Via TPM we learn that a legislator in the Palmetto State seeks to create a new South Carolina currency, just in case the US dollar blows up.
It seems that, as the proposed legislation puts it, “many widely recognized experts predict the inevitable destruction of the Federal Reserve System’s currency through hyperinflation in the foreseeable future.”
Those would be the experts who read this chart, no doubt.*
Facing this inevitable disaster, isn’t it just simple prudence to plan ahead? State Senator Lee Bright** (R.-Klanbucks) thinks so. His bill seeks to set up a joint committee of the state legislature to study the issue and make recommendations by November, 2011. The bill strongly suggests the kind of monetary system that South Carolina should consider:
Whereas, the Federal Reserve System’s currency not being redeemable in gold or silver coin or the equivalent in bullion is being identified by more and more experts as a major reason for the ever-increasing instability of the Federal Reserve System…
Ahh! A gold bug.
Of course, that worked out so well last time.***
Hell, Benjamin Franklin worked this out in 1729, in his landmark pamphlet calling for the establishment of paper currency in the commonwealth of Pennsylvania, pointing out, accurately, that a metal currency scheme worked to transfer wealth from laboring folk to the rich, whilst constraining trade to the impoverishment of the whole.
Sounds like exactly the prescription for South Carolina, doesn’t it?
Onwards! There is the inconvenience that maintaining a national currency system is a power reserved to the federal government…but no matter:
Whereas, “the police power” being the primary sovereign governmental function of every state, every state may adopt its own currency, consisting of gold or silver, or both, whenever necessary and proper to facilitate exercises of that power in aid of the general welfare of the state and its citizens; and
Oh. Now I get it. This is Wingnut synchronicity. With a local mint churning out nicely decorated chunks of gold and silver to act as money instead of the Yankee greenback, it becomes possible both to drive the local economy into lasting depression and nullify the legal authority of the U.S. government over the patriotic and God-fearing slaveholders citizens of South Carolina.
That worked out pretty well last time too, didn’t it?
That’s really what this is about, of course. Secession in salami slices, while retaining just enough connection to the loyal states of the Union to continue receiving their wingnut welfare from the rest of us. (As of 2005, South Carolina received $1.35 in federal spending for every degenerate Federal Reserve dollar it sends north to the enemy capital.)
And you know what? I think that this should really happen. Go for it, Palmetto (gold) Bugs! Set up a currency — with this proviso. Greenbacks cease to be legal tender. You’d be on your own, scrabbling for the shiny bits as best you could. No federal subsidies for you, neither.
So go ahead, I say. Try to make a metal monetary system work. I double dog dare ya. After all, the states are supposed to be laboratories of democracy…which means it’s useful for the rest of us to observe some catastrophic train wrecks when they occur.
*And yes, I know that this is snark, and that one measure only should not satisfy anyone trying to assess risks to the economy. But still, if you are looking for market wisdom on the future of inflation, the rate history of the long bond is a pretty good place to start.
**No easy jokes on the man’s name, please. Not that the Balloon Juice crowd would ever stoop to such low humor.
Will it be called the whiteback?
Rum, GoldBuggery, and the Lash!
Time to bring back the various punishments for coining! Hanging, drawing, quartering, boiling in oil.
@aimai: Not to mention the punishment specified for women. It was deemed lewd to subject either the condemned or the crowd to the parody of sexual ecstasy produced in the jerking and twitching that a hanged prisoner suffers (the “hangman’s dance”) as she/he strangles, and so female coiners were burnt at the stake instead.
(Though to be historically fair, by the seventeenth century at least, most women condemned to the stake were strangled quietly before the flames were lit.)
I can see how well it’s going to work out for vacationers to pay for rounds of golf in Myrtle Beach in gold bullion. There might be an issue for people flying into Myrtle Beach as to whether they need to pack their metal bullion in a separate bag, and whether the airlines are going to give them any special extra-bag or extra-weight allowances for it.
When South Carolina seceded the first time, they were the wealthiest state in the south. Gee, that worked out well for them. How much lower can they go.
c u n d gulag
I wonder which SC coin will be graced with Martin Luther Kings profile?
