These doomsayers are pushing forward legislation that would declare privately minted gold and silver coins legal tender, no different under state law than the U.S. dollar printed by the federal Department of Treasury.
The measure is Arizona’s latest jab at the federal government, which prohibits states from minting their own money. It also reflects a growing distrust of government-backed money.
“The public sees the value in it,” said Republican Rep. Steve Smith, of Maricopa. “This is the type of currency we have had over the history of mankind.”
The bill, which advanced in a 4-2 vote by a House committee Monday, states that gold and silver should be legal currency not subject to tax or regulation as property. The Republican-led Senate gave the bill its blessing in February in a 17-11 partisan vote.
The bill would let people use the precious metals as money as long as businesses agree to take them. If made law, it would take effect in 2014.
Democrats oppose the measure. They say it would be a bureaucratic nightmare because businesses don’t have the equipment to determine the value of gold and silver.
“This should be addressed by the Federal Reserve and not by the state,” said Democratic Rep. Rosanna Gabaldon, of Green Valley.
Keith Weiner, president of the Gold Standard Institute, which supports gold-backed currencies, said he envisions a system where people can pay for goods and services with debit and credit cards backed by gold and silver.
Paper money is a “recipe for worldwide bankruptcy,” Weiner told Arizona lawmakers Monday. “Everybody is going bankrupt on this system so we need a sound and honest money system, such as gold and silver.”
In 2011, Utah became the first state in the country to legalize gold and silver coins as currency. Lawmakers in Minnesota, North Carolina, Idaho, South Carolina, Colorado and other states have debated similar laws in recent years.
Many investors have invested their money in precious metals in recent years as a hedge against the declining value of the dollar. When the value of the dollar declines, gold prices rise.
Gold rose $12, nearly 1 percent, to $1,604.60 per ounce on Monday with news of Europe’s bailout plan for cash-strapped Cyprus. Silver inched slightly higher, up 2.3 cents to $28.874 per ounce.
The dollar was up against the euro, the currency used by 17 European countries, as well as the Japanese yen and the Canadian dollar in February.
Proponents of the switch to gold and silver argue paper money is too vulnerable to government manipulations. When central banks boost the amount of currency in circulation to drive down interest rates, the value of that currency relative to others can decline.
“It’s actually strange to me that we don’t have this already,” said Republican Rep. David Livingston, of Peoria.
Gold-backed money fell out of favor during World War I because the U.S. and many other countries needed to print more cash to pay for the war. In 1971, President Richard Nixon formally abandoned the gold standard.