Virginia coin moves closer to reality

Virginia Del. Robert G. Marshall fears that a financial apocalypse is coming and only one thing can save the Commonwealth: its own currency.

The idea that Virginia should consider issuing its own money was dismissed as just another quixotic quest by one of the most conservative members of the state legislature when Marshall introduced it three years ago. But it has since gained traction not only in Virginia, but also in states across the country as Americans have grown increasingly suspicious of the institutions entrusted with safeguarding the economy.

This week, the proposal by the Prince William Republican sailed through the House of Delegates with a two-to-one majority.

“This is a serious study about a serious topic,” Marshall said Tuesday. “We’re not completely powerless.”

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.

Much of the anger is directed at the Federal Reserve, which controls the nation’s supply of money. Since the financial crisis, the Fed has pumped trillions of dollars into the economy to help avert what Chairman Ben S. Bernanke believed could have been the next Great Depression. Critics worry the Fed won’t ever stop.

Marshall believes that the result could resemble the Weimar Republic of Germany after World War I: a worthless currency, skyrocketing inflation and a crumbling government.

And those are only the problems that the Fed might create. Who knows what other threats may be lurking in the shadowy world of cyberattacks, Marshall said. The Fed acknowledged Tuesday that its computer systems were recently compromised, although the problems did not affect critical operations and have since been fixed.

“This is a lifeboat study; what happens if?” Marshall said.

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You can voice your opinion about HJ 590 by contacting your Virginia Legislators. For their contact information, visit: http://conview.state.va.us/whosmy.nsf/main?openform

Tell your Delegate that this bill is about more than politics - it's about VIRGINIA, and saving the money of the citizens of this State!

More States Support Move to Metals as Dollar Weakens

Investing in silver and gold has become more attractive since the US dollar just doesn't have the clout it once did.

Fears over where the dollar is headed – especially with continued money printing from the central bank – has pushed safety-seekers into investing in silver and gold. Demand has also pushed gold and silver prices to new highs.

The idea of using gold and silver as an alternative currency has spread as the metals have grown more valuable. In fact, worries that the US dollar is on the cusp of a collapse have lawmakers from more than a dozen states (up from just three in the past few years) seeking approval from their state governments to either issue their own alternative currency or use gold and silver as a currency for settlement of state-related transactions.

Rep. Glen Bradley, R-N.C., who introduced a currency bill in 2011, told CNN Money, "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System... the state's governmental finances and private economy will be thrown into chaos."

Fourteen States & Counting

While the US Constitution bans states from printing their own paper money or issuing their own currency, it does permit states to make "gold and silver Coin a Tender in Payment of Debts."

The first state to introduce its own alternative currency was Utah. Gov. Gary Herbert signed a bill into law in March that recognized gold and silver coins issued by the US Mint as an acceptable form of payment.

Under the law, the coins, which include the hugely popular American Gold and Silver Eagles, are treated the same as the US dollar for tax purposes, eliminating capital gains taxes. The new law allows the coins to be exchanged at their market value, based on weight and fineness.

Rich Danker, a project director at the Washington, D.C.-based conservative public policy American Principles Project, explained to CNN Money, "A Utah citizen, for example, could contract to sell his car for 10-one ounce gold coins (roughly $17,000), or an independent contractor could arrange to be compensated in gold coins."

These other states have similar policies:

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Ron Paul's Statement at Hearing on "Free Competition in Currencies Act" (HR 1098)

John Maynard Keynes once stated that “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Such a situation is exactly what faces this country today, as the Federal Reserve seems hell-bent on destroying what little purchasing power remains of the U.S. Dollar...

... Economics teaches that monopolies produce fewer goods and sell them at a greater price than in a competitive market. This leads to inefficiency, deadweight losses, and over time complacency on the part of the monopolist. Most mainstream economists fail to extend the theory of monopoly to the market for money. Government monopolization of the issuance of money fails to produce the sound money the market demands. The poor-quality money that is issued continues to lose its value, and the American people must work longer and harder for money that continues to decline in purchasing power. Meanwhile, government agencies and the banking system benefit from the first use of that money, being able to spend it and lend it before it circulates through the rest of the economy and before prices increase in reaction to this inflation.

The only way to counteract this problem is to break the government monopoly on the issuance of money. The Constitution does not grant the federal government this monopoly, a fact which was not in dispute for nearly a century after this country's founding. The federal government has become complacent, forgetting the need for sound money, and the only way to break this complacency is to break the monopoly. HR 1098, the Free Competition in Currency Act, intends to do just that...

...I hope that this hearing will start a vigorous discussion of currency competition, sound money, and how to return to a sound dollar. HR 1098 is certainly not a panacea, as there remain significant structural problems in our banking and monetary system that still need to be addressed. But allowing for competing currencies will enable Americans to choose a currency that suits their needs, rather than the needs of the government. The prospect of Americans turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system.