New market opportunity in making leather pouches in which to hold your gold coin! See they’re really all about capitalism.
And may I just say that the tax collector writing in the book in that painting has the most amazing hat. All our tax collectors should have uniforms like that. Project Runway would have nothing on Project IRS.
I know nothing about the subject at hand, but I just wanted to say that these paintings bring regular joy to my life. Also, I have fallen in love with that orange hat. More tax collectors should wear hats of that sort.
Edit: Apparently Violet and I were typing the same thought at the same time. Great minds and all that.
Looking at the Benjamin Franklin link, I noticed that he also had a “Remarks on a South Carolina Currency Scheme” printed in The Pennsylvania Gazette, May 31, 1733. Apart from coming from the same colony/state, per his very short description of the scheme, it favored Silver and Gold over paper currency. Franklin raises three questions and concludes with: These Queries, for ought I know may have little in ’em. If they serve to make a Paper Currency any thing more consider’d, and therefore better understood, it is enough.
Oh, HERE you are! (See my comment in mistermix’s thread next door to read all about my confuzzlement with this post.)
Whenever I go to political/governmental events in SC, which my job requires of me now and then, they often trot out Ben Bernanke as a shining example of “local boy makes good” — he keynotes major conferences, etc. I’d just love to see the Fed Chairman and this legislative champion of goldbuggery debate the currency of South Calamity.
You had to invoke the name of the dread Montagu Norman, didn’t you.
Perform the appropriate exorcism, please. Stat.
The expression on the paint subjects face brought a little smile to my own face.
I’ve been reading your posts for a while now and would love to feature you in my own blog.
Do you have a favourite quote? Maybe from a political leader or a comedy stand up? Would love some link love. You can check it out before hand, but it’s a nice blog the-quotes-blog.blogspot.com
Thoughtful Black Co-Citizen
As I said on another blog about this subject: African-Americans in SoCa need to evacuate now before they become the currency of choice.
Aw you’re no fun! Now I have to think of a difficult joke on the man’s name.
U.S. Constitution: Article 1, Section 10:
A word comes to mind: Morans.
Tom Levenson @ Top:
Also, don’t throw me in the briar patch. And don’t eat that apple!
There was a land of Cavaliers and Cotton Fields called the Old South . . . Here in this pretty world Gallantry took its last bow . . . Here was the last ever to be seen of Knights and their Ladies Fair, of Master and of Slave . . . Look for it only in books, for it is no more than a dream remembered.
A Civilization gone with the wind . . .
“South Carolina is too small for a republic and too large for an insane asylum.”
They really are intent on living up to that saying, aren’t they?
Edit: Thank you, Wikipedia for today’s moment of irony:
To bad this will never happen. Think of all the gold SC will have to buy to “back” their new currency. And what will they buy it with, pray tell? I suppose they could ask the gold producers to lend them the gold they will need, but I suspect those producers are just not that generous.
@David: Watched the first half hour last night. I fantasize about winning the lottery and buying a hill outside Atlanta, where I will erect a one hundred foot tall statue of Sherman.
Let’s see now, US Constitution, Article I, Section 10: “No State shall…coin Money”.
Well that’s pretty vague, isn’t it?
Edit: Argh! Beaten by Gnomedad!
Tom Levenson @ Top:
I’d be happy to let them secede if weren’t for one problem: you know they’d deregulate the fuck out of industry, and, unfortunately, air pollution crosses state lines.
They’ll have to raise taxes to … Oh, I think I see a problem here.
I wouldn’t lean too hard on that “originalism” argument, gnomedad, as the Constitution does, as it tends to do in many instances, have a loophole written right in: let’s revisit the text (my emphasis added)
For the sort of ideological wingnuts who would propose gold-backed currency for a particular State, reinterpreting the Constitution to advance their own pet political/economic obsessions is an easy step: they do it all the time with the Second Amendment, why not Art1,Sec10?
Of course, in the real world, US States “coining” their own money would be a non-starter, but then, we’re not not talking about the “real” world: it’s South Carolina.
@MikeJ: Perhaps we should develop a nuclear weapon for, ah, anti-insurrectionary purposes.
We could name it “the General Sherman.”
