Is it really an odd idea or does it make sense? If in the US different states have their own legal system (overseen by the federal one) why wouldn’t they have their own currencies (again, overseen by the Fed)? If one state is stronger than the other it means it carries the burden for the weaker states. But I guess that’s a much bigger question that that.
A South Carolina state politician wants the state to develop its own gold and silver-based currency in case the Federal Reserve collapses and hyper-inflation ensues.
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“If folks lose faith in the dollar, we need to have some kind of backup,” State Sen. Lee Bright told the Spartanburg Herald Journal’s Stephen Largen. His bill asks a committee to look into the development of a state currency, citing the Constitution and Supreme Court precedents to prove the bill’s legality.
Slate’s Annie Lowrey tracks down similar bills in Georgia and Virginia, and points out that the legislation reflects a larger trend of state politicians wading into monetary policy. A bill in Georgia would require all debts to the state be paid in pre-1965 gold and silver coins. The Virginia proposal would let the state print its own money. Meanwhile, one politician in Utah wants to cut out the middleman entirely and allow the state’s residents to run their very own mints.
Advocates of currency alternatives to the dollar argue that the Federal Reserve’s quantitive easing techniques will lead to inflation. Texas GOP Rep. Ron Paul, who won the Conservative Political Action Committee’s presidential candidate straw poll last week, has been Congress’ most visible anti-Fed leader. Paul argues the Fed devalues the dollar, and proposes that the United States should gradually return to gold-backed currency.