“May this Texas spark set a conflagration that ultimately burns down the entire fractional-reserve banking system along with its chief enabler, the Federal Reserve System. Its “Federal Reserve Notes” are neither federal nor are they backed by any reserves. It is hoped that the Texas experiment will prove the fact, expose the lie, and ultimately end the fraud.”
Bob Adelmann, self proclaimed entrepreneur, money manager, and journalist makes no apologies for his staunch opinions regarding the announcement that Texas seeks to build its own bullion depository. HB 483 details the plan which will allow residents to purchase and store bullion at the state depository without involving the Federal Reserve System.
The depository would function as a vault, in addition to allowing patrons the ability to write checks using their bullion balance, while providing physical and electronic access to their account, just like a bank. The depository, however, will not be a lending system. Jaded by the current system, which allows for heavy borrowing without hard assets backing banknotes, the proponents of this bill decided it was time Texas took a step in a different direction and revisited the fundamental idea that you only spend in paper what you have in assets.
Tennessee and Kentucky have followed Texas’ lead by introducing and passing legislation designed to facilitate the creation of state-run gold and silver depositories. Constitutional expert, Professor William Greene, remarked:
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.
The bill has faced some opposition from those who argue the creation of a state-run depository violates the supremacy clause of the Constitution, but this claim is met with its own Constitutional content from Contract Clause: Article I, Section 10, Clause 1, which states gold and silver are legal tender at the state-level.
In addition to providing individuals the ability to store their precious metals, Texas would “repatriate over 1 billion dollars in gold from the Federal Depository in New York”, saving taxpayers 1 million dollars in storage fees. Currently, several companies have placed bids to build a depository or house the bullion in existing storehouses. Projections place the completion of the depository in late 2016 or early 2017.