I agree. Several states have initiatives to coin money out of gold and silver which the Constitution allows (but they can not print fiat money, only gold or silver). If they were to do this it would actually increase the money supply in circulation. There would simply be the additional gold and silver coins in circulation in addition to all the regular dollars. So it would tend to add to the inflation of the money supply (but not by much). So I do not see how they could argue it would harm the economy.

I think it would be great. Very few poeple would use gold or silver as money but just having the alternative I think would be good for the safety of the monetary system of the country. Any state that is proposing this (as far as I am aware) is making the use completely voluntary so there would be absolutely NO additional problems for merchants unless they chose to accept it. The only additional cost would be to state agencies as they would be required to accept it for things like taxes and licensees, etc.

It will be fought tooth and nail though. Why the Fed would not want to allow such a thing to come about is because it would bring to light of day the depreciating value of paper money that is not being responsibly managed. When people saw the coins gaining in value and paying bigger bills, they would instantly recognize the fallacy of a money that can be created in unlimited quanities at a cost of nothing.

All we need is a market based alternative money to use if we choose to use it. No one has to. No taxes on gains since it would be money, not an investment. In the event of a monetary crisis, another system would already be in place. One state is promoting state run depository to hold the gold and could be used via a debit card with the gold being debited at then current market rates. It would be a regular bank debit card and could be used seamlessly just like a regular debit card but the dollars paid would be debited to the gold baloance at current market rates. Since gold trades 24/7 there is always a current quote. James Turk of Goldmoney.com already has such a system but since it is illegal to have competing money in the US it can not be used here. No fractional reserve.

With modern technology, gold and/or silver could become money that is just as convenient to use as fiat digital money. The metal could stay in a secure private state audited vault with absolute ownership of the metal assigned to account holders on a ounce or gram basis, with no fractional reserve lending. People would have a choice of if they wanted to turn their money over to a bank to loan back out or have their money held secure for them in gold or silver. I think having an alternative so people can choose would be great. Let the people vote with their pocketbooks.

If one state gets this set up, you can bet there will be screaming and gnashing of teeth from all sides of the money power brokers, academia and main stream media.

John