New York Lawyer Goes Nuts Over Texas Gold Plan
New York attorney Joe Patrice at Above the Law (a popular blog for lawyers) has issued a screed condemning Texas's creation of a gold "bank" and has declared it contrary to the so-called supremacy clause in the United States constitution.
While reading the emotionally charged piece, one has to ask one's self, "why is he so worked up over something that is going on 2,000 miles away in Texas?" It is to be funded with Texas tax dollars, so Patrice isn't even paying for it. Nor will it impose any mandates or restrictions on Patrice at all. Nor is there any human rights issue at stake. This isn't a case of police beatings or similar outrages. But, being a left-wing New Yorker apparently means that everything that happens everywhere is your business.
Patrice writes: "You may be wondering why any state would even want to build a gold repository when the federal government already provides one so secure and so large that most American allies keep their reserves there as well."
As one reads on, it quickly becomes apparent that Patrice is mad that anyone would do anything that suggests that 100% total faith in the US government and the federal reserve is a bad thing. (Patrice of course ignores that many rich countries are attempting to get their gold out of the US.) In other words, Patrice is outraged that someone insulted our beloved government and central bank. Patrice is also angry that anyone would dare suggest that it is wise to keep wealth an in alternative to US dollars:
Though in fairness, as TPM reports, Gov. Abbott doesn’t believe that U.S. dollars are real money, so maybe it’s OK to waste them:
"And the new depository will not just be a well-guarded warehouse for that bullion. The law Abbott signed calls for the creation of an electronic payments system that will allow gold, silver, platinum, palladium, and rhodium depositors to write checks against their accounts, making the depository into a bank – one that will create a metal-backed money supply intended to challenge the paper currency issued by the Federal Reserve – or “Yankee dollars” as one of the law’s top supporters calls them."
You say, “Yankee dollars,” I say, “the global reserve currency.”
Ah yes, the dollar is the global reserve currency. Therefore, you should keep 100% of your wealth in dollars. That's an interesting position, and all I can say is, don't take investment advice from Joe Patrice. Unless, of course, you believe that risk doesn't exist.
Patrice then goes on to buttress his claim that Texas stinks by saying that Texas is a net tax-receiver state, which is a highly dubious claim. He links to an Atlantic story saying that Texas gets more in tax funds than it pays in, and calls Texas a "wasteful drain on tax dollars." However, virtually every other source that can be found on this topic shows that Texas is in fact a net tax payer state. Even Mother Jones, which has plenty of reason to hate Texas, admits that Texas pays in more than it gets.
Patrice goes on:
Though this does bring us to the actual reason for the bill: a symbolic gesture to convince morons that Texas is an independent realm...Having their own money bin and currency system — writing checks based off stockpiled metals creates, for all intents and purposes, an independent, gold-backed currency — goes a long way toward fluffing the illusion that Texas holds sway over the rest of America.
So really we get to the heart of the matter. Patrice is very angry that any state would act like it can do anything outside the purview of the central government.
It also brings to mind the central contradiction that tends to inhabit the mind of the anti-secessionist: "we hate those secessionists, and we'll never allow them to leave. We demand that they be united with us forever." During the Scottish secession campaign, some of the English were whining that Scotland was a drain on their resources while simultaneously demanding that Scotland never leave. If Texas is indeed a waste of tax money as Patrice claims it is, why is he so hot and bothered about Texas's moves toward independence? It's a strange ideological defect that goes unexplained.
And how does Patrice conclude this has something to do with the supremacy clause?
The only thing the US Constitution says on this matter is that states may not make something other than gold and silver legal tender. I have no doubt that the Feds will attempt to quash the Texas plan using the courts, but an strategy based on the "coin money" clause seems like an unlikely avenue. The feds are more likely to resort to the old standby of "national security" to make a case here. But, I guess "supremacy clause!" is just interventionist code for "we don't like you, and we'll come up with some newfangled legal interpretation to make you stop doing stuff we don't like."
In any case, the Patrice attack may be giving us something of a preview of the rhetorical attacks that are planned for any state that attempts to decentralize the monetary system.
Full disclosure: I am not a Texan, nor do I plan to move to Texas.