“”People sense that in the era of quantitative easing and zero interest rates, something has gone haywire with our monetary policy. But people are afraid to say it,” said Bell. “If one state recognizes gold as a valid currency, I think it would embolden people not just in other states but in Washington.” — Jeff Bell of the American Principles in Action
Utah lawmakers today gave their final approval to a bill that would recognize gold and silver as legal tender for the first time in the United States in some three generations.
H.B. 317, sponsored by Rep. Brad J. Galvez and Sen. Scott K. Jenkins, “recognizes gold and silver coins that are issued by the federal government as legal tender in the state and exempts the exchange of the coins from certain types of state tax liability.”
The measure awaits only the signature of Gov. Gary Herbert.
The Utah branch of the Tenth Amendment Center, hopes the bill will serve as “a first step” in the state’s effort to back constitutional standards.
Connor Boyack of the Utah center argues in a report that Article I, Section 10 of the U.S. Constitution states emphatically that “no state shall make any thing but gold and silver coin a tender in payment of debts.”
“Plainly put, this is the goal: to restore the Constitution’s mandate of gold and silver as the only currency accepted in payment of debts by the states,” he wrote.
The Tenth Amendment Center exlained: “Over time, as residents of the state use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state (as citizens residing in other states carry out their desire to bank with sound money), and an eventual outcry against the use of Federal Reserve Notes for any transactions.” Source: World Net Daily (1)
Most money in existence exists only in bank records. Bank money or credit is created out of an ethereal sleight of the electronic or papered hand. In loan repayment it is similarly destroyed, the residue being interest. Currency is the physical form of money and it is used solely for exchange; the rest is an illusion. To forge 1000 dollars of gold coins requires much effort and material. To create 1000 dollars of credit requires a few strokes of a pen. Money is both material currency and immaterial credit, the latter normally being the principle element.
How does a lender satisfy numerous persons seeking credit or compensate the goodwill of its depositors with insufficient material upon which depend issued notes guaranteeing entitlement? The lender cannot. Credit will see the stock of money, that is bank money, increase prodigiously. However, the material upon which this bank money depends will augment sluggishly.
This is the one advantage of a monetary base of precious metals. None trusts items that can be reproduced swiftly or counterfeited, a concern which gradually diminished when the state or a state sanctioned agency assumed the duty of maintaining the integrity of the currency. The difficulty of enlarging the stock of availing gold or silver did aid in maintaining its monetary value, but it greatly impaired its designed goal of acquitting the tasks of money and credit. Transactions could not be completed because of this frustrating lack of metal when economies expanded marginally or convulsively.
The vast increases in the stock of bank money naturally and greatly exceeded the ability of states to acquire the base of the monetary unit. Interest earned and bank money created could not be redeemed in the form of precious metals. Consequently, the precious metals represented in bank notes sharply diverged from the actual commodity reserve.
It is much in the way that the monetary base of money today, the currency, has diverged from the stock of money in existence. The sums of money in bank accounts greatly exceed the papered component.
Gold or silver money was necessarily and deviously replaced by its paper counterpart, easily created and issued, there being no shortage of paper. A national or regional monetary issue was then linked to a gold or silver standard, which fixed a certain sum of gold or silver to each dollar in existence.
Who uses gold as an alternative? Judging from its price, just about everyone. The monetary problems started when we all went off the gold standard. The gold standard was a means of keeping bankers and money managers honest. With the abandonment of the gold standard, it was deuces wild, and anything goes. A return to some form of gold standard means a return to some sort of sanity. These paper bailouts must end, because they are made on the backs of honest taxpayers.
The whole purpose of the gold standard is to impose restrictions on the money printers at central banks who can’t control themselves otherwise. To object to the gold standard backing of currency is like objecting to an element of the metric system like the meter or the kilogram or any other “unit of measure”. An ounce of gold is a unit of measure based on weight to which currencies should be fixed for the purpose of HOLDING VALUE as a necessary characteristic and function of money. Gold is money and currency is a money substitute useful for easing day to day exchanges that must be backed by a scarce resource like gold or silver to hold value.