WASHINGTON - April 15, 2011 - Starting in May, Utah residents will be able to shop in a currency other than the dollar - gold, something that hasn't happened since 1933.
Utah became the first U.S. state last month to recognize gold and silver coins minted by the federal government as legal tender. More than a dozen other states are considering similar measures, and are expected to follow Utah's example. The move, proponents say, is caused by declining faith in the U.S. monetary system and concern about rising inflation.
The gold standard, a monetary system in which the dollar is valued against a certain weight of gold, lasted until the Great Depression, when the Federal Reserve confiscated gold held by the public. President Nixon abolished the conversion of dollars to gold at a fixed rate in 1971.
It doesn't literally mean people would pull out gold coins at the cash register. Instead, the Federal Reserve would be required by law to make their notes redeemable for gold and hold gold coins and bullion as reserves. The printing of U.S. dollars would also be weighed against the value of gold.
The last time the gold standard was seriously considered was during President Ronald Reagan's regime. Reagan appointed a commission in 1981 to study the role of gold in the U.S. monetary system, but the group mostly came out against it - except for two members, including now-Rep. Ron Paul (R-Texas), a champion of the Tea Party movement.
Despite continued calls by proponents like Paul to consider the gold standard, it had mostly stayed under the radar, until now.
The Tea Party's growing momentum and rising inflation is giving new life to the issue, as is evident in Utah.
"We are just now starting to see some interest. These actions by state legislatures are mostly symbolic - declaring that people can use a one-ounce federally-minted gold coin at its face value of $50 doesn't really give people a reason to do that. But it's a statement by the state legislators that they are concerned by the state of the dollar," said Lawrence H. White, a professor of economics at George Mason University, who has published several reports on the topic.
