"Gold ATMs" Reinforce the Constitutional Tender Act

The technology is available NOW!

Back in October, we mentioned that ATMs that sell gold bars - that is, they convert fiat money into real money - are now operating in luxury hotels in Abu Dhabi, Bergamo and Madrid as well as around Germany.

I just noticed that a few months before that, in May, Joseph Salerno wrote on the Mises Economics Blog about the start of this enterprise:

It appears technology has moved the world one small step closer to a sound money. On Wednesday, a hotel in Abu Dhabi unveiled the GOLD To Go ATM, a gold dispensing vending machine created by a German firm. The machine dispenses 24-carat gold bars in 1, 5, and 10 gram sizes as well as gold coins. A computer inside the machine keeps track of the gold price in real time and updates it every ten seconds but maintains the price for a given buyer for ten minutes. The machine itself sports a gold leaf finish. There are plans to install 200 more machines in Austria, Germany, and Switzerland. It is noteworthy that the technology of tracking the gold price in real time could be adapted to tracking the gold-silver exchange rate thus reducing the transactions costs and facilitating the development of gold and silver parallel standards. Silver coins would be much more convenient than gold coins for everyday transactions. At current prices, a 1 gram silver bar would have a purchasing power of about $.70 and a 5 gram bar of about $3.50. “Small change” would be provided by bearer vouchers printed on base metal or on paper notes issued by nationnwide merchants like Walmart, McDonald’s, Best Buy etc. which would not be claims directly redeemable in gold or silver money but redeemable in their merchandise (like mall or store gift certificates). As long as these vouchers were not issued in excess they would be readily acceptable as small change in exchange.

This is exactly what we're saying can and would happen after passage of the Constitutional Tender Act: businesses and consumers, who would now be required to use gold and silver coins to pay taxes to, or receive payment from, the State, would find themselves in need of converting their fiat Federal Reserve Notes into real money, that is, gold and silver coins. They would still be using FRNs in non-State transactions, of course; but as businesses start posting their prices in dual currencies (FRNs and Gold or Silver Eagles) in order to take in coins to pay taxes, consumers would start seeing that the prices of goods are rising in FRNs, but they're remaining fairly level in Eagles. (For example, that digital camera at Wal-Mart is priced today at 1 Silver Eagle, or $29 FRN; next month, its price has risen in FRNs to $32, but is still priced in silver at 1 Silver Eagle, because that one-ounce silver coin retains its actual value in relation to the amount of products it can buy.) In a kind of "reverse Gresham's Law" effect, the use of money that keeps its value - gold and silver coins - would increase, and the use of money that loses its value - FRNs - would decrease: good money would chase out bad money.

Even simpler will be the use of ATM Cards, Debit Accounts OR "Secure Credit Cards" backed by gold and silver: you've got 20 Silver Eagles in your account from your recent State income tax refund; the cashier runs the camera you want over the scanner, you swipe your card and choose from, say, "FRN credit", "FRN debit", "Silver/Gold credit" or "Silver/Gold debit" on the little touch screen; you select "Silver/Gold debit", pay a Silver Eagle out of your account and into Wal-Mart's, and voila, the camera is yours... and Wal-Mart has another ounce of silver it can use to pay its own State sales taxes.

What if you don't have enough silver in your bank accounts to pay for the camera, but you do have enough fiat money? Then pay with FRNs... or whip out your iPhone, fire up your banking app, and transfer some FRNs into your Silver account by using your friendly bank's automatic conversion service which keeps track of the silver and gold price in real time - just like those "gold ATMs" above do.

It's simple. It's easy. It's already being done. And it would save the monetary system of the State and, ultimately, of these United States.

So get your State legislators to introduce the Constitutional Tender Act bill - and then rally everyone to make sure it's passed into law... before it's too late.