The core component of this new law is the legalized recognition of gold and silver coins (issued by the federal government) as legal currency within the state. They may be used voluntarily by consenting parties, and rather than recognizing the face value of the coin (a horribly distorted metric of the coin’s worth), the market price of the gold or silver content is recognized as its value.
Further, the law provides for relief from certain taxes, including sales tax and capital gains tax. As gold and silver are rightly considered a currency and not a commodity, when in coin form, it is ludicrous to consider the exchange of dollars for gold a “purchase” subject to a sales tax. One does not pay sales tax when going to the bank to exchange a dollar for a peso, yuan, or other fiat note. It follows, then, that the exchange of currency between a dollar and gold or silver should likewise be exempt. This new law provides for that common sense tax exemption.
This foundational piece of legislation, upon which other bills will hopefully be based, offers Utah businesses, taxpayers, and consumers the ability to more easily transact in a currency that is not subject to massive depreciation and manipulation. Competing currencies are an excellent idea that benefits everybody (as opposed to just the government), and the ability Utahns now have to move between dollars and specie without the previous tax burden should spur a variety of economic enterprises and exchanges worth watching in the coming years.
In 1966, prior to his reign at the Fed and corresponding embrace of statism and power, Alan Greenspan was a champion of gold. He published an article in Ayn Rand’s newsletter on the subject, a portion of which reads:
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
He was right. While this new law does not create a gold standard, it does constitutionally restore the ability for gold and silver to be used as legal tender within the state, and puts the fiat dollar on notice that it now has competition. Ultimately, the success of this law will be determined by the market’s acceptance and implementation of its provisions. We will be waiting with great interest to see what develops in the coming months as a result.
Connor Boyack is president of Libertas Institute. He is the author of Latter-day Liberty: A Gospel Approach to Government and Politics and Latter-day Responsibility: Choosing Liberty Through Personal Accountability.
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