Late last week, a bill to legalize gold and silver as legal tender was passed through the Oklahoma state house. The vote was 74-12.
Senate Bill 862 (SB862), was introduced by Sen. Clark Jolley and Rep. Gary Banz, with co-sponsorship 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.
The bill also provides a state-level tax exemption to Oklahoma residents exchanging their precious metals for another medium of change:
For taxable years beginning on or after January 1, 2015, there shall be exempt from Oklahoma taxable income, or in the case of an individual, the Oklahoma adjusted gross income, any amount of net capital gains, as defined in 26 U.S.C.A., Section 1222 of the Internal Revenue Code and included in the federal income tax return, which result from the sale or exchange of gold or silver for another form of legal tender.
Oklahoma is now slated to become the second state to recognize gold and silver as legal tender authorized for payments of debts and taxes. Earlier this year, the Arizona senate also passed a similar bill by a vote of 18-12. But that bill has stalled in the state house.
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 Oklahoma legislation is an important 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.
Although the bill passed through the senate by a 37-4 margin, it will have to clear the senate once again because the house amended the bill. Once it is given final approval, SB862 will head to Gov. Fallin’s desk for a signature.
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