Source: http://www.goldcore.com/

Utah Coin Act

Recently, I was interviewed on the Fox Business Channel regarding the Utah Legal Coin Act. Here is a little background and some interview questions.

For the first time since 1971, gold and silver are once again considered legal tender in at least one part of the United States. The State of Utah passed the “Utah Legal Tender Act,” which “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 law, signed by Governor Gary Herbert on March 25, is a voluntary system that provides an alternative to the fiat-based Federal Reserve notes that are created out of thin air in unprecedented proportions.

The most significant change from a practical perspective is that the Utah’s state tax code now considers gold and silver coins issued by the U.S. Mint as currency rather than an asset, which means since it is considered money it cannot be taxed. However, federal taxes still apply on these transactions.

1. What is this Utah Legal Coin Act about?

The Utah Legal Tender Act (HB 317) is designed to reinstate gold and silver coin as an optional medium of exchange in Utah intrastate commerce. The bill recognizes the inherent and inalienable right of citizens to voluntarily employ these time-tested, inflation-proof, complementary currencies to foster economic development throughout the state. The bill draws its authority from Article 1, Section 10 of the United States Constitution which provides that no state shall make anything but gold and silver coin a tender for payment of debts. Grounded in long-standing principles enshrined in the supreme law of the land, this statute addresses current, pressing monetary issues in modern American society—issues to which gold and silver coin solutions are uniquely suited.

2. Why do we want/need sound money?

Because the founders of our nation had experienced first-hand the ills attendant with unbacked fiat currency, they provided in Article 1, Section 10 of the United States Constitution that no state is to make anything but gold and silver coin tender for payment of debts. Unfortunately, we’ve departed from the wisdom they imparted, and embraced a medium of exchange that has no intrinsic value whatsoever. The value of today’s dollar is upheld by governmental edict, backed only by the indebtedness of our nation and its citizens. Because of sharp increases in our money supply, our national debt is on an upward trajectory, set shortly to eclipse our gross domestic product. Since there is no historical precedent for a totally fiat money system such as ours ever lasting more than a few decades, prudence dictates that alternative, sound means of exchange be put in place well in advance of any potential crises, such as those endured by the fiat-financed nations and empires of the recent and distant past.

Even absent the specter of catastrophic consequences, an alternative sound money system confers many benefits on citizens and state governments alike. Such a system serves as a refuge from the ills that fiat money produces, including the insidious “inflation tax” that our current monetary system imposes. Consider that the U.S. dollar has lost more than 95% of its purchasing power since decoupling from gold and silver backing. By contrast, sound money systems of the past continued virtually inflation-proof for centuries on end.

3. Are there other states that are looking at something similar?

Virginia House Joint Resolution 557
Georgia Constitutional Tender Act
Ohio Honest Money Project
Idaho Silver Gem Act, Bill No. 633
South Carolina House Bill No. 4501
Missouri House Bill No. 561
Washington House Joint Memorial 4010
Colorado Honest Money Act (HB09-1206)
Indiana Senate Bill No. 453
Montana House Bill No. 639
New Hampshire Gold Money Bill 1.1.

4. Why are the states doing this and not the Federal Government?

Because of the co-dependent relationship between Congress and the Federal Reserve, the likelihood of any sound money reform coming out of Washington is remote indeed. Individual states, exercising their sovereign authority, are best equipped to restore sound money to its prior status as a trading currency. So look for a sound money comeback on a state-by-state basis. It makes sense to first support states that are well positioned to make sound money a reality today. Then as the movement gains momentum, reluctant jurisdictions will see the advantages of embracing sound monetary systems.

More information can be found at www.utahsoundmoney.org.

We have received feedback on this from many people so far and many are of the belief that Gresham’s Law will mean that no one will spend real money (gold or silver) into circulation. We will not argue with the concept but will make the case that the market will decide and perhaps there will be some who want to “spend” their profits into the community. For example, when silver was approaching the $50 level there could have been (in theory) people who wanted to take advantage of that price and spend some profits for some good or service.

Also, we think that some merchants favorable to sound money principals might offer a discount for real money being used in a transaction. We can envision two prices—a silver price and a fiat price. Again, the market will decide and it is our hope that real money circulates enough to encourage other states to adopt such measures.

