This opinion piece published by the Salt Lake Tribune attempts to marginalize the proposed "Utah Sound Money Act." A response from Citizens for Sound Money has been submitted to the paper for publication and will be posted here shortly. Original Article...
The 2011 session of the Utah Legislature is looking like uncommonly fertile ground for crackpot ideas. So far there is a bill to name an official state gun and two calling for conventions to amend the U.S. Constitution. But the most outrageous scheme to surface yet is the Utah Sound Money Act, a system of commerce within the state that would be based on gold and silver coins.
If your political antennae detect rants against the Federal Reserve and debased paper money, you’re on the right the track. Among the legislative findings in the draft bill is this:
“Since the founding of the Federal Reserve Bank system in 1913, Federal Reserve Notes have lost more than 95 percent of their purchasing power. During that same period of time, from 1913 to the present, as well as throughout the entire course of recorded human history, gold and silver coin have reliably retained their purchasing power, although subject to periodic fluctuations in value.”
This formulation conveniently understates the volatility of the international gold and silver markets. The price of a troy ounce of gold on the New York Commodities Exchange closed at about $1,413 on Wednesday. Five years ago, that price was just $522. In 1997, it briefly fell below $300. So, hitching your currency to the price of gold or silver is no guarantee of stability, though the Federal Reserve does keep a gold cache. The price of the dollar fluctuates. So does the price of gold. That’s how markets work, especially today, when money can be moved around the world with the click of a mouse and governments employ fiscal and monetary policy to manage their economies.
Nevertheless, the author of the Utah Sound Money Act, Larry Hilton, an attorney who is not a member of the Legislature, clearly would like nothing better than to return the United States, or at least Utah, to the gold standard. But he can’t do that, because the Constitution gives the power to coin money and regulate its value to Congress. It specifically forbids the states from coining money.
To get around that, the bill would create Utah Intrastate Commerce Cooperatives whose members would conduct transactions among themselves using gold and silver coins issued by the U.S. or other governments or by private mints. The state, meanwhile, would be required to accept payment of taxes from people who want to settle their obligations with gold and silver coins. The state treasurer would set the exchange rates of such coins, and a Utah State Defense Force would guard the state’s hoard.
So far, the bill hasn’t found a sponsor. Here’s hoping it doesn’t. Utah can’t secede from the Union, and it shouldn’t try to secede from the federal currency, either.
© 2011 The Salt Lake Tribune -- Reprinted with permission
Sampling of comments posted in response:
The author of this article fails to realize that "volatility" of gold and silver is really volatility of paper currencies which are often used to measure the "value" of specie.
And citing the "increase" of the value of gold simply underscores the decrease in the value of the federal reserve note.
Citizens will one day be glad they legalized gold and silver coin in the state of Utah because their economic transactions will be facilitated with specie when the federal reserve note finally loses 100% of its value.
Larry Hilton, as an attorney, should know that the Federal Reserve is technically not part of the Federal government. Its an entity made up of private bankers that have nothing to do with federal employees or anything federal. Therefore, the Constitution technically cannot protect the Federal Reserve.
As long as the gold/silver or other valuable metals are introduced under the nose of the so-called Federal Reserve, it too falls under false promises.
Once you can stop these people from running circles around, then you have figured out how to beat them at their own game. Buying gold as some greater commodity than paper dollars is rather foolish at this time. Do away with the private banking scam first and then use the gold as a better currency as such when the private banking scam did not exist before 1913. Otherwise, you will go nowhere and will lose lots of money investing in something that is allowed to be controlled by the private banking scammers.
This proposal has more than its share of the pixie dust and millenarianism promoted by the predominant local religion.
But it's a serious mistake to dismiss the legitimate disquiet lots of rational folks have about financial stability and market solvency.
Just a couple of years ago, people awakened to news that Bear Stearns and Lehman Brothers had failed. Merrill Lynch, Washington Mutual and a number of other financial behemoths avoided bankruptcy only through shotgun marriages with somewhat healthier players.
Congress took some baby steps towards banking reform in the summer of 2010, but three hugely important reforms were left out.
1) regulation of all players, whether they call themselves hedge funds, hedge hogs or anything else, involved in commercial or investment banking.
2) complete separation of commercial banking (protected by FDIC insurance) and investment banking (casino banks)
3) breaking up the top five biggest banks in the US to prevent the too-big-to-fail scenario
Regulation of leverage was addressed by the banking reform bill, but it still might not have provided sufficient power to regulators.
The Federal Reserve Bank was probably the greatest technological development of the 20th century.
It institutionalized debt based money and at the same time neutralized the power of the shadow banks of Europe.
It set up a system of controls so that the Fed would always be responsible to the best interests of the American people without placing our money supply in the hands of the politicians.
America's rise to the leading economic power in the World is the result of our ability to finance our way through two world wars during the last century. The Fed made this possible.
The dollar's position as world reserve currency is because of the strength of the Federal Reserve System.
Close down the Fed and we return to the Dark Ages.
I would really like to know what crackpot idiot wrote this piece. Although you are correct when you say the dollars value fluctuates as does gold and silver, I would put up my gold and silver to your paper currency any day. Why would anyone want to remain at the uneven and unfair mercy of the Federal Reserve? They are the single most evil entity within our system. I just dont like the idea of the fate of our economy rests solely in the hands of an organization that has no government oversight.
"Give me control of a nation's money supply, and I care not who makes its laws."