02/11/2013 07:48 am ET Updated Dec 06, 2017

Virginia Alternative Currency: Prince William County Republican Wants Cheap 'Doomsday Dollars' As Apocalypse Insurance

If you ask Del. Robert G. Marshall, doomsday might be just around the corner.

That's why the Prince William County Republican wants to prepare Virginia for the impact of a major financial meltdown, caused by hyperinflation, cyberattacks on banks and the Federal Reserve's increasing control over the nation's money supply.

What if your credit or debit cards won't work tomorrow and you have no access to your money? How do you continue to conduct commerce in these emergency situations?

To protect Virginians and their assets, Marshall has drafted legislation with the goal to give Virginia its own currency.

House Joint Resolution 590, which passed by a two-thirds vote in the House of Delegates last week, would establish a 10-member joint subcommittee consisting of eight legislators and two non-legislative Virginia residents who would study the feasibility "of a metallic-based monetary unit."

Marshall said the new currency would not replace but compete with the U.S. dollar.

"It would be an additional vehicle of trade and commerce," he said.

The study's projected $17,440 cost would justify the means, he added.

"That's very cheap, just about what one delegate makes a year," he said.

His concern that the dollar might not always be available prompted him to introduce this measure, Marshall said.

"There are sniper attacks going on right now from foreign powers on our financial institutions," he said. "If they succeed, you're not going to be able to buy gas with a credit card. If you are on Medicaid, you won't get a debit card to buy food at the grocery store. A whole bunch of transactions are going to cease."

A simple way around this, Marshall said, would be to require at least the 81 state-chartered banks to issue checks to all account holders "so they can carry on commerce, so they can buy food, gasoline, pay their rent and electricity."

Marshall's idea isn't new. Rep. Ron Paul of Texas, a passionate advocate for the abolishment of the Federal Reserve -- who has run for president as a Libertarian and as a Republican -- previously introduced his "Free Competition in Currency Act" in Congress.

The measure, which would have allowed states to introduce their own currencies, was never signed into law but was reintroduced last month by Georgia Rep. Paul C. Broun, a Republican.

The proposals have gained support, especially among some Republicans and tea party groups nationwide, who worry about the Fed's continuing infusions of cash into the economy and who are pushing for a return to the "gold standard" that would require the U.S. dollar to be backed by gold reserves.

The guarantee of the convertibility of dollars into gold on demand was first established in 1944 at a fixed rate of $35 per ounce under the Bretton Woods Agreement. But in 1971, the measure was abandoned under Republican President Richard Nixon.

Since President Barack Obama's first election in 2008, several states have pursued legislative efforts for currency creation. These efforts face legal challenges, because while individual localities are permitted to issue their own currency -- as long as it is distinguishable from U.S. dollars -- the Constitution bans states from printing their own paper money or issuing their own paper currency.

But Article 1, Section 10 also leaves states the option to mint coins to be used for debt service -- a loophole that some use as a step toward currency creation.

At least 13 other states -- Colorado, Georgia, Idaho, Iowa, Missouri, Montana, New Hampshire, North Carolina, South Carolina, Tennessee, Utah, Vermont and Washington -- have explored the option of issuing their own currency.

To date, only Utah has passed such legislation, recognizing gold and silver coins issued by the U.S. Mint, like Silver Eagles and American Gold, as a legal form of payment.

Marshall introduced legislation in 2011 that authorized the governor to direct the state treasurer to mint "gold, platinum and silver coins for commemorative use that bear the seals of the commonwealth." The bill passed in both houses and was signed into law.

Two years ago, Marshall complained that his bill had been mischaracterized as an attempt to mint a separate currency for Virginia -- bringing criticism that he offered an alternative to the Federal Reserve. "Some hysterical comments," he said.

That was then. But now, Marshall is serious about taking that next step.

"Virginia has to do this, we need to be prepared," he said. "We have to anticipate this so we don't descend into social chaos. When you got massive inflation, you are setting up the stage for dictatorships. We don't need that in this country."

But experts say Marshall's fears are not grounded in reality.

"There is no chance whatsoever that hyperinflation will happen in the United States," said Michael Smitka, professor of economics at Washington and Lee University. "Only countries that are on the brink of a complete political breakdown ever face this."

Smitka said Japan, a country with an economic system most similar to that of the U.S., has never experienced hyperinflation after its 1991 economic meltdown.

"After all this time, what they have is outright deflation, not inflation, much less hyperinflation," he said. But slight, one-digit inflation, as the U.S. experiences, is manageable, he said.

Cyberattacks are even less likely to cause serious damage, Smitka said.

"Banks are very careful with their Internet systems. Anyone suggesting that a cyberattack can bring down an entire centralized system has no understanding of how it works," he said.

A system that can be trusted is already in place, Smitka said.

"Who are they going to put in to run the Virginia monetary system? I'd fear the competence of a state-level monetary board and state-level financial regulation more than the federal level," he said.

The Fed is prepared for national emergencies, Smitka said.

"The Federal Reserve in Richmond has multiple billions in cash reserves that can be infused into the Virginia economy if needed," he said.

Democrats also slammed Marshall's proposal.

"House GOP put on tin foil hats in late-night session," was the headline of a statement released by the Virginia House Democratic Caucus last week. Caucus chairman Mark D. Sickles, D-Fairfax, called the debate over this legislation "political theatrics."

Marshall stands by his measure, which the state Senate has referred to the Rules Committee.

"It's a serious effort dealing with a serious problem," he said.

But Marshall -- who suggested in 2011 to name a Virginia currency "Ginny" -- said he has not given any thought to whose head he would want to grace the commonwealth's coin.

"We are not at that point yet," he said. "But it won't be mine."


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