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Utah to reinstate Gold as a currency?

cpwill

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huh.

now this is going to be one interesting experiment in the labratory of democracy.

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...

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

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...

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...

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

tacomancer

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I wonder how valid this experiment will be if they don't go cold turkey off paper and electronic money. Interesting to see what happens though.
 

cpwill

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they're going to a mixed system; gold will be voluntary.
 

tacomancer

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they're going to a mixed system; gold will be voluntary.

Yes, that was pointed out in your OP. My question was to the validity of the usefulness of gold if an alternative exists. To put it in scientific terms, you have introduced a variable into the system which makes it harder to track out a hypothesis and validate it or invalidate it. Not to assume that such an experiment should happen to real people with real lives, who could suffer if their economy was suddenly changed, but I question if it will put to bed any questions about the superiority of one monetary system over another.
 

cpwill

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Greshams' law states that bad money chases out good. So I suppose we may get some evidence back rather quickly. Given the ability to use multiple currencies, if people quickly switch to spending gold, it means they want to hold on to their dollars. or visa versa.
 

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I don't understand the purpose of a state declaring that gold and/or silver is legal tender. Obviously there could be no coins with denominational amounts minted on them because metals fluxuate quite a bit in cost. How would the states get the gold/silver to mint their own coins with?

It's a publicity stunt, nothing more, nothing less.
 

Kushinator

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Why anyone would pay with gold rather than a card is beyond me. Besides, the value of a speck of gold fluctuates rather consistently. This is good news for those who sell digital scales in Utah i guess.
 

Guy Incognito

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Thank you to cpwill for mention Greshams law! Maybe somebody should pass that along to the Utah legislature.

The whole thing is absurd. Who sets the exchange rate? Can you demand that a bank trade you gold for your U.S. dollars? If not then what is the purpose of this aside from being, as has been observed, a publicity stunt?

I wonder if Utah's going to get its gold from Goldline?
 

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Hooray, the devil that is paper currency can be voluntarily replaces. Now folks from tibet or wherever can visit and buy/sell things.
 

Guy Incognito

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This will certainly be something everyone should watch closely. Go Utah

Why do you say that? What is this supposed to accomplish exactly? If people wanted to pay their debts in gold, there is nothing stopping them from doing it today. Apart from that, there is no reason for this, and plenty of reason not to do it. The king cannot issue two monies! It just doesn't work, it's basic economics.

Oh wait, I think I know what Republicans like about this idea:

It would also exempt the sale of gold from the state capital gains tax

So, as a way to get the economy back on track by replacing fiat money this idea is complete BS. But as cover for yet another Republican tax dodge, it works just fine:thumbs:
 

Cold Highway

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ARealConservative

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Why anyone would pay with gold rather than a card is beyond me. Besides, the value of a speck of gold fluctuates rather consistently. This is good news for those who sell digital scales in Utah i guess.

so the dollar isn't fluctuating, it's the gold?

hahahahahaha.
 

Guy Incognito

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My guess would be that Utah is trying to see which currency works better, debt based fiat currency or hard currency. Again as I said it is something worth watching

Gold standard - Wikipedia, the free encyclopedia

Silver standard - Wikipedia, the free encyclopedia

But thats just it. Using two currencies side by side, both fiat and hard currency at once, is no way to test which one is better. The principle is called Gresham's law, that when the king issueth two monies, the good shalll drive out the bad. That means that if both gold and fiat money are used as currency, people will hoard whichever one is more valuable. Probably gold. And so the only money circulating will be the worthless money.

So if the governnment is still enforcing worthless paper as if it has the same value as gold, concurrent with gold, people are probably gonna just hoard their gold and spend their paper. Which one would you spend, given the choice?

Having two currencies is not a test for which is better, it is an invitation to game the system.
 
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CriticalThought

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We aren't going to get anywhere by taking steps backward. We need to begin to seriously consider how we can implement an energy currency.

Our bodies run on energy currency (ATP), we heat our homes with energy, we run our cars with energy, we grow our food with energy, we make all our material things with energy, etc.

There are all sorts of supplies of stored energy; oil, gas, biofeuls, wind, solar, nuclear, etc.

It is only logical that our currency should reflect reality. Gold became an outdated standard the day that we developed the ability to split atoms.
 

VanceMack

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It looks like its not just Utah but 13 states at this point that are examining it. And if you look at what it says in the article, my immediate thought is that when people pay their taxes in gold, a state banks the gold as an investment. When the dollar continues to loose current value, the state investments are much more solid. It sounds like smart fiscal sense. Of course...mindless politically motivated idiots are immediately going to see some conspiracy, and not future planning from one of the few states that has managed to maintain a responsible fiscal policy.
 

