I’m not at all sure this is a good sign.
Utah became the first U.S. state last month to recognize gold and silver coins minted by the federal government as legal tender. More than a dozen other states are considering similar measures, and are expected to follow Utah’s example. The move, proponents say, is caused by declining faith in the U.S. monetary system and concern about rising inflation.
It’s not like they going to start carrying around gold coins. Rather the dollar will be backed by gold and can be converted if desired. I may not know enough to be sure, but, by itself, I don’t think this is a bad idea. At present, the dollar, and really no currency, is not backed by anything tangible. A dollar is worth a dollar because the government says so. But, this news is worrisome because it shows that some people are losing faith in the dollar and anticipate higher inflation. Half of economics is psychology, what people think is going to happen, and fears of inflation could become a self-fulfilling prophecy.