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Restore full faith and value of money
Monday, February 11, 2013
Grabbing my wallet the other day to pay a friend a debt, I discovered I still had a $20 New Zealand bill from our recent vacation there. It is an elegant piece of currency. It is full color, printed on transparent plastic “paper” and is washable and virtually indestructible. There are a number of anti-counterfeiting security features, including an oval “window” with the denomination burned onto it and a watermark of the queen.
My friend didn’t want it; it is useless to him.
This experience, my most recent book and a current legislative initiative, HJ 590, now being considered by the General Assembly to have our state produce its own coinage, got me thinking about our monetary heritage.
It is easy to dismiss the idea of having a state currency as another ludicrous idea from a wacko survivalist, fearful of the potential for failure of our fiat Federal Reserve notes (that lack hard asset backing). However, the proposed legislation may warrant further study for two reasons likely unbeknownst to the bill’s sponsor.
My book is a survival novel set in a Southwest Virginia hamlet. In my story, the national power grid is destroyed by a coronal mass ejection that sends a “pulse” of electromagnetic radiation at the Earth. Every aspect of our lives is impacted by electricity, and virtually nothing we need happens without it. The impact of a complete, interminable power outage is incalculable.
One of the casualties of a collapse of power is the coincident collapse of money. In our nation’s foundational days, money was hard currency, either in coins or paper. Those still exist today. While coinage has modest intrinsic value, the paper money is really a fiction, as it has value only because our government says it does, and we all buy into the fiction. The New Zealand $20 bill is costlier to manufacture and thus has greater inherent value than our own, but if nobody here accepts it, it is effectively worthless.
While paper and coinage still exist, our currency exchange system is now utterly dominated by electronic transfers, through checks, credit cards and a myriad of financial devices that shuffle “money” from place to place without moving anything tangible. Last week, I received $200 worth of groceries for the simple swipe of my credit card, after which I will electronically transfer “money” from my checking account to VISA, without anyone ever touching paper or coinage.
If the power grid were to fail, and with it all backup generators and the like (which is possible in a severe pulse), our monetary system would be annihilated. My novel’s characters return to bartering and using everyday items such as canning jar lids, bullets and cigarette packs as currency.
We’re in a period now of increased solar activity, so a massive power failure isn’t inconceivable. If such a disaster were to occur, a recognized state coin may provide a secure, workable currency.
But there’s a better reason for a state coin. In foundational days, physical money was made by the mints and printing offices of the Treasury Department.
Today, money is mostly not created at all. Instead credit is created, not by the Treasury Department but by the Federal Reserve, an utter, calculated misnomer as it is demonstrably not in any way part of our federal government, and it has no reserves. It is a private consortium of the nation’s most powerful banks and financial institutions, “private credit monopolies, domestic swindlers, rich and predatory money lenders which prey upon the people of the United States,” as Rep. Louis McFadden put it in 1932. The Federal Reserve simply creates credit and gives it to itself to loan to us at whatever interest rate it desires, giving the cadre of owners, some of the richest people in the world, ultimate domination over the rest of us. Literally the people who own the money own the world.
Suppose Virginia did issue a coin that became legal tender for all transactions, public and private. But instead of giving it to the banks to loan into circulation with interest, spent it into circulation purchasing goods and services by state agencies, as the federal government did with greenbacks during the Civil War.
Money would then be a public utility, a public trust, free to circulate and benefit our economy and our citizens, and free from the blood-sucking tentacles of the money changers. We would re-democratize money.
The Fed would become apoplectic. But our Founding Fathers would be smiling from their graves.
It’s a plan worthy of real consideration.
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