Texas Strikes Blow to the Fed, Opens New State Depository

By R. Brownell

Texas Governor Greg Abbott has just signed into law a bill that will create the nation’s first state level gold depository, but in order to start, Texas will repatriate $1 billion in gold from the Federal Reserve.

“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. 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…”

                                                                                                                      -Texas Governor Greg Abbott

A recent article from the 10th Amendment Center went into further detail in terms of the ramifications of Texas’s decision to create a system which supports the right to sound money:

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. 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.

Texas isn’t the only one trying to return to a currency backed with gold though:

In passing this law, Texas joins the ranks of major global economies that want to bring their gold home from New York. Germany, Austria, the Netherlands, and other European nations have already begun to repatriate gold from the New York Fed or have proposed to begin doing so.

As of now the location of the depository where the gold will be secured has yet to be determined; more information on the specifics of Texas’s new initiative is to be released in the coming weeks.