Skip to comments.Utah House Passes Bill Recognizing Gold, Silver as Legal Tender
Posted on 03/06/2011 1:34:02 PM PST by Tolerance Sucks Rocks
Utah took its first step Friday toward bringing back the gold standard when the state House passed a bill that would recognize gold and silver coins issued by the federal government as legal currency.
The House voted 47-26 in favor of the legislation that would also exempt the sale of gold from the state capital gains tax and calls for a committee to study alternative currencies for the state.
The legislation now heads to the state Senate, where a vote is expected next week.
Under the bill, the coins would not replace the current paper currency but would be used and accepted voluntarily as an alternative.
If the bill passes, Utah would become the first of 13 states that have proposed similar measures. The others states are Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington.
Backers of Utah's bill say they want to send a message to the rest of the country.
"People sense that in the era of quantitative easing and zero interest rates, something has gone haywire with our monetary policy," said Jeffrey Bell, policy director for the Washington-based American Principles in Action, which helped shape the bill.
"If one state recognizes gold as a valid currency, I think it would embolden people not just in other states but in Washington," he said.
The U.S. used the gold standard from 1873 until 1933, when President Franklin D. Roosevelt outlawed the private ownership of gold amid the Great Depression. President Richard Nixon abandoned the gold standard altogether when he announced in 1971 that the U.S. would no longer convert dollars to gold at a fixed value.
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Uh, oh, the bamster’s not gonna like this!
Currency is not my strong suit, but I’m just wondering...if I go to a store to buy something, and I can either trade my physical gold, or my federal reserve note representing the same nominal value, why on earth would I part with my gold?
I wonder how it will be valued. Gold has risen over $200 an ounce in the last ten months. It fluctuates daily and during the day.
Ha! Sure, when the price of gold doubles next week, know what you paid for that candy bar?
I’ll trade you a live chicken for that bag of hamburger buns.......
This news is good news because Utah are pushing for States rights here, and also making a point about the dollar. But - as you say - nobody’s going to give them any gold: I doubt they expect any.
I guess if you trade gold for something, then its more like barter than a currency.
How so? What right are they asserting that is in question?
well that’s just great.. can’t wait to to get my next 2 oz. psy check direct deposited.
Will state taxes be calculated on the face value of old coins?
If so, employees could receive and be taxed on an income of a mere $1000 per year (if paid in pre-1933 gold coins) or a relatively similar amount (if paid in pre-1964 silver coins).
You’ll probably be able to get more for gold than you would the paper.
So, I can either use a federal reserve note that says $50 on it, or my 1 oz US gold eagle coin that also says $50 on it? Hmm ... Which to spend?
Avoidance of Capital gains taxes
on the sale of the gold?
Already an anathema to me
as much of capital gains are actually inflation
not accrual of value
It would be weird to have a currency
that actually appreciated
Did you read the bit about Utah looking into a new currency?
Gresham's Law strikes again....
Art 1, Sec 10 of the Constitution clearly says states cannot coin money. Only the feds can do that. So what state right is involved? This seems like much ado about nada.
That’s what I’m saying.
In the future there may come a time where people will not sell you something for hyperinflated federal reserve notes.
At this time you wouldnt. But give it time and you might use that gold because paper will be absolutely worthless...more than what it is now.
What you say? You NUTS!
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any”
Tell me where the “F” do you see where they cant coin money?
If that comes, Armageddon is here and all bets are off. At that point, it matters very little what the "law" says is tender and what isn't. In the meantime, it makes no sense to part with gold when i could part with paper.
“make any Thing but gold and silver Coin a Tender in Payment of Debts;”
So..Now..they can coin money as long as it is Gold and Silver..or currency backed by gold and silver. They cant coin any type of currency OTHER than Gold and Silver..or money backed by it.
