Sen. Bill Ketron wants TN to consider creating its own currency

Gary Boone loosens a stack of one hundred dollar bills on a vibrating table before they are cut into singles at the Bureau of Engraving and Printing in Washington, D.C., in 2009. Tennessee Sen. Bill Ketron has filed a joint resolution to create a committee that would study whether Tennessee should adopt a currency as an alternative to the federal dollar in the event of a "major breakdown" of the Federal Reserve. ">

Gary Boone loosens a stack of one hundred dollar bills on a vibrating table before they are cut into singles at the Bureau of Engraving and Printing in Washington, D.C., in 2009. Tennessee Sen. Bill Ketron has filed a joint resolution to create a committee that would study whether Tennessee should adopt a currency as an alternative to the federal dollar in the event of a "major breakdown" of the Federal Reserve. / ANDREW HARRER / FILE / BLOOMBERG

State Sen. Bill Ketron is pushing for Tennessee to study whether the state should create its own currency in the event of a breakdown of the Federal Reserve.

Depending on the perspective, Ketron's proposal is either a harmless step toward safeguarding the state in the event of national financial calamity, or proof that the Republican-led General Assembly is distracting itself from the task of creating jobs and improving the economy.

Ketron has filed a joint resolution to create a committee that would study whether Tennessee should adopt a currency as an alternative to the federal dollar in the event of a "major breakdown" of the Federal Reserve.

The proposal is part of a burgeoning movement on the part of conservative lawmakers to begin preparing for a worst-case scenario in which the Reserve collapses. Ketron's legislation mirrors almost word-for-word bills filed in South Carolina and Virginia, which passed the law earlier this year.

The Utah House of Representatives passed legislation approving gold and silver as legal tender. A Georgia lawmaker has proposed legislation that would force the state to conduct its monetary transactions in gold or silver coins.

Ketron, R-Murfreesboro, said he got the idea from the legislation filed in other states.

According to Ketron, the Federal Reserve is closer to a major breakdown than it has ever been in his lifetime.

"We now owe China in the trillions and Japan is second," Ketron said. "What would happen if there was another cataclysmic event? I'm not Chicken Little saying the sky is falling, but prudent businesses are always prepared for the worst-case scenario."

Although Ketron stressed his proposal would merely launch a study committee to look at the issue, state Sen. Lowe Finney, D-Jackson, said the legislation was proof that the GOP was losing focus.

"Senator Ketron is trying to change our currency when what I think we ought to be doing is helping people earn more currency," Finney said. "My question is, How many jobs is this going to create, and what problem is this solving?"

Finney said such legislation distracts lawmakers from improving the economy, which he believed should be their primary focus.

"We've got counties out here with unemployment rates as high as 20 percent," Finney said. "I believe they voted for us to come up here and put them back to work."

Lt. Gov. Ron Ramsey was pressed by reporters this week to offer his opinion on Ketron's resolution. Ramsey said he hasn't read the bill but believed such a study committee was harmless.

"I'll have a study committee," Ramsey said. "We have study committees on a lot of things I agree and disagree with."

The Delayed Bills committee will consider the resolution, though it's unclear if the committee will take action any time soon. If the resolution is approved, the committee would study the issue of a new currency for Tennessee over the next year and then submit a report to the General Assembly.

Proposal called 'absurd'

One local expert said he believed Ketron's proposal is "absurd" and "unconstitutional." Vanderbilt University Economics and Finance Professor David Parsley said the U.S. Constitution forbids states from creating their own form of currency.

"I really don't know what it's coming from," Parsley said of Ketron's proposal. "Why should somebody be willing to accept Tennessee currency over a Federal Reserve note? Presumably, the United States has a lot more resources at its disposal with which to honor those debts.

"Why this is so absurd is that the (federal) currency is inherently backed by nothing. You can't take it to a bank and say, 'Give me gold.' The exchange is inherently backed by nothing, its value is the goods and services you exchange for it."