The Daily Item, Sunbury, PA

Politics

February 7, 2013

Virginia lawmakers consider state currency

(Continued)

"This is a lifeboat study; what happens if?" Marshall said.

Mainstream economics would suggest that America is in little danger of turning into postwar Germany. Inflation is below 2 percent even though the Fed has tripled the amount of money in circulation since the 2008 financial crisis. Investors view the dollar as a safe haven, buying up greenbacks when turmoil strikes around the globe. A single currency is one of the bedrock assumptions of modern economics.

But that doesn't mean Virginia shouldn't be ready, Marshall and his supporters believe. His 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." The study would cost $17,440.

"The resolution is pretty modest," said Lawrence White, a George Mason University economics professor who said he supports the proposal as a private citizen. "It's 'consider the idea.' "

White doesn't subscribe to the doomsday scenario, but he's no optimist, either. He predicted that the inflation rate would rise to 5 percent before the end of the decade and eventually reach 10 percent.

"I think the most effective way to send a message is to say you're prepared to do something," White said. "I view it as a kind of state-level expression of concern about the uncharted course the Federal Reserve has been on in monetary policy."

Some members of Congress have also denounced what they considered Fed overreach. Texas libertarian Ron Paul's book "End the Fed" hit No. 6 on the New York Times bestsellers list in 2009. A campaign by Sen. Bernie Sanders, I-Vt., dubbed "Audit the Fed" culminated in a report by the Government Accountability Office highlighting potential conflicts of interest within the institution.

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