Some “Gold-Backed” News Saturday 11-23-2024
Judy Shelton: "Why Don't We Use Our Gold As Collateral For A New Treasury Debt Instrument"
Arcadia Economics: 11-23-2024
Judy Shelton: "Why Don't We Use Our Gold As Collateral For A New Treasury Debt Instrument"
Former Trump economic advisor Judy Shelton has talked a lot about bringing gold back into the monetary system in the US.
And while she has not yet been officially brought back aboard Trump's team, it sure is fascinating to imagine what could happen if she is.
Because in a recent interview with David Morgan of The Morgan Report, in addition to sharing some fascinating monetary history, including how even Fed officials like Paul Volcker and Alan Greenspan agree that 2% inflation is far from the definition of stable, she also proposes the idea of using the nation's gold as collateral for a new treasury debt instrument.
Which is fascinating to hear, especially at the same time when the eastern half of the world continues to express a desire to turn to gold in place of treasuries.
So whether you're a monetary advocate, historian, or someone who just wants to navigate the changes to our monetary system that are coming, you're really going to enjoy this interview.
And to hear David Morgan talk with Judy Shelton, just click to watch the video now!
Texas proposes gold and silver-backed currencies to compete with fiat money
Kitco News: 11-23-2024
(Kitco News) – In a quest for sound money, a Texas lawmaker has filed two bills that, if passed, would create gold and silver-backed transactional currencies, backed 100% by the underlying asset, that would serve as legal tender in the state.
According to a report from the Tenth Amendment Center, Texas State Representative Mark Dorazio filed House Bill 1049 and House Bill 1056 on November 12, two bills with similar language that would add provisions to different sections of the Texas legal code.
“Under the proposed law, the Texas Comptroller would issue gold and silver specie (coins) through the Texas Bullion Depository and also establish gold and silver transactional currency defined as ‘the representation of gold and silver specie and bullion held in the pooled depository account,’” wrote Mike Maharrey, Communications Director at the Tenth Amendment Center. “The Depository would be required to hold enough gold and silver to back 100 percent of the issued currency.”
If approved, the bills would enable “Holders of gold and silver specie and currency to use them as ‘legal tender in payment of debt,’ in the state of Texas,” he noted. “The gold and silver-backed currency would be electronically transferable to another person. Gold and silver-backed currency would be redeemable in specie or at the spot price of gold in U.S. dollars minus applicable fees.”
Said differently, the passage of either bill would allow anyone in the state to conduct business transactions using gold or silver.
“The passage of this legislation would create a sound money alternative to U.S. dollars in both physical and electronic form,” Maharrey said. “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 Texas Gold Depository in the same way they use dollars held in a bank today.”
He stressed that the ability to use gold and silver-backed transactional currencies “would give people a way to shield themselves from the rapid loss of purchasing power inherent in the fiat dollar.”
“Over time, making gold and silver available for regular, daily transactions by the general public could have a wide-ranging impact,” Maharrey noted. “Professor William Greene is an expert on constitutional tender and said in a paper for the Mises Institute that if 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.”
According to Greene, “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,” Greene added
“Gresham’s Law holds that ‘bad money drives out good,’” Maharrey explained. “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.”
This led him to ask, “So, how do you reverse Gresham?”
“The key is to make it easier to use gold and silver in everyday transactions,” he said. “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 legal and tax barriers, you level the playing field and allow gold and silver to compete head-to-head with Federal Reserve notes,” he added. “On an even playing field, gold and silver beat fiat money every time.”
Maharrey highlighted the U.S. Consitution to strengthen his case, noting that Article I, Section 10 decrees that “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”
“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,” he said. “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.”
The proposed bills will be assigned to Texas House committees when the 2025 legislative session begins on Jan. 14.
Texas gold-backed digital currency could aid in Bitcoin adoption
While Maharrey is looking to get gold and silver recognized as transactional currencies in their own right, the Texas legislature is also making progress on legislation to create a blockchain-based gold-backed token, which could benefit not only the yellow metal but also Bitcoin.
In April 2023, two Texas lawmakers, Senator Bryan Hughes and Representative Mark Dorazi, introduced two separate bills for creating a state-issued digital currency backed by gold. And while the legislation is still working through the state’s Congress, one lawmaker thinks that once launched, the proposed gold-backed digital currency could help boost cryptocurrency adoption.
As reported by Cointelegraph, Cody Harris, a Republican Party member of the Texas State House of Representatives, sat down for a fireside chat with Coinbase’s David Duong at the North American Blockchain Summit on Thursday and provided an update on the stats of the gold-backed token.
“This [state-issued digital currency backed by gold] is something safe that people can get their feet wet with,” he said. “It’s more of a stepping stone to owning Bitcoin than competing with it or taking the place or something like that.”
Under the proposed plan, each digital currency token will represent a fraction of a troy ounce of gold held in trust and will enable holders to accumulate and spend gold via blockchain, removing a barrier that makes it difficult to utilize gold for daily transactions.
Harris said the benefits of the token are twofold. Not only will it simplify the use of gold for everyday use, but it could also help skeptics become more comfortable with cryptocurrency by serving as a government-issued digital alternative to fiat, which is a stepping stone to helping them open to the idea of using decentralized assets like Bitcoin.
For those who are hesitant to acquire BTC or explore crypto, he suggested that a state-issued coin would provide a higher “comfort level” than tokens issued by startups.
But not all digital tokens are seen as equal in his eyes, with Harris saying that digital fiat – also known as central bank digital currencies (CBDCs) – would have an overall negative impact on the state and the public at large.
“I think we would all agree that a CBDC is detrimental to the nation and the state of Texas,” he said, referring to the variety of threats CBDDs pose, such as surveillance and privacy concerns.
Harris called for the crypto community and broader public to take an active role in the CBDC and digital asset conversation to make sure they aren’t saddled with a dystopian currency that enables things like social credit scores.
“I think it makes it easier for us who are pro-Bitcoin to have conversations about why someone should change their perspective on it,” he said. “If we start at a CBDC, is it the goal of some parts of the US government? So let’s lock arms together and make sure that that doesn’t happen.”