The US state of Arizona approves gold and silver coins as legal tender

The US state of Arizona approves gold and silver coins as legal tender. According to Hong Kong media reports, just as Federal Reserve Chairman Bernanke pointed out that the current economy is still not up to standard, implying quantitative easing measures...

The Arizona State Assembly recently passed the approval of gold and silver coins to become legal tender in the state, without being subject to asset taxes and regulations; the bill will take effect as soon as next year. If the merchant accepts it, consumers can use the two precious metal currencies to make purchases.

In fact, in recent years, the Federal Reserve has continued to pump water into the market, which has already triggered market concerns about inflation. Supporters of the bill pointed out that Arizona has adopted gold and silver coins as legal tender. When the U.S. dollar completely loses its value, the state's financial system can avoid disaster.

Worry that QE will eventually bring down the US dollar

Other analysts pointed out that the relevant measures were proposed by the more radical Tea Party people and have little practical use. The main purpose is to express dissatisfaction with Bernanke's implementation of QE and worry that the policies implemented by the government or Bernanke and the Federal Reserve will trigger inflation and eventually bring down the US dollar.

Utah passed the relevant bill as early as 2011, but it is still not possible to use gold coins to purchase daily necessities in this state; Kansas, South Carolina and other states are also discussing the implementation of relevant policies. However, the relevant laws only allow merchants to accept gold and silver coins issued by the federal government for transactions.

The Texas government is considering setting up the Texas Gold Bar Depository to store gold bars worth US$1 billion. This batch of gold bars belongs to the University of Texas Investment Management Company and is currently stored in the warehouse of the Federal Reserve Bank of New York. Analysts pointed out that the action also showed that the state government did not trust the New York Federal Reserve Bank, and was worried that Texas would not be able to get its gold back once the Reserve Bank's QE eventually led to the collapse of the local currency and political system.

Officials said they could stop bond purchases early

Bernanke still supports the global central bank's water release, suggesting that the Federal Reserve will continue to implement QE. However, several Federal Reserve officials have said that the Fed can stop buying bonds early. Among them, St. Louis Reserve Bank President James Bullard yesterday predicted that the economy will continue to improve and the Fed will gradually reduce its bond purchases.

He also expected first-quarter growth to be slightly higher than the January estimate and expressed his willingness to reduce the scale of QE. Federal Reserve Vice Chairman Yellen also said last week that the Fed should slow down its asset purchases based on the outlook for the labor market.

Rick Rieder, head of BlackRock's fixed income investment department, said that the Federal Reserve's policies distort investors' asset allocation plans and require the Reserve Bank to reduce bond purchases by US$40 billion to US$45 billion per month. He said that although the unemployment rate is still as high as 7.6% and the labor market is also facing a series of negative impacts, the Fed should take advantage of the fact that the economy is still relatively stable and reduce bond purchases. BlackRock expects the unemployment rate to fall slowly and will not raise interest rates until the end of 2015.