Florida Makes Gold & Silver Official Means of Payment
Paul Craig Roberts
The Florida legislature has begun to move legislation to enact their prior approval for gold and silver coins to be legal tender in Florida.
This legislation will exempt gold and silver coins from sales tax in Florida. It also means that within Florida, there will be a means of payment independent of digital money created by governments for the purpose of controlling the population, it’s behavior, and it’s expressed views, in order that governments can rule via official narratives.
It is possible that if circumstances develop the tyrants in Washington will establish martial law in Florida and dispense with the use of real money in place of digital money that has no physical existence.
Unless all states adopt the legalization of gold and silver as legal tender, Floridians would be unable to make out of state payments and would have to become an economy unto itself, producing all of its own needs. This is the safest and most preferable way to exist.
Throughout history, gold and silver have been the means of payments. The Roman legions were paid in silver coins, the denarius. Estates were purchased for gold.
Paper money appeared originally as a receipt on gold holdings. If their gold was a large amount, people kept their gold in the vaults of goldsmiths and wrote notes to the goldsmiths to release the payment amount of the transaction to their business associates in order to pay their bills.
Goldsmiths learned that few ever claimed physical possession of their gold, instead using written notes, in effect checks, to transfer ownership. Thus goldsmiths became the first bankers, knowing that they could lend out the gold in their vaults that few ever came for. Moreover neither did those who borrowed the gold take possession physically. They merely wrote to the Goldsmith that they had made a payment that transferred ownership. Thus some percentage of their holding was transferred to the third-party.
This was the origin of fractional reserve banking.
When I was born gold was no longer a legal means of payment in the United States. President Franklin Delano Roosevelt, a liberal hero, had confiscated all the goal in the hands of the American population. Once he had it, he raised the price from $20 an ounce to $35 an ounce. Later, it was raised to $42 an ounce and stood there until Senator Jesse Helms in the 1970s got legislation passed permitting Americans to again own gold coins, but gold was not made an official means of payment.
Following World War II, the Breton Woods agreement gave the US dollar the world reserve currency role. This meant that US debt in the form of Treasury bonds became the reserves of the world’s central banks. Thus, the US government was able to pay its bills by issuing debt as US Treasury debt was the reserves of the world’s central banks. Initially under the Brenton Woods system foreign central banks could redeem their holdings of US treasuries for gold. However, by demanding gold in exchange for France’s holdings of US debt, President Charles de Gaulle prompted the closing of the “gold window” in the 1970s, and US debt could no longer be exchanged for gold.
When I was born, silver was a means of payment. There were one dollar, two dollar, and five dollar Treasury Certificates, not federal reserve notes, that were exchangeable for silver at the price of one dollar per ounce of silver. In my youth silver was used for transactions less than a dollar.The 10 cent piece known as the dime was silver. The 25 cent piece, or quarter dollar, was silver. So was the 50 cent piece. The penny was copper.
US one dollar bills, whether silver certificates or not, could be exchanged for a silver dollar at a bank, but silver dollars were not used in transactions. They existed to remind us that in the 19th century cowboys were paid 30 silver dollars per month and could survive on it.
For many years as my articles have documented, the US dollar has been able to maintain its value because gold and silver short-selling was able to hold down the rise in the dollar price of gold and silver.
Unlike equities, it is possible to short the precious metals market without holding collateral against the short. The futures market for gold and silver permits the printing of paper gold and silver in the form of futures contracts that are dumped in the futures market where the contracts drive down the prices of the precious metals. The peculiarity of the precious metals market is that the price of gold and silver has not been determined in the physical market where it is bought and sold, but in the futures market where it can be shorted by printing claims to gold and silver.
Recently in response to uncertainty of the value of increasing amounts of paper dollars not backed by anything, the demand for real money in the form of precious metals has overwhelmed the ability to use short-selling to hold down the prices of gold and silver.
As gold and silver prices rose, speculators joined the rise. Speculators simply see opportunities, and when they had accumulated sufficient gain, they cashed out of the rise, resulting in a sharp fall in gold and silver prices. However, the underlying situation that raised the dollar prices of real money has not changed, and therefore once speculative profits are removed from gold and silver prices the rise in the value of precious metals will resume.
One possible reason for President Trump’s desire for Venezuela’s oil and other assets, Greenland, and assets in Ukraine is to prop up the dollar with real things. As I have pointed out on numerous occasions, the power of the United States rests on the dollar’s role as world reserve currency as this permits the US to pay its bills by issuing debt. China understands the value of having the role 0f being the reserve currency and has announced that it wants this role for the Chinese currency. As China is less indebted, more industrialized, and has a higher gross domestic product than the United States, it is possible that the continuation of the rapid growth of US national debt will result in the US losing the reserve currency role to China.
For several decades, the United States has had a destructive policy of 0ffshoring its manufacturing, thereby weakening its own economy while the US government ran up massive amounts of debt. With the dollar already questionable Washington further undermined the dollar by weaponizing it, thus making it risky for central banks to hold US dollars in the form of Treasury debt as reserves. The seizure of Russian central bank reserves in the amount of $300 billion demonstrated the risk. With no end of American wars and spending sprees in sight, the US dollar’s role as w0rld reserve currency could well be in jeopardy. Once this role is lost the dollar’s value in terms of other currencies will fall, and as the United States has become an import-dependent economy, US inflation would explode, further driving down the dollar.
Policy makers should take notice of this threat. It is a more serious threat to America than is Iran, Venezuela, Cuba, Mexico, or Russia in Ukraine and the Arctic. It is far more important for the United States to protect the value of its currency than for the United States to spend another trillion dollars, clearing Israel’s opponents from the Middle East.