@JGabriel: If they were a foreign country we’d have some place closer to expend armament on so it would need to be replaced. More, rubble, less trouble.
More Common Sense Conservatism can be found here.
Someone should catalog this shit for easy retrieval.
Thoughtful Black Co-Citizen
@Citizen_X: That made me laugh. And now I feel guilty.
Thoughtful Black Co-Citizen
@Bob: Many states* have some version of Thomas.gov. It appears this turkey doesn’t have any co-sponsors.
*Actually, since S.C. has one, it’s a good bet all states have one.
Just let the worthless bigot states secede.
And then build that danged fence.
Here’s a question for the wingnut gold bugs: In their scheme–the currency backed by gold and presumably redeemable for same (otherwise what’s the point?)–what would prevent A-rab terrorists–or, worse, the French–from cashing in their SC-bucks for sweet auric metal and carting it off to foreign shores?
I think the French were actually doing that in the ’20s or ’30s, which caused the “No gold for you!” choke chain to be yanked the first time.
ETA: And FYWP for the maladroit “smart” apostrophes in front of my decades. Grr.
Because nothing says free market more than forcing the government to heavily intervene in rare mineral markets to sustain a completely faith-based linkage between the value of currency and the cost of a particular rock.
Mo's Bike Shop
Say a gold standard suddenly made sense to the whole world; has any OCD out there already done the math on how much gold would be in a twenty? I’m figuring a square centimeter of gold leaf laminated in plastic.
And of course, this means we have some means of mining more gold at precisely 3% each year so we don’t kneecap Western Capitalism, right?
I really love the expression on the face of the man in the black furry hat. He looks like he’s in pain. Given the title of the painting, it seems they are both tax collectors? Otherwise I’d guess he was being forced to give money to the man in the orange hat. But perhaps working for the man in the orange hat is punishment in and of itself.
He reminds me of a rat who has just been caught by a light: a little surprised, a little defiant, a little angry, poised both to run and to stand his ground. That face is beautifully rendered. It’s a lovely contrast to the tranquil, plodding, ordinariness on the face of the man in the orange hat.
Really excellent painting.
Love your posts and the accompanying artwork. It’s nice being introduced to so many artists whose work I’ve only seen in passing.
@Thoughtful Black Co-Citizen: No, I mean just catalog the shit the Tea Folk and Republicans conjure as good public policy. Charles Blow. the link above, has a good start, the TPM article is a great addition. Tag the list as above, “Looks Like I Picked the Wrong Week to Stop Sniffing Glue.”
That’s why it was illegal for individuals to own more than an ounce two. I’d be interested in seeing the teabagger reaction when the gumbint confiscated their gold.
Fiat money has been getting ready to blow up any day now since 1913.
They’re ready, and have been predicting it, I tell you…
And to top it all off, our state (SC) is now so broke that they can’t maintain our roads. So, they are going to propose that the problems be addressed by (drumroll, please)…FEMA!
I kid you not.
@Mo’s Bike Shop: Making change will be a bitch.
I see that the ad algorithm is working well, as I find myself advised by the US Gold Bureau that “Gold is on the Rise! Buy Gold Bars Fast!”
@gnomedad: It’s like these people have never read the document.
Except that the point you highlighted has nothing to do with the coining of money. It only means that when a creditor is owned money by the state, the state can’t authorize something like chicken heads or limestone pebbles as a form of legal tender and effectively cancel the debt. So the creditor can demand payment in gold or silver coins, or currency backed by gold or silver, since that was what U.S. currency was in 1787.
@cmorenc: And depending upon the price of gold, South Carolina would either be entirely bereft of tourists, or over-run by hordes of Yankee-trash.
@GregB: No, it will be called the Reichsmark.
@gnomedad: So Kentucky is in direct violation of the law every time it appoints someone a Kentucky Colonel? Last I checked, that’s kind of like a knighthood in the Bluegrass State.
@Mo’s Bike Shop:
I’ll give it a shot. Gold is running right now about $1300 or so an ounce according to 5 seconds worth of Googling, so $20 would be roughly 1/65th of an ounce of gold. Gold leaf seems to run about 1-2000 leaves (3.3″ square) to the ounce, so taking the thicker gauge as a measure, $20 would buy about 15 standard leaves, or about 150 square inches worth.
