Craig R. Smith and Lowell Ponte July 21st, 2015
A new kind of “bank” is being born that might break the money monopoly of the Federal Reserve, thwart President Barack Obama’s takeover of our banks, and restore honest money in America.
In this bank, your hard-earned savings are secured not in ever-inflating dollars, but in gold, silver or other precious metals. Your bills can be paid by electronically transferring not dollars but quantities of gold with others who have accounts there.
And if President Obama attempts the government’s new “bail-ins,” like those in Cyprus and Greece confiscating deposits to pay bank debts, the State of Texas promises to block any federal attempt to seize your account.
On June 12, 2015, Governor Greg Abbott signed into law a bill to create a Texas Bullion Depository. This measure passed the state legislature with strong bipartisan support – 140-4 in the Texas House, 27-4 in the Senate.
Among the first deposits here reportedly will be 6,643 gold bars that the University of Texas Investment Management Company (UTIMC) began acquiring in 2009. Today, this physical gold is worth a sizable fraction of $1 Billion and is between 2.5 and 5 percent of the second largest university endowment (after Harvard’s) in the United States.
Texas until now has stored its gold in a New York City vault of HSBC, a British bank that by some measures is the world’s largest. HSBC was the first bank named in our 2014 book Don’t Bank On It! The Unsafe World of 21st Century Banking because it had begun resisting depositor requests to withdraw their own money.
When Germany tried in 2012 to withdraw a fraction of its gold reserves from the Federal Reserve Bank in New York City, we documented, it was told that this would require at least 7 years. German officials were not allowed to audit, or even to see, their gold deposits, and eventually gave up. The government has refused all requests, even from Congressman Ron Paul when he chaired the subcommittee overseeing it, to audit how much gold remains in Ft. Knox.
No wonder Texas was eager to “repatriate” its gold and make it “non-confiscatable.”
The other half of this new Texas law has the potential to subvert President Obama’s push to impose a “cashless” society of digital transactions that are all trackable and taxable, a road to serfdom, surveillance and income redistribution.
The “bank” side of this Texas Bullion Depository, by laying the foundation for a 21st Century restoration of the gold standard of America’s Framers, might halt the unchecked growth of a “Progressive” welfare state fattened on limitless printing of fiat paper money.
According to Rick Cunningham of the Texas Center for Economics, Law and Policy, who drafted the original version of this law, the depository could be “a wholly unique solution” to the 2008 financial near-collapse.
Cunningham has said that “an advanced, state-owned system of electronic payments and settlements, denominated in ounces of precious metals, barred from engaging in lending, leasing, speculating or derivative transactions, and always maintaining a 100% ratio of bullion reserves to account balances…not only could it sustain state and local government operations, it could potentially sustain large swaths of the Texas economy, even in the face of a national financial or currency crisis.”
“[W]ith this depository,” said Texas State Representative Giovani Capriglione (R-Southlake), the law’s co-author, “private individuals and entities will be able to purchase goods, and will be able to use assets in the vault the same way you’d be able to use cash.”
What Rep. Capriglione is saying, according to the liberal-left Texas Observer, is that by using this depository like a bank, people will “be able to conduct transactions backed by the gold stored in the bank, circumventing the Fed.”
“[U]nless Texas is anticipating withdrawing from the union, which I suspect is some peoples’ want, I don’t see what advantage [the bullion depository] has,” said Edwin Truman of the Peterson Institute for International Economics. Building such a secure depository will cost more than the $605,000 Texas pays HSBC to store its gold now.
“When we came in the union in 1845, one of the issues was that we would be able to leave if we decided to do that,” said then-Governor Rick Perry, another depository supporter, in 2009. “It’s codified, anytime Texas wants to pull out of the union it can instantly,” Gov. Perry has said. “That’s the treaty, it’s on record.”
Texas seceded to join the Confederacy and was brought back into the Union. We need to remember, however, that from 1836 until 1845, Texas was its own country and had diplomatic or trade relations with Belgium, Denmark, France, Great Britain, the Netherlands, the Russian Empire, the short-lived Federated Republic of Central America and Republic of Yucatan….and the United States.
If Texas became a nation again, it today would be the 10th largest economy in the world, bigger than Canada, with a Gross Domestic Product of approximately $1.648 Trillion. With its Republican-run, pro-free enterprise government, Texas has produced one-third of all the new American jobs for which President Obama claims credit. Texas continues to be a powerful magnet, drawing in overtaxed businesses from more liberal states.
If the Texas Bullion Depository creates an independent sound money and sound banking system that cannot be dragged down by debased Fed dollars or the Federal Government, this would expand Texas’ opportunities for secession – which in 2014, according to Reuters polling, roughly one in four Americans approved – or for increased success and prosperity.
Could it be Texas will lead the charge to restore financial freedom – by liberating us from the tyranny of the Federal Government and Federal Reserve’s fiat paper money system? We hope so!