AUSTIN, Texas. (Mar. 13, 2023) – A bill introduced in the Texas Senate would take important steps toward treating gold and silver as money instead of commodities. Passage would set the stage for the people to undermine the Federal Reserve’s monopoly on money.
Sen. Tan Parker (R) introduced Senate Bill 1558 (SB1558) on Mar. 3. The legislation would establish “specie issued by the United States” as legal tender in the state, making it receivable in payment of all public and private debts contracted for in the state of Texas.
Under Texas law, “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.
Practically speaking, this would allow Texans to use gold or silver coins as money rather than just as mere investment vehicles.
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.”
Texas has already taken steps to facilitate the use of gold and silver in everyday transactions with the Texas State Bullion Depository. The depository was created by a bill signed into law by Gov. Abbott in 2015. The Texas depository received its first deposits in the summer of 2018. The following year, the state exempted precious metals in these depositories from taxation. Ultimately, depositors will be able to use a bullion-funded debit card that seamlessly converts gold and silver to fiat currency in the background. This will enable them to make instant purchases wherever credit and debit cards are accepted.
Establishing gold and silver as legal tender would take another step toward treating gold and silver as money, setting the stage to undermine the Federal Reserve’s monopoly on money.
Additionally, gold or silver specie bullion or specie other than gold or silver specie that is issued by the United States would be considered legal tender in Texas “if a court of competent jurisdiction issues a final, unappealable judgment or order” saying so.
By allowing the court to designate additional specie to be used as legal tender, Texas could free its citizens from potential supply constraints imposed by the use of only United States-minted gold and silver coins. More importantly, the people of the state of Texas would be able to define what specie is considered constitutional tender, further distancing themselves from potential control of their competing currency by Washington D.C.
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 Kansas 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 SB1558 would remove legal barriers that hinder the use of gold and silver as money in Texas.
Making gold and silver legal tender 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.
As of this reporting, SB1558 has yet to receive a committee assignment. It must receive a hearing and pass by a majority vote before moving forward in the legislative process.