“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense… that gold and economic freedom are inseparable.” — Alan Greenspan
The Washington Post is reporting that conservative state legislator Bob Marshall is proposing the Virginia government study the feasibility of minting gold and silver coins to be used as money in the event that hyperinflation renders the U.S dollar unusable. Rather than address the proposal itself, the response to this from the left has been ridicule Marshall for wanting to bring back the Confederacy.
Now, I realize that Southern whites are the last remaining group in America against whom it’s still culturally acceptable to be bigoted, and I’m no fan of Bob Marshall’s social positions, but this is not a proposal for the South to rise again, and I think most of its better-educated detractors know it. It ought to be enough to damn Marshall’s proposal for the flaws it actually has, which are (1) it’s not constitutional, as Article I, Section 8 assigns the federal government the exclusive authority to coin money, (2) it’s unlikely to pass in the General Assembly, and (3) if one government is debasing its currency it’s a little foolish to trust a different government not to do the same thing.
The real solution for those who want to use gold and silver as money is to use the Nike maneuver — just do it. You don’t need to wait for some government to tell you it’s okay. If you own a store, list your prices both in dollars and in ounces of silver. If you’re a customer, offer a silver round and see what the store owner says. It wouldn’t be that hard for someone enterprising to set up an online directory of businesses that participate. If there really is enough interest, those people can have their own sound money economy just like that. It’s the sort of thing I’ve always thought I might do using simply web technologies like PHP and MySQL if I can find the time. And with “quantitative easing” and related euphemisms for running the printing presses to churn out more money coming out of Washington, maybe sooner would be better than later.
Sound money legislation or ConTen Bills are up now in at least 10-12 states. Montana, Missouri, Colorado, Idaho, Indiana, Missouri, Montana, New Hampshire, South Carolina, Utah, Washington. Add VA and GA to the list. One of the originals “the Goldmoneybill” in NH dates back to 2005. Coining ‘state’ money is one I’ve not yet heard of, but accepting gold and silver for payment of certain taxes and permitting part of states’ funds to be held in gold…some of these are certain to pass soon. Good idea, merchants accepting gold and silver, that’s already being legally done on a very very small scale. http://www.opencurrency.com/ The drawback is the logistics of the transaction since goods are not priced by weight in metal one either uses a floating daily spot price or conversion price at the time of sale or the issuer sets an arbitrary base “face value” to the tokens. Neither equation adds up to increased retails sales for stores and then work in some measure of Gresham’s law and most people will hoard the pretty silver and keep charging on their plastic. However, Digital gold currency has been around for more than a decade, now with iPhone apps, anyone could can quickly and easily pay at the counter with DGC easy as 1-2-3. So– the next issue now coming up is the asset tax on buys and sells of ‘metal’. If you are using gold and silver daily you now have a monster problem of keeping track your buys and sells of metal as an asset and tax issues. This can be fixed with Ron Paul’s Free Competition in Currency Act of 2009, this gets rid of legal tender laws and drops the tax associated with asset sales of precious metal….
SO, great post and we are on the way to where you want to go, keep blogging the good ideas and connect with others with similar interest and we’ll get it done. Also see http://dgcmagazine.com
Mark Herpel
editor@dgcmagazine.com
Digital Gold Currency Magazine
I used to work for DGCs, so I’m familiar with them and like the concept. But the problem with them is they require technology with which both parties are already set up, and both parties have to be familiar with that particular DGC, comfortable using it, and trust it. That last part is pretty challenging considering the colorful history of the DGC industry. When someone hands someone else a silver round, there’s no third party baggage.
I also don’t think fluctuating metals prices are that big a deal. Americans may be used to only trafficking in one currency, but shops in border areas and tourism areas internationally handle more than one currency without too much ado. Yes, the price is constantly changing but it doesn’t usually shift that much in a single day, so a shopkeeper could look up the price in the morning and that would usually be sufficient. The tax situation is irritating, though. I’m not sure how bullish I am on the prospect of any of Dr. Paul’s legislation passing, but one can always hope. I expect that a larger ecology of users of sound money in transactions could only help its chances.
Thanks for the link to DGC Magazine. I hadn’t realized someone was planning to mint copper rounds for use in smaller scale transactions, but that’s pretty cool!
Thanks for the comments. I agree with you, just do it and some small organizations are doing just that…however it’s a very long road ahead for both digital and physical in the U.S. Some Islamic areas like the Kelatan State in Malaysia are trying to return to gold and silver by minting and promoting the use of the traditional gold dinar and silver dirham, this is partnered with http://www.e-dinar.com soon to offer an all coin account, as apposed to plain digital gold bullion. However, it’s hard to see how their first minting of $670k in USD value, will have any lasting effects. I’m a fan and big supporter, but man….I’m a prisoner of hope.
At least it’s great to see blogs, and the news papers starting to discuss it. Who knows if enough states put the bills up, perhaps some will eventually get passed. Thanks Steve.
Better to be a prisoner of hope than a prisoner of despair, I suppose. And there are simple things one can do, like separate our pre-1982 pennies and set them aside. Those older ones are 95% copper. With about 155 pennies in a pound and a copper spot price over four dollars, if you have enough pennies lying around that can be a good use of time, especially if you do it while watching TV or whatever.