Virginia Considering A State Currency


We’re not immune from the consequences of human behavior,” Marshall said. “At some point there is going to be a dollar that breaks the camel’s back.”


The Latest Lunacy:   Virginia Considering It’s Own Currency

Virginia Advances Bill Pushing for State To Establish Its Own Currency



Today at the gym I saw a headline on FOX News about Virginia looking to come up with a state currency over fears of the dollar crashing.   Naturally this sort of thing piqued my interest and I looked it up as soon as I got home.  It looks like Robert Marshall of the Virginia House of Delegates proposed this bill, which is gaining traction.    I’m not sure if he’s explicitly calling for a gold standard or if that’s just what’s implied.   I know a handful of other states have made similar propositions in the past few years.

The author of the US News opinion piece, Susan Milligan, basically argues that we haven’t seen inflation like some other countries, so a state currency is uncalled for.   She also incorrectly states the government’s official position that inflation is only a few percentage points, which doesn’t factor in food or fuel.  She admits that there are reasons to be concerned with the strength of the dollar, but states that it’s currently the world’s dominant currency.   This is certainly true, but if there are concerns about the dollar’s future, why not have a plan B in place?  It’s easier to work something like this out when everything is running smoothly rather than trying to put the pieces together after it’s already needed.   Proactive > Reactive, Susan.

She also states that while fiscal responsibility is a worthwhile goal, a new currency is not the answer.   I think that a competing currency is as good of an answer as any.   They just had a huge debate in Washington over our deficit and the only thing they came up with is that they’re going to make some insignificant cuts to the budget sometime later down the road.   They’re still planning on that 16 trillion (and growing!) debt going away through all this economic growth that we’re all waiting for.   At this point it seems completely Pollyanna-ish to think that any kind of solution is going to come out of Washington, so why not take every opportunity to diverge ourselves from their shipwreck?   If only everyone was represented by politicians who were willing to think a few steps ahead and bring up some uncomfortable topics, we might not be in the kind of mess we’re looking at.

The currency would compete side-by-side with the US dollar in Virginia.    Because the dollar is the dominate currency of the world, I’m sure it would be dominate in Virginia as well but it would give Virginians (and anybody else, really) more choices to pick how they want to do commerce or receive compensation.      I would also suspect that a local currency would help keep a lot of Virginia’s commerce close to home and help keep money within local communities.  If no one is in to it, it will fail.   If they are, it will secede, or, uh, succeed.   Freudian slip, perhaps?

At any rate, I think the real lunacy is the idea that the dollar is invincible and that there will never come a day when we need something else.

On a side note, I think it’s kind of funny how an alternative currency like Ithaca Hours are viewed as quaint community-builders but as soon as a Republican backs a currency and/or “gold” is mentioned, it’s a wacky idea at best and a treacherous strike right at the heart of America at the worst even though they both basically work on the same idea.   Alternative currencies are in the eye of the beholder, I guess.




Discussing Alternate Currencies in Washington / Copper as a Barter Currency

Recently Rob Gray of the American Open Currency Standard testified in front of the House Financial Services Subcommittee on Domestic Monetary Policy on the subject of competing/alternate currencies.   Mr. Gray has been running the AOCS for five years, which issues barter credits to be used in trade between willing participants.   You can read more about the program and his time in Washington here.    He gave a scathing speech and the gist of it to the government was “just stay out of our way”.   He brings up the point that currencies come and go, but there’s always a human desire to trade and we as humans will always find ways to facilitate it whether or not there’s a government-issued currency.  I liked Gray’s approach of political indifference on the matter – he isn’t asking for any laws to be made or repealed, he’s just asking for them to basically leave the issue of alternate currencies alone and let the people decide.    On his webpage he posted the following statement:

Let’s stop talking about auditing the Fed.

Forget about ending the Fed.

Let’s start ignoring the Fed,

and eliminating the impact they have on our lives.

Honestly, I think that’s a pretty good and practical approach to a lot of things in this country and I try to address that on this blog and in my daily life.   Sometimes instead of trying to change the system, it’s best to try to find ways to limit the impact of the system on you.    I think it’s great that the politicians in Washington had to sit through that speech – all except Congressman Al Green (D – TX), who apparently had enough and walked out when Gray called the Federal Reserve and all the politicians present that enable it thieves.

Fans of “sound money”, precious metals, barter and/or Ron Paul, or even folks who just enjoy watching politicians have someone set up camp in their asses every now and then will enjoy his speech:

I have a couple of the Ron Paul AOCS 1oz copper bullion rounds and I would like to pick up some more of the different ones they offer.   I have to say that they are pretty cool coins and they feel like something that actually has intrinsic value.   Each 1oz copper round is given a value of 2, which corresponds to roughly $2 worth of barter – if the participants want to give it that value, of course.

I’m glad that AOCS decided to go with copper and other metal rounds instead of just issuing electronic credits, plastic, coupons or something else as a medium of exchange.  Copper has played a role as a medium of trade (aka “money”) for thousands of years and there’s something timeless about using metal money in today’s world of Visa cards and paper money.   Even in this country we’ve historically used copper for pennies, although these days we use an alloy that is almost entirely zinc.

Going back to a few hundred or even a couple thousand years ago to agrarian economies, a commoner would have recognized copper as a metal with a great degree of utility and a little bit of beauty if put in the hands of the right craftsman.   Copper utensils, cookware, chains and handcrafts would have been prized and any bit of copper could always be used for one of these items.   Today copper is just as useful and prized in our society for wiring and piping as well as other things – look at all the copper theft going on if you need proof.   One big selling point of copper is that it’s easily recyclable – all you have to do is melt it and it’s about 100% reusable.   It also never goes bad, it’s durable and changes of or within government have no impact on it, making it a good choice as money.

Just based on my gut feeling when I look at one of these rounds, I would imagine that if I went back to one of those previously-mentioned agrarian economies, one of these rounds would purchase a small unit of some agricultural product – I’m thinking something along the lines of a squash, a couple of tomatoes, a couple of potatoes, a bunch of greens, a couple carrots, two eggs or something else comparable.   Perhaps a couple of coins could get a blade sharpened, a mug of beer or a loaf of bread.    In other words, copper as money fills in the gap for the small day-to-day transactions that might be too small to handle with silver and definitely for gold and allows for a little more denominational flexibility.

I also think that today if I ran into a merchant at the farmer’s market that accepted AOCS copper, I would be able to pick up just about the same amount with one ounce of copper as someone would’ve been able to centuries ago – even theoretically using the same atoms of copper used back then.     There definitely is something cool about the timelessness of metals as a medium of exchange between two parties…


Hiding in Every Euro: Signs of Doom!



NPR’s Planet Money just posted this and I got a bit of a chuckle out of it.  Everything on it is a coincidence (or is it?  dun dun DUNNN!), but they’ve found little “clues” on the Euro that point towards the difficulty of maintaining the Euro over there.   We have our conspiracy theories with the dollar (the “new world order” in Latin, Masonic symbols, etc), now Europe has theirs.    Looks like this was in Greece’s cards all along!
Again, there’s nothing really to take seriously about this article, it’s just kind of interesting/funny.

The Iraqi Dinar Scam



I recently listened an episode of “Rethinking Wealth with Jay Peroni” from FTMDaily where he covered investing in the Iraqi Dinar.  The episode can be found here:

I was in Iraq as a Marine infantryman in 2004-5, right after the invasion and shortly after the establishment of something vaguely resembling some kind of government in Iraq, as well as the new currency.   I remember many people talking about investing in it – before the Persian Gulf War the exchange rate between the dinar and dollar was anywhere from 3 dollars per 1 dinar or 1:1.      After the fall of Saddam, new dinars were issued and the exchange rate was something in the neighborhood of 1 USD per 1200 dinars.   Naturally, people looked at this and saw huge upside potential – maybe someday their 1200 dinars purchased for a dollar would go to somewhere near the previous exchange rate, resulting in something like 1000% gains.   After all, with all that oil they were sitting on and the fact that it appeared like they could only go uphill from where they were at, the prospect seemed likely and tempting.  One gentleman I worked with who bought dinars told me that the ace-in-the-hole for Iraq’s economy was  that they were sitting on the world’s largest mercury deposit and once that operation was up and running, the currency would skyrocket.   I can’t confirm or deny Iraq’s mercury deposit, but this is what I was told.

