Scary: Legislators want states to print their own money

What would happen in the U.S. if states and private mints were allowed to print their own money? Not being an expert on currencies and monetary policy, I am hardly the person to attempt to answer that question. But even a monetary amateur can see that this could be a very risky idea. Fortunately, as things stand, the Constitution specifies that it’s the role of the federal government to print currency. [Although proponents of competing currencies argue that the Constitution does not limit currency creation to the federal government.]

But in the anti-government, anti-Federal-Reserve frenzy created by ultra-conservative ideologues, a little thing like a fundamental, Constitutional hurdle isn’t stopping some lawmakers from trying—or at least trying to make a point. Congressman Ron Paul and legislators in 15 states have suggested that state-specific money would be a sound alternative to what they call the “dollar monopoly” of the Federal Reserve.

And they’re not just talking about it: they’re introducing legislation to make it happen. In 2009, Congressman Paul introduced a bill into Congress, which he called the “Free Competition in Currency Act” (HR. 4248). It would have allowed private mints to print currency in the United States. This year, Virginia state legislator Bob Marshall introduced a bill that would enable his state to create its own currency, which would compete with the dollar. Similar bills have been introduced in: Washington, Idaho, Montana, Utah, Colorado, Oklahoma, Indiana, Tennessee, Georgia, South Dakota, North Dakota, Vermont, Iowa and New Hampshire.

A few examples from 2011:

  • In February, a South Carolina state politician proposed a plan for the state to develop its own gold and silver-based currency, “in case the Federal Reserve collapses and hyper-inflation ensues.”
  • In Georgia, state Rep. Bobby Franklin introduced the Constitutional Tender Act, requiring “the exclusive use of gold and silver coin as tender in payment of debts by or to the state.” The coins he refers to are pre-1965 silver coins, silver eagles and gold eagles, which would be the “exclusive medium” the state could use to make any payments.
  • In May, Utah became the first state in the country to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes. One Utah politician has also suggested cutting out the middleman entirely, and allowing the state’s residents to run their own mints.

I’ll leave it to those with knowledge far above my pay grade to make the constitutional and monetary-policy arguments for and against these proposals. But, in my view, they certainly give off more than a whiff of states-rights ideology. And they seem to me to be part of a larger, right-wing, anti-government effort that has yielded state lawsuits aiming to get health-care reform declared unconstitutional, bills that would allow states to opt out of the Affordable Care Act, and even Texas Governor Rick Perry’s sideways threat of secession.

Does anyone else find this to be a scary scenario, with existential issues for the United States of America?

  • Shenonymous

    Thank you for this article.  It help put things in perspective.  Have any of these states actually passed legislation to mint their own money?  Seems to me there is a logic to having legal tender that is exchangeable for the very same reason money or coinage was invented in ancient times in the first place.  To make commerce easier.  With the population of the world exponentially larger than it was then, there is not enough precious metal to coin enough wealth for citizens to use and unless money was created in precious metals it would not be exchangeable between states and would even be chaotic for businesses at the local level.  It sounds like another Ron Paul insanity to me.  I think creating local money would be disastrous.

  • Tornadotom4201

    The reason the states are introducing competing currencies is because they’re tired of being robbed through the inflation tax by the federal reserve and u.s. government. The federal reserve is a socialist idea. It’s on the 5th plank of the communist manifesto. They continually devalue the U.S. dollar through inflation by simply printing more since 1971. Every FIAT/paper currency has failed in history, the dollar will be next during this decade.

  • Shenonymous

    Frankly, I don’t find socialist ideas repugnant but on the contrary useful for large disparate populations to achieve equality in an environment where the rich take advantage, exploit, the less privileged.  While I think communism is not feasible nor desirable, it does not hold the stigma it once had.  Marx is constantly being referenced by all economists and sociologists who contemplate the failing economics of large nations.  The government will do what it needs to do to stop financial disaster which it did with the stimulus, to whatever degree it did, whether or not it was enough.

  • sebastian

    if indeed it is the role of the federal govt to print money, then why is it printed by the federal reserve, which by the way is not a part of the federal government. it is undeniably a private banking institution that loans OUR government the money + interest due on the loan. practically 1/4 of your anual income pays that interest due to that private bank via your fed income tax. eliminating the fed reserve would eliminate the need to pay that tax. thats quite a savings and an insentive to try to find an alternative. oh, one other thing, fed income tax is not even a legal tax. it was never legally made a law that you have to pay it. it would have had to been ratified by 3/4 of the states to become a law, which it wasnt. in other words, there is not a law that states you must pay fed income tax. look it up.

  • Cooolll1

    As long as currency is backed by Gold or Silver it a great idea.When we went off Gold standard is when the feds had freedom to do as they please and congress had freedom to spend money to buy votes.After all we can always print more right.But Gold and silver standard wont allow you to print more than the amount os gold you have in the treasury.Our money is worthless now.The feds stole all the Gold robbed the american people thru inflation and taxes.But hey its all bushes fault.

  • Jeremy

    Backing a currency with a commodity only makes it vulnerable to the interests who own enough of that commodity. Why do commodities need to be involved?

  • Jeremy

    Collectivism doesn’t have a very illustrious history. Where did the stimulus money go? Are we not in an environment where the rich are taking advantage and exploiting the less privileged?-What was Occupy Wall street about?

  • Shenonymous

    Yeowie Kazowie, for a post I made two years ago! Fantastico! Way….elll socialism does seem to work well in the Scandinavian countries, particularly Sweden. It is not strictly communistic! It is economically socialistic, egalitarian politically. Some collectivist banks in America are thriving and credit unions based on a membership ownership are really the best.

    There are several websites that explain what happened to the stimulus if you google Where did the 2008-2010 U.S. Stimulus go? The webaddress is way too long to print here.

    Your question about OWS is a good one. It was a movement but it didn’t really make any huge difference with the Wall Street vulture culture, but it did wake the country up that mass movements can happen. Occupy was not organized well enough and too naive and didn’t really understand the dynamics of mass movements. Eric Hoffer’s “True Believer” is the seminal revelation of that kind of human collective action. I think every American ought to read it particularly Chapter 14. See for yourself. But if you want some excerpts, check out

    It is a worthy book to read and reread 10 times if not more.