Before we get to today's blog, first a little housekeeping: this week there will be no blogs on Thursday, Friday, or Saturday, but blogs will resume their normal daily schedule the following week. Additionally, please remember there will also be no vidchat this Friday. I may or may not do a News and Views this week, but if indeed I do do one, it will be on Wednesday, not Thursday. Thank you all for bearing with me.
So to today's story, submitted by W.G.: there's yet another state bullion depository in the works, this time in the American state of Tennessee, as a bill to establish one in the state has worked its way through that state's senate, according to this article by Amanda Bowers:
According to the article (and I'm going to end up citing extensively from it because there are important details here), the Tennessee bill has unanimous support in the state's legislature, though for the moment, the bill is simply a bill to study the establishment of a Tennessee state bullion depository:
Earlier this month, the Tennessee Senate passed a bill that would create a commission to study the feasibility of creating a state gold depository. A state bullion depository would not only create a safe place to store precious metals; it would also facilitate the everyday use of gold and silver in financial transactions in Tennessee and set the stage to undermine the Federal Reserve’s monopoly on money.
Sen. Paul Rose (R) introduced Senate Bill 279 (SB279). Rep. Bud Hulsey (R-Kingsport) introduced the companion, House Bill 353 (HB353). The legislation would require the Tennessee advisory commission on intergovernmental relations (TACIR) to study the feasibility of creating a state gold depository, including whether other states or jurisdictions have created a gold depository, and to report its findings to the speakers of the senate and house of representatives no later than January 1, 2022.
The Tennessee Senate passed SB279 by a 32-0 vote.
In, 2016 Tennessee Gov. Bill Haslam signed HJR516, a resolution in support of creating a state gold bullion depository. Both houses of the legislature passed the measure unanimously. Passage of SB279/HB353, five years later, would take a second step forward in the pursuit of sound money.
There's an intriguing history here of Texas's bullion depository, and the reasoning behind it:
By making gold and silver available for regular, daily transactions by the general public, the new depository has the potential for a 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.”
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 and silver 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 silver 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 and silver beat fiat money every time.
But what is very intriguing to contemplate here is an observation Ms. Bowers makes for what may be the ultimate reason behind the move to state bullion depositories:
The Texas Bullion Depository also creates an avenue toward financial independence. Countries around the world, including China, Russia and Turkey, have been buying gold to limit their dependence on the U.S. dollar. University of Houston political science professor Brandon Rottinghaus said a state depository can serve a similar function for Texas.
“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
Now here come the high octane speculation, though today we're not crawling to the end of the twig, be remain on the firm midsection of the branch. (This speculation, incidentally, is based on an observation made by Catherine Austin Fitts in her 1st Solari quarterly wrap up this year.) If indeed financial independence from the Federal Reserve and the Federal government is the goal, then one thing states are going to have to do in order to give teeth to their various nullification bills is to remove their state accounts from major corporate banks and bring those accounts back to banks within their states. When these steps are taken, political, and more importantly, cultural tethering to the federal system are considerably weakened.
And this brings us to the "end of the twig" portion of the high octane speculation, and again, it's not a speculation unique to me, others, including Ms. Fitts, have expressed a similar hypothesis, and that is, when one considers all the nullification bills, the secession movements, and the creation of bullion depositories by states (not to mention Texas Governor Abbot's discussions to woo market exchange data centers to Texas), it would appear that someone is undertaking all the right steps for a de facto, if not de jure, breakup of the USA. Why is anyone's guess, though one does not have to search hard for "surface" motivations - red state disenchantment with blue states, and vice versa - but as always, there may be, and probably are, deeper agendas in play.
The real question is, will it be a Gorbachev who presides over the process, or an Abraham Lincoln?
See you on the flip side...