PHOENIX, Ariz. (April 26, 2016) – Yesterday, the Arizona House passed a bill that would help “legalize the Constitution” by defining gold and silver specie as legal tender and encouraging their use as currency..
Sen. David C. Farnsworth and Rep. Doug Coleman, along with seven cosponsors, introduced Senate Bill 1141 (SB1141) on Jan. 19. The legislation defines specie (gold or silver coin, bar or round) as constitutional legal tender to establish it for use in the marketplace as currency. It reads, in part, “Legal tender is money and is not subject to regulation as property other than money – meaning it would not be taxed at the state level.
The amended language tightens the definition of “specie” to exclude coins or bars that make up some part of jewelry or that is valued based on historic or collectible significance.
The legislation broadens the definition of “legal tender” beyond only Federal Reserve Notes.
“Legal tender” means a medium of exchange, including sepcie, that is authorized by the United States constitution or Congress for the payment of debts, public charges, taxes and dues.
“Specie” means gold or silver coin, bar or round.
A STEP FORWARD
Passage of SB1141 would allow Arizonans to deduct the amount of any net capital gain included in federal adjusted gross income derived from the exchange of one kind of legal tender for another kind of legal tender or specie from their state income tax, In other words, individuals buying gold or silver, or utilizing gold and silver in a transaction, would no longer be subject to state taxes on the exchange.
Passage into law would mark an important step towards currency competition. If sound money gains 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 SB1141 would allow Arizona residents to secure the purchasing power of their money.
“This isn’t going to end the fed’s monetary monopoly overnight, but it sets the foundation and opens the door for more market activity by the people,” Tenth Amendment Center executive director Michael Boldin said. “This is an important part of the overall strategy, and activists in Arizona should continue working to get both bills passed.”
Currently, all debts and taxes in Arizona must be paid with either Federal Reserve Notes (dollars), authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.
But the United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”
The Arizona bills take a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly or the Federal Reserve by introducing competition into the monetary system.
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.