Utah Considers Return to Gold, Silver Coins

[Redneck]

Utah Considers Return to Gold, Silver Coins
By Stephen Clark

http://www.foxnews.com/politics/2011/03 ... ver-coins/

Published March 03, 2011
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AP2008

The Utah House was to vote as early as Thursday on legislation that would recognize gold and silver coins issued by the federal government as legal currency in the state. (AP)
It's been nearly 80 years since the U.S. stopped using gold coins as legal currency, and nearly 40 since the world abandoned the gold standard, but the precious metal could be making a comeback in the United States -- beginning in Utah.

The Utah House was to vote as early as Thursday on legislation that would recognize gold and silver coins issued by the federal government as legal currency in the state. The coins would not replace the current paper currency but would be used and accepted voluntarily as an alternative.

The legislation, which has 12 co-sponsors, would let Utahans pay their taxes with gold and also calls for a committee to study alternative currencies for the state. It would also exempt the sale of gold from the state capital gains tax.

The bill cleared a state legislative committee on Wednesday, the first of 13 similar bills in statehouses across the country to do so. If the bill clears the House, it would have to pass the Senate before the governor could sign it into law.

Attorney and Tea Party activist Larry Hilton, author of the original bill, said he doesn't foresee any roadblocks.

"There's enough uneasiness going on in the economy to trigger people to feel that, hey, having a little Plan B, kind of a backup system, is not a bad idea," he told FoxNews.com.

The U.S. used some version of the gold standard from 1873 until 1933, when President Franklin D. Roosevelt outlawed the private ownership of gold amid the Great Depression. An international monetary system based on a gold-exchange standard continued until 1971 when President Richard Nixon stopped the U.S. from redeeming dollars for gold altogether.

Critics of the gold standard say it limits countries' control over its monetary policy and leaves them vulnerable to financial shocks, such as the Great Depression. But supporters argue that the current financial system's dependence on the Federal Reserve exposes the value of U.S. money to the threat of inflation.

Rep. Ron Paul, a longtime critic of the Federal Reserve who has called on a return to the gold standard, has praised Hilton's efforts.

"Efforts such as yours in states around the country highlight the importantance of returning to sound money," Paul wrote in a letter to Hilton. "Even if such efforts fail to achieve legislative success on their first try, their importance lies in bringing to the public's attention the problem of the ever-weakening dollar and the necessity of returning to a sound monetary system."

Hilton said the bill before the House doesn't go as far as his original draft, which was more sweeping, including recognizing more than just U.S. minted coins and more details on specific tax treatment. But he said he's willing to take it step-by step.

He also said he's not pushing to restore the gold standard in the U.S.

Federal Reserve Chairman Ben Bernanke this week dismissed the notion of the gold standard returning to the U.S.

"It did deliver price stability over long periods of time, but over shorter periods of time it caused wide swings in prices related to changes in demand or supply of gold," he told the Senate Banking Committee. "So I don't think it's a panacea."

Bernanke also said that gold couldn't return as the world standard because there's not enough gold in the world to effectively support the U.S. money supply.

Hilton said he's taking a positive approach to the issue.

"This is not an anti-dollar issue at all," he said. "We want to strengthen the dollar. We think by introducing gold and silver of our nation's history, by injecting that into the debate is very healthy for our policymakers."

Jeff Bell, a policy director for the Washington-based American Principles in Action (APPIA), which helped shape the Utah bill, told FoxNews.com that passage of the bill would send a message to Washington and other states.

"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, who was an adviser to Ronald Reagan's 1976 and 1980 presidential campaigns. "If one state recognizes gold as a valid currency, I think it would embolden people not just in other states but in Washington."

Bell credited Tea Party activists for advancing the legislation this far. Rep. Brad Galvez, who introduced the legislation, is a freshman legislator backed by the Tea Party.

"Saying we now recognize gold as money is a big step forward," he said.

Twelve other states have offered similar proposals: Georgia, Montana, Missouri, Colorado, Indiana, Iowa, New Hampshire, South Carolina, Tennessee, Washington, Vermont and Oklahoma.

