PHOENIX, Ariz. (May 13, 2016) – Arizona Gov. Doug Ducey vetoed a bill that would have “legalized 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) earlier this year. The legislation defined specie (gold or silver coin, bar or round) as constitutional legal tender to establish it for use in the marketplace as currency. It read, in part, “Legal tender is money and is not subject to regulation as property other than money” – meaning it would have been treated just U.S. dollars and not taxed at the state level.
In his veto message, Ducey said he couldn’t support the bill “in its current form.”
“The language of the bill provides for a broad prohibition from state regulation of ‘legal tender’ as anything other than money. The provision is ambiguous and may have unintended consequences beyond the intent of the proponents.”
It is difficult to understand what Ducey found ambiguous in the language of SB1141. The bill simply defined gold and silver bullion as money (which it is) and treated it that way under the law. Essentially, Ducey vetoed money.
Keith Weiner testified in support of the bill as it moved through the legislature. He was clearly disappointed in the veto. He said he tried to convince Ducey not to veto the bill.
“Most legislation creates winners and losers. Those who will be hurt by a new law of course lobby against it, and may become enemies of the governor for signing it. This bill created no losers. No one would be hurt by recognizing gold as money. It would have been good for the state, adding jobs, and even tax revenue.”
Weiner said the veto proves Ducey isn’t really “pro-business,” and he ultimately vetoed the bill because he knew he could get away with it in today’s political climate.
“Few people care. While our monetary system drowns under zero interest and runaway debt, people are worried about the Kardashians and the gender of Bruce-now-Caitlyn Jenner. You had better start letting your government know that you want to start removing the roadblocks and start moving towards the only honest money: gold.”
A STEP FORWARD
Absent the veto, SB1141 would have 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 have no longer been subject to state taxes on the exchange.
Passage into law would have marked an important step towards currency competition. If sound money ever gains a foothold in the marketplace against Federal Reserve notes, the people will 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 have allowed Arizona residents to secure the purchasing power of their money.
“This wouldn’t have ended the fed’s monetary monopoly overnight, but it could have set the foundation and opened the door for more market activity by the people,” Tenth Amendment Center executive director Michael Boldin said.
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.”
SB1141 was 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.
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