LANSING, Mich. (Feb. 17, 2025) – A bill filed in the Michigan House would establish a transactional currency backed 100 percent by gold and silver, along with a bullion depository. If enacted, the legislation would create the infrastructure to facilitate the everyday use of sound money, while also offering safe storage for precious metals.
Rep. Alabas Farhat and two cosponsors filed House Bill 4086 (HB4086). The legislation would establish the Michigan Bullion Depository as a safe storage facility for precious metals. The depository would “serve as the custodian, guardian, and administrator of certain bullion and specie that are transferred to or otherwise acquired by this state.” Individuals and businesses would also be able to set up accounts at the depository.
The depository provisions are based on a similar law that was passed in Texas and signed into law by Gov. Abbott in 2015.
TRANSACTIONAL CURRENCY BACKED BY GOLD OR SILVER
Under HB4086 the state treasurer would be required to “establish and provide for the issuance of gold and silver specie,” 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.” The depository would be the sole issuer of this physical specie.
The treasurer would also be required to “establish and issue a digital currency based on gold and silver that represents a particular fraction of a troy ounce of gold or silver, as applicable, held in trust as provided by this article.” This digital currency would be known as the “Michcoin.” The treasurer would be required to ensure the holder of this digital currency could “use the specie as legal tender in payment of debt and readily transfer the specie to another person.”
The digital currency would be 100 percent backed by reserves in the depository.
In effect, individuals and businesses would be able to transact business electronically using currency backed by gold and/or silver held in the depository.
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 the Michigan Gold 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
HB4086 was referred to the House Committee On Communications and Technology where it must get a hearing and pass by a majority vote before moving forward in the legislative process.
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