In 2006/2007 I was paid for a project in e-gold[0]. Another currency backed by gold bullion. I never saw the gold, never touched it, but was assured it was there, really. The whole thing went tits up because it was a scam. Being in Texas and not Panama I guess this is slightly less scammy. But I suspect the people who want to hold gold will simply buy gold. And skip the questionably middleman.
The problem is fraction reserves, as soon as that fraud is legalized, the entire marketplace is by definition fraudulent. If they did have reserves and fraction reserve was suddenly legalized, you get retroactively robbed in a sense.
Holding gold would appeal to me but is impossible. I won't dedicate my life, hell or high water, to one country. You can't just up and carry stuff across nation borders. It is a total nightmare. In fact, every time I enter Thailand (and who knows how many other countries) I break the law. The limit for undeclared personal affects is exceeded by a single tshirt or pair of jeans in my luggage, since, well I wear all designer. Strikes me as beyond absurd how the world works ever since the idiocy of passports, permission, and visas was introduced:(
One of the worst inventions in history imo.
I think Ukraine should remind us all not to trust everything to one country. All your eggs in one basket
While I tend to systematically doubt anything that "represents" gold supposedly stored somewhere and therefore tend to agree with the sentiment, I believe that if an actual state were to implement this, along with:
- a system of independent, redundant audits of the reserves (independent as in: they would not live in Texas)
- a blockchain to track and record for all eternity the state of the currency *and* the audits
- a guarantee etched in stone in the Texas constitution that the e-currency is - by law - instantly convertible to the real thing (and by that, I mean actual gold, not the current market rate equivalent in toilet paper).
then it would have a chance of succeeding.
But again, there are so many ways to cheat and lie when you manage a gold "reserve", including storing fake gold, that - indeed - while this would be a lot easier to handle and trade with than real gold, it would still not replace it.
The Wikipedia article* makes it sound fairly legit, and that it collapsed because it didn't verify members well and so was used for illegal purposes. But not because it was a scam. It reads that it was widely used, and the article _implies_ it was genuinely backed by gold.
Do you have more insight here? I'd never heard of E-gold before today.
> When someone holding the digital currency wants to redeem it for cash, all they would need to do is present it to the comptroller or a designated agent, who will then sell gold held in the depository account equal to the redemption amount and transfer the funds to the redeemer, minus any fees.
> The value of each unit of the digital currency will be determined at the time of a transaction and “must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of that transaction.”
If this were actually put into effect, expect intense interest from current long-term owners of gold ETFs e.g. GLD. GLD steadily declines relative to spot bullion, as a means of charging to holders expenses of storage, security and management. The Texas proposal would apparently cover such costs entirely with fees on exchange transactions, making long-term holders something like free riders on the system.
> No State shall .. make any Thing but gold and silver Coin a Tender in Payment of Debts
the legislators are looking to require the state comptroller to establish a digital currency that is fully backed by gold and fully redeemable in cash or gold.
The U.S. UCC (Uniform Commercial Code) was modified in July 2022 to recognize CERs (controllable electronic records), a flexible definition that may encompass current and future digital currencies. It's now up to individual U.S. states to ratify the proposed UCC changes in state legislation, https://www.clearygottlieb.com//news-and-insights/publicatio...
> Control under Article 12 is designed to be a technology-neutral functional equivalent of “possession.” It generally encompasses circumstances when a party has the “private key” or other mechanism to avail itself of substantially all of the benefits of the record, prevent others from availing themselves of such benefits, and transfer the record and associated benefits.
The use of the term "currency" in the bills is probably ill-advised for just that reason, but states can, under certain circumstances, issue bank notes that act essentially as currency or bills of credit; Briscoe v. Bank of Commonwealth of Kentucky, 36 U.S. 257 (1837) found such bank notes constitutional so long as they aren't issued under color state sovereignty -- that is, they must trade on "no pledge of the faith of the state, in any form." (The federal government eventually killed off state bank notes, not by attempting to outlaw them directly -- AFAIK! -- but by taxing them aggressively, though I don't believe those laws are on the books any more.)
Having said that, the fact that these bills direct the state to establish the program, fixes in law the redemption of the "currency," and directs the state to hold gold reserves for the currency all suggest that this is Constitutionally questionable, because the bill is trading on "the faith of the state." Consider that, if Texas establishes a gold-backed stablecoin then executes a rug-pull, your legal options as an aggrieved party are limited due to state sovereignty, which is precisely the issue that the Constitution seeks to prevent (though at the time the question of sovereign immunity was somewhat less settled in the absence of the Eleventh Amendment).
Politicians: "Capitalism is unstable and we need regulators to control it and promote stability."
Capitalists: "We want to make something more stable than the current system."
