States seek currencies made of silver and gold

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States seek currencies made of silver and gold

By Blake Ellis @CNNMoney February 3, 2012: 10:53 AM ET


Worried that the Federal Reserve and the U.S. dollar are on the brink of collapse, more than
a dozen states have proposed using their own alternative currencies of silver and gold.

NEW YORK (CNNMoney) -- A growing number of states are seeking shiny new currencies made of silver and gold.

Worried that the Federal Reserve and the U.S. dollar are on the brink of collapse, lawmakers from 13 states, including Minnesota, Tennessee, Iowa, South Carolina and Georgia, are seeking approval from their state governments to either issue their own alternative currency or explore it as an option. Just three years ago, only three states had similar proposals in place.

"In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System ... the State's governmental finances and private economy will be thrown into chaos," said North Carolina Republican Representative Glen Bradley in a currency bill he introduced last year.

Unlike individual communities, which are allowed to create their own currency -- as long as it is easily distinguishable from U.S. dollars -- the Constitution bans states from printing their own paper money or issuing their own currency. But it allows the states to make "gold and silver Coin a Tender in Payment of Debts."

http://money.cnn.com/2012/02/03/pf/states_currencies/

[ivanm]

People would shave the coins, so would it really be a good deal to have them?  They could also melt then down for the metal. 

I think the name of the game for currency coins is to make them of materials that have relatively little monetary or intrinsic value, especially less than the stated face value of the coins.  This would decrease the incentive to sell them as a commodity metal.

I wonder about the fate of the copper pennies as copper is a valuable commodity. 

If I remember correctly, using clad metal coins such as the dime, quarter, or half dollar, was done in part to discourage the defacing or destruction of the silver coins.

Getting back to the thread topic.  Where would the states get the metal for the coins, and how would they pay for it?  When people speak of metal based currency it always leaves me to wonder how they can come up with trillions of dollars worth of gold and silver, that is, how will they pay for the coinage materials?  What would the medium of exchange be?  I think they would be right back to fiat money, simply account balances.