Over a dozen
states are now considering moving from a paper currency to a gold standard as
a monetary policy. Arizona is now the closest state in the running to having
a “legal tender” bill passed to offer its citizens a legal alternative to
dollars: American gold and silver coins. As recently as last week, the
Arizona House of Representatives approved a bill that would make gold and
silver a legal tender option, and a version of it already was approved by the
Senate. That means that "a final Senate vote is necessary before the
measure goes to the governor,” Jan Brewer. (If you live in Arizona, and want
to tell your representatives to vote yes, go here for the details.)
Lawmakers are aggressively attempting to establish this new monetary
standard in response to looming distrust of the Federal Reserve and its “off
the charts” printing. These concerns have become so great that these dozen or
so states are in the process of attempting to adopt “The Constitutional
Tender Act.” Utah is the forerunner, and in 2011 became the first state to
pass a law recognizing gold and silver as legal tender. Other states that are
considering following Utah’s lead include Minnesota, Idaho, South Carolina,
Colorado, Missouri, Maine, Washington, Tennessee, New Hampshire and, of
course, Arizona.
After Arizona, Missouri and South Carolina are the closest to enacting similar laws
in 2013. The language below, contained in one version of South Carolina’s
bill, is standard to many of the bills in state legislatures:
In the event of hyperinflation, depression, or other economic calamity
related to the breakdown of the Federal Reserve System, for which the State
is not prepared, the state's governmental finances and private economy
will be thrown into chaos, with gravely detrimental effects upon the lives,
health, and property of South Carolina's citizens, and with consequences
fatal to the preservation of good order throughout the State
With the possibility of an international financial crisis becoming more
evident with each day that goes by, many are pushing for passage of these
bills in the belief that the states can “avoid or at least mitigate many
of the economic, social, and political shocks to be expected to arise from
hyperinflation, depression, or other economic calamity related to the
breakdown of the Federal Reserve System only through the timely adoption of
an alternative sound currency that the State's government and citizens may
employ without delay in the event of the destruction of the Federal Reserve
System's currency.”
The
"Constitutional Tender Act,” as it is officially known, recognizes
U.S.-minted gold and silver coins as legal tender. As we explained in November of 2012, this “is an important
reason why Mike Maloney prefers U.S. minted coins,” in case many states adopt
similar language excluding bars, foreign coins and rounds. There are
provisions in some bills that would allow a state judge to grant legal tender
status to non-U.S. minted coin (specie).
The Federal Reserve’s printing in the past few years has been in direct
response to the consequences of the “Crash of 2008,” when worldwide markets
experienced an economic meltdown not seen since the Great Depression. The
Fed, under Chairman Ben Bernanke, has been infusing cash into financial
markets to hold down interest rates and create a fragile, mispriced stock
market. But a rising stock market only gives the illusion of an economic
recovery; the reality is that things are progressively getting worse for
average Americans, and worries are growing.
National unemployment in the U.S. sits at 11.6% using the government’s own numbers when
those who have given up looking for work are included as unemployed. U.S. GDP
has only maintained a 1.5% nominal growth rate, and the national debt has now
reached almost $17 Trillion.
As Arizona State Senator Bob Worsley, R-Mesa, maintains, “We’ve never had this amount of debt in this
country.” South Carolina State Rep. McClain R. “Mac” Toole (R-Columbia)
echoes Worsley’s sentiments as he stated: “I’m no financial expert, but I am smart enough
to know that you can’t keep printing money when it has no backing.”
Proponents of the bill maintain that it is only a matter of time before
the country suffers hyperinflation, making the “greenback” worthless. Arizona
State Senator Chester Crandell, R-Heber, says that the ultimate bottom line is "lack of confidence in the dollar—or at least the
real value of the dollar, what with the Federal Reserve continuing to
print...” He continues, “I think you can see that all over the country.
Countries including China are moving to have their own currencies recognized
as an international standard because the dollar doesn't do what it used to
do.”
As the Federal Reserve continues to print on an unprecedented level, the
new cash that is being injected into the financial system will cause massive
repercussions, such as record high price inflation, and the accompanying
shrinking purchasing power of the consumer. Sadly, “this is what the Federal Reserve does. The system
was designed to create inflation… since the Fed was created, the United
States has endured constant inflation. In fact, we have come to accept it as
‘normal.’” That being said, there is a very good chance that more states will
act to offer their citizens a legal alternative to the dollar, and that the
rest of the country will follow suit in efforts to avert many of the negative
impacts of the ongoing economic disaster.
