OLYMPIA, Wa. (Mar. 7, 2015) – A bill “legalizing the constitution” by authorizing the use of gold and silver as legal tender was introduced recently in the state of Washington.
Rep. Matt Shea (R-4) and six cosponsors introduced House Bill 2197 (HB2197) on March 20. The Constitutional Currency Restoration Act re-affirms gold and silver as legal tender in the state of Washington. Under the bill, “gold and silver coins, precious metal liquidation systems and contracts” are recognized “as an alternative competing currency” to Federal Reserve notes.
This bill would mark the first step towards full currency competition. If sound money is given a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by HB2197 can allow Washington residents to secure the purchasing power of their money.
HB2197 provides the historical basis behind the idea of gold and silver as money. It reads, in part:
Gold and silver-backed currency retains earned wealth in the hands of the people and has provided civil societies with a fair, honest, and reliable medium of exchange for over six thousand years;
Gold and silver-backed currency decentralizes power in the free market system and inherently prevents the centralization of economic control by the government and the ability of government to confiscate earned wealth through the hidden tax of inflation;
Gold and silver-backed currency provides competition in the currency marketplace and provides greater security to the people of Washington state in protecting their property and other assets from the hidden tax of inflation.
In addition, HB2197 states the Constitutional basis for the idea of gold and silver as money. It reads, in part:
The general government was not given the constitutional authority to create legal tender laws as attested by the fact the affirmative grant of legal tender power was voted down nine to two during the constitutional convention of 1787 accompanied by the following footnote from James Madison’s The Debates in the Federal Convention of 1787 “This vote in the affirmative by Virga. was occasioned by the acquiescence of Mr. Madison who became satisfied that striking out the words would . . . only cut off the pretext for a paper currency, and particularly for making the bills a tender either for public or private debts.”;
Washington state is required to recognize gold and silver as legal tender under Article I, section 10 of the United States Constitution which states “no state shall . . .; make anything but gold and silver Coin a Tender in Payment of Debts . . .”
HB2197 establishes gold and silver as a legitimate legal tender option for consumers. Under the bill, the following would be recognized as legal tender in the state of Washington:
(1) Federal specie gold and silver coin at any time issued by the general government of the United States of America; and
(2) Transactions by a precious metal liquidator backed by gold and silver of any size or shape marked by any refiner recognized by the Chicago mercantile exchange.
Professor William Greene is an expert on constitutional tender and said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.
Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.
Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there. Bills like HB2197 are a first step toward that ultimate goal.
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