[psi]

Interesting, so would that just mean the state would have to accept payments (e.g. taxes) in PMs or that everyone else would too?

[Redneck]

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I have a feeling that the IRS isn't going to like it...



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[psi]

I was wondering though, I don't know a lot about US law but how much berth does an individual state have to say what will be considered legal tender? I realize that silver and gold coins are already legal tender but it's a bit different to value them at the melt value rather than the face value. I'm not sure if that's what's being proposed though exactly.

[IdahoCopper]

Yes, the IRS is going to have a cow.

If an employer agrees to pay an employee 20 ASEs per week, (today = FRN$722.20), its still only $20 per week, because ASEs have a $1.00 face value.

The US Constitution authorizes the states to coin and use silver & gold money.

[DeanStockwell]

Minimum wage laws should prohibit that. It might work in very high paying positions, but you'd have to be making nearly $250 an hour...

[psi]

Does minimum wage apply though if you agree to be considered an "independent contractor" rather than an employee?

[Jonflyfish]

Yes, the IRS is going to have a cow.

If an employer agrees to pay an employee 20 ASEs per week, (today = FRN$722.20), its still only $20 per week, because ASEs have a $1.00 face value.

The US Constitution authorizes the states to coin and use silver & gold money.

This has already been tested. The IRS will look at the monetary equivalent in terms of FRN's and not the face value.

[Jonflyfish]

Does minimum wage apply though if you agree to be considered an "independent contractor" rather than an employee?

Minimum wage only applies to employees. Independent contractors are on the hook for any of their employees.

[psi]

I was thinking of the more simplified case where you do contract work for a company that you would claim as self employment income, but have no employees of your own. Say you agree to be paid the 20 ASEs for a job that would take you about a week instead of taking it as a weekly salary, minimum wage would appear not to have any bearing on that agreement. At least that was my understanding anyway.

Of course that doesn't address the "monetary equivalent" issue, but does the IRS really have the authority to say that a dollar of silver isn't really a "dollar", even if the law says otherwise? In practice I guess maybe they do have that authority.

[shinnosuke]

I was thinking of the more simplified case where you do contract work for a company that you would claim as self employment income, but have no employees of your own. Say you agree to be paid the 20 ASEs for a job that would take you about a week instead of taking it as a weekly salary, minimum wage would appear not to have any bearing on that agreement. At least that was my understanding anyway.

Your idea might work on paper, but most people are going to be looking for the benefits provided by working for the state (can you say "socialists protesting in Wisconsin?"), especially health insurance, which would probably be unavailable to them if they worked as contractors.

[psi]

That I can agree with for sure, I would not expect it to become a mainstream practice. Of course, if it worked you would be keeping more of your earnings so there is an upside. As I say I don't know much about US law so I'm just speculating.

[Redneck]

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More info.

Utah House Approves Gold, Silver as Legal Tender

http://www.thenewamerican.com/index.php ... gal-tender


Utah House Approves Gold, Silver as Legal Tender
Written by Alex Newman
Monday, 07 March 2011 10:35


The Utah House of Representatives voted on March 4 to make gold and silver coins issued by the federal government into legal tender within state borders, prompting praise from sound-money advocates across the nation. The legislation will now be taken up by the state Senate.

In addition to possibly making precious-metal coin lawful money for intrastate and government transactions, the bill would exempt gold and silver from state sales, income, and capital-gains taxes. The legislation also states that individuals cannot be compelled to accept precious metals instead of Federal Reserve Notes. It was approved in the House with a vote of 47 to 26.

According to the bill’s summary, it “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.” Under the measure, Utah citizens would be able to pay their taxes with precious metals at market value, as opposed to the face value used by the federal government, which is far less than the price of the actual gold or silver in the coins.

The legislation would also mandate that the Revenue and Taxation Committee “study the possibility of establishing an alternative form of legal tender” and “recommend whether an alternative form of legal tender should be established.” Those recommendations would be considered in the 2012 legislative session.

