Utah House Passes Bill Recognizing Gold, Silver as Legal Tender

FOX News ^ | March 4, 2011 | FOX News

[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.

[Huck]

In the future there may come a time where people will not sell you something for hyperinflated federal reserve notes.

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.

[crz]

“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.

[HangnJudge]

Took me a while to find the right reference...

Article. I
Section. 10.
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.

[Huck]

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.

[Huck]

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.

[Dr. Thorne]

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.

[WestwardHo]

We live in a small farming/ranching community. Some of the men are already discussing a bartering system.

[Monorprise]

“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)

[PieterCasparzen]

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

Basic reality:

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.

[barb-tex]

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.

[AEMILIUS PAULUS]

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.

[jesseam]

I live in Montana so will dust off my gold pan and head for the nearest crick!

[Huck]

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.

[Huck]

Gresham’s law.

[Dick Bachert]

Better late than never.

[Tolerance Sucks Rocks]

It’s right there in what you cut-and-pasted: “No State shall . . . coin Money . . .”

[Tolerance Sucks Rocks]

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).

[AEMILIUS PAULUS]

Thanks. I forgot-due to old age!

[Tolerance Sucks Rocks]

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.

[Tolerance Sucks Rocks]

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.)