DES MOINES, Iowa (Jan. 25, 2025) – Legislation introduced in the Iowa Senate would establish a gold and silver backed currency system, offering Iowans a practical alternative to Federal Reserve notes and challenging the central bank’s monopoly on money.

Senate Bill 112 (SF112) sponsored by Rep. Kevin Alons and a coalition of cosponsors, would require the state treasurer to issue gold and silver specie and create a transactional currency tied directly to the precious metals. 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 SF112 would allow any person to conduct business transactions using gold or silver.

IMPACT

The passage of this legislation would create a sound money alternative to U.S. dollars in both physical and electronic form.

Using gold and silver-backed transactional currency, any person or entity would be able to do business using a debit card that seamlessly converts gold and silver to fiat currency in the background. Private individuals and businesses would be able to purchase goods and services using assets held in an approved depository in the same way they use dollars held in a bank today.

Gold and silver-backed transactional currency would give people a way to shield themselves from the rapid loss of purchasing power inherent in the fiat dollar.

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 most states 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 paper 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.

State laws that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money.

WHAT’S NEXT

SF112 was referred to the Senate State Government Committee where it needs to get a hearing and pass by a majority vote before moving forward in the legislative process.

Mike Maharrey