By Mike Maharrey
A Tennessee bill would exempt gold and silver bullion from sales tax, taking a small step toward nullifying the Federal Reserve’s monopoly on money.
Introduced by Sen. Frank Niceley, Senate Bill 1610 (SB1610) would exempt the sale of all gold, silver and bullion that is used as a medium of exchange or sold “based on their intrinsic value as precious metals” from state sales tax.
This would remove one of the greatest roadblocks for the use of gold and silver as money in Tennessee.
The legislation would take a small step toward breaking the Federal Reserve’s monopoly on money by making it easier for Tennesseans to use gold and silver in transactions. Should they start doing so, this would introduce competition into the monetary system and build a strong alternative to Federal Reserve Notes (dollars) when doing business.
SB1610 would also incentivize investors who want to protect their wealth from currency devaluation by investing in gold and silver bullion. This would make it easier for Tennesseans to shelter themselves from the effects of quantitative easing and other central bank policies that steadily erode the value the dollar.
State regulations discouraging its use create one of the biggest obstacles to people developing ways to use gold and silver as money. SB1610 would remove one barrier.
A companion bill, HB1627 was filed in the House by Rep. Bud Husley. And another similar bill, HB1518, was introduced by Rep. Bryan Terry (R-Murfreesboro).
Honest money in constitution
The U.S. constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”
HB1610 would help facilitate a movement toward that constitutional ideal, ignored for decades in every state. Encouraging the use of gold and silver undermines the Federal Reserve monopoly by introducing competition into the monetary system.
Professor William Greene is an expert on constitutional tender and said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve System 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.
Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state-by-state level is what will get us there.
While not as all-encompassing as a Constitutional Tender Act, SB1610 would represent a first step toward reestablishing gold and silver as tender within Tennessee, and provide a foundation for further action.
Mike Maharrey is the communications director of 10th Amendment Center.