We find it interesting that some of the opponents of the law come from the CPM Group:

Opponents of the law warn such a policy shift nationwide could increase the prospect of inflation and could destabilize international markets by removing the government’s flexibility to quickly adjust currency prices.

“We’d be going backward in financial development,” said Carlos Sanchez, director of Commodities Management for The CPM Group in New York. “What backs currency is confidence in a government’s ability to pay debt, its government system and its economy.”

Larry Hilton, a Utah attorney who helped draft the law, disagrees and says the gold standard would restore faith in American money at a time when spiraling debt is weakening confidence.

“We view this as a dollar-friendly measure,” Hilton said. “It will strengthen the dollar by refocusing policy matters in Washington on what led to the phrase, ‘the dollar is as good as gold.’”

We, of course, side on the principle of sound money and think the U.S. has not instilled confidence for a very long time. I am scheduled to fly to Utah and be with Governor Gary R. Herbert for a ceremonial signing of this law. We again are hopeful that other states will follow and the principle of fair weights and measures will once again be restored to the people.

Summary

We applaud Utah and are anxious to see if this is a moral victory, or actually becomes a trend. In our view a great deal depends upon how the implementation process proceeds. David Morgan interview the creator of the bill and this will be published in the July issue of The Morgan Report.

David Morgan

Become a member today: http://www.silver-investor.com/amember/signup.php

Source: http://www.silver-investor.com/blog/silver-market-update/utah-coin-act/

Investing in Silver
Thursday, June 16th; 4:00-5:00 EST

Register Here

From silver bars to Morgan dollars, the lure of silver entices investors and distracts collectors. And now we have the America the Beautiful 5-ounce silver coins, both bullion and collector versions. If you are interested in buying into the silver market, don’t miss as Dave Harper, editor of Numismatic News, explains the options available and just where collector silver coins fit in the mix. Find out when you should pay melt value for a silver coin and when you can expect to the price to be based on its collector value.

Investing in Silver

Free Online Seminar Silver, silver, silver – it’s the hot topic in today’s market, but what does that mean for you? During the FREE online seminar Investing in Silver, slated for Thursday, June 16, the experts of Krause Publications will take you behind the story of silver’s history-making price climb, and explore options for getting in on the silver rise.

The dynamic seminar duo of David C. Harper, executive editor of Numismatic News and Debbie Bradley, numismatic editorial director, will cover many angles of the silver market during this FREE online seminar, including:

• Silver’s history and its rise in popularity within investment circles
• Silver and its various forms (bars to bullion and more)
• Silver’s history – facts and fiction
• Silver’s cycles and how to use what you know
• Silver coins – melt value or collector value?

If you’d like to submit a question to David Harper, there is a space at the end of the registration form to do so, and your question may be discussed during the online seminar.

This is a free online seminar from the experts. Register for it here

By Beth Deisher-Coin World Editor | April 11, 2011 6:00 a.m.
Article first published in 0211-04-11, Opinions section of Coin World

On Tuesday, February 22, 2011, the Constitutional Tender Act (HB 3) was assigned to the Banks and Banking Committee‘s “Financial Institutions” subcommittee, “to have a hearing” (quote from committee Chairman Morris – see video below). Please contact subcommittee Chairman Tom Weldon and ask him to hold a hearing on this bill right away!

Email: tom.weldon@house.ga.gov
Phone: 404-656-0152
Fax: 706-965-4011
Address: 401 Coverdell Legislative Office Building, Atlanta, Georgia 30334

Benko: Gold, the States, and Federal Monetary Policy

By: Ralph Benko
Senior Advisor, American Principles Project

Why are so many state legislators beginning to call for issuance of a form of gold money?The Constitution prohibits states from coining money but allows them make “gold and silver Coin a Tender in Payment of Debts….” By prohibiting everything except “gold and silver Coin” the Constitution clearly contemplates this as legitimate.

