Saturday, April 15, 2017

Counter Current News — Massive Blow To Federal Reserve: Texas Introduces Bill To Recognize Gold & Silver as Legal Tender


The crazy is spreading.

It's not mentioned here but they want a balanced budget amendment, too, to bring prosperity to all that work hard to earn their money.

Moronism.

I have not been posting much on politics and global affairs of late. The crazy is even more rampant there, and the level of moronism astonishing. "What a revoltin' development" as Chester A Riley (played by William Bendix) used to say on "The Life of Riley." But this is not funny.

Counter Current News
Massive Blow To Federal Reserve: Texas Introduces Bill To Recognize Gold & Silver as Legal Tender
CCN

36 comments:

Penguin pop said...

Peter Schiff's moron wet dream. Unreal.

Might as well ban the dollar entirely from Texas and really have people suffer from their own stupidity in that state to teach them a lesson.

Andrew Anderson said...

Inexpensive fiat is the ONLY ethical money form for government use otherwise the taxation authority and power of government is misused to benefit special interests such as gold owners and fiat hoarders.

That said, the central bank should not be creating fiat for the private sector either. That it does so is largely responsible for the resulting expensive fiat fetish.

Ryan Harris said...

Abbott is trying to get a Convention of States organised. Only needs a couple more...

djrichard said...

From the article, “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)."

Reverse Gresham's Law? LoL, how does that work?

If they truly wanted to challenge the Fed Reserve, they should have the state treasury issue IOUs (instead of FRNs) as payment for bills and services rendered. And recycle that back through taxes and bond issuance (pay interest in IOUs don't you know).

Oh well, in lieu of that, will the state treasury of texas being using gold to pay bills? And will they use gold to pay out interest on bonds? The answer to that tells you everything you need to know.

Matt Franko said...

Remind me to check the Texas SAT scores in math....

Penguin pop said...

Matt, a little bit old, but not surprising.

https://www.dallasnews.com/news/news/2014/10/07/texas-sat-math-scores-hit-a-22-year-low

Ryan Harris said...

Texas is moving The Republic's gold back from NY to put in our gold repository. Just in case, you know. ;)

34 states needed for CoS. 10 have passed resolutions so far this year with another 16 having scheduled in the next month or so. There is a twitter account that keeps us abreast of the progress.

Texas gov. made it an emergency iterm for Lege. It has passed our Senate this week, I think maybe next week or two we get resolution signed. 33 GOP governors now?, and I've heard 3 or 4 dems say they will support.

Remains a long shot, but this year is the best chance we have to reform the government in DC for many years. Heavens knows the folks in DC will never do it. They think everything is just fine the way it is. I'm not a fan of balanced budget proposal, but if we have to accept that, it's a small price to pay to reign in DC. It would be nice to have a more concise commerce clause to reduce the size and scope of the bureaucracies based in DC and move them back to states. Lot of good jobs in DC area, lets move them back to depressed towns around the nation.

Ryan Harris said...

Is it rein in or reign in? Rein is a horse. But reign is a queen. And we want to stop a government like we would a horse. It's all very confusing.

Bob Roddis said...

Since none of you understands the first thing about Austrian concepts and analysis, how do you know that the proponents of this are "morons"? How is that Mr. Franko has such a high I.Q if he is not only unable to understand Austrian concepts and analysis but is resolutely opposed to ever even thinking about them in the first instance?

Also, the obvious point of such a move to make sure that the government is indeed "revenue constrained".

The three levels of consensus:

1. Voluntary exchange - violence and threats of violence are prohibited and proscribed = Libertarianism = Peace and prosperity

2. Compulsory payment - violence and threats of violence used to collect resources = taxation

3. Surreptitious and underhanded theft of purchasing power by the government because the masses would object to paying taxes for government spending in real time; monetary dilution hides this theft and wealth transfer = MMT

Noah Way said...

The Convention of States just another neocon power play. Better to burn down DC and start over than to transfer power to the same set of asswipes.

Unknown said...

Regarding the CoS, there are two items you should read before you get too excited about. One is an article by Alice Marshall -The coming constitutional convention train-wreck redux

The other is a piece of fiction by John Michael Greer "Twilight's last gleaming" - he did a synopsis of the novel in five parts. Parts four and five are relevant.

Tom Hickey said...

@ Bob Roddis

Your response to @djrichard at April 15, 2017 at 6:53 PM above?

Ryan Harris said...

They way Gov works now is a catastrophe. Not having a CoS because it will be a worse catastrophe? I understand the fear of change and progress, but...

The leaders are ignorant of all they should know, but they are no more incompetent than previous leaders. They certainly are not malevolent. They know more than the people that drafted the constitution and previous amendments and I trust they will treat the responsibility with the extraordinary restraint and thoughtfulness before acting.

