By Dr. Edwin Vieira, Jr., Ph.D., J.D.
Of course, when the plan was first drafted several years ago, it was accepted that this infusion of gold into the State’s finances and her private economy would take time, and that sufficient time would be available for the reform to move forward at a reasonable pace. Now, however, the urgency of the situation requires that the process be speeded up in the following way:
• The State will hold the gold in her own depository, controlled by a State Militia that will be revitalized in the same statute that provides for use of the alternative gold currency.
• Within 30 to 45 or so days of the enactment of the enabling legislation, all members of the Militia—which will include every able-bodied adult from 16 to 60 years of age—will be required to obtain an electronic gold currency account as part of his or her Militia duty.
• Also within those 30 to 45 days, each and every businessman in the State—each of whom is a member of the Militia, too—will be required to set alternative prices and for his goods and services in both gold and Federal Reserve Notes as part of his Militia duty.
• Except with respect to the payment of particular taxes, no one will be required actually to use gold, rather than Federal Reserve Notes, in their financial transactions. Yet, the State will have enabled her citizens to do so, and will have established an alternative price-structure in gold for both her own financial affairs and for her entire private economy. At that point, the State and her citizens could, to whatever degree they wished, voluntarily go off the Federal Reserve Note standard to a pure gold standard. And, presumably, the State and increasingly large percentages of her citizens would do so, in pursuit of their own rational economic and political self-interests.
Why would implementation of this plan be advantageous?
• First and foremost, adoption of such an alternative gold currency would be an act of foresight. It would recognize that resuscitation of the Federal Reserve System is impossible, and that acceptance of a new global fiat currency and central bank to replace that System would be intolerable.
• Second, and no less important, adoption of an alternative gold currency would be an act of scientific insight, because it would introduce a currency the objective value of which could always be verified or falsified immediately upon inspection. That objective value would be a fixed weight of gold. It would be an objective value, because an ounce of gold is an ounce of gold is an ounce of gold—everywhere throughout the world, no matter what economic, political, or social conditions prevailed. Under this plan, a specific weight of gold, and only that weight of gold, would become the State’s official monetary unit. Thus, the holder of the currency himself would not only own but would actually possess the gold, because gold would be the currency.
Contrast this with a Federal Reserve Note. Even when such a note was “redeemable” in gold, some Federal Reserve regional bank or the United States Government actually owned and possessed the gold that “backed” the note; and the holder of the note had no more than a claim to redemption. Only upon actual redemption did actual title to and possession of the gold change hands. And that right of redemption was eventually cancelled, both domestically and internationally. As to gold, then, Federal Reserve Notes proved to be, as John Exter so well put it, “an I.O.U. nothing currency”, made possible because the “currency” and the gold were separate things, under the control of different people. But with gold as money, nothing is owed and the holder of the currency holds the gold, so no debt of redemption can ever be repudiated.
• Third, also in the scientific spirit, an alternative gold currency would allow for more than one experiment to be conducted—indeed, as many as fifty separate experiments in each of the several States would be possible. If any single experiment should fail, it would do so only locally, not nationally. If it succeeded, it could be expanded quickly and easily enough elsewhere. And by the process of judicious trial and error, constant improvements on any initial success would be possible. Moreover, even if politically influential factions could succeed in stopping the adoption of an alternative currency in one State, they would be unlikely to be able to exercise the political clout necessary to suppress it in every other State as well. And if they did not stop it everywhere, the market would prove the theory somewhere, and then expand its application everywhere.
• Fourth, adoption of an alternative gold currency could be accomplished incrementally and gradually, allowing the market to set and equilibrate prices as more and more people employed the new currency in preference to Federal Reserve Notes. No sudden, economically disorienting jump from Federal Reserve Notes to gold would have to occur.
• Fifth, quite unlike the Federal Reserve System and its bills of credit, an alternative currency consisting of gold would be fully constitutional. The Supreme Court has already ruled that the States are not bound, and constitutionally cannot be bound, to use as their currency a currency emitted by Congress—in particular, that they may choose to employ gold and silver in preference to irredeemable paper currency, even when Congress has declared that paper currency to be “legal tender”. Thus, the adoption of an alternative gold currency would return each State to the rule of constitutional law and federalism with respect to money.
