NOW IT’S ALABAMA AND BULLION
You can now add Alabama to the list of American states that are taking definite moves to utilize bullion as currency, as that state's senate has just passed a bill removing sales tax of gold and silver bullion (story courtesy of W.G.):
A similar move recently passed the Utah legislature as it successfully removed sales tax on the Utah "goldbacks", the local currency that started in Utah and has already spread to being used in some places in Wyoming. Texas, as readers here already know, has opened its state bullion depository, neighboring Oklahoma is considering a similar measure to Alabama's, Mississippi has already passed one, Tennessee is considering similar measures and its own bullion depository, South Carolina has already passed such a measure...
... so what is all of this adding up to? Well, at the minimum, I now suspect that these measures are at least in part in response to another story that I'll be blogging about his week, and that's the $100 dollar bill "supernotes" story, which has again entered the news. Similarly, I strongly suspect that these "southern" states - Utah and Wyoming perhaps being "southern" in their rather independent attitude - are reading the handwriting on the wall in the wake of failure after failure of the federal government to resemble anything approximately close to sound governance or policy, and as we all know by now, the monopoly on reserve currency status of the US dollar was dealt a severe blow in recent weeks by Russia's insistence on payments for its oil and gas in roubles and/or bullion. The Russian government went so far as to remove the value-added tax on bullion, and to put a floor on bullion prices in similar moves designed to recognize it as money, not commodity. The American states are doing the same.
This portends something quite important, and you might have missed it. So it's worth mentioning again: reserve currency status usually accrues in recent historical memory to the world's largest military power, and particularly to its largest naval power. From the Venetian Republic through Portugal, Spain, France, The Netherlands, Great Britain, to the USA, this has been true. Military force in effect is the backing of a reserve currency, particularly a pure fiat monetized debt instrument like the dollar. When confidence in the military capability of a power's reserve currency is eroded, that status is not long for the world, and I suspect that the moves of American states reflect a growing doubt about American military capabilities, especially as it appears the western-trained and equipped Ukrainian military - a force three times the size of the invading Russian forces - is not faring too well.
The next step? One of the things I've been predicting are regional arrangements between states with these types of laws, and the emergence of bullion-back local or regional currencies. The Utah goldback being a case in point. But the other thing that needs to emerge are local state militias. Texas already has one, but its notable that Florida governor DeSantis took steps recently to create one for Florida as well. After that, the rubber meets the road if and when states start talking openly about whether or not they should assume federal obligations...like social security, or shifting bullion into their pension funds...
See you on the flip side...
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