DES MOINES, Iowa (Feb. 8, 2024) – Yesterday, an Iowa Senate subcommittee recommended the passage of a bill that would establish a state-issued gold or silver transactional currency. Enactment of this legislation would give Iowans the option to do business with sound money and undermine the Federal Reserve’s monopoly on money.

Sen. Kevin Alons and a bipartisan coalition of 14 cosponsors introduced Senate Bill 2108 (SF2108) on Jan. 24. The proposed law would require the state treasurer to issue specie (gold or silver coins) and establish a transactional currency.

Specie under the proposed law would be defined as “a precious metal stamped into coins of uniform shape, size, design, content, and purity, suitable for or customarily used as currency, a medium of exchange, or the medium for purchase, sale, storage, transfer, or delivery of precious metals in retail or wholesale transactions.”

Transactional currency is defined as “a representation of actual specie and bullion held in a depository account by a depository account holder and which may be transferred by electronic instruction.”

Specie, gold and silver bullion, backing the transactional currency would be stored in an “approved” bullion depository which could include a state bullion depository, the Texas Bullion Depository, or a similar depository established in another state.

The bill specifies that “the treasurer of the state shall establish a means to ensure that a person or state who holds the transactional currency may use the currency as legal tender in payment of debt and readily transfer or assign the transactional currency to any other person or state by electronic means.”

In practice, the passage of SF2108 would allow any person to conduct business transactions using gold or silver.

On Feb. 7, a subcommittee of the Senate State Government Committee recommended SF2108 for passage. A vote total was not available at the time of this report.


In a nutshell, any person or business would be able to transact business using state-issued gold or silver coins, or a debit card that seamlessly converts gold and silver to fiat currency in the background. Private individuals and entities would be able to purchase goods and services using assets in an approved depository in the same way they use cash today. Doing so has the potential to open the market to sound money in day-to-day transactions.

Making gold and silver available for regular, daily transactions by the general public creates the potential for a wide-reaching effect. Professor William Greene is an expert on constitutional tender and said in a paper for the Mises Institute that 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.”

Gresham’s Law holds that “bad money drives out good.”  For example, when the U.S. government replaced silver quarters and dimes with coins made primarily of less valuable copper, the cheap coins drove the silver out of circulation. People hoarded the more valuable silver coins and spent the less valuable copper money. So, how do you reverse Gresham?

The key is to make it easier to use gold and silver in everyday transactions. The reason bad money drives out good is that governments put up barriers to using sound money in day-to-day life. That makes it more costly to spend gold and silver and incentivizes hoarding. When you remove barriers, you level the playing field and allow gold and silver to compete head-to-head with Federal Reserve notes. On an even playing field, gold and silver beat fiat money every time.

In most states, debts and taxes must either get 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 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.”

The creation of a transactional gold and silver currency would take another step toward that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly of the Federal Reserve System by introducing competition into the monetary system.


SF2108 will now move to the full Senate State Government Committee where it must get a hearing and pass by a majority vote before moving forward in the legislative process.

Mike Maharrey

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