Distrust of the Federal Reserve and concern that U.S. dollars may become worthless are fueling a push in more than a dozen states to recognize gold and silver coins as legal tender.
Arizona is poised to follow Utah, which authorized bullion for currency in 2011. Similar bills are advancing in Kansas, South Carolina and other states.
The measures backed by the limited-government Tea Party movement are mostly symbolic -- you still can’t pay for groceries with gold in Utah. They reflect lingering dollar concerns, amplified by the Fed’s unconventional moves in recent years to stabilize the economy, said Loren Gatch, who teaches politics at the University of Central Oklahoma.
“The legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing,” said Gatch, who studies alternative currencies at the Edmond, Oklahoma-based school. “There is a fear that the government, or Bernanke in particular and the Federal Reserve, is pursuing a policy that will lead to the collapse of the dollar. That’s what is behind it.”
Bernanke has pushed interest rates to near zero since the 18-month recession that began in December 2007. The Fed said in March it would continue buying $85 billion in securities each month in a program known as quantitative easing that has ballooned its assets beyond $3 trillion and is aimed at keeping long-term borrowing costs low to support economic growth.
Chairman of the Federal Reserve Ben Bernanke testified before the House Financial Services Committee on Wednesday morning. The 10-second takeaway, a near facsimile of Tuesday’s hearing before the Senate Banking Committee, was that Bernanke remains a champion of quantitative easing. Rolling with the blows dealt by those who disagree with his policies (there are many), Bernanke dug a trench around the idea that the benefits of the Fed’s policy outweigh the risks.
As watchman of the nation’s money supply, Fed Chairman Ben Bernanke has the task of increasing or decreasing it as appropriate to foster price stability and low unemployment. This has been part of the Fed’s role since its creation in 1913. However, when you consider the relationship between the money supply (as measured by M2) and GDP, something very interesting appears. We’ll call this the M2 to GDP ratio. This ratio has been rising steadily for the past 32 years. Even though it’s in record territory today, the economy is still bouncing along the bottom, bringing into question the effectiveness of this latest round of quantitative easing (QE). Let’s begin with a primer on GDP.
In an exchange with Bob Corker on Tuesday in which the Senator called Ben Bernanke an inflation dove, the Chairman of the Federal Reserve responded that “my inflation record is the best of any Federal Reserve chairman in the postwar period.” For the readers who presume this article to be satire, the link here will prove otherwise. Bernanke, the walking, tripping, living definition of systemic risk now views himself as a top level inflation fighter in addition to being the world’s foremost Great Depression expert, bank savior, and so many other things. And it’s President Obama who has the huge ego?
What’s comical here, and to be fair, it’s easy to misspeak when under the spotlight, is that by his very own economic illogic Bernanke implicitly acknowledged that in addition to having the best inflation record since WWII, he’s also overseen the worst economic performance of any Fed Chairman since 1945. It should also be said that Bernanke implicitly acknowledged Tuesday the utter failure of his quantitative easing program. More on both later.
For highlights of the question and answer session of Federal Reserve Chairman Ben Bernanke's testimony to the Senate Banking Committee on Tuesday on monetary policy and the U.S. economy.