The following report is by ZeroHedge via OilPrice.com:
Bills introduced in the Texas House and Senate would create a state-issued, gold-backed digital currency.
Enactment of this legislation would create an option for people to transact business in sound money, set the stage to undermine the Federal Reserve’s monopoly on money and create a viable alternative to a central bank digital currency (CBDC).
Sen. Bryan Hughes (R) introduced Senate Bill 2334 (SB2334) on March 10. Rep. Mark Dorazio (R) introduced a companion, House Bill 4903 (HB4903) on the same day. The legislation would require the state comptroller to establish a digital currency that is fully backed by gold and fully redeemable in cash or gold as well. The comptroller would also be required to create a mechanism to use this gold-backed digital currency in everyday transactions.
In establishing the digital currency the comptroller shall establish a means to ensure that a person who holds the digital currency may readily transfer or assign the digital currency to any other person by electronic means.
The state of Texas would hold gold backing the currency in trust on behalf of the digital currency holders.
The trustee shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold.
In practice, individuals would be able to purchase digital currency from the state. The state would then use the money to purchase gold that would be held in the Texas Bullion Depository or another secure vault. Individuals would be able to redeem their digital currency for dollars or gold.
Central Bank Digital Currencies (CBDC)
A gold-backed digital currency would create an alternative and allow individuals and businesses to avoid a CBDC.
Digital currencies exist as virtual banknotes or coins held in a digital wallet on your computer or smartphone. The difference between a central bank (government) digital currency and peer-to-peer electronic cash such as bitcoin is that the value of the CBDC is backed and controlled by the government, just like traditional fiat currency.
At the root of the move toward a CBDC is “the war on cash.” The elimination of cash creates the potential for the government to track and even control consumer spending.
Nigeria is already trying to get people to accept its CBDC (with a great deal of resistance), and China, India, and the US have all launched pilot programs to test CBDCs.
Imagine if there was no cash. It would be impossible to hide even the smallest transaction from the government’s eyes. Something as simple as your morning trip to Starbucks wouldn’t be a secret from government officials. As Bloomberg put it in an article published when China launched a digital yuan pilot program in 2020, digital currency “offers China’s authorities a degree of control never possible with physical money.”
The government could even “turn off” an individual’s ability to make purchases. Economist Thorsten Polleit outlined the potential for Big Brother-like government control with the advent of a digital euro in an article published by the Mises Wire. As he put it, “the path to becoming a surveillance state regime will accelerate considerably” if and when a digital currency is issued.
A gold-backed digital currency would create an alternative to CBDCs.
Impact
The creation of a state-issued gold-backed digital currency would create currency competition with Federal Reserve notes and undermine the Fed’s monopoly on money. It would also provide an alternative if the Federal Reserve implements a central bank digital currency.
Broadly speaking, by making gold conveniently available for regular, daily transactions by the general public, gold-backed digital currency would create the potential for a wide-reaching effect. Professor William Greene, an expert on constitutional tender, said in a paper for the Mises Institute that when people in multiple states actually start using gold 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.
Gresham’s Law holds that “bad money drives out good.” 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. So, how do you reverse Gresham?
The key is in making it easier to use gold in everyday transactions. 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 incentivizes hoarding. When you remove barriers, you level the playing field and allow gold and silver to compete head-to-head with Federal Reserve notes. On an even playing field, gold beats fiat money every time.
Background
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Currently, all debts and taxes in Kansas are either paid with Federal Reserve Notes (dollars) which were 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.
The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat currency. Without the backing of gold or silver, the central bank can easily create money out of thin air. This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.
Creating a gold-backed digital currency would take another step in the process of abolishing the Federal Reserve system by attacking it from the bottom up – pulling the rug out from under it by working to make its functions irrelevant at the state and local levels, and setting the stage to undermine the Federal Reserve monopoly by introducing competition into the monetary system.
What’s Next?
At the time of this report, SB2334 and HB4903 had not been assigned to committees. Once they get committee assignments, they must get a hearing and pass by a majority vote before moving forward in the legislative process.
The Tenth Amendment Center contributed to this report.
AUTHOR COMMENTARY
I honestly don’t see this passing or getting far, or at least not for a while, especially considering that this would only be one for the state. But it just goes to show you that so-called Republicans are just as antsy to enslave people as Dems. It’s all just one big club.