Many people I was with talked about investing in dinars and over the course of time I’ve talked to a few civilians that put money into dinars, banking on a rise in value.   Although I have a handful of dinars as souvenirs (both old with Saddam and new) laying around, I didn’t purchase any dinars for the sake of an investment and I’m glad I didn’t – I know it was tempting to do so.

Peroni points out that the currency is not convertible – it cannot be exchanged on the market for other currencies.   They are only good as currency within Iraq and if you have them in the United States, they’re pretty much only valuable as collector’s items.   I will admit that their currency is kind of cool looking, for what that’s worth, but useless for foreign exchange trading.   In other words, the people that bought dinars with the intent of exchanging them when they rose in value were sold a lemon, unless they plan on hitting up the bazaar in Baghdad sometime in the near future.   I’d also like to point out that Iraq is nowhere near stable and it’s highly likely that they could issue a new currency when/if it becomes convertible.    I also think that there might have been some of the same phenomena with penny stocks going on –  the arbitrary value assigned to it makes it appear like any change in value will be drastic but in reality the actual value of the stock/currency isn’t magically more likely to jump/fall as dramatically as anything else.  What I mean by that is that the currency will go up and down in value just the same as if it were arbitrarily priced at 130, 13 or 1.3 dinars per US dollar – the fundamentals do not change simply based on the price alone.   I guess it goes to show that sometimes if it sounds too good to be true, it probably is.

It’s been about seven years since I was in Iraq, but occasionally the Iraqi dinar will cross my mind and I’ll briefly wonder what happened with it as an investment and the thought will leave my head as quick as it came in.  I’ve put out a few feelers on Facebook to see if any of the other Marines I was deployed with on Facebook had any updates on how that was working out for them, but I never had any good responses.   Fortunately, I don’t think that many of the Marines in my unit put any sizable sums of money into the dinar.

Peroni stated that the current exchange rate is somewhere in the neighborhood of 1400 dinar per US dollar.    When I was over there, it was in the neighborhood of 1300 per dollar, so I’m a little surprised to see it dropped in value – I figured it would eventually hover around 1000 dinar per US dollar once things leveled off a bit until they eventually rebased the currency.    My unit spent a lot of time on the streets and we would often purchase things in the market with US dollars, usually getting somewhere near the actual exchange rate but the more savvy merchants and currency exchangers knew how to get a little bit of a premium out of the trade (1000-1200 dinar per dollar).   Either way, the dollar still went far on the streets of Iraq – a dollar could buy 2-4 packs of cigarettes or a few packaged cakes (I was a big fan of cappuccino flavored ones from Iran) and candy bars or a large bottle of soda.  $5 could get you pretty much anything you wanted.   Although they would rip you off a little bit here and there, it was kind of hard to really get bent out of shape over it when you took into account the relative poverty of the average Iraqi.

I remember one comical incident where we found a merchant in the town that sold gold – we naively expected that we would be able to get gold at rock-bottom prices but we were shocked when the guy wanted $150 for a gold ring.    I believe at the time gold was at $300 per ounce, so it wasn’t priced too far over spot.   Robert Kiyosaki describes a similar incident in one of his books when he was in Vietnam trying to buy gold from a North Vietnamese mine at below-spot prices and not understanding the way pricing works on those kinds of things.

Although I didn’t know much about investing then (and I’m still not an expert today by any means), I had enough sense to know that I didn’t like the fundamentals of Iraq’s economy and that’s about the nicest way I could put that.    I believe that our leaders had dubious intentions on Iraq, but I believe that most of us at the ground level had good intentions for the people of Iraq.   I wish them great success in future endeavors and I think it would’ve been great if both the Iraqis and the American servicemen who put money into the dinar could grow wealth together via this investment, but the dinar as an investment vehicle just wasn’t meant to be.

Interestingly enough, a visit to shows the option to purchase dinars, but under the menu of selling dinars you get this:

Dinar Trade Inc. is currently undergoing some major changes never before seen in the market. Soon we will be offering new options for your current and future Iraqi Dinar holdings, along with other investment opportunities in Iraq. We would like to thank all of our loyal customers for their blessings and support during this major transition. We look forward to doing business with you in the near future.
I have a feeling that this page has looked like this for quite some time.

See also They’re Going To Be Worth Something Someday…