Lawmakers are aggressively attempting to establish this new monetary standard in response to looming distrust of the Federal Reserve and its “off the charts” printing. These concerns have become so great that these dozen or so states are in the process of attempting to adopt “The Constitutional Tender Act.” Utah is the forerunner, and in 2011 became the first state to pass a law recognizing gold and silver as legal tender. Other states that are considering following Utah’s lead include Minnesota, Idaho, South Carolina, Colorado, Missouri, Maine, Washington, Tennessee, New Hampshire and, of course, Arizona.
After Arizona, Missouri and South Carolina are the closest to enacting similar laws in 2013. The language below, contained in one version of South Carolina’s bill, is standard to many of the bills in state legislatures:
In the event of hyperinflation, depression, or other economic
calamity related to the breakdown of the Federal Reserve System, for
which the State is not prepared, the state's governmental finances
and private economy will be thrown into chaos, with gravely detrimental
effects upon the lives, health, and property of South Carolina's
citizens, and with consequences fatal to the preservation of good order throughout the State
With the possibility of an international financial crisis becoming more
evident with each day that goes by, many are pushing for passage of
these bills in the belief that the states can “avoid or at least
mitigate many of the economic, social, and political shocks to be
expected to arise from hyperinflation, depression, or other economic
calamity related to the breakdown of the Federal Reserve System only
through the timely adoption of an alternative sound currency that the
State's government and citizens may employ without delay in the event of
the destruction of the Federal Reserve System's currency.”The "Constitutional Tender Act,” as it is officially known, recognizes U.S.-minted gold and silver coins as legal tender. As we explained in November of 2012, this “is an important reason why Mike Maloney prefers U.S. minted coins,” in case many states adopt similar language excluding bars, foreign coins and rounds. There are provisions in some bills that would allow a state judge to grant legal tender status to non-U.S. minted coin (specie).
The Federal Reserve’s printing in the past few years has been in direct response to the consequences of the “Crash of 2008,” when worldwide markets experienced an economic meltdown not seen since the Great Depression. The Fed, under Chairman Ben Bernanke, has been infusing cash into financial markets to hold down interest rates and create a fragile, mispriced stock market. But a rising stock market only gives the illusion of an economic recovery; the reality is that things are progressively getting worse for average Americans, and worries are growing.
National unemployment in the U.S. sits at 11.6% using the government’s own numbers when those who have given up looking for work are included as unemployed. U.S. GDP has only maintained a 1.5% nominal growth rate, and the national debt has now reached almost $17 Trillion.
As Arizona State Senator Bob Worsley, R-Mesa, maintains, “We’ve never had this amount of debt in this country.” South Carolina State Rep. McClain R. “Mac” Toole (R-Columbia) echoes Worsley’s sentiments as he stated: “I’m no financial expert, but I am smart enough to know that you can’t keep printing money when it has no backing.”
Proponents of the bill maintain that it is only a matter of time before the country suffers hyperinflation, making the “greenback” worthless. Arizona State Senator Chester Crandell, R-Heber, says that the ultimate bottom line is "lack of confidence in the dollar—or at least the real value of the dollar, what with the Federal Reserve continuing to print...” He continues, “I think you can see that all over the country. Countries including China are moving to have their own currencies recognized as an international standard because the dollar doesn't do what it used to do.”
As the Federal Reserve continues to print on an unprecedented level, the new cash that is being injected into the financial system will cause massive repercussions, such as record high price inflation, and the accompanying shrinking purchasing power of the consumer. Sadly, “this is what the Federal Reserve does. The system was designed to create inflation… since the Fed was created, the United States has endured constant inflation. In fact, we have come to accept it as ‘normal.’” That being said, there is a very good chance that more states will act to offer their citizens a legal alternative to the dollar, and that the rest of the country will follow suit in efforts to avert many of the negative impacts of the ongoing economic disaster.
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