Gold may become legal tender if a number of states and some interest groups have their way. The Tea Party organization and a number of conservative-leaning states say Federal Reserve Chairman Ben S. Bernanke has literally driven the US Dollar into the ground. Bernanke, originally a George W. Bush appointee to the long-term post, has been straying farther and farther from his original selector's line.
In 2010, former Sen. Jim Bunning, R-Ky., reported that Bernanke had a heavy hand in the massive bailout of AIG, an act some saw as a massive overreach of government. Bunning said Bernanke and Treasury Secretary Tim Geithner were working somewhat behind the scenes to craft the bailout terms.
Since then, inflation has increasingly plagued the economy under Bernanke's watch, while the dollar has slipped from its once unwavering post as the go-to currency worldwide. A number of Asian nations have switched to the Chinese Yuan as reserve currency, in the face of America's massive $16 trillion estimated debt and increasingly unguarded spending policies.
Following the passage of a 2011 state bill, Utah has approved gold bullion as legal tender. While Bloomberg News reports that people "can't pay for groceries with gold in Utah", the motion sends an important message that many Americans believe the gold standard must return.
President Richard Nixon abandoned the longstanding policy of treating gold bullion as US currency in 1971. Since then, prices on everything from milk to gasoline have skyrocketed as the dollar continues to weaken. One ounce of gold is estimated to be worth over $1500 as of April 4, while one gallon of gasoline hovers around $4, a far cry from the $0.87 gallon of 87 octane in the 1980s.
While Utah has officially passed the measure making gold legal tender, Arizona has legislation that passed the first hurdle of being approved by the state legislature. South Carolina and Kansas are said to have similar gold-as-legal-tender legislation. Bernanke's reduction of interest rates to below 1 percent for an extended period of time may be seen by many borrowers and mortgage holders as a gift, but at the same time, mutual funds such as Vanguard offer much higher interest profits than the few cents per hundreds one gets in their local bank's savings account.
The Lone Star State is proposing legislation that goes even farther than that of Utah. Gov. Rick Perry, a Republican, has announced his support of a bill establishing a state depository to hold over $1 billion in gold bars owned by a management organization at the University of Texas. The bill would also reportedly allow Texans to store their gold investments in the depository as a safe haven should the dollar collapse.
While many proposals may consider gold legal tender, the US Constitution prohibits states from producing their own currency. The clause refers to a time in the Colonial era when each state would have its own 'dollar' but would not accept other states' money. A modern day example of how that might have looked is to think of Americans living near multiple state lines, such as people in New York City, who are very close to Connecticut and New Jersey, or in Chicago which is near both Wisconsin and Indiana. It could easily become a hassle to find ways to pay for necessary items in other states.
In order to facilitate their wishes and stay adherent to the letter of the law, the Arizona legislation in particular would allow the use of privately minted gold and silver as currency, such as collectable coins from private companies. So, if the dollar continues to flounder, a number of other states may or may not begin considering similar policy to make gold legal tender.
© 2024 Latin Times. All rights reserved. Do not reproduce without permission.
