By Mike Maharrey
The creation of a state gold depository in Texas represents a power shift away from the federal government to the state, and it provides a blueprint that could ultimately end the Fed. The depository inched closer to reality last month when Texas officials formally called for businesses to submit their plans for building the facility.
Gov. Greg Abbot signed legislation creating the state gold bullion and precious metal depository in June of 2015. The facility will not only provide a secure place for individuals, business, cities, counties, government agencies and even other countries to to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in business transactions. In short, a person will be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money.
The state issued a formal Request for Proposals last month. Companies interested in building and running the facility must have their plans submitted by Sept. 30.
According to an article in the Star-Telegram,”state officials want a facility ‘with an e-commerce component that also provides for secure physical storage for Bullion in an existing facility or a newly constructed facility.’ Officials say plans for a depository should include online services that would let customers accept, transfer and withdraw bullion deposits and related fees.
By making gold and silver available for regular, daily transactions by the general public, the new law has the potential for wide-reaching effect. Professor William Greene is an expert on constitutional tender and said in a paper for the Mises Institute that when 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.
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.
A spokesman for Texas Comptroller Glenn Hegar called the collection of proposals for building and running the depository “an important step along the process.”
It does show the depository is moving forward. And it shows that Comptroller Hegar is committed to ensuring Texans and Texas businesses have a safe and secure place to store their gold.
Over the last year, state officials have developed specific criteria for the new depository. Officials say more than a dozen companies have offered input into its development.
University of Houston political science professor Brandon Rottinghaus said development of a state gold depository was a step toward independence.
This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.
The Texas gold depository will create a mechanism to challenge the federal government’s monopoly on money, and provides a blueprint for other states to follow. Last spring, the Tennessee legislature passed a resolution approving the idea of a gold depository in Tennessee. Consider the ramifications if Tennessee follows through and other states follow suit. If the majority of states controlled their own supply of gold, it could conceivably make the Federal Reserve completely irrelevant.
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About the author
Michael Maharrey [send him email] is the Communications Director for the Tenth Amendment Center, where this article first appeared. He proudly resides in the original home of the Principles of ’98 – Kentucky. See his blog archive here and his article archive here. He is the author of the book, Our Last Hope: Rediscovering the Lost Path to Liberty. You can visit his personal website at MichaelMaharrey.com and like him on Facebook HERE
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