CBDCs are the elimination of all liberties we have left. They must be wholly and completely rejected. Even if such a CBDC were to initially allow people to transfer their digital coin into dollars or gold, just to grease the wheels of the people, that would not last long, as the whole goal is to be totally digital and have full control over everyone’s transactions.
I have been seeing a lot of chatter that other countries are purportedly planning to back their CBDC with gold. To me, I think this is a trap and a snare. The whole point of the CBDC is to have total control of people’s money and buying power, so what is the point of having it backed by gold? And even if it were, why would a central bank allow people to buy CBDCs with gold, and why would you in the first place (not to mention the fact the CBDCs have expiration dates and cannot be accumulated); or why would a central bank allow you to buy gold with a CBDC, and if you could, it would certainly not benefit you because the system is predicated on being totally digital?
And yet I have seen a lot of economists get seduced and ensnared by these talks of being gold-backed. I believe it is a trap, and, dare I call it a “sucker’s market.” I am NOT against gold and silver in of itself; but if you are stacking it as some kind of safe haven asset to survive a total collapse of a society, or to trade with CBDCs, I find that to be a bad idea.
Riches profit not in the day of wrath: but righteousness delivereth from death.
[1] Go to now, ye rich men, weep and howl for your miseries that shall come upon you. [2] Your riches are corrupted, and your garments are motheaten. [3] Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days. Proverbs 11:4; James 5:1-3
In whatever form they come, reject CBDCs.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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Gold backed is fine Digital…NO.
That’s interesting. I wonder how many Texans will be swayed by that?
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Wouldn’t this achieve the same tyrannical end of any CBDC in order to work?
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And, as for the gold, wouldn’t you still be holding paper (in this case: air) like what have proved to be some of the biggest scams going, selling the same gold to multiple people, much as fractional lending allows them to risk your money several times over, & not holding the actual asset?
I’m constantly searching for what we are supposed to do with our hard earned money‘s we’ve saved a lifetime for that are in the banks/CDs or even in an annuity? All I hear is there won’t be any money in the banks And need to buy gold and silver. The average person it’s not even reading stuff that I am and I still am confused. I cannot find the answer anywhere. If the stock market crashes plus our money was made in thin air and not worth anything? How can the FDIC insured anything if there is no money, real money? What in the world are we supposed to do with our money/savings? No one can tell someone else what to do with their money but could at least give us an idea on the flipside of everything that is being written about plus all the podcasters Plus I don’t really understand any of it. We should not have to be placed in this situation. Can anybody just tell me where to look or who to listen to or something? Or just an opinion or an idea or anything which certainly be appreciated. I don’t write in comments like this but I do feel desperate.
Unfortunately, most of the economic guys I like, who are quite intelligent and privy to what is going on, believe precious metals are their savior. In a full-blown collapse that is on the horizon, gold and silver will not amount to anything. I have a more detailed study on that. https://winepressnews.com/2020/12/15/should-a-christian-invest-in-gold-and-silver/
Honestly, I would say that your best bet is to look towards things like land and livestock, things that will help you to be better interdependent. Food, water, clothing, and guns/ammunition are also things to really consider. And if we get a massive price correction and perhaps crash in housing, decent living arrangements out of the city and suburbia I think is good. Again, so many of these gold guys are putting the cart before the horse, and in their pride they think some coins will save them in an implosion of the economy. To clarify, I am not against precious metals in of themselves, and I think if you have a ton of excess cash that you are looking to put into, then perhaps gold and silver might make sense; but buying precious metals for some kind of vain protection or somehow buy CBDCs with I think is bad advice.
Thank you so much for your honestly. I will take your advice tho it’s all scary esp since I had saved for my care –being over 70 makes it worse. You just makes sense to me where others really didn’t. Again, I really appreciate it :)) Marsha
I see nobody has thought about the implications of social security. The fed will keep people using its currency or it will threaten to cut off social security. How many retired or close to retirement will go for that? I venture to guess hardly any at all so they’ll vote no in Texas and any other state that proposes such an idea. The fed has us by the cajones.
Great point. Especially with it drying up in the next few years, this would cause a lot of people to capitulate.