07/17/15 – Bill Greene – The Scott Horton Show

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All right, you guys, welcome back.
I'm Scott Horton.
It's my show, The Scott Horton Show.
On the line now, I got Bill Green.
He teaches political science at South Texas College down there near Brownsville.
And he's written a couple of papers for the Mises Institute about this brand new Texas law, I almost can't believe it, creating a, well, I'll let him explain exactly what it creates.
Welcome to the show, Bill.
How are you doing?
I'm doing well.
Thanks for having me on.
I appreciate you joining us here.
So they're legalizing gold as a Texas currency, is that it?
Or what exactly are they doing?
Well, it's interesting.
What they have done is Governor Abbott just signed into law recently this bill that establishes a gold and other precious metals depository for the state of Texas.
And so what this basically means is that Texas is going to be putting all of its gold, and a whole substantial gold, actually, but it's being held up in New York, ostensibly by the Federal Reserve.
And so Texas is going to be demanding their gold to be returned to them.
They're going to put it in this depository that the law just established, and then the state and citizens are going to be able to use that depository, once it gets set up properly and everything, and be able to use that depository in order to make transactions.
It'll operate in many ways along the lines of sort of a proto-bank.
So it's almost like a hard currency bank.
It's not really a bank, but it is the first step towards establishing a sound money bank, basically.
Well, it kind of almost sounds like a big safe deposit box for people, just a safe place to put their gold.
No?
Or it's more than that?
Well, in one way it is.
It is a safe place to put your gold, your silver, whatever precious metals you have.
I mean, assuming you trust the state of Texas any more than the national government.
So it's a place to put it there, and if you have trust in the state government, then you'll trust that.
But it's also, it goes beyond that.
One of the things that it does is it establishes that gold and silver, specifically legal tender gold and silver that's minted by the U.S. Mint, is actual money, and can be used as such by the state and by the citizens.
This is a remarkable step forward towards getting states to go back to what the Constitution originally required them to do, which was to only use gold and silver coin as an acceptable payment for debts, both to and from the state.
But now, so are they going to find themselves in conflict?
I'm sorry, go ahead.
Oh, I was going to say, are they going to find, well, no, go ahead, I'll save my question.
You were going to say the other thing it does?
The other thing it does is, as I was saying, it allows just regular people to also use that, to use their precious metals on an everyday basis.
I mean, once this gets established and people can start basically writing checks off of what they have in there, and then once it moves to being able to use things like debit cards, and you have automatic translation, automatic conversion of gold and silver to Federal Reserve notes and back again, then you're going to be able to start using this just like you use any other money.
And that would be a major step forward to returning to sound money in this country and getting rid of those funny notes from the Federal Reserve.
Man, this is so cool.
Maybe.
First off, are they going to have a problem with the supremacy clause in challenging, are they in effect challenging the federal government's legal tender laws or not?
No, because it really doesn't do anything directly against the legal tender laws, against the Federal Reserve itself.
What it does, the challenge that it really represents, is once people are able to start using gold and silver on a regular basis and use it as money, as we used to do, then people who aren't used to doing that anymore, people are going to very quickly realize that, hey, this stuff actually holds its value in the long term much better than these pieces of paper with dead politicians on it, and I'm going to start saving my money this way, I'm going to start using my money this way, I'm not going to use these things that are losing value on such a rapid basis to the point where, I mean, as you know, the Federal Reserve note, our dollar, has lost over 95% of its value since the establishment of the Federal Reserve, but gold and silver in the long term hold their value, and so once people start seeing that on a day-to-day basis, then they will stop using Federal Reserve notes the way that they've been using them, and it won't be long, really, until the Federal Reserve is simply an irrelevant institution, especially when it comes to the manufacturing of funny money.
Alright, well, you're singing my song, there's no doubt about that, Professor, but now hold on a minute, I found you because of this quote about the reverse Gresham's Law, this is what you're talking about, this is going to take off and it's going to keep taking off better and better and better, but Gresham's Law, and I'm no economist, I'm an anti-war guy, really, but it makes a lot of sense to me, that if I can buy gold certificates with Federal Reserve notes, and that the Federal Reserve notes are going to depreciate and the gold and the gold certificates are not, that what's going to happen is, I'm not going to trade with my gold certificates, I'm going to trade with my Federal Reserve notes, and then on the margin of whatever I can save, I'm going to keep as many gold notes as I can, because the good money drives out bad, and that's why it drives out bad, why would I want to hold on to a Federal Reserve note and save that when I could save this gold receipt instead?
But you're saying that this is going to be such a good deal, that it's going to not just overcome the Gresham's Law, but reverse it, so I don't understand.
Well, that's a fantastic point, I think it's probably one of the main objections to why do this in the first place, besides the fact that it's really constitutionally required that states do this, but none of them do it, and that is, Gresham's Law says that good money drives out bad, but that's not all it says, good money drives out bad when you have legal tender laws.
Oh, I thought it was bad money drives out good, I've got it all confusing.
I'm sorry, I'm sorry, bad money drives out good, that's what I meant to say, because the reverse of Gresham's Law is something called Fears Law, which is that that's when good money drives out bad.
Fears Law takes effect when you don't have to use the bad money, when it's not a requirement that you use the bad money.
Right now, because of legal tender laws, we can't use gold and silver.
I mean, we can, but we would be idiots to do so, because the legal tender gold and silver, as you know, if you have a one ounce silver dollar that the Mint puts out right now, that's one ounce of silver in that thing, but it's only got a face value of one dollar.
I'd be an idiot to spend that in a store somewhere, because I'm only going to get a dollar's worth of stuff that you normally get with Federal Reserve notes, instead of the $20 or so that it would be worth in Federal Reserve notes if I were to convert it.
The same with $50 gold coins.
They have a face value of $50, but they have an ounce of gold in them, so I'd be a triple fool to try to spend that for only $50.
However, with something like this new depository, once it gets rolling in the sense to be able to use it for transactions, those transactions are supposed to be in the actual value of the precious metals themselves, not the face value of the coins, and once that occurs, then when you have conversion take place, which is automatic, I mean, when you go in and use your, say, your ATM, your debit card at Walmart, then it's just like anything else.
There's an automatic conversion if you are somewhere that doesn't normally take Federal Reserve notes.
If it doesn't normally take gold or silver coins, it would convert it to Federal Reserve notes, whatever the equivalent value is.
You can do this now, and in fact, I have a debit card right now that is really a secure credit card that is backed by silver that I have put into an account.
This is computers that do this stuff for us now, and so it automatically converts the silver that I have in that account into Federal Reserve notes.
That silver, then, is taken out of that account, and if I want more in there, I can put it in there.
So it's not a difficult thing to do.
It's not like the old days where you'd have to carry around gold and silver in your pocket.
With this sort of thing, it's going to be just using it like money, and that's when the good stuff starts happening.
Okay.
Hey, great.
Thanks so much for your time on the show.
I really appreciate the good news, Bill.
Absolutely, and go to ConstitutionalTender.com for more information on it.
Okay, great.
ConstitutionalTender.com.
We'll be right back, y'all.
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