Earlier this year, the Utah state legislature was considering a similar proposal known as the “Utah Sound Money Act.” That bill would have recognized gold and silver coins issued by some trustworthy foreign governments as well. It would have gone even further toward normalizing trade in precious metals than the “Legal Tender Act,” and so attracted a broad coalition of prominent backers from across the country including long-time sound-money advocate U.S. Rep. Ron Paul (R-Texas).

“To me, the best road back to a really well-functioning monetary system is through the states, and through the states exercising their monetary power as articulated in Article I, Section 10 of the [U.S.] Constitution to make nothing but gold and silver coin a payment in tender of debts,” said Utah attorney and businessman Larry Hilton, who authored the original bill and has been a key backer of state-based sound-money legislation in Utah.

He told The New American earlier this year in an interview that, “If each of the states — or even just a small handful — do what we’re contemplating here in Utah, I think it would have a very positive impact on the dollar itself.” It would also bring countless other benefits ushered in by competition and the preservation of purchasing power, he added.

More than a dozen other states have introduced like-minded measures across the United States as the Federal Reserve cartel continues creating new money at a record pace and the fiat dollar continues its rapid loss of purchasing power. Lawmakers in Virginia, for example, were considering a bill earlier this year to officially study the adoption of alternative currencies such as gold and silver in case of an increasingly likely hyperinflationary scenario and a total breakdown of the Federal Reserve System.

State legislators in Utah, however, recognized the problem and decided to take preventative measures early on. “This is a step in preparedness; a step in security that allows us to be able to help hold up our economy as the dollar continues to shrink,” the Utah bill’s chief House sponsor, Republican Rep. Brad Galvez, told the Salt Lake Tribune.

Another supporter of the legislation, Rep. Ken Ivory, told the paper that the measure was “a way for us to preserve for the citizens of Utah … the purchasing power of the money they hold.” As an example, he cited the increased value in real terms of a 1960s half-dollar silver coin. The Federal Reserve’s paper currency, meanwhile, has lost well over 90 percent of its value since the central bank was established in 1913.

"People sense that in the era of quantitative easing and zero interest rates, something has gone haywire with our monetary policy," policy director Jeffrey Bell of the group American Principles in Action told Fox News. "If one state recognizes gold as a valid currency, I think it would embolden people not just in other states but in Washington." The organization played a role in drafting and supporting the bill.

Another group, known as Utah Sound Money, is also lobbying hard in favor of the legislation. “Although the current version of the bill has been [pared] back from the original draft, it is, nevertheless, critically important to take this first step towards the restoration of Sound Money as a viable option in our society,” the group said in a message to supporters urging them to back the new measure.

“A State's sovereign power to declare gold and silver coin a legal tender is one of only two express reservations of state power specifically included in the U.S. Constitution, as originally ratified,” it said. “The Legal Tender Act is an important exercise of that power which our nation's founders were careful to reserve to the states.” The American Constitution makes clear that no state shall make anything but gold and silver a tender in payment of debts.

A vote is expected in the state Senate sometime this week, and if approved, the legislation would require the Governor’s signature to became law. Opponents have expressed concern that the bill could lead to slightly decreased tax revenues (about $250,000 for 2012) if gold and silver coins were exempted from taxation. But supporters counter that they should not be penalized for choosing to save and do business with sound currency instead of failing Federal Reserve Notes.

Analysts predict that as the U.S. dollar continues its downward spiral, more and more states will begin making back-up plans to safeguard their economies. A wave of state legislatures reasserting their sovereignty over the federal government and promoting the concept of nullification will also likely contribute to the state-based sound-money trend. Silver was breaking new price records on March 7, in large part due to the diminishing value of the U.S. dollar.

Prominent voices in the United States, international institutions, and foreign countries are hoping to use the emerging dollar crisis as an opportunity to create a world currency controlled by an international central bank. How successful they will be probably depends in large measure on how — and how quickly — state legislatures react to the problem.



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