SALT LAKE CITY, Utah (Jan. 24, 2024) – A bill introduced in the Utah House would expand and clarify the definition of gold and silver as legal tender in the state.
Rep. Ken Ivory introduced House Bill 348 (HB348) on Jan. 19. Passage into law would set the stage for the people of Utah to further undermine the Federal Reserve’s monopoly on money.
Utah led the way, reestablishing constitutional money by making gold and silver legal tender in 2011. HB348 would expand the definition of “specie legal tender” to include gold or silver coins or bullion not issued by the United States government. It would also clarify that specie legal tender may be used for the issuance or repayment of debt obligations in the state.
“Nothing precludes the use of specie legal tender for the issuance or repayment of any bond, surety, or other debt obligation authorized or required by law, if permitted by the resolution or agreement securing the bond, surety, or other debt obligation.”
The bill takes additional steps to facilitate the use of sound money by requiring the state treasurer to create a framework allowing for the use of electronic currencies backed by specie legal tender within the state. In practice, this would allow people to easily use gold or silver in everyday transactions.
BACKGROUND
Practically speaking, making gold and silver legal tender allows people to use gold or silver coins as money rather than just as mere investment vehicles. In effect, it puts gold and silver on the same footing as Federal Reserve notes.
Wyoming, Oklahoma, and Arkansas have taken this step, along with Utah
The impact has already been dramatic in Utah. The legal tender law opened the door for the development of a gold and silver market in the state. With some legal hurdles cleared away by the state, the United Precious Metal Association (UPMA) in partnership with Alpine Gold Exchange set up the state’s first “gold bank.” The Utah Specie Legal Tender Act has also led to the creation of Goldbacks, a local, voluntary medium of exchange. Goldbacks are notes made from fractions of an ounce of physical gold. The company created a process that turns pure gold into a spendable physical form for small transactions.
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, most debts and taxes in most states are either paid with 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.
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.
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
HB348 is currently in the Rules Committee. From there, it will be assigned to a House committee for further consideration. Once it receives a committee assignment, it will need to get a hearing and pass by a majority vote before moving forward in the legislative process.
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