DailyFinance: U.S. Currency Backed by Gold and Silver? Yes, But the 'U' Stands for Utah
Writing for the Daily Finance, Eamon Murphy assesses the impact of Utah's Legal Tender Act. Consider his comments on the notion of a sound money stimulus
... Utah attorney Larry Hilton, who drafted early versions of the bill, hopes that his state's innovation will prove the beginning of national movement: "I think if we see more states acting in concert with what we've done, that will probably be a bigger blip on the radar screen."
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Hilton thinks of the legislation in terms of the Constitution, in which the states reserve to themselves the right to declare gold and silver legal tender. "There is a very important role for states to play in stabilizing the national monetary system," he says. "When the dollar was backed by precious metals, it maintained its purchasing power over a period of 150 years."
Those days are gone, he says, the gold standard having been eroded by pressures such as world wars and the dollar's status as the international reserve currency. With nothing backing the dollar up -- except the increasingly strained full faith and credit of the U.S. government -- some citizens fear a calamitous drop in its value, potentially touched off by a sudden loss of reserve currency status. For Hilton, the proper exercise of the states' constitutional power could help check the federal government's undermining of its own currency on the international stage through domestically-directed programs like the stimulus and quantitative easing. "By doing so," he adds, "states can essentially create localized stimulus by expanding the monetary base without dollar inflation."