Wow - Utah wants to return to honest money

The Salt Lake Tribune reports, "A bill that recognizes U.S. gold and silver coins as legal tender and exempts their sale from the state capital gains tax passed the Utah House Government Operations Committee Wednesday."

This bill is very interesting on many levels:

• It does not attempt to create a new paper currency that is backed by gold and silver.  Instead, it seeks to restore gold and silver coins themselves to their constitutional roles as money.  Whenever someone says they want gold backed paper money you always have to wonder if they are going to game the system like the federal government did when the dollar was backed by gold.  That experience, which ended in default in 1971, showed us that backed by gold is not the same thing as gold.  It also showed us that government has no problem stealing from the people.  The Utah bill does not look like it is playing games.  Those folks appear genuinely concerned that Federal Reserve notes are not worth the paper they are printed on.
• The bill exempts coin "sales" from state taxes.  In other words, it makes gold or silver coins real money, not "collectable" items which can appreciate and have capital gains.  Of course, the federal government wants none of that and if you are stupid enough to report the conversion of gold into paper money to them they will treat it as a taxable event.  That is a total scam and the fact that Utah is working to remove the state taxation of conversion between metal coins and paper money proves the point.  Did we ever have to pay tax as children when we saved up dimes and quarters and then went to the bank to convert them to dollars?  Of course not.  But the federal government wants us to do exactly that if we want to convert gold and silver coins into dollars today.  The feds believe that the fact that their paper money cannot hold its value is your problem, not theirs.  Silver and gold coins never increase in value.  The paper money decreases in value and thus it takes more of them to buy gold and silver which has not lost value.  Whose problem should that be, ours or the fed's? 
• While the bill is a step in the right direction, Gresham's law and fear of federal taxation will probably limit the actual trading of gold and silver coins for items in the economy.  Gresham's law is really just a rule of thumb which states that bad money will displace good money in the economy because people will pass the bad money along in trade and hoard the good money.  A good example of this is that you never see any silver dimes or quarters in the money supply anymore.  When people see the silver ones they put them in their pockets and they do not spend them.  Instead, they spend the silver colored ones that have no actual silver in them.  Likewise with gold.  The Utah law seeks to make it legal to pay for things with gold coins but who would use gold to pay for a car when they can use paper money instead?
• The big wildcard in all of this is the marketplace.  Gresham's law only holds true when gold and paper trade at the same rate.  However, if car dealers start giving price discounts based on buying with gold and silver coins instead of with paper money then all bets are off.  Yes, the discounts would have to be significant in order to tempt people to spend their coins instead of paper but I think if you could get 10-15% off for spending gold coins instead of paper money that it could see some interest from the buying public.  Discounts for more tangible forms of payment are not new.  If you have ever seen a cash price that is lower than a credit price for something then you have experienced this for yourself.  Who knows, maybe one day at the gas pumps there will be a credit price, a cash price, and a silver price.
• The whole idea of a new currency (or return to the old standard) represents a new threat to the federal government.  The feds have lots of power over everyone which they acquire via their ability to spend money on anything they want.  It gives them the ability to pick winners and losers, friends and enemies of the state.  The reason they get away with it is that they don't have to earn the money or even tax it away from the public.  They simply borrow or print it and that is an exorbitant privilege not only over other nations but also over the states.  If everyone decided to follow Utah's lead on this and if businesses subsequently stopped accepting paper money or gave a big discount for using gold and silver coins then the federal government would collapse within a few short months.  Without control over the currency of the land the federal government is nothing.  At this point the Utah legislation can be viewed as "a stunt" by DC statists.  They can claim it will never catch on.  They can pooh-pooh it like they did about the Tea Party.  But if Americans are finally waking up to the scam which is fiat currency and fractional reserve banking and if they are willing to go through the pain of a transition back to honest money then the federal government could go bankrupt in short order and return the control of people's lives back to the state level where most of the power was constitutionally intended to reside.

I really have tip my hat to Utah government for making this statement and for giving up any level of expected tax revenue in pursuit of returning to an honest money supply.  This is a move that is pro business and pro labor at the same time.  It is a move that shows a real desire for integrity.  That's something I have not been able to say about any government in a long, long time.