No State shall enter into any Treaty, Alliance, or Confederation;
grant Letters of Marque and Reprisal;
coin Money; emit Bills of Credit;
make any Thing but gold and silver Coin
a Tender in Payment of Debts;
pass any Bill of Attainder, ex post facto Law,
or Law impairing the Obligation of Contracts,
or grant any Title of Nobility.
If it ever comes down to a barter/Armageddon situation, I’m not trading gold. I’m trading coffee, tobacco, sugar, salt, chocolate, whiskey, a few contraband items, and my services.
Interesting. This requires further study. Still, I’d rather my state kept the gold and paid in paper. Anyway, aren’t most transactions electronic nowadays anyway? There is no tender.
The coin above is a $50 Gold Eagle minted by the United States Federal Government. You could buy a nice steak dinner with a salad and a glass of wine including tax and tip for the $50 face value of this coin.
However, the gold in the coin is worth approximately $1,430.00 today. How will merchants understand how to value this coin if used as currency?
Also, most owners of these coins are NOT selling or trading them. They are holding them expecting the worth of the gold to increase substantially. Some believe the value of one ounce of gold to rise as high as $5,000 or above when serious inflation kicks in.
We live in a small farming/ranching community. Some of the men are already discussing a bartering system.
“In the future there may come a time where people will not sell you something for hyperinflated federal reserve notes.”
They will be FORCED to, congress(without specific authorization) made the Federal reserve banknote legal tender. What will happen is they will require such an obsessive amount of them that nobody will be able to pay for it.
A car full of cash will not buy a car full of goods. Gold and silver being mostly non-inflatable will however retain relative value.
If we end up in a hyper inflation type environment, a lot of State Governments which tax in cash will be cripple cause they won’t be able to pay their critical personnel.
They MUST establish an alternative for their own survival. But that is ultimately going to require more then just making gold and silver coins legal tender.
Eventually the State will have to store its tax dollars in-terms of gold, and if it wants to secure its population it is going to have to require banks do likewise.
This can be done slowly over time or it can be done at a bit more expense at the last moment.(possibly a better idea to wait)
Art. I Section 10 boils down to...
a) no state can coin money
b) no state can recognize anything other than gold or silver coin as legal tender
Something or someone has to have the responsiblity and
authority to create money.
Art. I Section 8 grants this to Congress..
“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”
Congress has enacted legislation to manage the creation of money.
More money needs to be created as population the total value of all assets increases, so people and businesses can keep enough of their assets liquid (in the form of money, as in a checking account balance) to be able to conduct the transactions they need to. The money supply needs to be appropriate to allow the economy to function. Even if it were all gold coin, it would still be possible to create too much money - simply set the value of a 1 oz gold coin at $1 million as of today, and then overproduce the coins.
The idea of the supposedly so “terrible” fiat currency or paper money is to make it have a relatively cheap inherent value, as in, a piece of paper. The paper currency has no other use than money. As long as the paper does not become more valuable than it’s face value, there is no incentive to use it as a commodity, like writing paper, or fuel. Any metal, on the other hand, HAS INHERENT VALUE as it CAN BE USED FOR PURPOSES OTHER THAN MONEY. The metal is a commodity: steel, silver, nickel, copper, gold are all commodities. Once the value of the commodity in the piece of money becomes higher than the face value of the piece of money, people will melt down the currency and use the metal as metal instead of money. Therefore, it is much more difficult to manage the money supply, because you have to deal with the value of the metal commodity that the currency is made of as well as the money supply in managing the value of the money.
thst is why I am storing my panic cash in silver dimes. A one gram piece is already over $50, so in a barter situation, your eagle might trade at a discount, since you will have to expend more. Ever try to change a 100 bill in a drive in grocery.
What is the name of the economic law which states, in essence, bad money-(fiat dollars)-chases good money-(gold & silver)-out of circulation? I forget.
I live in Montana so will dust off my gold pan and head for the nearest crick!