Regulators: "Whoa there! Hold those horses! That ain't a move in the playbook! What will these madmen think of next, a full reserve bank? Shut that scheme down now!"
The 3 act play making sure the system is safe unprincipled men since ... I dunno, maybe forever. I doubt this Texan scheme will have a long life either.
I hope they use an existing, leading-edge project. There are some very advanced and capable cryptocurrencies. Or Ethereum which is catching up and would be amazing.
It seems like the US would just try to block something like this on principle though. Having your own currency puts you in competition with other countries, doesn't it? And that's not part of the concept of a (US) state.
> On May 2, a Texas House committee passed a bill to create 100% reserve gold and silver-backed transactional currencies ... HB4903 will now move to the Calendars Committee. This committee determines which bills move to the House floor for a vote.
Reading through it sounds like the comptroller may not be buying physical gold to be delivered and stored at the texas facility. But buying paper representing gold stored somewhere else. I see a future filled with financial shenanigans where more and more complex layers of papers/futures/derivatives/etc become allowed to 'represent' gold, all ripe for exploitation and fraud (just like the the existing crypto, real estate, stock market, and fiat systems!). The more things change, the more they stay the same.
The state of Texas has run a "depository" for precious metals since 2018. In practice, it operates as a sort of specialized safe deposit vault, with holdings of each account kept segregated:
Yes. It is the stated position of the Texas GOP that they should secede.
"33. State Sovereignty: Pursuant to Article 1, Section 1, of the Texas Constitution, the federal government199
has impaired our right of local self-government. Therefore, federally mandated legislation that infringes200
upon the 10th Amendment rights of Texas should be ignored, opposed, refused, and nullified. Texas201
retains the right to secede from the United States, and the Texas Legislature should be called upon to202
pass a referendum consistent thereto."
The question was resolved n 1865 with a lot of bullets and a lot of dead soldiers. Texas joined the Union in 1845, btw.
These are chucklehead GOP politicians who only have a seat through gerrymandering. I suspect if this was to go to referendum it wouldn't get far. The most citizens of their largest cities have no interest in secession.
No. They couldn't if they wanted to. There is no legal or constitutional basis for a state to secede. How would that even work? It's not like they can force people to leave the US and strip them of their citizenship. Are they just going to kick out over half the people in Texas? Besides Texas' economy would collapse immediately. There would be a mass exodus of businesses. Texas would be completely cut off from the national banking system. It's an absurd idea.
I mean the popular support isn't there but they'd in reality only need the support of the texas national guard. A traitor president also helps.
And you also have a ton of people who go "who cares, let them leave" like they're breaking up with a romantic partner lol, absolutley no sense of patriotism.
I mean, I don't care if it is texas, missisipi or claifornia, I am an american and all of it is mine. Whether it is a buch of small skirmishes or a full on civil war again, sececession can only be accomplished by a lot of blood spilled. I can't stand guns and I don't even care enough about politics to vote but if any state tries to secede, I would join whatever military opposing them or just buy a gun and find a secessionist armed soldier to kill and hope that I have a death as honorable as fighting to defend your homeland, sure bests rotting in a bed or in a hospital. Even if I can't get others to join me I can contribute just my tiny drop of blood to the price that needs to be paid to separate a land from its people.
Now, there is exactly one scenario where I'd have no opposition to them seceding: if the constitution is changed to get rid of the electoral college, senatorial representation or if religious rights are infringed upon (even by a SCOTUS decision), and I don't mean protections for miniorities who disagree with a religion but anything that prevents people from sincerely believing (not satanists whose belief according to themselves is fake! For example) in a creator and acting on that belief (including voting). Because before you are a citizen you are a human and before you have legal rights you have natural rights that supersede legal rights(see: declararion of independence) which were the foundation and reasoning used to justify America's secession from Britain.
For Texas secessionists though, all they can acheive is destabilization of the US and as a result the whole world. Russia and China's wet dream but my take on it is that secession is as realistic as a neo-nazi white nationalist state.
That's one of the crazier political rabbit holes to go down. There are reasonable and/or reasonable-sounding arguments for pretty much every position and those arguments have been rehashed in every imaginable way for decades and decades. Online there's probably tens of gigabytes of debate between "hard money" advocates and "fiat" or inflationary currency advocates.
After seeing endless debates between various schools of economics for decades, in the end I've come to the conclusion that nobody really knows what they're talking about.
A big problem is that history is an experiment with no replications, no controls, and no good way to tie complex causes to complex effects. "What would the past 100 years have looked like had we kept the dollar pegged to gold?" We don't know and we'll never know. All you can do is tell just-so stories. Did having an inflationary currency help us achieve the remarkable growth of the past hundred years? We can't know that either. For all we know all that growth was due to demographics and technology and would have happened regardless of the monetary system.
