My newsletter this time is about transactional gold. This is an idea being explored for Iowa by Iowa Sen. Kevin Alons and a number of other legislators. This article was written by Kevin Freeman and Mike Carter of the Economic War Room to support the movement in the Texas legislature toward creating a transactional gold system. I have edited the article some for clarity and space and to update it in light of the recent election of President Trump.
Imagine going to your favorite restaurant and paying for your meal using a real gold debit card. No, not the gold card that your credit card company issues. But a debit card accepted everywhere that pays for goods and services in gold – transactional gold. It sounds like science fiction, but it is already being done in Switzerland through commercial platforms such as Glint.
Transactional gold is not another central bank digital currency (CBDC) with all their privacy and control concerns. Transactional gold is not at risk of being devalued by irresponsible Washington spending or targeted attacks from China or Russia. Instead, transactional gold is a way for every American to protect their finances by keeping more of what they earned. After all, money is power – purchasing power.
While the U.S. dollar is a relatively strong currency compared to other currencies in the world, it has lost over two-thirds of its value in the last 40 years. That’s terrible. But it was predicted long ago by our founding fathers.
America’s founding fathers feared fiat money – currency backed by nothing more than what people believe it to be worth. To them, currency was a tool to be used for the benefit of a civilized society, which required a safe and secure system people could trust. It was clear that the country they were building would need a currency, but such a currency must be properly organized and maintained to protect its value and to protect the people from a government that could use it to control them. For this reason, the first U.S. dollar was a commodity currency based on the then-popular Spanish dollars, which were minted in gold and silver coins.
In 1971, everything changed. President Nixon closed the gold window.
Under President Nixon, the U.S. dollar became a fiat currency; its value is determined entirely by popular opinion and “backed by the full faith and credit” of the United States government. It has remained that way ever since, and the point of no return has long since passed.
What has been the result? From 1971 to the present, the dollar has lost 87% of its purchasing power. The sad truth is: If the average American were paid their salary in gold, their annual income would have maintained or gained buying power over the years. Instead, being paid in U.S. dollars has meant that the buying power of American citizens has declined, even as the average income has increased. This is not simply a byproduct of poor monetary policy; it is by design and is being used as a weapon against hard-working Americans.
With the dollar no longer on the gold standard, the Federal Reserve, on behalf of the U.S. government, began to do what it does best: print more cash. Not in the literal sense of printing dollar bills in the basement. It’s much easier than that these days. With the push of a button, digital money is created.
With the U.S. dollar facing rapid inflation, and the U.S. government rapidly losing its control on the world stage, and the Federal Reserve continuing to print more money for an overreaching government that continues to expand, Americans face massive hits on their purchasing power.
The damage done by devaluation caused by excessive printing and federal government spending is not the only threat to the American people. There is also the threat of the federal government instituting Central Bank Digital Currency (CBDC), (I have written about this in past newsletters) which will give the feds control over every aspect of life by controlling every cent people have or spend, everything you buy or sell, and even limit or deny you access to your own funds. The plan to create a CBDC is well underway and is endorsed by the leading authorities, including the International Monetary Fund.
President Biden’s alarming Executive Order 14067 issued on March 9, 2022 is aimed at developing a digital assets policy plan, organizing federal regulators’ efforts towards that end, and asking for more work to be done into developing a United States CBDC – literally electronic money made from thin air that the government can control.
It is hoped President Trump will do what he can to head off these efforts but it will remain to be seen what he can do as this effort is pushed by global and international organizations and not just President Biden.
On the state level, our ability to resist the rise of a CBDC lies entirely in our ability to create an alternative system. The transactional gold system being considered in Texas provides an alternative currency that is legal tender in the United States and backed by the precious metals gold and silver.
Gold has been used as money for thousands of years. The use of gold as currency has many advantages, including its long history of acceptance, limited supply, and natural privacy. But it has several disadvantages too. It’s hard to carry. It’s not easily divisible. You can’t just scrape off a few flakes and buy a cup of coffee. And it is expensive to store.
But we have something available to us today that changes everything about using gold as currency: the debit card payment system. By using existing debit card technology, Americans can make everyday purchases or pay bills with gold or silver. Everyone can participate if they desire. (Left, Right, Center, Wealthy, or not!) A state would earn standard fees already paid by merchants. It is just another safe, secure way to pay.
Texas already has a depository for gold members of the public can deposit; it’s called the Texas Bullion Depository. Adding a debit card technology on top simply provides people functional access to it, thus the gold becomes transactional. The depository will be able to offer, constitutionally, money held in gold and silver and physically located in Texas. Furthermore, state banks could offer either “paper accounts” based on the U.S. dollar or gold accounts (based on Texas Transactional Gold and Silver). Many banks may want to offer both.
Some may ask: is this system constitutional? Using gold and silver is a state right, secured in the U.S. Constitution Article 1, Section 10. There are several Supreme Court rulings that support this state right. Iowa’s constitution permits the creation of a state-owned bank or depository accepting and holding gold and silver: Article 8, Sections 6 & 7. Legislation to establish this system of transaction gold is already underway in 22 states, including Texas and Iowa. By using existing debit card technology, Iowans could make everyday purchases or pay bills with gold they deposited in a location designated in Iowa, perhaps even through a gold account offered by their local community bank.
The U.S. dollar has plummeted in buying power since the 1970’s. Gold, on the other hand, has maintained its value and in some cases has even gained value. Every American, regardless of economic class, should have the option to have money held in precious metals as a protection against inflation. Transactional gold is the true decentralized solution, giving privacy back to the individual. Transactional gold holds its value and with current technology, we can allow individuals to use a constitutional state-issued currency, backed by gold, to make everyday purchases. This will enable people who have not been able to buy gold to buy in, making this stable currency accessible to all.
For middle and lower-class families, owning gold isn’t easy, and it isn’t convenient. Holding gold as a form of savings isn’t useful when it comes to more immediate needs. But with transactional gold, families would be able to hold their emergency savings in transactional gold, giving them a hedge against inflation and decreased purchasing power, as well as the essential convenience of immediate access through a debit card. With transactional gold, a family can protect themselves against the devastation of devaluation. That is true economic justice.
