AUGUSTA, Maine (April 18, 2023) – Last Wednesday, a Maine committee approved a bill that would make gold and silver legal tender in the state. Passage into law would eliminate barriers to using gold and silver in everyday transactions, a foundational step for the people to undermine the Federal Reserve’s monopoly on money.
Sen. Eric Brakey and nine fellow Republicans introduced Senate Bill 1270 (LD1270) on March 21. The legislation would make gold and silver in coin or bar form legal tender for all transactions as long as the buyer and seller agree as to the fair market value of the metal.
Practically speaking, this would set the stage for Mainers to use gold or silver coins and bars as money rather than just as mere investment vehicles. Declaring gold and silver legal tender would create a more favorable legal environment for the use of these precious metals in everyday transactions. In effect, it would put gold and silver on the same practical footing as Federal Reserve notes.
On April 12, the Joint Committee on Health Coverage approved LD1270 with an “ought to pass” majority report. Ten committee members signed the “ought to pass” report with two signing on to the “ought not to pass” report.
As introduced, LD1270 included provisions to eliminate the sales tax on the sale of gold and silver. The committee amended that provision out of LD1270 because a separate bill (LD1051) with those provisions recently passed out of the Joint Committee on Taxation.
Maine could become the fifth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming and Oklahoma followed suit, and Arkansas joins them this year with a new law that will go into effect this summer.
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.”
BACKGROUND
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 LD1270 would remove legal barriers that hinder the use of gold and silver as money in Maine.
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.
WHAT’S NEXT
LD1270 will now move to the full Senate for further consideration.
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- Alaska Senate Committee Passes Bill to Make Gold and Silver Legal Tender in the State - April 24, 2024