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"Monetary Reform: The Beginning of the Beginning"

by Charles Kadlec
The @DailyReckoning

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Fundamental reform of the world’s monetary system has begun. It is way too early and too amorphous to be front-page news. We are only at the beginning of the beginning of a popular effort to restore gold backed money to the center of economic activity.

Defining a dollar, or a British pound, as a fixed weight of gold was an innovation that further increased the usefulness of money. You could take currency and trade it for something you needed, or you could trade that money for a fixed weight of gold. As a general proposition, paying with paper money was no different than paying with gold, except paper money was more convenient to carry...

...Forty years ago, that order was up-ended by President Richard Nixon’s decision to sever the final link between the dollar and gold. For the first time since Sir Isaac Newton established the British gold standard in 1717, all of the world’s major currencies during a time of peace were free to float against one another and to fall in value against precious metals. The consequence has been a debasement of the dollar and all other currencies, an ever more cyclical economy, a 40-year hiatus in real wage increases for American workers and a growing fear of yet more financial crises created by monetary instability.

As a consequence, support is growing to repeal tax and other legal barriers that effectively prevent people from using precious metals as money.

In March, Utah repealed its capital gains tax on gold and silver coins it will recognize as legal tender. Twelve other states are considering similar legislation.

Then, in June, Senators Jim DeMint (R-S.C.), Mike Lee (R-Utah) and Rand Paul (R-Ky.) introduced the Sound Money Promotion Act that would remove the 28% federal tax on gains realized in the use of gold or silver coins recognized as legal tender for use within a state.

Now, in Switzerland, efforts are underway to create an official Gold Swiss franc (GSF) with a set of coins, each with a fixed content of gold. The proposed constitutional change would permit private institutions to issue an unlimited number of coins whose appearance, content and weight of gold, and definition would be under the supervision of the Swiss government...

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"Not Worth a Dollar: Utah recognizes gold and silver as legal tender"

by Brian Bolduc
National Review Online

Since 1913, the dollar has lost over 95 percent of its purchasing power. Why? Because the Federal Reserve, which Congress established that year, has printed more money than necessary.

Or so skeptics claim. Many tea partiers agree — so much so that they’re spearheading an effort to introduce two competing currencies into the money supply: gold and silver.

The Constitution forbids states to coin money. In Article I, Section 10, however, it reads, “No state shall . . . make any Thing but gold and silver Coin a Tender in Payment of Debts.” Jeff Bell, policy director of American Principles in Action, argues that this passage authorizes states to recognize gold and silver as legal tender.

Colorado was the last state to do so, in 1893. But Utah, taking “a precaution against further deterioration in the dollar,” has revived the endeavor, Bell says...

...But this setup poses challenges. If gold and silver trade at market value, vendors will have to measure coins’ weight and purity to determine their worth. Will McDonald’s have a scale in every drive-through?

No, thankfully. Bell says private interests are starting banks in which members can leave their gold and silver deposits. They then can use those deposits as backing for debit cards: “You could pay any bill or your taxes with a Visa debit card that would then be assessed against the valued coins — and they may be revalued all the time.”

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"A First Step To Sound Money"

Editorial of The New York Sun | June 28, 2011

...It’s called the Sound Money Promotion Act, and The New York Sun is happy to lay claim to being the first newspaper to endorse it. The measure, as it is characterized in a press release posted by Senator DeMint, would remove the tax burden on gold and silver coins that have been declared legal tender by either the federal government or state governments...

...It seeks to block tax authorities from treating gold and silver coins as though they were mere commodities and start treating them, at least in tax law, as though they were what the Founders of America thought they were, which is money. Gold and silver coins are already treated this way, as legal tender, inside the state of Utah, whence Senator Lee was elected.

This is because Utah was the first state in our modern time to exercise its constitutional power to make gold and silver coins legal tender. It did so earlier this year, ahead of as many as a dozen states that are at various stages of looking in to the question of how to protect themselves against the collapse of the United States dollars that are being issued by the Federal Reserve. They are all being energized by the fact that the value of the dollar has collapsed to barely a fifth of what it was, if that, at the start of the 21st century...

...How far the three senators will get with the Sound Money Protection Act is hard to say. Its implication — a recognition of gold and silver as the true constitutional money — is, in the current context, radical. But it's no more radical than the Founders, who, when they twice used the word “dollars” in the Constitution, were referring to a coin containing 371 ¼ grains of silver. They codified that as the definition of the dollar in the Coinage Act of 1792. They also referenced gold in the 1792 Act, with a value of 15 times that of silver. We are in a time when understanding the concept of constitutional money will point the way to the policies needed to steer our country out of its current difficulties.

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