 1% monthly stamp requirement is printed on the face