Virginia to Print its Own Money?

[ShotgunBlast]

I found this interesting. They want to study to see how effective it would be for Va to have its own currency. And it looks like Virginia isn't the only state having this conversation.

So far, only Utah has approved a law recognizing nontraditional currency. Four other states have bills pending this year. Marshall said he is unsure of his proposal’s prospects in the Virginia Senate. One Democrat derided it as a descent into “la-la land.”
But the fact that the debate is happening at all reflects a deep-seated distrust in the very foundation of the country’s economic system — the dollar.

http://dailycaller.com/2013/02/06/virgi ... -currency/

[OakRidgeStars]

Cool.

[wpoppert]

That would appear to violate Article I, Section 10 of the U.S. Constitution, but I have been informed by numerous liberals that the Constitution is no longer relevant, so I guess it's ok. I can certainly appreciate the sentiment in VA and UT, though.

[Kreutz]

This would catch on with the "locavore" types for sure. A homegrown currency is actually a cool idea. I try and shop local, why not use local dough?

[Greybeard]

Virginia advances bill pushing for state to establish its own currency


Read more: http://www.foxnews.com/politics/2013/02 ... z2KAbn2Cqj

[PhantomPhixer]

Oh how I wish they would. I'll just keep on fantasizing about secession....

[DryBones]

Oh how I wish they would. I'll just keep on fantasizing about secession....

move to Texas, they will go first. They already have their own power grid.

[Reverenddel]

And they're one of the states that have been pushing to go back on the gold/silver standard.

Two states are REALLY moving towards independence from the Federal Government, Montana, and Texas....

[ss313]

Well it sounds like secession may be closer than the masses realize. This is how it started last time. The good part about this is that our Northern neighbors won't be able to blame it on slavery this time. It will be focused on states rights and the upholding of the Constitution as it was intended to be. As far as I'm concerned let them have the northern half. It's too cold for me up there anyway. And if you don't want to work for a living you should be more than welcome to go up their and live off the governmaental entitlements. As long as they last.

I only fear that this will be a battle that is as hard or harder fought than the last one. But for my children's future you can count me in.

Molon Labe

[ss313]

The only issue that I see with this is that unless it is made of precious metals and somewhat based on their values it will be hard to make it work. It would be hard for a vendor to purchase a product from outside of VA with a state currency. And as much as I would like for us to be self sufficient we are not there yet.

[thekinetic]

The first step towards a civil war has been made. There is only one choice to save liberty and avoid a civil war now, rules dictate I cannot say but we all know what that choice is. So now we must all weigh the cost, one vs. many.

May god have mercy on us all!

[Reverenddel]

Gold, and Silver is traded WORLD WIDE...

Just read what it is as "spot", and trade on that aspect. For example, Coin dealers pay a percentage UNDER spot, and sell for a percentage OVER spot...

[gunderwood]

The only issue that I see with this is that unless it is made of precious metals and somewhat based on their values it will be hard to make it work. It would be hard for a vendor to purchase a product from outside of VA with a state currency. And as much as I would like for us to be self sufficient we are not there yet.

This always get brought up when dealing with gold and silver. Namely, how to value them as a currency, but for most people it's a misunderstanding of valuation equivalents. The US Dollar use to be specified as so much gold and silver (even copper at times). This caused problems because the relative value of gold to silver, silver to copper, and gold to copper changes and did not stay the constant ratios that the coinage laws required. It's impossible for a law to solve a market function...yet so many "learned" economists and politicians still don't get it. There would have been no problem if they had done something like the following:

Eagle = 1ozt gold (minted as the 22kt "crown standard")
Dollar = 1ozt silver (minted as the 90% coinage standard)
but the relative valuation of dollar to eagle floats, it's not a fixed ratio!
Etc.

If a Dollar is one troy ounce of silver you don't have to specify any other valuation to it or ratio. It's that simple, one troy ounce. How much the dollar (aka one troy ounce) buys depends on the relative value of silver to other goods & currencies (e.g. Euros) and any premium people are willing to trade for to coinage convenience. You only run into problems when you attempt to peg a currency to two things. When $20 dollars equals 1ozt gold and $1 dollars also equals 416grains of coinage grade silver. Thus, all VA or any state would have to do is simply create a currency which was only tied to one thing and allowed to float against all others and you have no problem. Do NOT define your new currency at 1 coin = $100 dollars and also equals x amount of gold or silver (inherent in the fact you minted it of so much gold or silver). If you do, it's doomed to failure.

Alternative currencies like the American Open Currency Standard attempt to split the difference because people are not use to thinking this way and dealing with effectively multiple currencies with which they can purchase the same item with. However, the rest of world does this all the time when dealing with their national currencies and dollars (which many places accept and just run with the floating exchange ratio). It's not hard, it's just Americans are use to only dealing with one currency standard rather than multiple in our everyday lives.