VanceMack

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We aren't going to get anywhere by taking steps backward. We need to begin to seriously consider how we can implement an energy currency.

Our bodies run on energy currency (ATP), we heat our homes with energy, we run our cars with energy, we grow our food with energy, we make all our material things with energy, etc.

There are all sorts of supplies of stored energy; oil, gas, biofeuls, wind, solar, nuclear, etc.

It is only logical that our currency should reflect reality. Gold became an outdated standard the day that we developed the ability to split atoms.

Utah also is heavily invested in natural gas as a resource. Not sure what you are looking for as an energy currency. Hopefully something more compelling than the carbon exchange. Please expound.
 

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so the dollar isn't fluctuating, it's the gold?

hahahahahaha.

In 1999 gold was selling for about $290 an oz. and a screen printed t-shirt cost about $7 at Walmart. Now that screen printed t is about $8, and the price of an oz of gold is about $1,400. In 1999 I could have purchased about 41 screen printed t-shirts at walmart for the value of an oz of gold, now I can purchase 175 t's at walmart for an oz of gold.

Assuming that the value of a screen printed t-shirt is about the same that it was in 1999, thus setting it as a standard in value, the dollar has deflated by about 15%, but gold has inflated by nearly 500%.

In 1979 it hit $850/oz, by 1983 it was down to $350 an oz. This was during the most inflationary period for the dollar ever - the dollar was loosing value rapidly and gold lost value at a rate of many times the devaluation of the dollar.

History proves that the dollar has been much more stable in value than gold. In additition to the stability of the dollar, it is much more predictable in value than gold. The dollar has rarely gone up in value, so over a period of time we know in advance that it is pretty safe to assume that our dollars will purchase a few less tshirts in the future, however it is not safe to assume anything about the price of gold (in relationship to the value of a tshirt) as gold could purchase more tshirts or less tshirts in the future.

Moving to a very unstable commidity in order to stabilize the value of currency makes as much sense as trading in an economy car for a limo to save gas.
 

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Utah also is heavily invested in natural gas as a resource. Not sure what you are looking for as an energy currency. Hopefully something more compelling than the carbon exchange. Please expound.

To put it simply, energy is our utlimate limited resource. As such, our economy should be based on it. If we had unlimited energy at our disposal then the limiting resource would be material resources, but even things like fresh water can be made if we have an adequate supply of energy.

I envision that as our technology develops and we develop new ways to store energy we will use those as currency instead. Imagine using AA batteries as currency instead of using paper or gold. Except in this case, the AA battery would probably have enough energy to heat your house for a month.
 

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It looks like its not just Utah but 13 states at this point that are examining it. And if you look at what it says in the article, my immediate thought is that when people pay their taxes in gold, a state banks the gold as an investment. When the dollar continues to loose current value, the state investments are much more solid. It sounds like smart fiscal sense. Of course...mindless politically motivated idiots are immediately going to see some conspiracy, and not future planning from one of the few states that has managed to maintain a responsible fiscal policy.

Ya, there are kooks and morons, oops I mean tea baggers, in every state.

I actually think that individual states trying to go on the gold standard is a cool idea. I like experiments. I however am not looking forward to having to price my goods in multible currencies or having to check the price of gold every time I make a financial transaction.
 

VanceMack

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In 1999 gold was selling for about $290 an oz. and a screen printed t-shirt cost about $7 at Walmart. Now that screen printed t is about $8, and the price of an oz of gold is about $1,400. In 1999 I could have purchased about 41 screen printed t-shirts at walmart for the value of an oz of gold, now I can purchase 175 t's at walmart for an oz of gold.

Assuming that the value of a screen printed t-shirt is about the same that it was in 1999, thus setting it as a standard in value, the dollar has deflated by about 15%, but gold has inflated by nearly 500%.

In 1979 it hit $850/oz, by 1983 it was down to $350 an oz. This was during the most inflationary period for the dollar ever - the dollar was loosing value rapidly and gold lost value at a rate of many times the devaluation of the dollar.

History proves that the dollar has been much more stable in value than gold. In additition to the stability of the dollar, it is much more predictable in value than gold. The dollar has rarely gone up in value, so over a period of time we know in advance that it is pretty safe to assume that our dollars will purchase a few less tshirts in the future, however it is not safe to assume anything about the price of gold (in relationship to the value of a tshirt) as gold could purchase more tshirts or less tshirts in the future.

