"I don't think this has any practical implications,” says David Rapach, associate professor of economics at St. Louis University. “This could be a combination of nostalgia toward both states' rights and the gold standard, but we moved away from those types of models for good reasons.”
Perhaps the good professor has never heard of Gresham's Law, or seen The Hunger Games. But it does fit my model that most economists' understanding of current economic events has a lag of about ten years. That is why so many of them missed the build up to the financial collapse.
I would not underestimate the ingenuity of the public and their preference for stable value, and their building resentment at being bullied and abused by pampered elites in a distant city. The Sound Money Bill may be a local protest, but so was The Boston Tea Party.
Missouri's Sound Money Bill Is Really a Protest
By David Nicklaus
April 24, 2012
When the dreaded hyperinflation arrives, the Missouri House wants Missourians to be ready.
Last week, the legislative body passed the Missouri Sound Money Act of 2012, which declares U.S. gold and silver coins to be legal tender in the state.
That sounds a bit odd, especially since the federal government already recognizes its bullion coins as legal tender. It's just that nobody's going to pull out a $50 gold piece to pay for snacks at QuikTrip, because the ounce of gold in the coin is really worth $1,600.
Backers of the Sound Money Act envision a system in which you could deposit gold and silver coins in a vault and get a debit card tied to their metal value. If the Federal Reserve debases the value of the dollar – a favorite prediction among the gold-bug set – gold and silver would rise in value, and prescient Missourians could brag about their enhanced purchasing power.
Utah passed a legal-tender law last year, and South Carolina's legislature is considering one this year.
Rich Danker, economics director of conservative lobbying group American Principles in Action, said a couple of institutions in Utah are working to create the gold debit-card system. Until that's in place, sound-money advocates have to spend out of bank accounts denominated in dollars, just like the rest of us.
Missouri's legal-tender bill would benefit precious metals investors by eliminating state capital gains taxes on U.S.-minted coins. A fiscal note says the state treasury could lose more than $370,000 a year.
That's a small price to pay, backers argue, for monetary freedom....
Read the rest here: Missouri's Sound Money Bill Is Really a Protest - St. Louis Today
