*South Carolina Lawmaker Wants Separate Currency For State
By Liz Goodwin
Mon Feb 14, 12:52 pm ET
A South Carolina state politician wants the state to develop its own
gold- and silver-based currency in case the Federal Reserve collapses
and hyper-inflation ensues.
"If folks lose faith in the dollar, we need to have some kind of
backup," State Sen. Lee Bright told the Spartanburg Herald Journal's
Stephen Largen. His bill asks a committee to look into the development
of a state currency, citing the Constitution and Supreme Court
precedents to prove the bill's legality.
Slate's Annie Lowrey tracks down similar bills in Georgia and Virginia,
and points out that the legislation reflects a larger trend of state
politicians wading into monetary policy. A bill in Georgia would require
all debts to the state be paid in pre-1965 gold and silver coins. The
Virginia proposal would let the state print its own money. Meanwhile,
one politician in Utah wants to cut out the middleman entirely and allow
the state's residents to run their very own mints.
Advocates of currency alternatives to the dollar argue that the Federal
Reserve's quantitative easing techniques will lead to inflation. Texas
GOP Rep. Ron Paul, who won the Conservative Political Action Committee's
presidential candidate straw poll last week, has been Congress' most
visible anti-Fed leader. Paul argues the Fed devalues the dollar, and
proposes that the United States should gradually return to gold-backed
currency.
In addition to the nightmarish logistical challenges involved with a
state adopting a new currency, Lowrey points out that commodity-backed
currencies can also experience volatility. For example, if a state
collects income taxes in gold and then a big new gold mine is
discovered, the metal's value would decline--together with the state's
revenue holdings.
So for now, it's probably bests for individual consumers to refrain from
shifting over to sovereign state currencies--especially since none of
the recently introduced currency bills stands a strong chance of
passing. However, for numismatists looking to make a political
statement, the Ron Paul silver dollar will likely appreciate--especially
since federal authorities raided the libertarian minting operation that
marketed it back in 2007.
(Dollar coins in a U.S. mint in Philadelphia: AP/Matt Rourke.)
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