Is it legal to bank with Gold and Silver?Submitted by brent.larsen on Thu, 12/20/2012 - 13:07
So, I have a crazy idea, but I bet its not legal.
Basically, the idea is to create a bank that uses competing currencies instead of the dollar. Gold and Silver being the obvious choices, but really it could be used with any precious commodity.
The basic idea is that when you open an account, or take out a loan, you do so in gold (or silver). The Account itself would be measured in silver ounces, not dollars.
The bank would allow you to use a normal debit card to pay for things in dollars, since that is what the country uses as currency. But it uses the current exchange rate to deduct that much gold from your balance, converts it to dollars, and pays the transaction in dollars.
Same thing happens in reverse when you deposit your paycheck (which is probably in dollars). It converts it to Gold, and updates your balance.
If the bank loans you $20,000 to go buy a car, you decide at the time you take out the loan whether you want it to be $20,000 worth of Gold, or Silver that you owe back. You agree on a rate of interest that both you and the bank are comfortable with, and then they loan you that much gold, (convert it to dollars so you can pay the car dealer) and now you make your payments in a sound currency, rather than the dollar.
Seems like it makes more sense (as a consumer) to take loans out in dollars from other banks, and keep your checking / savings in silver and gold, but that is not the point.
The question is ... is this sort of arrangement somehow illegal?