Multinational companies and agreements already dominate our society at every level. Let's make it official and create a government for the new world order.

Footsoldier said...

There's money being poured in to fund this change from Robert Mercer.

Mercer wants the US to go back to the gold standard




http://www.newyorker.com/magazine/2017/03/27/the-reclusive-hedge-fund-tycoon-behind-the-trump-presidency

Tom Hickey said...

Mercer wants the US to go back to the gold standard

Death for a country that is a net importer. Of course, the solution is to make the US a net exporter. That cannot happen without cutting costs by either dropping employee compensation and protections to the level of emerging nations, or increasing productivity using automation and robotics, which increase domestic unemployment, or some combo.

Globally, this would result in a return to mercantilism, that is, a beggar-thy-neighbor trade policy, and make development impossible without developing nations taking on huge debts payable in gold. That is recipe for global economic contraction and war.

The crazy abounds.

Ryan Harris said...

You can't change the paradigm without breaking norms... "being crazy"

Penguin pop said...

What if breaking the norms results in a disaster like we haven't seen in a very long time? Would we ever go back to some kind of status quo again? The big positive though is that people like Mike would be able to make huge amounts of money, and so would lots of investors.

That Mad Max clip Matt posted the other day comes to my mind again.

"We ain't never comin' back."

https://www.youtube.com/watch?v=Gb1uDc_qa-4

Tom Hickey said...

You can't change the paradigm without breaking norms... "being crazy"

AKA normalizing the crazy.

Ryan Harris said...

Right. With the help of a little persuasion maybe.

Ryan Harris said...

Peng, MAD MAX? ! Pessimism. It's all very unlikely to happen. There is tremendous resistance and fear surrounding reform. Status-quo is powerful. I put the odds at like 5% it happens.

Noah Way said...

That cannot happen without cutting costs by either ...

Or by setting the value of your own currency against others, having protective trade policies, etc.

Tom Hickey said...

Or by setting the value of your own currency against others, having protective trade policies, etc.

Yes, but it's hard to drive down the USD when it is the global reserve currency. And protective trade policy leads to trade wars.

A big reason that China is saving USD is that the US won't approve them buying what the want (technology) or investing in the US in what they want to buy (technology), for reasons of "national security."

Andrew Anderson said...

Yes, but it's hard to drive down the USD when it is the global reserve currency. Tom Hickey

I imagine negative yields on new US sovereign debt and negative interest on fiat account* balances at the FED, aka "reserves", would do wonders in lowering the demand for the US dollars. Besides, positive yields and interest on risk-free sovereign debt constitute welfare proportional to wealth, not need.

*with a $250,000 or so negative-interest-free exemption for individual US citizen accounts at the FED when those are allowed.

Brian Romanchuk said...

The morons (hi Bob if you read this!) writing the article (including Fox News) did not understand what legal tender means. If the Texas law is like Utah's, it just means that they are treating gold as "money" for tax purposes. I have no idea how that will interact with Federal income tax law.

If it were legal tender, you could be forced to accept gold in payments of debts. That is the only step that woud directly put Texas in conflict with the Fed.

These morons (hi Bob again!) wail about "money" all day, and they still don't have the slightest clue of what they are talking about.

Ryan Harris said...

"A big reason that China is saving USD is that the US won't approve them buying what the want (technology) or investing in the US in what they want to buy (technology), for reasons of "national security."

I never liked the blue raspberry Kool Aid myself. Grape guy here.

Ryan Harris said...

Brian, I think the desire to promote gold and silver is more of a figurative way to express political dissatisfaction and lack of faith by State leaders toward Washington. It's our national pass time here to have tongue-in-check criticism of DC.

Actual legal tender... Don't get me wrong, we still have 10s of thousands of people that ride hundreds of miles into Houston in covered wagons and on horseback for the rodeo each year. It has it's charm and I don't doubt 3 or 4% of the population are thrilled by the actual idea of gold. But my County tax collector's office doesn't accept gold for my automobile's Tax-Id plates, or property and school taxes, and the State? Sales and franchise tax remittances must be electronic, unless a business is tiny. Gold coins are symbolic of distrust in the US Gov, and her fiat, nothing else.

Brian Romanchuk said...

Ryan,

Sure. But they seriously need to get the terminology right, if they want to sound like experts on the monetary system.

It's funny how little understanding the gold bugs have of how business works. No retail establishment is going to give their minimum wage employees authorisation to accept "gold" coins. When it turns out to be a chocolate covered in foil, what recourse is the business owner going to have?

The Rombach Report said...

djrichard - "...will the state treasury of texas being using gold to pay bills? And will they use gold to pay out interest on bonds?"

