Texas and Florida's Gold/Silver Legal Tender Laws Provide a Meaningful Hayekian Check on Dollar Debasement
Source: Kevin D. Freeman. "Texas And Florida Are Reviving The Stability Of The Gold Standard." August 24, 2026. thefederalist.com
The Gist
Texas and Florida now let people use gold and silver like everyday money instead of just as investments, which the author says is a big deal because it gives Americans a real alternative to the dollar for the first time in decades. He argues that even if hardly anyone uses this option, its mere existence should pressure the federal government to manage the dollar more responsibly, echoing economist Friedrich Hayek's old idea that competition keeps money issuers honest.
Conclusion
By making gold and silver usable as everyday money, Texas and Florida have created a real, disciplining alternative to the dollar—one that matters regardless of how many people actually use it, because its mere existence forces the federal monetary monopolist to behave better.
Premises
- Texas (HB 1056) and Florida (HB 999), along with several other states, have removed most of the practical friction (tax, storage, liquidity) that previously made gold and silver usable only as investments, not as spendable money.
- This mirrors Friedrich Hayek's argument in 'Denationalisation of Money' that competition among currencies disciplines monopolist issuers, since users can abandon currencies that lose value.
- Federal actions (the GENIUS Act and the ban on a retail Fed digital dollar) have already handed digital currency issuance to private companies, but all permitted stablecoins are pegged to the dollar—meaning competition exists only among distributors, not among underlying units of account.
- Gold and silver rails are therefore the only competing currencies anchored to something other than the dollar itself, making them uniquely significant despite crude form compared to Hayek's ideal.
- The Constitution (Article I, Section 10) uniquely permits states to recognize gold and silver as legal tender, meaning Texas and Florida are exercising a specifically preserved constitutional option rather than inventing a loophole.
- Macroeconomic indicators (a $40 trillion national debt, over $1 trillion in annual interest payments, a 10% dollar depreciation, gold's 35% price increase, and sustained foreign central bank gold buying) show growing distrust in the dollar's stability, creating demand for a viable alternative.
- Historical precedent (e.g., bank fee reductions due to consumer ability to switch banks) shows that the mere availability of an exit option changes incumbent behavior, even for those who never switch.
Assumptions
- Having a legal, liquid exit option meaningfully disciplines a currency issuer's behavior, even absent mass adoption.
- Gold and silver, despite their historical price volatility, function as adequate stand-ins for a competing 'currency' rather than mere commodities.
- The federal government's monetary policy is analogous to a self-interested monopolist whose behavior can be checked by market-based competition.
- State-level legal tender laws will be practically accessible and used enough to constitute a genuine 'exit,' not just a symbolic one.
- The analogy between competitive currency issuance and Hayek's theoretical framework holds despite gold/silver being a cruder instrument than Hayek's proposed basket-based unit.