The Washington Post reports that Virginia is seriously studying the prospect of issuing its own money. The idea of a state currency, unthinkable only a few years ago, has now become eminently thinkable.
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.
What has changed is faith in the federal government, not just in Virginia but in a growing number of places. The lack of faith in the competence of government — and the soundness of the dollar — has been growing leading some states to create contingency plans in case the currency goes bust.
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.
Marshall’s proposal would create a 10-member commission to study “the need, means, and schedule for establishing a metallic-based monetary unit to serve as a contingency currency for the Commonwealth.” This mirrors a rising trend in the availability of quasi-money. Economist Bernard Lietaer points out that there are already various forms this available. “For example, he said, there are 50 trillion airline frequent-flier miles in circulation, far surpassing the number of dollar bills.” FTAlphaville at the Financial Times describes the emergence of parallel money in Kenya.
While this may leave the system exposed to the corporate fortunes and bankruptcy risk of its owner, we’d argue that doesn’t need to be a bad thing. Who says money has to be centralised at all? Looking to history, central bank money is actually a relatively new phenomenon, pre-dated by private money systems.
People want it as a hedge or insurance in case the major currency system goes down. One way to think about a parallel money system is by imagining that the dollar became worthless tomorrow. But even without a dollar if you could obtain airline flights or get a case of beans, flour or ammunition by participating in an points system you could survive for a while — as long as the institution that issued the points kept functioning. Today Amazon announced that it was launching a kind of “virtual currency”.
Amazon, the world’s largest online retailer, plans to introduce virtual currency that can be used for purchases on the Kindle Fire tablet to entice more developers to create programs for the device.
Starting in May, consumers in the US will be able to use Amazon Coins to buy applications and virtual merchandise sold within games, the Seattle-based company said today in a statement. The company will give customers “tens of millions of dollars” worth of the currency, which will be accepted in the Amazon Appstore.
Anyone receiving payment in Amazon coins would theoretically be able to live entirely within the economy of the retail giant. Presumably the Amazon coins would entitle him to purchase MRES, canned bacon and anti-radiation pills and whatever else is on offer at Amazon. If the rate of inflation within the Amazon world was lower than that in the bricks and mortar universe you might hold rather more Amazon coins than dollars.
Of course the reason for the sudden interest in quasi-money, parallel money, virtual currency, guns and all the rest of it is fear. That fear springs from the perceived incompetence of the political class. An administration which seems increasingly unable to control the borders, defend its diplomatic missions, defeat al-Qaeda, checkmate the Muslim Brotherhood, balance the budget, raise sufficient revenues or do anything much, except demand more power, can pretend to be omnipotent. But people notice it has feet of clay when even North Korea is laughing at it.
by Tyler Durden on 10/20/2012 11:12 -0400
Everyone knows that when it comes to US currency in circulation, the $2 and the $50 bills are rapidly approaching numismatic status due to either the government’s unwillingness to print them in sufficient amounts or the general public’s unwillingness to accept them as legal Federal Reserve Note tender. What people may not know is how other currency denominations have fared over the years. And as the charts below indicate, the historical government production of various currency denominations may tell us something about actual supply-driven intentions of the Fed and/or upcoming price levels. Because one thing is certain: judging by recent production patterns, the $1, $5 and $10 bills (aka Federal Reserve Notes), all of which saw their lowest production in 30 years in 2010, will soon suffer the fate of the dodo!
$1 bill production 1980-2010:
$5 bill production 1980-2010:
$10 bill production 1980-2010:
Why the collapse in production? Is it simply due to the increasing (forced?) migration to electronic, and other, forms of payment? Perhaps. We leave it up to readers to decide on their own.
One thing we do know is that the plunge in small-denomination bills is not uniform. In fact, when it comes to $100 bills, production has never been higher. Is the Fed hinting at something?
$100 bill production 1980-2010:
So, how long until we start seeing the face of Grover Cleveland much more often again?
More severe inflation may bring back Grover
US currency in denominations above $100 has not been printed since 1945, and has not been issued to the public since 1969. Old high denomination bills are legal tender, but are mostly in the hands of numismatic dealers and collectors.