@azlib: Barbecue sauce. The only thing produced in the Palmetto State of any value.
Popcorn. I haz it. I am with Tom. Let them do it with the caveat that they get no filthy federal lucre–none. Nada. Zip. Let the games begin!
I’d be happy to let them secede if weren’t for one problem: you know they’d deregulate the fuck out of industry, and, unfortunately, air pollution crosses state lines.
Perhaps we could enclose the state of SC with a giant transparent dome.
That way, the poor, sensitive little dears won’t even have to breathe the same air as us.
@JGabriel: I lived there once, and a neighbor of ours decided to burn some trash in her back yard. I complained to the authorities, and the bubba on the other end shrugged and told me, “so? It ain’t aginst the law or nuthin.” Swear to God.
Of course, if we had an HOA, we could have pretty much applied vigilante justice against the offending party, and the bubbas at the Richland County Sheriff’s Office would have shrugged and said, “well, I guess they don’t need us out thar.”
Having a secure gold standard would involve cornering the market on another metal first. Jeesh, any alchemist worth his weight in…. lead knows that! I’m quite sure SC has an adaquate supply of bullets to get ‘er done.
It’s likethese people have never read the document.
Fix’t that for you.
Mike in NC
I had to go check and see if there was really an actual place in SC called “Klanbucks”, because I’d so want to go and check it out.
Man, you took the most substantive point right off the table! How do you expect to ever get a commenting thread on the merits of the proposed law going under such circumstances.
Good gawd — these nuts are what allows the MSM to point to him and say, “See, Paul Ryan is not as bad as that kook so we need to pay attention to Paul Ryan (or insert any whack politician that does not have a clue as to how the economy or government finances actually works) and his brilliant debt/deficit busting scheme.” Which makes Paul Ryan the frickin’ center in the minds of these idiots in the media.
@Steaming Pile: And I actually sent off for some of the mustard based sauce a couple of years ago. Not impressed with it, tho I was able to eat it. Perfect for making chow chow. I make better BBQ myself.
@Chicago Todd: Yeppers. The same Paul Ryan who thinks the best way to ensure a brighter future for the children of America is by cutting them off at the knees in the present. Of course, the dog-whistle there is that he means his children and the children of people like him when he talks about “our children”–he doesn’t give a shit about the children of poor folk. IGMFOADYDFH.
This thread makes me nostalgic for the good old days when we made fun of bartering with chickens. What century will the goobers be racing backwards to next month?
@Cat Lady: As chicken is technically an unlimited currency supply, I highly encouraged this method of currency. The fact that I have easy access to said fowl and the production of the noble bird had nothing to do with my enthusiasm.
It’s like I’ve said for some time now: the wingnuts’ attitude towards the Federal government is exactly that of a teenager screaming at his parents “I hate you, you’ve ruined my life, and I wish you were dead! Now give me a ride to the mall!”
Hey, I’d love to be able to drive to Carolina and buy cheap shit for American dollars instead of having to go all the way to another country. Go for it!
Barbecue sauce. The only thing produced in the Palmetto State of any value.
And one of the many things that North Carolina does better.
I’m sitting in SC, maybe 200 feet from Fort Moultrie on Sullivan’s Island, where Poe set his story, “The Gold Bug.” He was stationed at Fort Moultrie.
This is one crazy place. The collective stupidity is beyond calculation. This particular bedlam-dweller’s proposal will be publicly cheered here as another step toward an Elysian state of Federal nullification, but in private, not so much. The corporate interests here are no less self-oriented than anywhere else. It’s bluster, blather, and balderdash.
@Mo’s Bike Shop: I go through this every so often. A $20 purchase would use 0.1 gram (one decigram). If you’ve handled gold leaf for gilding, it’s approximately ten leaves/sheets. If you haven’t, a “standard” US postage stamp weighs approximately 1 gram, so the same weight in gold would be ~$200.
Lotsa approximations, of course.
Here’s the way I swag it. US M1 (money supply, more or less just the cash) is ~$1.8T. Our GDP is ~$15T. Money velocity, then, is about 8. Rephrasing, every dollar gets used 8 times. I’m going to use that as my baseline swag.