[PhantomPhixer]

I've often wondered why a currency couldn't just be tied to another commodity. Like oil, or an industrial metal that is in demand. Copper dollars? Uranium dollars?

[ShotgunBlast]

I've often wondered why a currency couldn't just be tied to another commodity. Like oil, or an industrial metal that is in demand. Copper dollars? Uranium dollars?

The petro dollar is the only thing keeping the US running, but other countries are taking steps to trade oil for gold or the Chinese yuan instead of in US dollars. As that becomes more and more popular the US dollar won't be worth the paper it's printed on.

[gunderwood]

I've often wondered why a currency couldn't just be tied to another commodity. Like oil, or an industrial metal that is in demand. Copper dollars? Uranium dollars?

There are two different questions here. First, there is tying a currency to a commodity vs. the currency actually being a commodity. A currency that is simply tied to a commodity would be like the old US silver and gold certificates; redeemable upon demand or at least a promise by the government that they really have enough of the commodity to back the outstanding certificates. Of course, much of the Roaring Twenties (boom) and the Great Depression (Bust) were made possible because of such a system. The Fed inflated the money supply because most people traded the certificates as if they were the real thing (just like today's paper markets for commodities like gold/silver where the outstanding paper is much, much greater than the actual commodity), so there is a risk that the government will break the inherent promise behind those certificates. However, previously the Dollar (derived from the Spanish coin of the era, but actually goes all the ways back to the Thaler http://en.wikipedia.org/wiki/Thaler), was merely a unit of silver, not a certificate of silver. The Dollar was the commodity. The pros and cons are mostly obvious. If you physically must transact the silver, it's much harder to create monies without lots of hard work (mining). Every time certificates are used, they are eventually abused. Perhaps the concept behind Bitcoin, with its cryto security, may fix that...assuming you can trust the computer that must verify the currency. The simpler solution is to show me the physical money!

The second question is about why not other commodities. This is an excellent question and one which I'm only going to scratch the surface of. Yes, there have been monies made of other commodities. For example, private copper was used extensively at times in Great Britain when ever the King's coinage focused on producing only larger silver/gold coins and ignoring the needs of the common person for small daily transactions. The reason gold/silver are used as the "ideal" money commodity is because of their physical properties meeting the requirements of money so much better than anything else. Some of those requirements are (not in an particular order):

1. Easily identified. How do you know that the coin you hold in your hand isn't fake? The physical properties of gold/silver make it much easier for the average person to verify they are real coins. The density of gold and it's color (there's not much like it and the color changes are easily seen if it's pure or been alloyed), silver has a extremely unique sound when it is struck (there's a reason we sing about silver bells during Christmas, amazing sound even from a coin). Etc.

2. Easily divisible. Making change is an important part of doing business. In the old days they would just cut the coin up. You can't cut up a $100 dollar bill and have anything but shredded paper.

3. Durable. Gold and silver coins have survived for ages because they are not easily dissolvable or oxidizable, etc. While not perfect, the coins typically held up very well and lasted for decades or generations. Gold was typically alloyed into the 22kt English Crown standard (e.g. modern day American Gold Eagle) and silver was often 90% per the Spanish Dollar (US junk silver, aka old dimes, quarters, etc.) to make them a bit more durable.

4. Not easily inflated. Inflation is a hideous crime against all people, so much so that under the Coinage Act of 1792 the prescribed penalty for counterfeiting was a felony and death! Now if only we could get some agreement that government counterfeiting, aka inflation, is no different than private counterfeiting perhaps we would make some headway with the current debt crisis. The outcome is the same, the evil is the same, but one is illegal because it enriches a private entity and the other is legal because it enriches the government. Corruption? Absolutely! Other than very few examples, gold/silver have remained relatively stable values throughout history, at least when they were being used as monies. This is because there isn't much of them available and that which is available is difficult to acquire. Despite mining advances, output has been very stable for centuries (compared to any other commodity/currency arrangement). There is a reason kings of old wanted the alchemist to find a way to transmute base commodities into gold. As long as the money was gold/silver, there was a limit as to how much the king could spend. We foolishly through that limit out and have created a monster that is draining the wealth of the entire nation...we call it the Federal Reserve and it's a government granted monopoly and cartel. Even Congress understands this which is why they steadfastly refuse to even let it be audited because if the people were to actually see what happens behind the curtain they would demand dissolution of the institution!

Etc. There are other useful commodities and personally I'm all for any commodity based money that people freely exchange. Want to use copper, go for it. Platinum? Sure. Sea shells? If you want, but I won't be accepting them.

Edit: An excellent, but not large book on the subject is "The Ethics of Money Production" by Jorg Guido Hulsmann.
http://www.amazon.com/Ethics-Money-Prod ... 1933550090
https://mises.org/store/Product2.aspx?ProductId=536

or free download here: mises.org/books/moneyproduction.pdf