CHEYENNE, Wyo. (Feb. 6, 2023) – Last Wednesday, the Wyoming Senate passed a bill that would expand the Wyoming Legal Tender Act to create a process for the state to accept gold and silver for the payment of some taxes. The passage of this bill would set the stage to further undermine the Federal Reserve’s monopoly on money.
A coalition of 12 Republicans introduced Senate Bill 101 (SF101) on Jan. 12. The law would amend the Wyoming Legal Tender Act to require the state treasurer to establish a system to provide for the payment of mineral tax payments with specie or specie legal tender “subject to authentication procedures … that are consistent with precious metals industry standards.”
Under Wyoming law, specie legal tender is defined as coins having gold or silver content, or refined bullion, coined, stamped, or imprinted with its weight and purity.
As part of the process, the state treasurer would determine, maintain and publish market-based exchange rates between specie, specie legal tender and other legal tender currencies on a real-time basis on the state treasurer’s website in order to calculate tax payments to or from the state.
SF101 would also empower the state treasurer to invest in precious metal leases or bonds payable in precious metals “if market conditions warrant.”
During a committee hearing on the bill, Sound Money Defense League policy director JP Cortez said, “Given the financial risks facing the U.S., Wyoming should take these modest steps toward creating alternative ways of transacting and saving using sound money.”
SF101 would have originally allowed all state and local taxes to be paid in gold or silver. But sources close to the Tenth Amendment Center say due to issues with local governments authenticating, storing and transporting gold and silver, supporters of the bill decided it was best strategically to amend the bill to focus on state taxes in order to get it passed and set up a system for pricing, holding, and receiving precious metals. In Wyoming, mineral taxes are the only significant revenues collected directly by the state treasurer.
On Feb. 2, the Wyoming Senate passed SF101 by a 16-15 vote.
The Wyoming Legal Tender Act passed in 2018 defined gold and silver specie as legal tender and eliminated all taxes levied on them. Oklahoma and Utah also recognize gold and silver as legal tender.
The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in U.S.-minted gold and silver dollars. The company was also instrumental in the development of the “Utah Goldback,” described as “the first local, voluntary currency to be made of a spendable, beautiful, physical gold.”
Recognizing gold and silver as legal tender takes an important first step toward 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 recognizing gold and silver as legal tender will allow Wyoming residents to secure the purchasing power of their money.
The passage of SF101 would further establish the role of gold and silver as legal tender in Wyoming by creating a legitimate mechanism to use species legal tender for the payment of state and local taxes,
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.” States have simply ignored this constitutional provision for years. It’s impossible for a state to return to a constitutional sound money system when it taxes gold and silver as a commodity.
This Wyoming Legal Tender Act reestablished gold and silver as legal tender in the state and took a step toward that constitutional requirement, ignored for decades in every state. This sets the stage to undermine the monopoly of the Federal Reserve by introducing competition into the monetary system.
Constitutional tender expert Professor William Greene said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, 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.
SF101 will move to the House for further consideration. Once referred to a committee, the bill must get a hearing and pass by a majority vote before moving forward in the legislative process.
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