Utah Pushes To Accept Gold, Silver As Alternative Currency

Tyler Durden's picture

A month ago we reported that the state of Virginia has established a subcommittee to study alternatives in the case of a terminal "Fed" breakdown, and would propose gold as a sound alternative to the existing fiat currency. Now, the state of Utah has gone a step further and is actually voting, as early as today, on whether to recognize gold and silver coins, issued by the federal government, as legal currency, a move that would send a huge signal to the Marriner Eccles building that Americans have had enough of the Fed's dollar debasement. "The coins would not replace the current paper currency but would be used and accepted voluntarily as an alternative." Reports Foxnews: "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 11 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." Paying taxes in gold? Interesting. We certainly hope this was not highlighted due to being the only viable use of funds, as one would question the legitimacy of the entire proposal. Finally: "Attorney and Tea Party activist Larry Hilton, author of the original bill, said he doesn't foresee any roadblocks." We shall see about that, but in the meantime it is worth highlighting that the onslaught against the dollar is coming not only from China which as we reported yesterday is pushing to convert the renminbi to a global reserve currency, but from within, as more and more states realize that the viability of the dollar is now crippled, thanks to the Chairprinter.

From FoxNews:

"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.

Not surprisingly, Ron Paul is all over this proposal:

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 importance 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."

While the original bill proposed by Hilton also required foreign minted coins to be accepted as legal tender, the revision only limits US produced coins. Even with this setback, Hilton said that he's "willing to take it step-by step."

As we reported yesterday, Bernanke told the Senate yesterday that he does no envision the gold standard as a viable alternative to the disastrous fiat system currently in place, which has resulted in revolutions across the development world. "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. So I don't think it's a panacea." Supposedly Bernanke has not seen the VIX in 2008.

The bill, once passed will be a critical stepping stone to not only undermining the dollar but to further stablishing gold as a true reserve currency alternative:

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.

And once Utah proves a successful test bed of this near-revolutionary refutation of the Chairman's ideology, everyone else will follow:

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

It goes without saying that we will track these developments closely, and carefully observe who(and why) voices any opposition to comparable proposals elsewhere. 

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drbill's picture

Gresham's Law!

Who in their right mind would use gold to pay their taxes when you could pay them with paper?

Dr. Porkchop's picture

That was my first thought... why surrender gold to pay taxes, pay them in their own useless paper! Preserve your wealth in gold and silver. They'll be worth so much more than that down the road.

Cyrano de Bivouac's picture

No, the state government could adjust for the depreciation of the dollar- if you owed 2,000$ in taxes you could pay with 1 oz. at 1,400$.

Dr. Porkchop's picture

Better yet, you could offer to pay taxes in unallocated gold certificates.

chumbawamba's picture

Riiiiiiight.  Who gets to choose the basis date for the depreciation?  What if the dollar appreciates sharply?

Render unto Caesar that which is Caesar's.

I am Chumbawamba.

Clampit's picture

State governments provide services that are most often cited as evidence of government's necessity.

The bigger question then becomes do state gold valuations necessarily translate into federal valuations? States could finally play central banker to their advantage. Best to be ready for secession, even if only monetary, and I'm glad my state's on the list. That and the patently absurd concept discussed later on of a dormant metal gaining capital.

zhandax's picture

I can understand Paul's encouragement by a sign that the population at large is not totally fuckin brain dead. However, as mentioned, as long as the state will accept useless Crane cotton for taxes, only a damnfool would use something else. Other than a sign of the above, what purpose does this bill serve? As far as I know, gold and silver coinage was never de-monetized; i.e. it can still be used by someone dumb enough to send a load of double eagles for tax payments at face. Chumbawamba, there is no mention of any adjustment for real value here.  This bill just restates constitutional law. "Full of sound and fury, etc, etc".

I am reminded of the instance last year when the 19 year old at the dry cleaner gave me a 1964 Kennedy in change and apologized for it. When I realized what it was, I asked if she had any more. She had accepted 10 earlier in payment and admitted she thought they may be fake. I offered her $5.00 for the remainder which she eagerly accepted.  Who will train the young morons accepting this 'new' currency?  The price of tungsten double eagle blanks on eBay ready for plating will skyrocket.

