PHOENIX (Mar. 25, 2015) – A bill “legalizing the constitution” by authorizing the use of gold and silver as legal tender was given final approval by the state Senate in Arizona today. It now moves to the Governor’s desk for a signature
Introduced by Rep. Mark Finchem and six cosponsors, House Bill 2173 (HB2173) re-affirms gold and silver as legal tender in the state of Arizona on a voluntary basis. It reads, in part: “Legal tender is money and is not subject to taxation or regulation as property other than money.”
HB2173 previously passed the state House by an overwhelming 34-23 margin. Today, the Senate concurred with a 17-12 vote.
This bill would mark the first step toward 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 HB2173 can allow Arizona residents to secure the purchasing power of their money.
Currently, all debts and taxes in Arizona must either get paid with 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.”
HB2173 takes a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly the Federal Reserve system 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.
HB2173 will be transmitted to newly-elected Gov. Doug Ducey’s desk in the coming days. He must sign or veto legislation within 5 days of the day after transmittal (excepting Sundays), or it becomes law without signature.