Moving to a very unstable commidity in order to stabilize the value of currency makes as much sense as trading in an economy car for a limo to save gas.

As opposed to investing in...say...the stock markets? How many states have lost their ass with the market and economic collapse? How many retirement accounts... individual, government, union, and corporate...are simply wiped out?

A state that operates with a balanced budget and demostrated fiscal responsibility as opposed to a federal government that has put the US taxpayers 14 trillion plus or states that have multibillion dollar deficits...hmmm...which would seem to be more fioscally responsible...
 

VanceMack

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Ya, there are kooks and morons, oops I mean tea baggers, in every state.

I actually think that individual states trying to go on the gold standard is a cool idea. I like experiments. I however am not looking forward to having to price my goods in multible currencies or having to check the price of gold every time I make a financial transaction.

I wonder who is more financially secure, the Tea Party folks or...well...people like you....
 

VanceMack

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To put it simply, energy is our utlimate limited resource. As such, our economy should be based on it. If we had unlimited energy at our disposal then the limiting resource would be material resources, but even things like fresh water can be made if we have an adequate supply of energy.

I envision that as our technology develops and we develop new ways to store energy we will use those as currency instead. Imagine using AA batteries as currency instead of using paper or gold. Except in this case, the AA battery would probably have enough energy to heat your house for a month.

Where do you see scientists and universities in this country NOT trying to come up with the next new big thing with regard to energy? Im all for renewable energy R and D...but at the same time, states must forecast stable long term growth. Wouldst that the fed had such vision.
 

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In 1999 gold was selling for about $290 an oz. and a screen printed t-shirt cost about $7 at Walmart. Now that screen printed t is about $8, and the price of an oz of gold is about $1,400. In 1999 I could have purchased about 41 screen printed t-shirts at walmart for the value of an oz of gold, now I can purchase 175 t's at walmart for an oz of gold.

Assuming that the value of a screen printed t-shirt is about the same that it was in 1999, thus setting it as a standard in value, the dollar has deflated by about 15%, but gold has inflated by nearly 500%.

In 1979 it hit $850/oz, by 1983 it was down to $350 an oz. This was during the most inflationary period for the dollar ever - the dollar was loosing value rapidly and gold lost value at a rate of many times the devaluation of the dollar.

History proves that the dollar has been much more stable in value than gold. In additition to the stability of the dollar, it is much more predictable in value than gold. The dollar has rarely gone up in value, so over a period of time we know in advance that it is pretty safe to assume that our dollars will purchase a few less tshirts in the future, however it is not safe to assume anything about the price of gold (in relationship to the value of a tshirt) as gold could purchase more tshirts or less tshirts in the future.

Moving to a very unstable commidity in order to stabilize the value of currency makes as much sense as trading in an economy car for a limo to save gas.

Given technological advances, I have to wonder why screen printing isn’t cheaper now then it was in 1999. This individual product anecdotal provide very little use.

Gold is only volatile because people’s faith in fiat currency remains volatile, creating an artificial bubble because the worth of fiat currency is completely arbitrary.
 

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But thats just it. Using two currencies side by side, both fiat and hard currency at once, is no way to test which one is better. The principle is called Gresham's law, that when the king issueth two monies, the good shalll drive out the bad. That means that if both gold and fiat money are used as currency, people will hoard whichever one is more valuable. Probably gold. And so the only money circulating will be the worthless money.

So if the governnment is still enforcing worthless paper as if it has the same value as gold, concurrent with gold, people are probably gonna just hoard their gold and spend their paper. Which one would you spend, given the choice?

Having two currencies is not a test for which is better, it is an invitation to game the system.

Most of my financial transactions are electronic or in the form of check. Assuming that the gold currency would not be pegged to the value of the dollar, and assuming that the electronic banking system will not accomidate the gold currency, them most likely all my transactions would be in the good ole US dollar and not gold. I really don't know how a competing currency would fit into my finances at all. My financial obligations are all stated in US dollars, so I would most likely prefer to be paid in US dollars so that I can pay my bills.

I believe I would just simply choose to not accept a competing currency as payment for my services.

If I want to own gold, then I would simply purchase some gold, but I cant eat gold, I can decorate myself with gold but I would never wear it for clothing, it doesn't keep me warm in the winter or cool in the summer, it has no medical value, it cant transport me anywhere, it cant operate my machinery, and it certainly doesn't entertain me. I have no use for gold other than to try to impress other people, but I don't have any ego issues so I really don't even feel that urge.
 
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