Gold standard a tin solution

Anyone who doubts there's a silver lining to all that debt Uncle Sam is piling up need only look to the Beehive State, which is buzzing about both silver and gold. Unfortunately, a silver lining of this kind is the last thing anyone needs.

Motivated by fear, Utah has adopted a silly law that "recognizes gold and silver coins issued and deemed legal tender by the federal government to be legal tender in the state."

What's this all about? Basically, the people behind this bill distrust the dollar. Indeed, some Utahns are talking about keeping precious metal coins in a depository of some kind so people can write checks against them. The idea is to create some truly hard money against the day the dollar finally collapses, as advocates of the legislation seem to believe it will.

The law also lets users of these coins out of the state capital gains tax if they have risen in value -- as many have, along with precious metals prices. A gold American Eagle coin with a $50 face value, for instance, is worth around $1,600. Avoiding Utah's capital gains tax on this will presumably leave people more money to buy survival gear.

So should we all return to the gold standard, formally abandoned in this country in 1971? In a word, no. That would constrain economic growth by limiting the expansion of the money supply and of credit, as well as the ability of the Federal Reserve to fight unemployment -- one of its main jobs. Gold always shines brightest at times of fear. Some folks in Utah must be awfully scared.