Official gold holdings around the world is approximately 30,562.5 tonnes (metric tons). Private holdings (jewelry, gold bug holdings, etc) are estimated to be another 50,000 tonnes. There are 32150.746 troy ounces per tonne.
That’s ~2,590,144,503.780 troy ounces of gold in the world — 2.6B troy ounces for rounding.
World GDP in 2008 was US$61T. (We had a decline in 2009 to $58T, but that’s due to the recession.) Divide by 8 and we need 7,625,000,000,000 dollars due to velocity. That means each Troy ounce of gold needs to be worth ~$2,932. ASSUMING the world goes to a pure gold standard AND that /all/ gold, including that on dome tops and various statues and artwork, is confiscated and converted. For simplicity I assumed half is untouchable, so a troy ounce becomes a notional US$6000
@Kirk Spencer: You just made my head hurt. This could also be due to the head cold I’m developing however.
When did they START maintaining their roads (outside of columbia-myrtle beach-greenville spartanburg that is)?
You post this with a straight face or were you giggling when you wrote it? I suppose some have been living under a rock for the past 40 years, but it seems abandoning the gold standard is as bad, if not worse, in this respect.
I heard Karl Marx wrote a landmark pamphlet or two. They say the same about Milton Friedman.
For dogs sake not that mustard based evil concotion!
Aye, but Lindsey, and Demint have already made it happen!
@Yutsano: You and me both, hon. How you be? More importantly, how the kitteh be?
I think its funny, and a bit weird, that as people move more and more to a cashless society (direct deposit, credit and debit cards, automatic or online bill paying) that these wingnuts are pushing for physical transactions in a heavy substance.
@asiangrrlMN: Sheesh. You and my mom. First thing she asked me last time I went home: “Where’s the kitten?” Thanks mom, thanks.
I think today I’ll be nursing peppermint tea and Jewish penicillin. I think I can head this one off before it gets too bad.
@JoJo: well, you see the heavier substance can be rolled up into smaller tiny little round balls and maybe it won’t clog up the tubez so much as the crumpled bills.
@DPirate: Price of money is the issue. When the money supply is not adequate for commerce, metal currencies have only two directions to go: towards debasement to increase the nominal value of a coin — which doesn’t work well because people can weigh coins pretty easily — or through an increase in the price of money, the interest rate charged or a fall in the prices of other goods denominated in metal.
When either happens, holders of undebased coin or bullion, or real property gain, as the return on their holdings goes up. Everyone else loses.
Franklin noted that the former class was dominated by the landed interests in PA. He writes:
Kinda agree w. old Ben here. In fact I do so concur.
So no, I did not giggle as I wrote this post. Well I did, but not at that particular line.
@Yutsano: Heh. We know the important thing in life–cats! Fingers crossed you don’t get sick.
That is absolutely false. You could come up with a hypothetical situation where Franklin would be wrong, but in practice he would always be right.
Damn, that’s ftw right out the gate.
They have two plans, actually: one involving cropdusters, the other Mini Coopers.
Phoenician in a time of Romans
Here’s a question for the wingnut gold bugs: In their scheme—the currency backed by gold and presumably redeemable for same (otherwise what’s the point?)—what would prevent A-rab terrorists—or, worse, the French—from cashing in their SC-bucks for sweet auric metal and carting it off to foreign shores?
Hmm – given Walmart, there’d be a constant outflow of gold to China, with the Chinese wanting, well, nothing from SC.
We’ve seen that before, and I don’t think SC is capable of starting another Opium War…
Just a note about the painting by Van Reymerswaele: I believe the person writing in the ledger is supposed to be female: the headdress is one that women wore in the previous century. The other person would be the actual collector of the money. Part of what makes this picture so amusing is that these well-off leeches are too miserly to buy up-to-date clothing, so they are wearing the latest fashions from 100 years before.
I’d also note the variety of coins being counted: there were so many different currencies in the early modern that counting them, weighing the metal content, and changing them was a true growth industry. Perhaps Mr. Bright would like to create jobs that way?
They don’t even have to bother with a new design-they can reuse the design of Confederate money.
