Confidence in the U.S. dollar is so low that 13 states are poised to recognize gold and silver coins as legal tender.
Arizona is the latest state set to make the move.
Monday, the Republican sponsored Arizona measure sailed through the House of Representatives 36-2. The bill moves on for another vote in the Senate, where it got its first nod Feb. 28 in a 17-11 vote.
Should it land on Gov. Jan Brewer’s desk, it’s good as gold.
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Sen. Chester Crandall (R-AZ), the bill’s sponsor, says the move “is the logical thing for the state of Arizona to do.”
The bill doesn’t mean residents will pay for groceries and utilities with the coins. It’s more of a backup plan that provides “a lifeboat for Arizona so that we can construct Plan B” when paper currency is no longer widely accepted.
Utah led the way in 2011 when it sanctioned bullion as currency with the Legal Tender Act.
States considering similar bills include Colorado, Kansas, Idaho, Indiana, Missouri, Montana, New Hampshire, South Carolina and Virginia.
Why States Are Turning to Gold and Silver Coins
Throughout history, every single instance of money printing and substantial increases in a country’s debt has always led to the destruction of paper currency and a depression among the citizens that live through it.
At least, that is what Utah lawmakers found when researching the benefit of gold and silver bullion as legal tender.
Utah’s passage was spurred by the U.S. Federal Reserve’s money printing, massive debt accumulation, and $220 billion annual interest due on the debt.
Worries of the U.S. dollar losing value, hyperinflation and an economic collapse all supported the move. Lawmakers argued that gold and silver bullion will continue to keep their value because they are sound currencies with no debts attached to them.
Missouri shared that sentiment when it proposed The Sound Money Act in April 2012. Its passage also was motivated by the belief that the U.S. dollar is burdened by heavy debt and losing value as that load grows.
“Today, the citizens of Missouri are one step closer to having the value of their investments, savings and currency protected from inflation and manipulation by the Federal Reserve Board and the federal government,” Rick Danker, Economics Director of American Principles in Action said following the bill’s approval.
“This is great news for the cause of sound money, not just in Missouri but for other states seeking to use their constitutional authority to make gold and silver coins legal tender,” he added.
South Carolina lawmakers took up the discussion in March 2012.
“I’m no financial expert but I am smart enough to know that you can’t keep printing money when it has no backing,” Republican Rep. Mac Toole told Fox News at the time.
Lawmakers in Texas are mulling a measure to establish the Texas Bullion Depository. The facility would store about $1 billion in gold bars currently housed in a New York bank warehouse.
The University of Texas Investment Management Co., which owns the gold, took delivery of 6,643 bars of the yellow metal in 2011, worried that demand for the precious metal would outstrip supply.
The proposed depository would also accept deposits from the public. In addition, it would serve as the foundation for a payment system in the Lone Star State in the event of a “systemic dislocation in a national and international financial system.”
“We are seeing a distinct movement back to a world where gold is considered money,” Jim Rickards, author of “Currency Wars: The Making of the Next Global Crisis,” told Bloomberg News.
Gold and Silver Coins: A Symbolic Move
The push supporting gold and silver coins sends a clear message to Washington that states are banking on alternative currencies as the country’s budgetary woes mount.
“The legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing,” Loren Gatch, a political teacher at the University of Central Oklahoma, explained to Bloomberg. “There is a fear that the government, or Bernanke in particular and the Federal Reserve, is pursuing a policy that will lead to the collapse of the dollar. That’s what is behind it.”
The Fed put up a “wall of money” in 2008 when it launched its stimulus program in the wake of the Great Recession.
The central bank has kept short-term interest rates near zero since then. It went on to engage in several rounds of aggressive bond buying. The aim: to lower long-term interest rates and goose the stagnant economy.
Yet, these easy money polices have done little except swell the Fed’s balance sheet beyond $3 trillion and devalue the dollar.
Some have simply called for a return to the Gold Standard, which would stabilize the dollar by discouraging runaway fiscal spending and the liberal printing of dollars.
“People know that something is wrong with the dollar. You cannot trash your money without repercussions,” said Forbes Magazine publisher and former GOP presidential candidate Steve Forbes.
What do you think – do you want to see gold and silver coins become legal tender in your state?
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- Money Morning: Does Investing in Gold Top Your List of “Best Investments”?
- Bloomberg News: Trust in Gold Not Bernanke as U.S. States Promote Bullion
- RT News: Arizona pushes to have gold as legal tender
- Alaska Business Monthly: Missouri House of Representatives Approves Gold, Silver as Legal Tender
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