Yesterday, the Oklahoma State Senate passed a bill that would legalize gold and silver as legal tender, moving the legislation on to the House for consideration. The vote was 37-4.
Senate Bill 862 (SB862), was introduced by Sen. Clark Jolley and Rep. Gary Banz, with cosponsorship from Sen. Natham Dahm. It reads, in part:
Gold and silver coins issued by the United States government are legal tender in the State of Oklahoma. No person may compel another person to tender or accept gold or silver coins that are issued by the United States government, except as agreed upon by contract.
If passed into law, Oklahoma would become the second state to recognize gold and silver as legal tender authorized for payments of debts and taxes. Last month, the Arizona senate also passed a similar bill by a vote of 18-12.
Currently all debts and taxes in Oklahoma and the rest of the United States are either paid with Federal Reserve Notes (dollars) which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” The Constitutional tender act is a big step towards that constitutional requirement which has been ignored for a long time in every state of the country. Such a tactic would achieve the desired goal of abolishing the Federal Reserve system by attacking it from the bottom up – pulling the rug out from under it by working to make its functions irrelevant at the State and local level.
Passage of this legislation would introduce currency competition with Federal Reserve Notes. Professor William Greene explains further:
“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.
Without a single act of Congress, the Federal Reserve system can be brought to its knees by passing such bills in states all over the country.
SB862 will first be assigned to a house committee where it will need to pass by a majority vote before the full house has an opportunity to send the bill to the governor’s desk for a signature.