Texas bill to create a gold-backed digital currency

This is interesting

https://www.kitco.com/news/2023-04-06/Texas-moves-to-create-gold-backed-digital-currency.html

The September 1st timeline is ludicrous for the implementation, though. It'd be years before it could be completed and stable, I'm guessing.

 

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Interesting, I like the redeemable aspect but at the same time, I wouldn't use it. I don't see any reason to change the way we do business. A digital programmable currency is and will be the downfall of the people and only benefit those in charge.

 

Unfortunately I suspect we're already 90% of the way to a digital programmable currency simply with credit cards.

 

"All you need to do" is my go-to phrase for making fun of naive proposals. I have to chuckle when I actually see it in print.

I wonder how the folks proposing this are choosing to interpret Article I, Section 10, Clause 1? ("No State shall... coin Money...")

Government overreach: a terrible thing, unless it's the right level of government. Specifically, the one that happens to be dominated by people who share your particular opinions on the thing being reached for.

 

Ha, good point! I wonder if they're banking on the fact that it's a direct digital representation of gold as the clause to get by with it... It's sort of a digital 'Gold and Silver' tender in an extremely loose interpretation.

 

There isn't such thing as the right level of government. IF SBDC's go into effect they aren't downloadable, right now there are certain states trying to put laws into effect to keep their state free from the control that the fed will have. I do like seeing these local and state bills rise up.

 

At this point I don't have to use a CC. Infact I don't have one and never will.

 

Not digital gold ,but Tennessee did this last week.

Tennessee Gov. Bill Lee has signed a bill into law that creates a process for the state to buy, sell, and hold gold and silver. This sets a foundation for Tennessee to achieve more financial independence with gold and silver reserves and could help undermine the Federal Reserve's monopoly on money.Mar 29, 2023

 

The terminator is coming soon(for real).

 

So let me get this straight. You are going to trust the Comptroller of Texas to physically hold your gold while you digitally spend it?

The implementation, btw, is relatively trivial. You just leverage somebody else's blockchain, such as Ethereum.

When the currency is created, the Comptroller receives the fiat currency, buys gold, and creates a digital certificate in the blockchain. The certificate is transferred to your wallet.

Spending it is just the same as any other blockchain transaction.

When the current owner wants to redeem it, they "spend" it by transferring it to the Comptroller's wallet who then gives them the gold.

The devil is in the details... Gold is not infinitely divisible... if they buy it in 1-gram quantities, that is $64 or $65 dollars of gold, but at yesterday's spot price of $2,007.

How does the Comptroller's office cover the costs? Kitco is selling grams at $81 or a $16 (25%) haircut)...

How do you make change? It's pretty unusual for a full tank of gas to cost $65 or a basket of groceries cost $65.

 

It's not just credit cards, the "money" that we all have in our bank accounts is up to 90% digital (doesn't represent physical bills), it's all just numbers in a database.

Whether it ends up being crypto (public blockchain transactions) or digital dollars in private bank accounts, we are certainly moving toward a cashless society. And, now that the technology and infrastructure are in place, it makes sense to move in this direction. Why keep expending resources are producing physical representations of stored value when it can be done digitally for relatively free?

Personally, it's been months since I've even touched a dollar bill. My employer puts digits into my bank account, and I spend them by paying off my credit card digitally.

 

I don't keep my money there either. LOL

Do some research on "Programable" and just sit in some thought about what that will or will not do to your freedom.

 

It seems to me that a "monopoly on money" is precisely what Article I, Section 10, Clause 1 of the Constitution codifies. What am I missing?

 

Whatever "freedoms" that I would lose by going digital.... I suppose I've already lost them and don't feel the impact (I haven't used cash for years). The only reasons that I wouldn't want a paper trail associated with my expenditures would be if I were doing something illegal, trying to avoid taxes, or the like. I wouldn't equate the removal of mechanisms that allow for these types of things to losses of freedoms.

We can imagine a scenario where the "programable" aspects of cryptocurrencies could become a problem. But, just like every other paradigm shift that occurred throughout history, we have to implement rules, regulations, and practices that avoid potential pitfalls.

We fear change, tending to focus on the potential downsides while minimalizing the upsides. This happened when the first coins started being minted:

"Why would I accept a hunk of gold for my grain?! Give me that goat!"

It happened when we shifted away from the gold standard:

"Why would I accept this paper for my goat?! Give me that gold!"

And it is happening as we go digital:

"Why would I accept these digital numbers for my work?! Give me that paper!"

In the end, it is all fiat (including gold). We have simply progressed toward more efficient and stable versions of storing value artificially.

 

This is the drawback to using Ethereum or some other blockchain. They would probably have to implement their own level 1 blockchain that doesn't allow an 8+ length mantissa... Or I suppose you're right, implement a token on eth that only allows a thousandth of a kilo. I can't imagine that the Texas govt would layer on top of eth though...

As to the value per gram, I have no idea. Maybe they themselves will keep kilos and then decide to divide the bar up into units smaller than grams. Then tell people they can't actually get gold in exchange for it unless they want it in kilos, with the rest coming back as dollars?

 

Besides which, Why does gold have any intrinsic value? It's not like you eat it. At some point you have to convert it into a physical good other than gold.

To the other point about using fractional kilograms of gold the problem is that as soon as I have to have a minimum redemption unit I can't really use it for everyday commerce. I have to trust some electronic representation.

At least with a physical coin I can always punch a hole in it and use it as a washer.

Like most of this kind of garbage initiated by people who don't know what they're talking about. It's a solution in search of a problem.

 

Honestly, I think the bottom line on this is to increase state revenues by charging a service fee/tax every time someone buys or sells back (and even sells to one another) this digital gold. Ultimately that's the goal of government activity: you gotta keep the money coming in.

 

You are missing the point, nothing in the equation is about doing anything illegal, or not wanting a paper trail. Programmable means that you can't keep your own money, unless it is on a platform, programmable means they have the ability to stop you from buying whatever you want even may need, if it goes against the program. It means if they want to lock you down, they can stop you from buying food, fuel etc. And it all could be because they think you are using too much. That is not freedom. You are thinking about this the exact way that they want you too.

That will never happen! Well it is happening and the proof is in the past few years.
Please choose to educate yourself more on the subject.

 

I understand the programable aspects of cryptocurrencies, and that they can be used to impose limitations on funds. I just do not expect that this will become truly problematic at a societal scale. Just because it can happen, that doesn't mean that it will.

When it comes to paradigm shifts in the way that we do things, there are always some potential downsides that we are correct to be concerned about (your concerns are warranted). These pitfalls are overcome by designing the system to account for them, which we've managed to pull off in every case in the past. Why should we assume that this one will be any different?

If the system is truly problematic, then it will fail because people will opt for alternatives. The only way that this would not be the case is if our government became extremely authoritative and dictatorial. But, if that happens, then we have bigger things to worry about than currency.

 

I am bound by the pitfalls and the rules here.
I will just say that these changes have only been beneficial to the leaders and those who implement these changes. It has been shown thru time with the debasement of silver and gold in coins, to the most recent leaving the gold standard, anytime these so-called officials want to change things it has been the people that have paid the price. When it is the people that control markets and money, prospering has always been the result.