The fundamental issue here is not the acceptance of real money....it is the underlying value of same.  Twenty dollars haven't been worth an ounce of crown gold since they were all confiscated to disguise paper's devaluation and it has been downhill since.

CH1's picture

Caesar gets what he earns in voluntary trade... or else he's a criminal... period!

jimijon's picture

I minted a coin for that Chumba ... http://www.mundogold.com


DosZap's picture

You still lose your PHYSICAL GOLD.

Never fly.

jeff montanye's picture

fyi, according to some old charts on http://www.chartsrus.com/ gold and silver peaked before the exploitation of the new world: gold at a real (early 90's?) $2400 (?) and silver at a real $800 (?).  may have both bottomed in the last decade or so.  that's an impressive bear market to reverse. 

grok's picture

in an ideal world, wouldn't this make the concept of capital gains on gold obsolete?  If gold is treated as a currency, it IS par, why would you pay gains taxes on it?  Isn't this what we want?  We may not get a backed currency right away, but isn't this a step towards that?

Bobbyrib's picture

A gold back currency is the worst idea I have ever heard of. Whose gold do you think will be backing the currency? Your neighbor's who believes gold is a worthless relic of the past? Giving politicians something of value and expecting them to not cheat the public is a fantasy.

buzzard's picture

My first thought too... At this point I can't imagine giving any state or municipal government  any silver. Since FRNs aren't worth anything, if you insist on paying them something it would be an easy call in my book. But what do I know?

bankrupt JPM buy silver's picture

ASE are legal tender, this should not be a problem...its constitutional.  But I guess so is printing money so....



grok's picture

what is ASE, I assume you mean some kind of bullion.  I think what we have now is that it is legal tender, but only for the face value of the coin.  That's no good.

chumbawamba's picture

American Silver Eagles have a legal tender face value of One Dollar.  Just as pre-mid-1982 US pennies have a legal tender face value of One Cent (bullion value = ~3 cents) and a US nickel has a legal tender face value of Five Cents (bullion value = ~7.3 cents).

For Internal Revenue Service purposes, the value of exactly one ounce of silver or one ounce of gold depends on whether valuing it at face value or bullion value puts more money into the coffers of the government.

I am Chumbawamba.

johnQpublic's picture

ever wonder why they dont make a thousand dollar or ten thousand dollar gold coin, fifty dollar silver eagle?


DosZap's picture

Correctomundo, before it has a chance it has to have a floating rate scale.

The coinage would have to be be revalued, mixed with cupro/copper, to make them a viable option, and that takes an act of Congress, and the Mint.

Misean's picture

I gotta read the posts before posting.

cxl9's picture

Perhaps they'll offer a discount.

But seriously, this is just a show of "no confidence" in the dollar, or at least in current dollar monetary policy. It's not like anyone is actually going to pay their taxes in gold.

grok's picture

Yep I'm with you there!

cranky-old-geezer's picture

State governments really have nothing to gain by accepting gold / silver coins because money they take in goes out very quickly before it has a chance to appreciate in value (gold / silver coins) or depreciate in value (dollars).

This assumes gold / silver coins are valued at current spot price for gold / silver, not face value.  If accepted merely at face value they gain trmendously, but who would accept mere face value for their gold / silver coins?

hugolp's picture

Gresham's Law only applies if there is an artificial mandated price between the currencies. If they freely float then its not an issue.

traderjoe's picture

Every transaction that occurs in PM's further legitimizes their use as both a money and a currency. This would allow citizens to convert their fiat to PM's earlier - since they can pay their state taxes with it. Shopkeepers will be more willing to accept PM's for the same reasons. Increasing the uses for gold helps it's value. Hoarding it does not. Making it a money of the few hurts it's value and it's usefulness. Velocity matters.

strannick's picture

Exactly. Paper back to the paper pushers and save your metal for stuff you need, to get from people who know value

johnQpublic's picture

i want to see a proposal to pay PEOPle who work for government in gold

ditto your thought on paying them in gold


people=public employees...not "representatives"

tmosley's picture

A bill "allowing" payment in gold is the first step toward a bill "requiring" payment in gold.  

That is how you force gold to circulate in a hurry.  It is NOT a violation of Gresham's Law, but a repudiation of the bad currency.

DosZap's picture

This would turn out very badly.For us.

It would result in confiscation.Unless the Gv't revalued gold on hand to meet currency in circulation, and coupled only be used in the states.

