Utah Spurs Gold Rush

On June 2, hours after he presided over a ceremonial signing of Utah’s Legal Tender Act of 2011, Republican Gov. Gary Herbert was called by an out-of-state newsman for his comments on the day’s events.  Herbert sent word to the reporter that he is proud that Utah has emerged as “a leader in sound money policy.”

This was an understatement.  Ever since the Utah House passed the bill by a 47-to-26 vote following a half-hour debate on March 4—and well before the Legal Tender Act became law on May 10—Utah’s drive to define U.S.-minted gold and silver coins as official in-state currency has attracted attention in the national and international media—including respectful front-page coverage in the New York Times on Memorial Day, three days before Gov. Herbert’s ceremonial signing.

More important, at least a dozen other states have seen the introduction of similar legislation.  South Carolina’s legal tender bill has 10 sponsors in the state house, including the Republican majority leader, Kenny Bingham.  Its lead sponsor in the state senate is David Thomas, chairman of the banking and insurance committee.  At its annual convention in mid-May, the South Carolina Republican Party passed a resolution endorsing the bill.

In Iowa, Kent Sorenson, a young, politically gifted conservative leader who ousted seemingly entrenched Democratic incumbents in races for the state house (2008) and state senate (2010), introduced a legal tender bill as soon as he learned what Utah was doing.  Sorenson supports returning the United States to a gold-backed dollar.  The sponsor in the Iowa House is Kim Pearson, another articulate newcomer.

So what is the nature of what Herbert described as Utah’s sound-money leadership?  Is the Legal Tender Act of 2011 a pro-gold protest against the weak dollar/stagflation economy on offer from the Obama administration and the Federal Reserve under Chairman Ben Bernanke? 

Or quite apart from any national political impact, will it have a favorable effect on the economy of Utah, or, for that matter, other states looking to enact similar laws?

The answer, at least potentially, is both of the above.  Washington-based reporters covering the Fed say that that body, though so far offering no public comment, has cast a jaundiced eye on the Utah legislation as well as the spread of the hard-money movement to other states.  The fact that two of the movement’s most active states, South Carolina and Iowa, happen to be two of the first three states to vote in the contest for the Republican presidential nomination could also prove significant.

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