I’m not sure what that clause means. I’m pretty sure “make” doesn’t mean coin. But I don’t really know what that means. The Constitution clearly says they can’t coin money, so “many any thing other than gold or silver” has to mean something else.
It’s right there in what you cut-and-pasted: “No State shall . . . coin Money . . .”
They will have a gold dollar and a paper dollar, if they’re smart. One gold dollar will be worh 0.02 x 1430 paper dollars (or, in the near future, 0.02 x 5000 paper dollars, or 100 paper dollars).
Thanks. I forgot-due to old age!
I’m certain it means that no state can use anything other than the gold and silver coins produced by the Federal Government to pay off its debts.
That’s easy enough to solve: stop producing the stuff that doesn’t match its metal value and price everything in denominations that still hold their value. Or you can simply switch metals, such as using zinc instead of copper in pennies. Of course, you would need to adopt new standards related to the new metals.
(We’re currently having a similar problem with pennies and nickels, in that it costs more to produce them than their face value. The simple solution, just price everthing to the nearest tenth of a dollar and stop producing pennies and nickels.)
The states dictate to the feds not the otherway around!
How can Utah be the “first of 13 states” when 12 other states have already proposed similar laws?
And what’s the big deal. It has to be minted by the federal government. That means any silver or gold coin from any other nation or from an private mint won’t qualify.
That’s what I figured. Then there was a SCOTUS case where I think they determined that if the bank wants to accept a note, that’s fine.
My guess would be they are trying to say that if it passes the Utah Senate then Utah would be the first state to have a bill pass both House and Senate. I'm working on the assumption that "proposed" means something less than that.
Lately I've been trying to understand how States are able to issue bonds. While a bond has a maturity date, in "all" the other important ways (represents a promise of value, can be traded for other items, has a relatively inelastic value, etc) there doesn't seem to be much difference between bonds and reserve notes.
Suppose you could get a guy to sell you a new car for $400, as long as you paid in US gold coins. A $20 gold piece is worth about $1500 today. $400 dollars worth could get you a car worth $30,000 in paper money.
So, if you pay just "$400" for the car, do you pay tax and licensing on that amount, and does the guy who sold you a $30,000 car for "$400" get a $29,600 tax write-off on the loss?
I suspect that this is not legal, but it seems strange that the US government puts $1500 worth of value into a $20 legal tender coin.
>Currency is not my strong suit, but Im just wondering...if I go to a store to buy something, and I can either trade my physical gold, or my federal reserve note representing the same nominal value, why on earth would I part with my gold?<
No current notes are backed by gold anymore. haven’t been for a very long time. The government recalled them many years ago.
Then they went to silver. These too were recalled.
The notes we now have are a fiat currency.
By the end of the year, if things continue to go as they are with the IMF stating the dollar is no longer viable as a world currency. China is pushing the yen as the new global currency very hard. (They now only sell in trade of you use the yen as of last week on many things). They believe that by the end of 2011 it will replace the dollar as the global currency.
If that happens .. you would be saving money wiping your bum with $50.00 bills as it will be less expensive than a roll of toilet paper.
...Other than gold or silver.
If you care to read the debates, they clearly were horrified by paper money. And since the states held sovereign rights and created this monstrosity we call the Federal Government, the rights were reserved to the STATES and NOT the federal government.
Now having made that clear, they put in the No state shall coin money which meant worthless currency. Then, they made it so only Congress can set the value thereof. Why? Because to make commerce regular throughout the union..which meant the value of each states currency would be the same all over the union. The federal standard for currency only became in effect totally during the civil war, why? Because the north had to pay for the war.
Oh My GAWD!
Go read the ratification debates.
States can coin their own currency as long as it is backed by gold and silver. But, Only Congress sets the value. Why? To make commerce regular..or to regulate commerce. How do you make it regular? You set the value so each states currency is equal in value throughout the union.
All they have to do is pass a currency law.
So what would happen if they did that? You’d find that each state would NOT be held liable for another states debt since each state coined their own currency.