Legislators in a dozen states are looking at legislation about gold or silver-based currency, including, right now, Utah, South Carolina, Virginia and New Hampshire. States haven’t issued money for over a hundred years. So … why now? There is disgust by state legislators with the federal government’s promiscuously printing money. This reflects the views of those who wrote and adopted the United States Constitution.

The transcript of the debates in the original Constitutional Convention shows the attitude of the Founders toward paper money was one of disgust. In debate one delegate, Roger Sherman, called for the insertion of an absolute prohibition against states issuing their own paper money.

Mr. Wilson and Mr. Sherman moved to insert after the words ‘coin money’ the words ‘nor emit bills of credit, nor make any thing but gold and silver coin a tender in payment of debts’ making these prohibitions absolute…

Mr. Sherman thought this a “favourable” crisis for crushing paper money.

The Founders voted to adopt Sherman’s “crushing” of state-based paper money.

As for the federal government, the original draft of the Constitution included language permitting the federal government to issue unbacked paper money. The Founders objected strongly to this power. The objections were summed up by delegate Oliver Ellsworth:

Mr. Elsesworth thought this a favorable moment to shut and bar the door against paper money. The mischiefs of the various experiments which had been made, were now fresh in the public mind and had excited the disgust of all the respectable part of America. By witholding the power from the new Governt. more friends of influence would be gained to it than by almost any thing else. Paper money can in no case be necessary. Give the Government credit, and other resources will offer. The power may do harm, never good.

Those who wrote the Constitution decisively stripped the federal government of the power to issue inconvertible paper money. And stripped it stayed… until, temporarily, during the Civil War. Saving the Union was of transcendent importance. A strong constitutional argument exists for the legitimacy of paper money as an expedient. But it set a bad precedent.

“The American people are patient but we are not stupid.”

Ralph Benko
Senior Advisor, American Principles Project

For most of American history dollars were convertible into gold or sometimes silver. It is a 20th century innovation to have inconvertible money. FDR suspended domestic convertibility. And then… Richard Nixon’s 1971 suspension of the convertibility of the dollar into gold put the final nail into the dollar’s coffin. President Nixon announced this as a temporary suspension.

President Nixon made certain promises to America when he suspended convertibility of the dollar. August 15, 1971:

“I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold ….

Now, what is this action–which is very technical–what does it mean for you?

Let me lay to rest the bugaboo of what is called devaluation.

If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.” (Emphasis supplied.)

Well. The dollar today is worth less than a quarter was worth in 1971.

Ralph Benko
Senior Advisor,
American Principles Project

The American people are patient but we are not stupid. We have noticed the steady erosion of the dollar’s buying power, that fact that our dollars are worth 80% less than the day of “the Nixon shock.” We have noted the bankruptcy of the assurances we were given.

Yet Washington has been curiously unresponsive to the suffering brought by its failed promise. Why? Washington has itself been a primary beneficiary of monetary depreciation.

The federal government spent $15 billion from 1789 – 1900. Not $15 billion a year. $15 billion cumulatively. Uncle Sam will spend $10 billion a day in 2011. The federal government spends more every two days than it did altogether for more than America’s first century. Although these sums are not adjusted for inflation they give a correct impression of the magnitude of the change from what our Founders set forth and our early statesmen delivered.

How does Washington get its hands on so much money? Three ways. Taxing us, on which it is maxed out. Borrowing — deficits — to which there is a growing massive resistance. And there is a third and even more pernicious way: printing dollars. Washington prints money – such as Chairman Bernanke’s massive $800B+ “quantitative easing.” Wildly printing money erodes the value of the dollar. It will damage every American’s hard-earned savings.

The power to print money at whim is wrong.

It is toxic to our personal and national wellbeing.

And it is unconstitutional.

So legislators in twelve states are exploring gold-based currency. It is reprehensible for national elites to deride those who are doing so. Whatever objections one might have to the mechanisms being considered the impulse is legitimate and even noble. State legislators are challenging the federal abuse of an unconstitutional power, challenging the issuance of unhinged paper money.

Federal officials should take these state initiatives as a cue. Federal officials have sworn to preserve, protect and defend the Constitution of the United States. Let them take their oath seriously and restore the convertibility of dollars to gold.

Source: http://www.cnbc.com/id/41665142