When Brian Murphy told me about what was going on with Texas and this effort to ‘repatriate’ the state’s gold bullion I couldn’t believe what I was hearing. And this is after the state’s elected governor had starting sounding the alarm about President Obama possibly planning a military takeover of his state. So my disbelief was a pretty high bar. The story is sort of a perfect microcosm of a sizeable and wealthy state under 100% GOP verging into Tea Party management.
You start with the decision of the University of Texas Board of Trustees, goaded forth by a far-right gold bug on the board, to take the amazingly foolish step of investing a substantial amount of the University endowment in actual gold. Not options or other paper investments which allow you to invest in gold (which can be easily hedge against volatility in some cases) but actually gold bullion – stuff that you could actually walk over and put in your pocket and take home, if you had really big and aggressively stitched pockets. That decision ended up losing UT at least a couple hundred million dollars. And I think it was a bad enough decision that it gets you into the territory of whether the board was in some sort of breach of its fiduciary responsibilities to protect the university’s assets.
Because not many people have over 6000 gold bars lying around they had to be stored in a depository in New York City – at the cost of about a million dollars a year. And over time, this get swept up into the kind of far right gold mania which has been a staple of the Obama years and advertisements trolling for suckers on Fox News. If the state’s gold was in New York City, might the Fed or Obama confiscate it? And shouldn’t Texas be using the gold to start standing up a new metallic Texas currency to be ready when Obama and the Fed push the country into total economic collapse?
Well, of course it should.
That led to a movement to “repatriate” the gold back to Texas and churned up a lot of excitement in the gold bug and prepper community. But a bill to bring the gold back to Texas died when it became clear that it would cost Texas several million dollars to build its own Fort Knox.
This is when the poetic justice really came into full flower.
It turns out that if the new Texas Fort Knox was privatized, it wouldn’t have to show up as a cost in the state budget. In other words, if you just put the 4000+ bars (they had ended up converting some back to paper) in the basement of a Tesla dealership it wouldn’t seem like spending. And what about building support for the law among gold traders who make money off rubes who they convince to put their assets in gold? Yes, definitely! That too. So far-right paranoia mixed with allowing tax payers to be fleeced with budgetary gimmickry and ill-conceived privatization.
It’s all come together now to put Texas back in the vanguard of the freedom movement and bring its gold back to Texas. And as one of the bill’s top supporters predicts, the new Texas gold money “will make Texas a center of world finance to rival London and New York.” Because of course it will.
TPM contributing editor Brian Murphy has the rest of the story.