Zurich, Switzerland

Across a growing chorus of stores and other retail outlets all over the United States, vendors are accepting EUR as payment.

And now, gold and silver are accepted as legal tender currency in the state of Utah. Other states are pursuing similar actions.

Investors aren’t the only ones tired of ultra-loose Federal Reserve monetary policy.

The Fed has kept the Federal Funds rate, which it sets, effectively at 0% since late 2008. In the process of establishing “easy money,” the central bank has forced retirees back into the market as savings accounts and CDs pay little – offering negative inflation-adjusted rates. It’s also forcing some vendors to accept another currency to settle transactions.

Utah is the first example of a new push among some states to hedge the dollar’s decline and protect its purchasing power by accepting precious metals as a form of payment.

The U.S. dollar has been mired by two periods of super-low interest rates since 2003. The tech-bust in 2000 and then the housing crash in 2006-2007 both led to abnormally low interest rates, creating bubbles in assets and encouraging mountains of leveraged speculation.

The Fed is obviously tilting towards inflation risks at this stage of the economic recovery by keeping short-term rates too low for an extended period; the Bernanke Fed has been clear in its desire to grow inflation even at the expense of some inflation; the official CPI, at 2.1% over the last 12 months, is probably closer to 8% or higher. Nobody is paying 2% more for goods and services.

By the end of 2011, the Fed will probably be the only major central bank, apart from Japan, to keep lending rates at current levels. By remaining behind the inflation curve, the dollar is likely to weaken further in 2011.