The world is forever changing and I never thought that I would see a state propose a digital currency backed by gold, but it’s finally happened. Two bills have been introduced in the Texas House and Senate proposing the creation of a state-issued, gold-backed digital currency.
If enacted, this legislation would give people the option to transact business and create a viable alternative to a central bank digital currency (CBDC) while also undermining the Federal Reserve’s monopoly on money. With banks being as unstable as they are today, depositors pulling all their funds, and banks collapsing similar to Silicon Valley Bank, it’s no wonder why Texas is making a move.
Senate Bill 2334 (SB2334) was introduced by Sen. Bryan Hughes (R) on March 10, while Rep. Mark Dorazio (R) introduced a companion, House Bill 4903 (HB4903) on the same day. The legislation would require the state comptroller to establish a digital currency fully backed by gold and fully redeemable in cash or gold. The comptroller would also create a mechanism to use this gold-backed digital currency in everyday transactions.
People would then be able to buy a digital currency from the state, which would then use the funds to buy gold, which would be stored in the Texas Bullion Depository or another safe vault. People might exchange their digital money for cash or gold. Texas would hold the gold which would back the currency in trust for the digital currency holders. This would certainly be a great thing for gold investors today.
A gold-backed digital currency would create an alternative for individuals and businesses to avoid a CBDC. Digital currencies exist as virtual banknotes or coins held in a digital wallet on a computer or smartphone. The value of a CBDC is backed and controlled by the government, just like traditional fiat currency.
This law would promote currency competition with Federal Reserve notes, so undermining the Fed’s monopoly on money, while also giving an alternative if the Fed develops a central bank digital currency.
Professor William Greene, an expert on constitutional tender, has discussed the possibility of far-reaching consequences, arguing that if people in multiple states start using gold instead of Federal Reserve notes, it would nullify the Federal Reserve and end the federal government’s monopoly on money.
Do you think the government has too much of a strong hold on our money today? Maybe so. Maybe not. That’s not for me to answer but for you to consider when deciding what to do with your money, assets, and retirement funds today.
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