It’s for Real – U.S. States Prepare for Dollar Collapse

As the Federal Reserve Board defies all precepts of sound money stewardship, a growing number of states are seriously looking at alternative currencies (gold and silver) to help their people protect their wealth.
In the August 2011 issue of our sister publication Money, Metals and Mining, editor David Morgan received this reader question: “What are your thoughts on how the endgame of owning physical silver will go? In other words, what do you think will be the best way to exit physical ‘ounces’ one day?”
David’s answer, in short: “… it will be spent.”
David clarified further, “As paper money becomes less desirable, people will want something of ‘value’ for their labor, service, or good. What I think is very likely to take place slowly at first and then pick up steam is that silver (gold too) will be used to transact all kinds of different business deals – from simple things such as food, all the way up to major purchases such as real estate. Check out if you’re able to do so, and you will find more and more ads that will accept or prefer to deal in silver…”

Many Attempts Taking Place
to Help You Spend Your Gold and Silver
in the Free Market…

North Carolina Republican Representative Glen Bradley introduced a currency bill last year and is quoted by CNNmoney saying, “In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System… the State’s governmental finances and private economy will be thrown into chaos.”
In 2011, Utah was the first state (in a long time) to recognize gold and silver coins minted by the U.S. Government as legal tender for goods, services, and state taxes. In addition, Utah does not levy a tax on bullion (although federal capital gains taxes would still apply).
In 2012, Idaho legislators introduced the Idaho Constitutional Money Act of 2012, and Washington legislators introduced the 2012 Gold and Silver Legal Tender Act of Washington State.
One of the sponsors for the Washington bill, Representative Matt Shea, says, “Sound money is freedom… The free-market is about competition, and allowing competing currencies is just another extension of that time-honored principle.”
In the past three years, more than a dozen states have introduced bills or moves to study the feasibility of using gold and silver as alternative currencies.
Numerous other states are gearing up for the next round of sound money propositions.

Swiss Now Thinking
of Bringing Back a Gold-Backed Franc

Over the last few years, sound money initiatives have taken root primarily at the state level. Except for Congressman and presidential candidate Ron Paul, there is not much discussion or activity at the federal level.
On the other hand, Switzerland is discussing introducing a “parallel” gold Swiss franc (NOT backing the current Swiss franc with gold). This new gold Swiss franc would circulate alongside the fiat franc.
“The time is right; the issue simple. We are talking about freedom of choice in monetary matters…. If today’s monetary system remains as good as today’s authorities claim it is, they shouldn’t worry – if it isn’t, we, the people, shouldn’t be forced to use it,” says Thomas Jacob, responsible for bringing the gold franc idea to national attention in Switzerland.
Switzerland was one of the last countries to sever its link to gold. At the time, the law required 40% of issued currency to be backed by gold. This uncoupling happened rather recently, too, in the year 2000.
In an interview with the Daily Bell, Jacob was asked if the Swiss people had forgotten the value and importance of sound money principles. His reply: “Not the Swiss… politicians and monetary authorities have.”
Let Them Have Silver
Sound money is being actively discussed at the national level in Mexico, too. President of the Mexican Civic Association for Silver, Hugo Salinas-Price, says, “In Mexico we have a Congress that is quite well aware of the importance of this legislation [silver coin used as a free and competitive currency in Mexico] and it has broad support both in the Senate and in the Chamber of Deputies [similar to the House of Representatives]… The idea is well understood and approved.”
Mexican Libertad
Similar to the Swiss plan, silver will NOT back the Mexican peso. Instead, a one-ounce silver coin called Libertad (Liberty) will be introduced as a parallel currency and freely circulate in the market.
What’s interesting about this plan is that it attempts to encourage more savings, and mute out the price volatility normally found with silver.
When the Libertad launches it will be priced slightly above the market rate for silver. If silver rises, the value of the Libertad will adjust up incrementally. But, if prices drop, the Libertad stays stable at its previous high. For example, if silver goes to $40 (about 500 pesos) an ounce, then drops precipitously, the Libertad remains at 500 pesos (or whatever the official value was set at before silver prices fell).
In this way, the people of Mexico are encouraged to accumulate savings, while at the same time protecting their buying power.
One challenge Salinas-Price faces ought to sound familiar to Americans: “If it wasn’t for the central bank, this measure would have passed a long time ago. The party leaders are afraid to jeopardize their careers by becoming enemies of the central bank.”
Your Own Gold and Silver Standard
You need not wait for national or state-level legislation aimed at restoring sound money in order to adopt your own gold and silver standard. The only thing you need in order to establish a legal barter transaction involving precious metals as payment is two consenting parties to the exchange.
As confidence in the fiat system erodes, private transactions will increasingly be done using precious metals. That’s what David Morgan sees unfolding in the years ahead.