A bill recently signed into law in Texas that will set up a state gold depository represents a power shift away from the federal government to the state, and it provides a blueprint that could ultimately end the Fed.
Gov. Greg Abbot signed the law creating the state gold bullion and precious metal depository last month. In his signing statement, Abbot emphasized the autonomy the new facility will provide the state.
“…the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state.”
Media coverage has primarily focused on the fact that the gold depository will give the Lone Star State complete control over its gold and greatly increases its economic independence.
For instance, The Star-Telegram reported that the primary goal of the depository is to “bring home more than $1 billion in gold bars that are owned by the University of Texas Investment Management Co. and are now housed at the Hong Kong and Shanghai Bank in New York.” Under the new law, Texas gold will be beyond the purview or control of any “governmental or quasi-governmental authority” not directly administered by the state.
Controlling its own gold supply shifts power to the state, away from the federal government and other non-government entities. Control represents power, and Texas just got a lot stronger. On top of that, having its gold secure within its borders broadens its options should a massive economic meltdown occur.
Rep. Giovanni Capriglione sponsored the bill creating the new depository. During a recent radio interview reported by the Texas Observer, he said that the 2008 financial crisis and the very real possibility of a future US dollar collapse spurred the gold depository idea. “It really kind of brought to bear the idea that we need some kind of Plan B,” he said.
The existence of a state gold depository will certainly provide security for state assets and solidify Texas’ independence, but it has the potential to do something much bigger. If enough states follow Texas’ lead, it could ultimately change the way Americans transact business. As Capriglione pointed out during the interview, it has the potential to undermine the Federal Reserve’s monopoly on money.
“The really interesting part about this depository, which hasn’t been getting a lot of press, is that with this depository, private individuals and entities will be able to purchase goods, and will be able to use assets in the vault the same way you’d be able to use cash.”
In other words, Texans will be able to conduct transactions with sound money, backed by gold or silver stored in the state depository, bypassing the dollar and the US central bank completely.
That’s real power.
Constitutional tender expert Professor William Greene wrote a paper for the Mises Institute arguing that enough states start transacting business in sound money, 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.”
The Texas gold depository creates a mechanism to begin this process, and provides a blueprint for other states to follow. Consider the ramifications if other states follow suit. If the majority of states controlled their own supply of gold, it could conceivably make the Federal Reserve completely irrelevant.
Here we have the blueprint to literally end the Fed.
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