Secession and the Power of the Purse

February 14, 2010

You may have seen Edwin Vieira’s three-part series at DumpDC.com, which was a dissenting opinion about secession. I think that his analysis is wrong in all but two points. After all he is a Yankee and educated at Harvard (Just kidding, Ed…kind of…mostly). But there is one point he makes that is unarguable. That is the absolute requirement of a seceding state to wield the Power Of The Purse.

The Power of the Purse is the ability of the seceding state to establish its own money.

I’ve written over and over about this for months and feel like the Lone Ranger. I see all sorts of activity in states like Texas and New Hampshire about secession, and the educational activities that these secession hotbeds are doing is crucial. There is such a dearth of knowledge in the populace about secession that it won’t happen unless the citizens know about it commonly.

But the movement won’t move forward unless someone takes control of the Power of the Purse.

The successful secession will be preceded by the establishment of a new currency that is based in precious metals. Any state that tries to secede without its own new currency is destined to fail. You cannot counterfeit your way to prosperity.

Try to wrap your head around a hypothetical secession scenario for a moment:

State X issues a Declaration of Independence, followed by an Ordinance of Secession, which sets forth the terms under which the state is seceding. Washington refuses to accept the secession. DC begins its retaliation and its efforts to bring the rogue state back into the fold.

The first and most effective weapon Washington could wield is money. The Federal Reserve and Treasury could shut off all transactions with all banks within the seceding state. No more cash sent to those banks. This move alone would severely curtail commerce within days as banks would run out of cash within hours. Then, Washington could just play a game of “chicken” to see who blinks first.

A concurrent move could be to suspend Federal payments of any kind to residents of that state, including Social Security, Federal pensions, Medicare, Medicaid, Veterans health benefits and such. The howling would be deafening.

If that state was still relying on Federal Reserve notes and Washington’s banking system, it would likely capitulate quickly. So much for sovereignty…so much for liberty.

But a state that had planned ahead by establishing a new monetary system would not be brought to its knees so easily.

First, the new currency must be based only on gold and silver. A new monetary system that mirrored the counterfeiting ways of Washington won’t work.

Next, State X must write a new constitution that prohibits fractional reserve banking, the method whereby banks create money from thin air.

Next, State X must establish the weights and fineness (purity) of the new currency without establishing its value.

Next, State X must enact laws that provide for the private minting of gold and silver coins. So long as the privately minted coins meet weight and fineness standards, they will be considered legal tender. That means that competition would be introduced into the minting of money, thereby allowing the free market to set the value of the money supply.

Right now, a state could begin to require its citizens to pay their taxes with gold and silver coins or electronic money (ecurrency).¹ Ecurrency facilitates electronic transactions in commerce without carrying around coin. Naturally, it would make sense that State X would assess no taxes of any kind on currency or precious metals transactions. Establishing this payment system now would begin to (a) educate Joe Citizen about sound money, and (b) start filling state coffers with real money.

Along with this initiative, State X MUST wield the Power of the Sword, coming in my next article.

Secession is the Hope for Mankind. Who will be first…and wisest?

DumpDC. Six Letters That Can Change History.

¹Read more about gold-backed money at Edwin Vieira’s website: Edwin Vieira . Scroll down until you find the article entitled “The State Electronic Gold Currency Plan.”

© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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