Republican state Rep. Brad Galvez sponsored the bill, which also excludes gold and silver from capital gains taxes, as a protest against Federal Reserve policies. Galvez said he didn’t want a complete return to the gold standard, but wanted to give consumers more options.
“We’re too far down the road to go back to the gold standard,” Galvez told the AP. “This will move us toward an alternative currency.”
The Utah Gold and Silver Depository will open June 1, and consumers will be able to store their gold coins there in exchange for a debit card that draws on their funds there. Merchants won’t be required to accept gold coins, so the depository is the only way to guarantee the currency can be used.
Idaho, Minnesota, North Carolina and at least nine other states have similar bills drafted. Minnesota was the only state already considering the legislation.
Republican presidential candidate and former Minnesota Governor Tim Pawlenty made remarks in late March that implied he’d like to see a return to the gold standard. He told Fox News’ Sean Hannity that the recession would continue because the government had injected “fiat money” into the economy.
“It may look like there is temporary improvement because they have artificially infused the economy with government money, but the consequences of that will, as sure as we’re sitting here, will rear its head,” Pawlenty said, according to The Hill.
The Economist pointed out the flaws in the gold standard system, namely that it was partly due to lack of regulation on gold conversion rates that the country fell victim to the Great Depression. Gold and silver were prohibited by President Franklin Roosevelt from being used as currency during the Great Depression to prevent hoarding. President Richard Nixon formally and fully terminated the gold standard in 1971.
American Principles in Action, a DC-based conservative non-profit policy group that strongly supports a return to the gold standard, helped shape Utah’s new legislation. APIA economics project director Ralph Danker said that the gold standard would up consumers’ confidence and send a strong message to the Federal Reserve.
“Making gold and silver coins legal tender sends a strong signal to Congress and the Federal Reserve that their monetary policy is failing,” Danker told the AP. “The dollar should be backed by gold and silver, so we have hard money.”