Joe Salerno earlier mentioned that Texas might create a new state-level gold depository that would allow investors to store gold and silver outside the federally-regulated banking system. As banks clamp down on storage of gold and silver at banks, the purpose of new Texan legislation was to encourage investors to move their precious metals to Texas and to perhaps even to begin to build a system of gold and silver "certificates" that could be traded as a type of money.
As expected, the Texas governor has signed the bill into law.
The Tenth Amendment Center reports:
The new law establishes a yet-to-be-determined secure location for storage of bullion, such as gold and silver.
“Today I signed HB 483 to provide a secure facility for the State of Texas, state agencies and Texas citizens to store gold bullion and other precious metals,” said Abbott. “With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state.”
GOLD AND SILVER 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. Doing so has the potential to open the market to sounds money in day-to-day transactions.
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.
ZeroHedge has more.
It is unclear what action the federal government will take at this time, but legal challenges are sure to be expected.
And while the Texas depository is a government-owned enterprise, it nevertheless is an improvement since it is a case of decentralization (and arguably nullification) which provides alternatives to the Federally-controlled monetary and banking systems. As Hayek and other Austrians noted for decades, a decentralization of the monetary system is a key first step in moving toward more sound money.
In my article "Let's Secede from the American Monetary Union" I further discuss some of the advantages of currency competition and decentralization.
