As Good as Gold? Arkansas Allows Use of Gold, Silver As Legal Tender

P. Gardner Goldsmith | April 17, 2023
Text Audio
00:00 00:00
Font Size

Arkansas Governor Sarah Huckabee Sanders (R) April 11 signed HB 1718, the “Arkansas Legal Tender Act,” which, along with similar moves in progress in twenty-two other states, represents a vestigial tie to whatever remnant of federalism remains in the US, and also represents a powerful challenge to what many observers note appears to be a push for an inflationary, privacy-invading Fed/US digital currency that will be blended into a single-world digital currency possessing the same central-control powers.

As Mike Maharrey writes for the Tenth Amendment Center:

“On Tuesday, Arkansas Gov. Sarah Huckabee Sanders signed a bill into law to make gold and silver legal tender in the state, and effectively repeal the state capital gains tax on gold and silver. Passage can help eliminate barriers to using gold and silver in everyday transactions, a foundational step for the people to undermine the Federal Reserve’s monopoly on money.”

Of course, in small “black and gray” markets – meaning, in private transactions conducted via free will and voluntary association, away from the thick tentacles of government – this kind of metal trade for products and services always has taken place. But this official move is significant for a number of reasons. The elimination of a capital gains tax on gold and silver trade puts those forms of currency on the same level as the mystical and inflated-to-death US Federal Reserve Note, aka “the Dollar,” allowing less impedance on the flow of precious metals as specie money.

Related: Court Rejects Multi-State Attempt To Stop Biden’s Arbitrary 'Cost Of Carbon' Impositions | MRCTV

And since precious metals cannot be made out of thin air, that trait helps the metallic currency retain its value – something that federal money, even when the feds have claimed it was “tied” to a certain amount of gold – has not done and never will do.

Adds Maharrey:

“The law makes ‘gold and silver specie’ legal tender in the state, meaning it is recognized as a medium of exchange. Practically speaking, this will allow Arkansans to use gold or silver coins as money rather than just as mere investment vehicles.”

There are, however, some stumbling blocks written into the statute – the kinds of “state v. people” hurdles that ought to be recognized before adding more praise.

Maharrey observes that HB1718 will reserve for the Arkansas government the power to define the kinds of silver and gold coins that it will consider specie money.

“‘Specie is defined as a ‘coin having gold or silver content; or refined gold or silver bullion that is coined, stamped, or imprinted with its weight and purity and valued primarily based on its metal content and not its form.’ Under the law, specie will include coins issued by the U.S. government or ‘other specie that an Arkansas court rules to be within state authority to make or designate as legal tender.’”

And while one confidently might assume that, should it come to that, Arkansas courts likely would rule that most kinds of stamped silver or gold coins are acceptable as legal tender for trade, economists and political philosophers often teach and have known for centuries that ALL so-called “legal tender” laws -- by which politicians claim the power to tell people what they can use as a means of value communication – are immoral, unethical, and, functionally, represent political threats of aggression against peaceful people who want to decide for themselves what they use for trade.

The practical implications also are clear. Under any “legal tender” statute, there always exists the danger that the operational organs of a particular polis will proclaim that only X or Y are useable monies. This harbors the risk of the government shifting things back to a state-preferred or state-issued currency (which we have seen on the federal level since the First Bank of the United States was chartered and granted to a crony pal of “Treasury Secretary” Alexander Hamilton).

Even if metal coins are the focus of the polis, thus giving the appearance that a government is promoting “sound money,” such a state-claim over which kind of coin is “acceptable” can trend towards “acceptance” only of an inflationary currency issued by an institution that creates the coin and then uses it to buy state debt and facilitate even more state spending. This is similar to the bogus Federal Reserve “gold standard” that became exposed after years of the central bank issuing much more paper than it could cover with reserves of gold.

The risk might be small, but this otherwise laudable legislation could open the door to political favoritism of some coin-makers over others.

Related: Crypto Crosscut? Federal Reserve Points Itself Towards Digital 'Money' | MRCTV

Historically, any government-favored or government-created bank/money-issuer -- including government treasury departments themselves – that gets a legally advantageous position tied to the state ends up inflating the number of currency units to fund more statism and maintain its government preferred position. Thus, metal coinage can appear to be a better hedge than paper or digits against this tendency, but metals can be mixed/alloyed, and if people want it to be an honest, non-inflationary, money system, the issuance and acceptance of the coinage must be handled via private market means.

So, while the Arkansas move is laudable – as are others around the US – the baseline claim of the government to have a “legal tender” power always contains within it these historically dangerous problems of political preference granted to only certain coin-makers, and they hold the potential of stifling market power to maintain the value of the coins.

As a good summation of where things stand, and how this kind of statute can lead to a better monetary environment for the populace, Maharrey adds:

“Arkansas is now the fourth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming and Oklahoma have since joined.

The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in U.S.-minted gold and silver dollars. The company was also instrumental in the development of the ‘Utah Goldback,’ described as ‘the first local, voluntary currency to be made of a spendable, beautiful, physical gold.’”

Each time states pass this kind of legislation, they open windows onto a bit more freedom and privacy for everyday people – something that oppressors like Senator Liz Warren (D-MA), President Joe Biden, and many big-government lovers cannot stand.

The leviathan does not want us to escape its privacy-invading tentacles, let alone see us turn away from its worthless debt-carrying nonsense “money.”

Freedom demands that we proclaim our right to do precisely that, and this move by the Arkansas government is a step in the right direction.


Follow MRCTV on Twitter!