NASHVILLE, Tenn. (March 24, 2023) – Yesterday, Tennessee Gov. Bill Lee signed a bill into law that creates a process for the state to buy, sell, and hold gold and silver. This sets a foundation for Tennessee to achieve more financial independence with gold and silver reserves, and could help undermine the Federal Reserve’s monopoly on money.
Rep. Bud Hulsey (R) and Rep. Monty Fritts (R) introduced House Bill 1479 (HB1479) on Jan. 31. Sen. Frank Nicely (R) and Sen. Adam Lowe (R) sponsored the companion bill (SB529) in the Senate. The new law authorizes the state treasurer to “purchase and sell gold or precious metal bullion or specie that will be directly owned by the state.”
Precious metal bullion is defined as “metals that are formed into uniform shapes and quantities such as ingots, bars, or plates, with uniform content and purity, as are suitable for or customarily used in the purchase, sale, storage, transfer, and delivery of bulk or wholesale transactions in precious metals.” Specie is defined as “a precious metal stamped into coins of uniform shape, size, design, content, and purity, suitable for or customarily used as currency, as a medium of exchange, or as the medium for purchase, sale, storage, transfer, or delivery of precious metals in retail or wholesale transactions.”
In practice, the enactment of the law allows the state of Tennessee to hold reserves of gold, silver, platinum, and palladium coins and bars.
On March 6, the House passed HB1479 by a 98-0 vote. On March 13, the Senate substituted the House bill for SB529 and passed the measure by a 33-0 vote. With Gov. Lee’s signature, the law went into immediate effect.
Another bill pending in the Tennessee legislature would create a state gold bullion depository. It was deferred to 2024. The passage of these bills together would set put the state on a path to financial security and independence.
Holding gold and silver will allow the state of Tennessee to shield its assets and hedge against rapidly depreciating Federal Reserve notes.
As Sound Money Defence League policy director JP Cortez noted while testifying in favor of a similar bill in Wyoming, “Proposals encouraging state gold holdings have come before the legislature since January 2019, but no bills have been passed. During the last four years of inaction on sound money, gold bullion, priced in declining dollars, has risen by 50 percent.”
Holding gold and silver in reserve will also create a pathway for Tennessee to maintain financial independence should the U.S. dollar collapse, a very real possibility as the world moves away from the greenback as its reserve currency.
In fact, central banks around the world have been buying gold to limit their dependence on the U.S. dollar. Last year, central banks bought 1,136 tons of gold. It was the highest level of net purchases on record dating back to 1950 and the 13th straight year of net central bank gold purchases. According to the World Gold Council, there are two main drivers behind central bank gold buying — its performance during times of crisis and its role as a long-term store of value.
It’s hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace.”
These factors are as relevant to Tennessee as they are to India.
When Texas opened its gold depository in 2018, University of Houston political science professor Brandon Rottinghaus made a similar point.
“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
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.” Currently, all debts and taxes in Tennessee are either paid with Federal Reserve Notes (dollars) which were 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.
The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat currency. Without the backing of gold or silver, the central bank can easily create money out of thin air. This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.
The passage of HB1479 sets a foundation for sound money in Tennessee.
It also takes another step in the process of abolishing the Federal Reserve system by attacking it from the bottom up – pulling the rug out from under it by working to make its functions irrelevant at the state and local levels, and setting the stage to undermine the Federal Reserve monopoly by introducing competition into the monetary system.
In a paper presented at the Mises Institute, Constitutional tender expert Professor William Greene 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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