I wonder if maybe it doesn't matter that much, and so in that sense both sides are wrong. Maybe the real basis of the economy is the real economy (people, capital, resources, technology) and what you use to price it is secondary. So as long as your monetary system avoids extreme failure modes like hyperinflation or extreme deflationary collapse, the system will just adapt to whatever monetary base it's given and price signals will do their job.
Gold is not deflationary from monetary perspective. More gold is mined constantly. Due to its high stock-to-flow ratio, the monetary inflation is very low.
From the perspective of CPI (consumer price index), gold would be "deflationary", because prices would get cheaper. However, this is not a property of gold; it's the property of a capitalist economy, where companies compete to offer better products at cheaper prices.
There's no good reason for diluting the currency to keep prices increasing, other than corruption and greed of those who control the money supply. Inflationary currency means that someone is profiting by creating money, and that profit is paid in the increasing price of products.
[+] [-] yardie|2 years ago|reply
[0]https://en.wikipedia.org/wiki/E-gold
[+] [-] silverpepsi|2 years ago|reply
Holding gold would appeal to me but is impossible. I won't dedicate my life, hell or high water, to one country. You can't just up and carry stuff across nation borders. It is a total nightmare. In fact, every time I enter Thailand (and who knows how many other countries) I break the law. The limit for undeclared personal affects is exceeded by a single tshirt or pair of jeans in my luggage, since, well I wear all designer. Strikes me as beyond absurd how the world works ever since the idiocy of passports, permission, and visas was introduced:(
One of the worst inventions in history imo.
I think Ukraine should remind us all not to trust everything to one country. All your eggs in one basket
[+] [-] ur-whale|2 years ago|reply
But again, there are so many ways to cheat and lie when you manage a gold "reserve", including storing fake gold, that - indeed - while this would be a lot easier to handle and trade with than real gold, it would still not replace it.
[+] [-] vintagedave|2 years ago|reply
Do you have more insight here? I'd never heard of E-gold before today.
[*] https://en.wikipedia.org/wiki/E-gold
[+] [-] everybodyknows|2 years ago|reply
> The value of each unit of the digital currency will be determined at the time of a transaction and “must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of that transaction.”
If this were actually put into effect, expect intense interest from current long-term owners of gold ETFs e.g. GLD. GLD steadily declines relative to spot bullion, as a means of charging to holders expenses of storage, security and management. The Texas proposal would apparently cover such costs entirely with fees on exchange transactions, making long-term holders something like free riders on the system.
[+] [-] soulofmischief|2 years ago|reply
[+] [-] nobody9999|2 years ago|reply
[0] https://constitution.congress.gov/browse/essay/artI-S10-C1-2...
[+] [-] walterbell|2 years ago|reply
> Control under Article 12 is designed to be a technology-neutral functional equivalent of “possession.” It generally encompasses circumstances when a party has the “private key” or other mechanism to avail itself of substantially all of the benefits of the record, prevent others from availing themselves of such benefits, and transfer the record and associated benefits.
[+] [-] HillRat|2 years ago|reply
Having said that, the fact that these bills direct the state to establish the program, fixes in law the redemption of the "currency," and directs the state to hold gold reserves for the currency all suggest that this is Constitutionally questionable, because the bill is trading on "the faith of the state." Consider that, if Texas establishes a gold-backed stablecoin then executes a rug-pull, your legal options as an aggrieved party are limited due to state sovereignty, which is precisely the issue that the Constitution seeks to prevent (though at the time the question of sovereign immunity was somewhat less settled in the absence of the Eleventh Amendment).
[+] [-] hnburnsy|2 years ago|reply
[+] [-] lotophage|2 years ago|reply
[+] [-] zoklet-enjoyer|2 years ago|reply
[+] [-] roenxi|2 years ago|reply
Capitalists: "We want to make something more stable than the current system."
Regulators: "Whoa there! Hold those horses! That ain't a move in the playbook! What will these madmen think of next, a full reserve bank? Shut that scheme down now!"
The 3 act play making sure the system is safe unprincipled men since ... I dunno, maybe forever. I doubt this Texan scheme will have a long life either.
[+] [-] ilaksh|2 years ago|reply
It seems like the US would just try to block something like this on principle though. Having your own currency puts you in competition with other countries, doesn't it? And that's not part of the concept of a (US) state.
https://en.wikipedia.org/wiki/Texas_secession_movements
[+] [-] KRAKRISMOTT|2 years ago|reply
[+] [-] walterbell|2 years ago|reply
> On May 2, a Texas House committee passed a bill to create 100% reserve gold and silver-backed transactional currencies ... HB4903 will now move to the Calendars Committee. This committee determines which bills move to the House floor for a vote.
[+] [-] Eddy_Viscosity2|2 years ago|reply
[+] [-] everybodyknows|2 years ago|reply
https://www.texasbulliondepository.gov/faqs
Fees are 0.5% of value per year:
https://www.texasbulliondepository.gov/pricing
Apparently there is no per-transaction charge, unlike the proposed digital instrument.
[+] [-] torgian|2 years ago|reply
When 1 TexanGoldUnit eventualy devalues to 1000 TGU, does that mean my gold becomes dust too?
[+] [-] dotcoma|2 years ago|reply
[+] [-] bovermyer|2 years ago|reply
This just feels like cryptobros convincing legislators to back their latest pet project.
[+] [-] harywilke|2 years ago|reply
https://texasgop.org/wp-content/uploads/2022/06/6-Permanent-... https://www.thebulwark.com/texas-republicans-deadly-serious-...
[+] [-] sneak|2 years ago|reply
They even have their own separate power grid, just in case.
[+] [-] krapp|2 years ago|reply
[+] [-] yardie|2 years ago|reply
These are chucklehead GOP politicians who only have a seat through gerrymandering. I suspect if this was to go to referendum it wouldn't get far. The most citizens of their largest cities have no interest in secession.
[+] [-] weare138|2 years ago|reply
[+] [-] CatWChainsaw|2 years ago|reply
[+] [-] ur-whale|2 years ago|reply
[deleted]
[+] [-] badrabbit|2 years ago|reply
I mean, I don't care if it is texas, missisipi or claifornia, I am an american and all of it is mine. Whether it is a buch of small skirmishes or a full on civil war again, sececession can only be accomplished by a lot of blood spilled. I can't stand guns and I don't even care enough about politics to vote but if any state tries to secede, I would join whatever military opposing them or just buy a gun and find a secessionist armed soldier to kill and hope that I have a death as honorable as fighting to defend your homeland, sure bests rotting in a bed or in a hospital. Even if I can't get others to join me I can contribute just my tiny drop of blood to the price that needs to be paid to separate a land from its people.
Now, there is exactly one scenario where I'd have no opposition to them seceding: if the constitution is changed to get rid of the electoral college, senatorial representation or if religious rights are infringed upon (even by a SCOTUS decision), and I don't mean protections for miniorities who disagree with a religion but anything that prevents people from sincerely believing (not satanists whose belief according to themselves is fake! For example) in a creator and acting on that belief (including voting). Because before you are a citizen you are a human and before you have legal rights you have natural rights that supersede legal rights(see: declararion of independence) which were the foundation and reasoning used to justify America's secession from Britain.
For Texas secessionists though, all they can acheive is destabilization of the US and as a result the whole world. Russia and China's wet dream but my take on it is that secession is as realistic as a neo-nazi white nationalist state.
[+] [-] viro|2 years ago|reply
[+] [-] bediger4000|2 years ago|reply
Just a few minutes' reflection should convince you that's a very bad idea for any free market, capitalist economy.
[+] [-] api|2 years ago|reply
After seeing endless debates between various schools of economics for decades, in the end I've come to the conclusion that nobody really knows what they're talking about.
A big problem is that history is an experiment with no replications, no controls, and no good way to tie complex causes to complex effects. "What would the past 100 years have looked like had we kept the dollar pegged to gold?" We don't know and we'll never know. All you can do is tell just-so stories. Did having an inflationary currency help us achieve the remarkable growth of the past hundred years? We can't know that either. For all we know all that growth was due to demographics and technology and would have happened regardless of the monetary system.
I wonder if maybe it doesn't matter that much, and so in that sense both sides are wrong. Maybe the real basis of the economy is the real economy (people, capital, resources, technology) and what you use to price it is secondary. So as long as your monetary system avoids extreme failure modes like hyperinflation or extreme deflationary collapse, the system will just adapt to whatever monetary base it's given and price signals will do their job.
[+] [-] Geee|2 years ago|reply
From the perspective of CPI (consumer price index), gold would be "deflationary", because prices would get cheaper. However, this is not a property of gold; it's the property of a capitalist economy, where companies compete to offer better products at cheaper prices.
There's no good reason for diluting the currency to keep prices increasing, other than corruption and greed of those who control the money supply. Inflationary currency means that someone is profiting by creating money, and that profit is paid in the increasing price of products.
[+] [-] qgin|2 years ago|reply
[+] [-] ur-whale|2 years ago|reply
I believe the person who has to spend - likely more than - a few minutes reflection isn't who you think.
IOW, burden of proof is on you.
[+] [-] Finnucane|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] rdxm|2 years ago|reply
[deleted]