Our friend Kevin Freeman, founder of the Economic War Room, and a thought leader on finance and economic policy, alerted us to a bill recently introduced in the Texas legislature.
State Senator Bryan Hughes and State Rep Mark Dorazio filed identical bills in the Texas Senate and House to take advantage of a provision in Article 1, Section 10 of the Constitution and provide for the issuance of debit cards backed by gold.
This legislation could ultimately make gold coins “tender” in Texas and conveniently allow citizens to transact business with them, functioning as a 100% specie-backed digital currency. What’s unique, though, is that the bill would allow you the value of gold but the convenience of a debit card that works in the American monetary system. No one would know you are buying and selling with gold as it would be seamless. If the bill passes, it would create a great alternative for people wanting to conduct transactions using gold and hold their cash 100% backed by physical gold.
The system of gold-backed digital transactions has already been proven by such private sector companies as Glint. And, as Kevin reminded us, originally, money was gold and silver only. Under the Constitution states can’t coin their own money, but are allowed to make gold and silver coins legal tender. This is just applying that principle and adding modern technology.
If we have a state do that (like Texas) it has all the convenience of digital currency plus added benefits, including privacy and the potential that fluctuations in the gold value may not be taxable as long as the gold is held by the state and declared tender according to the Constitution.
Also worth noting is that foreign currency is taxable if it rises in value, but this is not foreign currency. There is no provision in the income tax code allowing the taxation of “Constitutional” currency. This is also something under consideration by other states at various stages of development. Ultimately, would not displace the US dollar system but rather offer another convenient way to pay that has advantages. And the underlying process and theory were tested in an 1837 Supreme Court ruling.
If you like the idea of the highly political Federal Reserve not only “managing” the money supply, but “managing” your life by all means ignore the idea of a Central Bank Digital Currency. However, many conservatives have been alarmed by the Biden administration’s Executive Order on a Central Bank Digital Currency (CBDC), correctly we think, seeing it as part of a move to create a Red China-style social credit system, where, coupled with a vaccine passport or similar internal tracking system, the United States government could track and manage your every action and transaction.
Social credit, equity, diversity, and inclusion could all play into the next U.S. digital dollar. Do the wrong thing and you will be de-banked. For those who see that as a farfetched conspiracy theory, recall that the Canadian truckers who were protesting Leftist Premier Justin Trudeau’s COVID lockdown policies had their bank accounts seized for opposing the government, so YES, it can happen in an otherwise fairly free western country.
We urge CHQ readers and friends to educate themselves on the dangers of a Central Bank Digital Currency by going to the Economic War Room episode entitled “The Golden Bullet for the Central Bank Digital Currency”
For more background on the dangers of a Biden-backed Central Bank Digital Currency and the benefits of the proposed Texas gold-backed digital payment system, see these two episodes of Kevin Freeman’s Economic War Room: