Texas now proposes a gold and silver back currency to compete with fiat money and serve as legal tender in the state.
In an effort to establish a more stable monetary system, a Texas lawmaker has introduced two significant bills aimed at creating transactional currencies backed by gold and silver.
If passed, these bills would enable the use of these precious metals as legal tender within the state, providing a 100% asset-backed alternative to fiat currency.
Legislative Details
On November 12, Texas State Representative Mark Dorazio submitted House Bill 1049 and House Bill 1056.
These bills, while similar in language, aim to amend different sections of the Texas legal code to incorporate provisions for gold and silver-backed currencies.
According to a report from the Tenth Amendment Center, the proposed legislation stipulates that the Texas Comptroller would issue gold and silver coins through the Texas Bullion Depository.
This depository would be mandated to hold sufficient quantities of gold and silver to fully back the issued currency.
As outlined by Mike Maharrey, Communications Director for the Tenth Amendment Center, the bills would allow holders of gold and silver to utilize these assets as “legal tender in payment of debt” within Texas.
Furthermore, the gold and silver-backed currency would be electronically transferable, enabling seamless transactions.
This means that individuals could redeem their currency either in physical coins or at the current market price of gold, minus any applicable fees.
Implications for Business Transactions
Should these bills be enacted, Texans would be able to conduct business using gold and silver much like they currently do with U.S. dollars.
Maharrey emphasized that the introduction of such legislation would create a viable alternative to the fiat dollar, allowing for both physical and digital transactions.
With the potential for debit cards that convert gold and silver into fiat currency behind the scenes, everyday commerce could see a significant transformation.
This initiative is particularly appealing to those looking to protect themselves from the devaluation of the dollar.
Maharrey noted that making gold and silver accessible for daily transactions could lead to far-reaching economic consequences.
Professor William Greene, an authority on constitutional tender, suggested that if multiple states begin to adopt gold and silver as currency, it could effectively diminish the Federal Reserve’s influence, challenging the federal government’s monopoly on money.
Theoretical Economics: Reverse Gresham’s Law
Greene further explained a phenomenon he termed “reverse Gresham’s Law,” where the superior value of gold and silver coins could drive out inferior Federal Reserve notes.
He argued that as people begin to use both types of currency, the inherent value of the precious metals would lead to a natural preference for them over fiat currency.
Maharrey elaborated on this by referencing historical instances where less valuable money supplanted better forms due to government intervention.
He pointed out that by removing legal and tax barriers to using gold and silver, these assets could compete on equal footing with Federal Reserve notes, thus encouraging their use in everyday transactions.
Constitutional Foundations
Maharrey further reinforced his argument by citing Article I, Section 10 of the U.S. Constitution, which asserts that “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”
He highlighted that most debts and taxes are currently settled using Federal Reserve Notes or U.S. Treasury coins, which rarely contain precious metals.
Establishing transactional currencies backed by gold and silver would align Texas with constitutional mandates, creating a competitive monetary environment.
The proposed bills are set to be reviewed by Texas House committees when the legislative session opens on January 14, 2025.
Exploring Digital Solutions: Gold-Backed Tokens
In addition to advocating for gold and silver-backed currency, Texas lawmakers are also making strides toward creating a blockchain-based gold-backed token.
This initiative aims to facilitate the use of gold in transactions while also potentially boosting Bitcoin adoption.
Earlier in April 2023, Senators Bryan Hughes and Mark Dorazio introduced separate bills aimed at establishing a state-issued digital currency supported by gold.
Cody Harris, a Republican member of the Texas State House, expressed optimism that such a token could serve as a gateway for individuals new to cryptocurrency.
Harris explained that the proposed digital token would represent a fraction of a troy ounce of gold held in trust, making it easier for people to utilize gold in their daily transactions.
He believes that this state-issued solution could provide a more comfortable entry point into the world of cryptocurrency, especially for those wary of decentralized assets like Bitcoin.
Concerns Over Central Bank Digital Currencies
While advocating for a gold-backed digital token, Harris voiced strong opposition to central bank digital currencies (CBDCs), which he believes could pose significant risks to individual freedoms and privacy.
He cautioned against the potential for a surveillance state enabled by CBDCs and urged the public to engage in discussions about the implications of digital currencies.
Harris emphasized the importance of the cryptocurrency community’s involvement in shaping the future of digital assets, warning against the dangers of government-issued digital currencies that could enforce social credit systems and other forms of control.
A New Monetary Landscape
As Texas lawmakers push for the establishment of gold and silver-backed currencies, the potential for a fundamental shift in the state’s monetary landscape is becoming increasingly tangible.
These initiatives not only aim to provide citizens with alternatives to fiat currency but also seek to challenge the existing monetary system, fostering discussions about the future of money in America.
With the upcoming legislative session, the fate of these bills remains to be seen, but their implications could resonate far beyond the borders of Texas.
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