A South Carolina politician wants his constituents to stop using dollars — and for the people in his state to rely on gold and silver coins instead.
Rep. Mike Pitts, a state representative and Republican, has introduced legislation that would make paper money illegal in the state.
“I’m not one to cry ‘chicken little,’ but if our federal government keeps spending at the rate we’re spending I don’t see any other outcome than the collapse of the economic system,” Pitts told The Palmetto Scoop, which broke the story.
"The Germans felt their system wouldn't collapse, but it took a wheelbarrow of money to buy a loaf of bread in the 1930s," Pitts later told CBS News site Political Hotsheet.
"The Soviet Union didn't think their system would collapse, but it did. Ours is capable of collapsing also."
Inflation has become a renewed concern after China has dumped tens of billions of its huge U.S. debt holdings this week.
Now Japan — the other major U.S. creditor abroad — could follow suit, warn top Japanese bankers.
The implication for interest rates and for the value of the U.S. dollar has investors buzzing about gold and other hedges against a falling greenback.
It also creates serious concern for the nascent U.S. recovery. Quickly rising interest rates could slam the brakes on the recent GDP rebound.
Treasury said this week that foreign holdings of U.S. Treasury bills slipped by $53 billion in December, far more than the previous record drop of $44.5 billion in April 2009.
China alone dumped $34.2 billion of its U.S. debt, falling to $755.4 billion and, a result, pushing Japan into the No. 1 position among U.S. foreign creditors.
"Fears are growing that the U.S. fiscal health will worsen further as (President Barack) Obama hasn't been able to offer details on how to rebuild government finances," Akihiro Nishida, senior fixed income strategist at Mitsubishi UFJ Securities, told The New York Times.
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