About a year ago, we took a look at Republicans in a handful of state legislatures who had declared their lack of faith in the U.S. economy by proposing bills to permit their states to accept gold and silver as legal tender and/or to mint their own gold or silver money. 

(Fun fact: Such a bill actually passed Utah’s GOP-controlled legislature and was signed into law by the state’s Republican governor.) 

Well, the right-wing ideologues and conspiracy theorists with no faith in our nation’s economy are at it again. 

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. 

While Article I, Section 10 of the U.S. Constitution prohibits states from issuing their own currency, it does permit states to make “gold and silver Coin a Tender in Payment of Debts.” 

Citing concerns with nonexistent “hyperinflation” and baseless fears that the Federal Reserve could collapse at any moment, an increasing number of extreme right-wing Republicans in states are attempting to use this clause as a way to push the country back towards the gold standard (which often is blamed for prolonging the Great Depression and was abandoned in 1933). But returning to a gold (or silver) standard would leave our nation completely powerless to control our own monetary policy, often tying inflation rates to completely arbitrary factors such as the rate that gold is mined on other continents, rather than to the interests of a national economy. It also leaves us without one of our most important tools to push back against economic downturns. 

But that’s not stopping GOP presidential candidates from pushing for it on the national level. 

Ron Paul is sponsoring the "Free Competition in Currency Act," which would allow states to introduce their own currencies, and rival Newt Gingrich is calling for a commission to look at how the country can get back to the gold standard. 

Basically, state-issued currencies are a “terrible” idea, according to at least one economic scholar. 

"Having 50 Feds" could debase the U.S. dollar and even potentially lead the country into default, he said. "The single currency in the United States is working just fine," said [Vanderbilt University economics and finance professor David] Parsley. "I have no idea why anyone would want to destroy something so successful -- unless they actually wanted to destroy the country." 

Thirteen state legislatures reportedly are using taxpayer resources to consider bills to either issue their alternative gold- or silver-based currency, accept other gold or silver coinage as legal tender, or to study such proposals. These states include (click to see the actual bills): 

• Alabama
• Colorado
• Idaho
• Iowa
• Minnesota
• North Carolina
• Pennsylvania
• South Carolina
• Virginia
• Washington

So instead of dealing with real issues facing their states – unemployment, education funding, job creation, infrastructure maintenance and development, to name just a few – these Republicans waste time and resources airing their economy-undermining, right-wing conspiracy theories. 

This local legal tender push is just one terrible idea among many popping up across statehouses this year, but it may take the gold as the proposal with the least basis in rational thought.

Virginia GOP Delegate Bob Marshall has found a new reason to loathe the Federal Reserve: he thinks the Richmond Fed is celebrating “behavior” that “adds significantly to illness, increases health costs, promotes venereal diseases, and worsens the population imbalance relating to the number of workers supporting the beneficiaries of America’s Social Security and Medicare programs.” 

At the request of an employee group representing gay, lesbian, bisexual, and transgender people, the Richmond Federal Reserve is flying a rainbow flag outside of its building to represent LGBT rights during Gay Pride Month. 

Republican Delegate Riley Ingram also shared his opposition to the flag with the bank. But Del. Marshall, who has an extensive history of opposition to gay rights and equality, seems particularly riled. 

“I do not believe that a celebration of ‘gay pride’ has anything to do with the mission of the Federal Reserve under the Federal Reserve Act passed by Congress,” Marshall said. “This is a celebration of a behavior that is still a class six felony in Virginia. How can the American people trust the judgement [sic] of the Federal Reserve as an institution when its spokesperson celebrates an attack on public morals?” 

Del. Marshall has preexisting issues with the Federal Reserve. During this past legislative session, he filed legislation that would have resulted in a study of “alternative currencies to that distributed by the Federal Reserve System ‘in the event of a major breakdown of the Federal Reserve System.’” He also wanted the Commonwealth to begin minting its own gold and silver coins as said alternative currency. 

Del. Marshall also has a long and storied history of fighting for continued discrimination against the LGBT community. When the federal government repealed “Don’t Ask, Don’t Tell,” he fought to maintain the ban on gays serving in the Virginia National Guard. He also recently lobbied against a proposal that would have allowed unmarried couples – homosexual or heterosexual—to adopt children. 

Since either the Federal Reserve or the LGBT community clearly is enough to upset Del. Marshall on its own, one can only imagine the anxiety caused by both offending him simultaneously.

(h/t Anita Kumar)

We interrupt the election analysis to bring you a bit of policy news.

In the wake of the nation's deepening economic crisis, state leaders across the country are working hard to take action in response.

In California, lawmakers and Gov. Schwarzenegger are discussing the possibility of a special session to reassess budget priorities amidst the news that revenue for the state might fall as much $1 billion below the amount originally projected.

In New Jersey, both chambers of the legislature will meet for an address by Gov. Jon Corzine and the Senate Budget and Appropriations Committee plans a special hearing on the economy for next Monday.

State employees are among the people being impacted by the projected budget shortfalls. In many states, government workers are being offered early retirement packages, and others are being asked to work fewer hours or to pay more for benefits. Still other states, like Pennsylvania, have instituted a hiring freeze in an effort to balance their budget.

The possibility that municipal bond markets might become inaccessible is another huge potential problem facing local governments. State lawmakers have begun to appeal to the federal government for assistance, but it appears that there are legal barriers that would prevent Washington from coming to their aid. Namely, a longstanding provision of the Internal Revenue Code prohibits the federal government from guaranteeing the tax-exempt bonds that local governments issue.

We'll obviously have plenty more to say about politics as Election Day draws closer, but this crisis will be a major point of emphasis for our legislators in the near future, and we'll keep you posted on other responses as they develop.