Texas called … they want their gold back. Governor Rick Perry is a staunch supporter of a piece of legislation which would bring the state’s $1 billion in gold reserves back to Texas. Republican State Representative Giovanni Capriglione  sponsored the bill designed to move Lone Star State gold bars out of a Federal Reserve vault in New York.
Representative Capriglione had this to say when discussing the gold return bill with local news media:
“For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up.”
Texas is not attempting to create its own gold standard; state officials merely want to create a more fiscally secure reputation. Giovanni Capriglione also noted the importance of possessing such a reputation in case either a national or international financial crisis should occur.
Texas is home to six of the 14 most financially stable cities in America. Governor Rick Perry believes that if Texas owns the gold, no one else should be allowed to decide if the state can reclaim possession. The gold bill might possibly become a true bipartisan effort. Democratic State Senator Rodney Ellis thinks the return of the bars is an “interesting concept.” Before the Democrat is willing to issue support, he wants to speak with fiscal experts about the plan.
If the Texas gold bill passes, a Texas Bullion Depository would be created to hold the bars. State officials do not want just the gold certificates; they want all of the actual precious metal they own currently stored at the Federal Reserve vault in New York.
Transporting $1 billion worth of gold bars would be both a hefty and potentially hazard-filled endeavor. Texas supporters of the gold return bill want to sell the bars currently stored inside the Federal Reserve vault and then repurchase the same amount of the precious metal in Texas. The move by Texas to put their gold inside a local depository would likely reassure bank account holders about the stability of the state economy and the availability of their funds.
The austerity measures in Cyprus, which many feel prompted the government to close down banks, is weighing on the minds of some Texans. When the Cyprus banks reopened, a 300-Euro ($383) daily withdrawal limit was imposed. Bank patrons also experienced restrictions on money transfer to outside the country accounts.
Bitcoins, a digital cash alternative, reportedly soared in Cyprus, Spain, and Greece last week . Fiscal experts believe the 20 percent uptick in Bitcoins purchases from those areas indicates citizens are searching for a way to get their funds out of the country.
Could a run on the banks happen in America? Although some financial experts think such a scenario is unlikely, it happened during the 1930s and could occur again.
While none of us would like to believe that the United States government would ever just reach into our bank accounts and take money out like what happened in Cyprus – they already have access to our funds. As banking analysts note, the government essentially taxes our bank accounts via interest rates. Such rates are now near zero percent, meaning depositors are not being compensated for the use of their funds. While such a system is not equal to the bold Cyprus cash grab, it still means that customers are effectively loaning their money to banks without any real guarantee on the investment.
Low interest rates and high inflation reduce the value of bank deposits. The reduction in buying power prompted by our current bank rates, the bulging deficit, and inflation rightfully has many Americans and fiscally conservative politicians concerned.
If the Cyprus, Greece, and Spain woes spread on a larger scale throughout Europe, the United States economy could face serious pressure as well. Although credit unions and banks boast a federal guarantee up to $250,000 on our accounts, few fiscal experts feel the financial institutions could make good on the promise if there was a wide-spread run in the United States.
What do you think about the Texas gold bill designed to bring their gold back to the Lone Star State?