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Why Arizona’s “Sound Money” Law Needed To Fail

I know the title of this blog may strike some of you the wrong way, but I implore you to read first and judge second. I am well aware that for the last 5,000 years of human history we have used gold and silver as money instead of cash. I am aware that things only changed once kings and monarchs realized how important the gold was and decided to keep it for themselves while ordinary citizens were forced to trade goods and services for paper, and I am aware that every fiat currency ever printed has failed, because that is what they are designed to do. With that said, Arizona’s “Sound Money” law needed to fail.

The legislation would have allowed people to use gold coins and silver coins to purchase goods and services throughout the state. Here’s the problem. People who buy gold coins do so because they want to beat inflation, not because they need groceries or gasoline. That’s what cash is there for, at least for now. The mentality of physically-held precious metals investors is to buy and hold. Not buy and spend.

Additionally, it is dangerous enough walking around with cash instead of a credit or debit card. How many people in Utah would be mugged for their money if the “Sound Money” law passed? A one-ounce silver coin is equivalent to about $30. A one-ounce gold coin, $1500. Carrying those around doesn’t sound like the best idea, even in a nice place like Phoenix, Tuscon or Sun City.

Utah passed a similar law in 2011, except with a bill pay system that worked with gold and silver as deposits. At the time of this writing, the commission’s web site shows that nobody has signed up for the program. The legislation was a complete waste of time and money. Maybe one day gold and silver will be our daily currency, but until then politicians should focus on making a difference instead of trying to make a point.

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