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?