A number of states are now considering making gold and silver coins legal tender amid fears that the Federal Reserve’s monetary policies may result in a substantially less-valuable dollar.
Arizona lawmakers are expected to soon authorize residents to use bullion as legal currency. Similar legislation was passed in Utah in 2011, and several other states are also considering such a move, Bloomberg reports.
The Tea Party-backed legislation is largely symbolic, according to the University of Central Oklahoma’s Loren Gatch. As Bloomberg notes, “you still can’t pay for groceries with gold in Utah.”
“The legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing,” Gatch told Bloomberg. “There is a fear that the government, or Bernanke in particular and the Federal Reserve, is pursuing a policy that will lead to the collapse of the dollar. That’s what is behind it.”
The Fed hopes that its ambitious and controversial asset-buying program, which is known as quantitative easing, will help spur economic growth. Critics note that the policy could increase inflation substantially over time. In March, The Fed announced that it will continue buying $85 billion in securities each month.
Speculation that inflation would be pick up from the government’s economic-stimulus programs helped push gold prices up 78 percent since December 2008. But consumer prices rose only 1.3 percent in February from the year earlier, according to the Federal Reserve, lower than the Fed’s 2 percent target rate.
Rich Danker, the economics director at the Washington, D.C., based American principles project, told Bloomberg that allowing consumers to use gold “people the option of using money that won’t lose any purchasing power to inflation.”
“People in these states find the idea of having the option to use hard currencies appealing over these policies they have no control over,” Danker said.
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