The unanimous passage of HB 3169, a bill establishing a bullion depository in Texas, is seen as a victory in the fight against the U.S. Federal Reserve’s money monopoly. This step follows the recent Texas bill, SB 2097, to make gold and silver legal tender in the state. Texas is just the latest of several states, including Arizona, that have joined the effort to provide an alternative to the Fed’s fiat currency.
Freedom from the Fed
Texas and other states have always had a constitutional right to use gold and silver as legal tender, but the impact of finally exercising that right could be significant.
For just over a century, the U.S. Federal Reserve has operated as the nation’s central bank. It has progressively expanded its impact on and role in the economy through the use of monetary policies and fiat currency. That expansion of control has a growing segment of the marketplace concerned, as explained in The Creature from Jekyll Island. 1
The Texas legislation is seen as a strong effort to return monetary sovereignty to the state and weaken the Fed’s total control over the nation’s currency. House Bill 3169 includes the following provisions:
- Create a state bullion depository
- Manage where and how ‘state money’ is deposited
- Set the rates of exchange between precious metals and other currencies (including the U.S. dollar) stored in the depository
Governor Greg Abbot signed legislation authorizing a state-owned precious metals bullion depository two years ago. Since that time, state agents have been working toward a fully functional facility. 2
Sound Money
Economics professor William Greene has been actively involved in this state-by-state effort to erode the Fed’s current absolute control over the U.S. monetary system. He asserts that legislation to establish gold and silver as legal tender and to create a state bullion depository could undermine the Fed because people would favor gold and silver coins over Federal Reserve Notes. Over time, argues Greene, the state will attract more banking business, its treasury will build real wealth, and people will abhor Fed notes.
A long-time proponent of efforts to restore ‘good money’ policies, Texas Representative Ron Paul has been vocal in his support of this type of state-level legislation. He believes paper currency will come to have little purchasing power as the Fed continues to create unsustainable government debt and deficit spending. He observed in 2008, ‘In the absence of legal tender laws, people are free to accept the medium of exchange of their choice, and are likely to insist on payment in something of real value.’
HB 3169 will be forwarded to the Texas Senate for further consideration. Indications are that some form of the bill will be approved and sent to the governor for signing. Once passed, the legislation will place Texas on the vanguard of the sound money movement.