Operationally speaking the Texas state treasury could pay bills in silver & gold if it was legal tender... no? As far as paying interest on bonds goes, that might require a covenant in the bond stipulating that interest could be paid and principal could be redeemed in either silver, gold, or federal reserve notes.

Greenspan wrote WSJ OpEd in Sep 1980 or 1981 [can't find the link] describing how the Treasury could issue debt giving an investor the option to receive interest and/or principal payments in either gold or dollars.

djrichard said...

Instead of gold, they should do livestock. Paying interest with livestock is easy. Just put a male and female together and wait the necessary time. :-)

Noah Way said...

Economic Models Explained with Cows

SOCIALISM
You have 2 cows.
You share the milk with your neighbor.

COMMUNISM
You have 2 cows.
The State takes both and gives you some milk.

BUREAUCRATISM
You have 2 cows.
The State takes both, loses one, milks the other, then lets the milk spoil.

INDUSTRIAL CAPITALISM
You have two cows.
You sell one and force the other to produce the milk of four cows.

FINANCIAL CAPITALISM
You have two cows.
You sell three of them to your publicly listed company using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a US Senator leaving you with nine cows. Legislation is passed giving you production subsidies and mandating the public purchase of your milk.

GREEK CORPORATION
You borrow two cows from the world bank with a promise to return five. The 2 cows get eaten and the world bank loans you 7 cows - 2 for milk and 5 to pay off the first loan - at the future cost of 18 cows. The two cows get eaten and the world bank loans you 20 cows - two for milk and 18 to pay off the second loan - at the future cost of 61 cows. After 10 years you owe 1,379,274 cows to the world bank.

A SWISS CORPORATION
You have 5000 cows. None of them belong to you.
You charge the owners for storing them.

AN ITALIAN CORPORATION
You have two cows, but you don’t know where they are.
You decide to have lunch.

AN INDIAN CORPORATION
You have two cows.
You worship them.

A BRITISH CORPORATION
You have two cows.
Both are mad.

AN IRAQI CORPORATION
Everyone thinks you have lots of cows.
You tell them that you have none.
No one believes you, so they bomb the crap out of you and invade your country.
You still have no cows, but now you a Democracy.

AN AUSTRALIAN CORPORATION
You have two cows.
Business seems pretty good. You close the office and go to a pub to celebrate.

A WELSH CORPORATION
You have two cows.
The one on the left looks very attractive.

Bob said...

LOL, brilliant :)

djrichard said...

Moderation didn't happen though until there was a cow issuer of last resort :-)

Detroit Dan said...

That was a good laugh to start the week!!

Bob Roddis said...

1. Tom Hickey said...@ Bob Roddis

Your response to @djrichard at April 15, 2017 at 6:53 PM above?


I do not believe in legal tender laws. I believe that the type of money to be used for a contract should be decided by the contracting parties.

2. Professor Farley Grubb has criticized the historic hard money regime of the USA as follows:

An inside government-issued tax-backed paper money not directly linked to specie would likely have insulated and dampened the effects of international trade-flow specie shocks on the public.

However, in the same paper he thoroughly documents that the current system is completely unconstitutional and was precisely what “the founding fathers in their debates and votes at the 1787 Convention on monetary/banking powers” “tried to prohibit constitutionally”.

Today the U.S. has the same written Constitution in terms of monetary powers that the founding fathers created in 1787. Yet we have a national paper money that is backed not by specie but only by federal government taxes, or the good faith and credit of the federal government—a government that also has power to institute price and exchange rate controls on said currency (Rockoff). This paper money is also a legal tender, with the legal tender clause “This note is legal tender for all debts, public and private” printed on each note. It is issued by the Federal Reserve Banking system that, while only a quasi-government agency in the strict legal sense, is about as close to a national banking system incorporated by the federal government as one can get. Unless we take the original intent of the founding fathers in their debates and votes at the 1787 Convention on monetary/banking powers to be a devious ruse, then it is hard not to conclude that we have strayed far away from what they tried to prohibit constitutionally.

http://www.nber.org/papers/w11783.pdf

His paper was listed as an authority by the pro-MMT Columbia group that put on the Bob Murphy/Warren Mosler debate in 2013.

Bob Roddis said...

Brian Romanchuk: I appreciate your nuanced analysis of the three broad categories across society that I employed to distinguish between various levels of consensus regarding tax and spending policy. Before reading your thoughtful comments, I LITERALLY DID NOT THINK YOU HAD THE CAPACITY TO UNDERSTAND THOSE DIFFERENCES.

Tom Hickey said...

@Bob Roddis

Well, as you point out, that is a legal question. Settled law would indicate that SCOTUS has reversed the original intent, if Grubb is correct about it.

Maybe the new more conservative and purportedly originalist court will reverse itself on that and the US will go to specie rather than paper.

Specie Circular

Specie Payment Resumption Act

Coinage Act - United States