A weak dollar, mounting inflationary fears and skyrocketing gold and silver prices are prompting some states to convert precious metals into currencies. Utah is now allowing gold and silver coins to be used as legal tender, and others may follow suit. South Carolina lawmakers are proposing a bill that would do just that based in part on concern that present monetary policies may be undermining the national economy.
“I’m no financial expert but I am smart enough to know that you can’t keep printing money when it has no backing,” says Republican Rep. Mac Toole, according to WACH, the Fox News affiliate in Columbia, South Carolina.
Lawmakers are insisting the move is based on economics and not on political or other reasons. “For those of you who think this is a way to re-establish secession, the bill was passed in Utah and it’s currently law there,” says S.C. Republican Rep. Mike Pitts. Utah has legalized gold and silver coins as currency and has also exempted the sale of the coins from state capital gains taxes.
Utah Republican state Rep. Brad Galvez, who sponsored the bill legalizing gold and silver as currencies, says Americans are losing faith in the greenback, according to the Associated Press. “We’re too far down the road to go back to the gold standard,” Galvez says, according to the AP. “This will move us toward an alternative currency.”
The idea seems to be spreading, even if many such measures are more symbolic protests to monetary and fiscal policies as opposed to a more serious push for a new currency. Lawmakers in Minnesota, North Carolina, Idaho and several other states are proposing measures similar to the one in Utah. Supporters say the move sends a clear message to Washington: stop printing money and start getting the country’s financial house in order.
“Making gold and silver coins legal tender sends a strong signal to Congress and the Federal Reserve that their monetary policy is failing,” says Ralph Danker, project director for economics at the Washington, D.C.-based American Principles in Action, which helped shape Utah’s law. “The dollar should be backed by gold and silver, so we have hard money.”
Critics, meanwhile, say the move could disrupt the monetary system by making it more difficult for the government to adjust exchange rates when needed. “We’d be going backward in financial development,” says Carlos Sanchez, director of Commodities Management for The CPM Group in New York, according to the Associated Press. “What backs currency is confidence in a government’s ability to pay debt, its government system and its economy.”
Some aren’t calling for gold to be used as tender but are calling for a return to the Gold Standard, which attaches the value of the dollar to a certain amount of gold. A return to the gold standard would stabilize the dollar by discouraging hefty fiscal spending as well as preventing the Federal Reserve from printing excess money. “People know that something is wrong with the dollar,” says former GOP presidential candidate and Forbes Magazine Publisher Steve Forbes, who adds “you cannot trash your money without repercussions.” “What seems astonishing today could become conventional wisdom in a short period of time,” says Forbes, according to Human Events, a conservative media website.
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