Lately, the Texas legislature has been a hotbed for newsworthy stories. Some of the bills proposed are horrible, such as the one that would make it illegal to record police or another that would punish businesses for NOT discriminating against transgender individuals. But the latest interesting piece of legislation is more positive. The bill would authorize the use of gold and silver as legal tender.
Senate Bill 1245 (SB1245) was introduced by State Senator Konni Burton (R-10). The bill proposes to reaffirm gold and silver as legal tender in Texas on a voluntary basis. The bill states that gold and silver would become legal tender in Texas “to the extent allowable under Section 10, Article I, United States Constitution.” This is often referred to by advocates for competition in money as legalizing the Constitution.
Senate Bill 1245 is accompanied by Senate Bill B989, which was proposed by Burton and State Senator Lois Kolkhorst. It would charter the creation of a state-run bullion depository. This second piece of legislation is a bit more controversial, as it seems gold and silver storage, as well as transactions involving the precious metals would be filtered through the state-run depository.
The Tenth Amendment Center reports on the significance associated with introducing competition into money and provides some details on SB989.
This bill would mark the first step toward currency competition. If sound money is given a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by SB1245 can allow Texas residents to secure the purchasing power of their money.
SB1245 works hand-in-hand with another bill filed in the state Senate this year. Introduced by Burton and Sen. Lois Kolkhorst, Senate Bill 989 (SB989) would create a state bullion depository. It reads, in part:
Sec. 2116.002. TEXAS BULLION DEPOSITORY.
(a) The Texas Bullion Depository is established as an agency of this state in the office of the comptroller.
(b) The depository is established to serve as the custodian, guardian, and administrator of certain bullion and specie that may be transferred to or otherwise acquired by this state or an agency, a political subdivision, or another instrumentality of this state.
What the bill essentially does is create a means for intergovernmental transactions to occur in precious metals. Taxes could be paid in precious metals and it would allow people who receive payments from the government to elect precious metals for payment. It would also allow normal citizens to open an account and deposit their precious metals in the state depository. They could then use the electronic system to make payments to any other business or person who also hold an account.
These two pieces of legislation would be a move in the right direction, but ultimately are flawed. True freedom in money would not place qualifiers restricting the market to only gold and silver (in addition to dollars) being accepted as legal tender. It is true that, prior to the recent reign of fiat currency, gold and silver were the choice of the marketplace for thousands of years. However, rights are violated when a government uses force to restrict the market for money. Even if the restrictions put in place are intended to limit the market place to only gold and silver being accepted as legal tender, rights are still violated as coercion would still dictate what commodities are acceptable money.
The other aspect of these proposed bills that gives me pause is the edict granted to the government in the state of Texas to create bullion depositories. While it would be nice to be able to pay taxes or transfer funds in gold or silver; this move opens the door to rights violation via taxation or through other forms of extortion common to coercive governments. If the market dictates there is a need for bullion banks or something similar, in order to expedite transactions involving precious metals, then the demand should be met by the market. It doesn’t make any sense from a moral or practical standpoint for the government to centrally plan a “solution.” It’s comical that this bill presents the bullion bank as a solution, because at this point there is no way of knowing the inefficiencies that will need to be addressed by the marketplace. Let’s leave the innovation up to the entrepreneurs and start-ups that are so prominent in every other part of the economy.
– Michelle Obama is traveling to Asia to tell people how they should be educating their kids.
– Obama interview by VICE News. (Surprise he doesn’t think legal marijuana is a good idea.)
– The NYT reports on Facebook’s new payment system.
– Ted Cruz wants to “explore the moon, mars, and beyond.” How’s that “small” government working for ya Ted?
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