Windemup's picture

As the rains return to the midwest US.

bob_dabolina's picture

This demeans my people and should not be pursued.

-Eric Holder

chumbawamba's picture

Ya gotta call a spade a spade.

I am Chumbawamba.

DosZap's picture

Eric Holder should be a trash collecter....racist bastard.

Whats this MY PEOPLE shit?, whites say that and are skewered,MY PEOPLE means Blacks are different than other  Americans.

Either your an American or your  COLOR doesn't matter.


We need a National Association of Caucasian Folks, and a Miss White America, a White America College Fund.

This one sided shit is way past OLD.

Time to get EQUAL RIGHTS.

stoneman sacked's picture

Pay taxes in gold! I had a hearty laugh. It is like the matrix. Just another system of control

Non Passaran's picture

Ha, ha, ha, that was very funny! But it doesn't make any sense. If I store most of my savings in PMs and my 2010 tax amounts to say 14K, now I could pay my tax bill with with 10oz of gold (a good deal as I paid only 12K for it last year). This makes perfect sense also because as a result more people would buy/invest in physical.

chumbawamba's picture

Your gains would be higher if you didn't have to pay sales tax on each of your purchases because they would almost all likely be below $1,500, and being able to deduct it after the fact is little consolation.  You still lost that gain to a bullshit tax.

But otherwise, yes, it does make sense to invest in gold, then sell some when you need to pay your taxes, if the government would let you do that, but they don't, because they either take their tithe from every one of your paychecks, or they require you to file and pay quarterly if you're self-employed.  So either way you don't really get to reap the true gains you might have otherwise if you could just pay at the end of the year and keep your money in gold until your liability is due.  Sorry, nope, you naive slave.  Your money is THEIR money, and then you get what's left over.

Pop Quiz: how did it come to be that people who are self-employed and not incorporated are required to pay the federal income tax?

I am Chumbawamba.

hound dog vigilante's picture

Both of you are missing the real point(s) of this bill/news. This is a re-assertion of states rights, for one, and it legitimizes PMs as a medium of exchange. Gold and silver - sanctioned at the state-level in direct defiance of the Fed and federalism. More baby steps like this, and before you know it we'll be re-building this country's economy from the bottom up.


Paying your taxes with PMs may or may not be a wise move... personally I would rather unload evaporating FRNs on the state and keep my PM. But these are insignificant details relative to the massive shift towards local/personal sovereignty that bills like this one truly represent. This bill's not forcing anyone to pay their taxes w/ PMs. Rather, from between the lines of this bill a clear message is sent, "the state of Utah recognizes that FRNs are toilet paper." Yeah, most taxes are unconstutional - I get it. But let's not stand still for fear that our strides be to short.

Federalism, Corporatism, Socialism... all are under attack, at long last. I couldn't be happier. I look around and i see people taking action at the local & personal level, and in some areas this activism is trickling-up to state politics. Fantastic. Some people think this is 'doom and gloom' or extremist or whatever. I think its progress. I think its rational. May we see more of it.

chumbawamba's picture

Eh.  If they want to make a statement then don't obfuscate it by linking it to payment of taxes (of all fucking things).  I would prefer if our so-called "statesmen" act like it and stop trying to hide whatever message they're trying to make behind stupid bills that will ultimately serve to just make the ignorant people scoff.

I am Chumbawamba.

Moe Howard's picture

Don't ask questions like that pop quiz.

It makes the Federales nervous.



<HELP> for explanation

cranky-old-geezer's picture

Pop Quiz: how did it come to be that people who are self-employed and not incorporated are required to pay the federal income tax?

That's easy.  They have a social security number (federal government ID number), making them a wholly owned subject (slave) of the federal government.

Same thing when you get a license plate with a state-issued registration number on it (state government ID number) for your vehicle.  You just transfered ownership of your vehicle to the state.  They own it now.

I'm surprised so few people here know these things.  Cops certainly know it.

DosZap's picture

You didn't pay taxes on our gains?.
IRS got a 1099 from who you bought it from, if a dealer.

oygevalt's picture

Please see here for some clarification re the 1099 issue: www.irs.gov/pub/irs-pdf/i1099msc.pdf.  It may clear up some common questions.

tired1's picture

Another Fort Sumpter?