Franklin may well have been correct in asserting “that a metal currency scheme worked to transfer wealth from laboring folk to the rich, whilst constraining trade to the impoverishment of the whole” but he apparently was incorrect to imply that paper currency would obviate this outcome!!!
Wile E. Quixote
I like Tom’s idea that we should let them have their new currency, with the proviso, added to Tom’s about not being allowed to use greenbacks any more, that the new coins and bills are only allowed to bear the likenesses of William Tecumseh Sherman, Ulysses S. Grant, Philip Sheridan, Martin Luther King, Fredrick Douglass, Sojourner Truth, Malcolm X, Medgar Evars, Thurgood Marshall or Earl Warren and that the back of the bills have to contain either, the lyrics for the Battle Hymn of the Republic the text of the Thirteenth and Fourteenth amendments or the text of Abraham Lincoln’s Second Inaugural Address.
Wile E. Quixote
Look, we can’t let “them” simply secede because we can’t allow a state to leave and to take rights away from our fellow Americans (including “them”). Got it?
@John Puma: Well, the thing is… with a fiat currency you have the choice of how that goes. With gold, there is none.
The problem is that policy choices are being made in such a way as to strongly privilege Thems That Haves. It wasn’t ever thus, and need not be forever.
That does require people to actually get involved in the political process though. I’m trying to figure out why nobody’s tried to use a flash mob approach to getting people to sign up to a party in huge numbers. Get the technorati into the political process instead of the way that most of them seem to be simply watching from the sidelines.
@efgoldman: Umm…no. That would be wrong. I could possibly come up with some Middle Eastern inspired chicken soup that has mint in it, but that would be stretching the limits of culinary decency a bit too far.
The Republic of Stupidity
@David: They were a gaseous lot, weren’t they. It seems the tradition hasn’t changed, and may have gotten worse. Perhaps THEY are more responsible for global warming than all those cows that exist to feed us carnivores?
“Think of all the gold SC will have to buy to “back” their new currency. And what will they buy it with, pray tell? I suppose they could ask the gold producers to lend them the gold they will need, but I suspect those producers are just not that generous.”
Change “gold producers” to “Glenn Beck” and you will have the same answer!
Even the Confederate constitution forbade states from their own currencies. This moron in South Carolina wants to go back to the Articles of Confederation.
@Tom Levenson: Sure, debasement would not work if it were all coinage. They aren’t necessarily talking about carrying around bullion, though. It is metal-backed, not simply metal.
So there is the second option, which is otherwise known as inflation. To say that there will be more inflation in a metal-backed currency than in a pure fiat currency seems to me on the face of it wrong in theory, and I do not think that history will bear that idea out.
It would be, as you say, simply a question of the price of money (that is, currency).
In Franklin’s time, what backed the currency (gold/silver) was the actual currency used in circulation. This, I agree, should be avoided, and I will allow that he was right. Yet this is not necessary in order to back the dollar in gold. As such, while something to keep in mind, it doesn’t rule anything out.
Yes, true, but so what? After all, inflating the currency is supposed to represent the increase in the economy, so this is at least in theory a good thing. Regardless, it is only different from fiat inflation in terms of it’s immediacy. People are affected alike in either system depending upon their financial situation.
So, the govt says that this year, due to the gains in the economy/lack of currency/whatever, the dollar is no longer equal to x units of gold. Now the dollar will be equal to x+1 units. Seems a better way to inflate currency than by stealth, as we do today.
IMO, “goldbuggery” is basically due to people wanting to know wtf is going on with their money.
@Napoleon: I am not saying that he is wrong. I am saying that it doesn’t matter that he is right because the very same things are happening today with our currency and economy. That is the basis of my crack about the line he wrote.
One of Congress’s enumerated powers is “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”
Wouldn’t South Carolina’s new currency be unconstitutional?
Uh, what does this do to credit cards then? US currency is at least backed by gold. Plastic credit cards are backed by, what? Ethereal ones and zeros? Does this kill electronic transfers entirely? Will I have to mail lumps/wads/sheets of gold as a deposit for my stay in Hilton Head this summer? How many milligrams of gold will it take to buy a box of Titleists?