• Sixth, introduction of an alternative gold currency would not depend upon a State’s having any gold in her Treasury at the beginning of the process. Indeed, adoption of such an alternative currency would bring gold into the State’s Treasury right away. Constitutionally, of course, the States cannot coin money. Only Congress enjoys the governmental power “[t]o coin Money”. But, inasmuch as an alternative gold currency could—and initially should—consist of bullion, not coin, no State would be dependent upon the assistance of Congress and the United States Treasury in the adoption of such a currency.
• Seventh, employment of an alternative gold currency would not involve a State in the rat’s nest of central economic planning. A State would not be required to attempt to regulate the supply of money against a so-called “price level”, to fix interest rates, or to engage in any of the other political-cum-economic manipulations characteristic of a central bank. Whatever amount of gold the people desired to use as their alternative currency would become currency; and the free market would then rationally establish and mutually adjust the prices in gold of all goods and services.
• Eighth, adoption of an alternative gold currency would not serve only one set of selfish special-interest groups at the expense of the rest of society. In particular, adoption of such a currency would facilitate the absolute separation of private banking from the government, on a State-by-State basis. No longer would bankers and their clients in “the financial community” enjoy the status of an economically and politically specially privileged class.
• Ninth, although it would bring about the politically radical end of separating private banks from the government—which “the financial community” would vehemently oppose—adoption of an alternative gold currency would not expose America to the economic equivalent of “mutual assured destruction”. At present, any attempt to reform the monetary and banking systems “from the top down” can likely be thwarted by the bankers’ threat to precipitate an economic collapse. “Yes”, the bankers warn, “you can destroy us. But, more importantly, we can destroy you. If we go down, we will take the economy with us. Without us, you will have no currency, no credit, and thereby no means of maintaining a high level of economic activity. So we have you by the throat. There is nothing you can do but to continue to allow us to loot society, and then to bail us out when our schemes threaten to implode or explode.” With an alternative gold currency, however, monetary reform would not come “from the top down”, by attempting to abolish the Federal Reserve System at one fell swoop and thereby throwing the economy into chaos. Rather, reform would come gradually and systematically “from the bottom up”, by introducing a sound currency into the free market on a State-by-State basis, in free competition with the Federal Reserve System. If the banking cartel and its clients should respond aggressively, they would merely hoist themselves on their own pétard, because in any State which had adopted an alternative currency the people would no longer be dependent upon the banks for currency. Whatever the bankers might then do in a destructive vein would only drive the market farther and faster in the direction of the alternative currency. Rather than mutually assured destruction, such actions would bring about the bankers’ assured destruction.
• Tenth, on the other hand, if adoption of an alternative currency on a State-by-State basis showed promise, with more and more people using that currency to the exclusion of Federal Reserve Notes in more and more transactions, the banks would be forced to compete. At least some of them might try to generate a new currency “redeemable” in, or “backed” by, gold. Exactly how they might do this, or even if they could do it, one cannot predict, because such a new bank currency would have to be as secure as the alternative currency, which would require that it not be based on fractional reserves. Yet, if even some of the banks could move in that direction, it would tend to stabilize their system, and perhaps allow for its orderly long-term transformation or liquidation, rather than sudden collapse.
To be sure, the adoption of an alternative gold currency would face political hurdles. For example, adoption of gold as currency at the State level will be complicated by claims of the General Government to tax exchanges of gold for Federal Reserve Notes, and exchanges of gold for goods and services (which are now erroneously treated as some sort of “barter” transactions). In the midst of a nationwide economic breakdown, however, any State which adopted an alternative gold currency would be in an especially favorable bargaining position, and would probably be able to negotiate an accommodation with the United States Treasury.
Even if prudence did not prevail at the bargaining table, the State could sue the President of the United States, the Secretary of the Treasury, and the Board of Governors of the Federal Reserve System, in the original jurisdiction of Supreme Court, for their failures to maintain all forms of United States currency at par—which now should be about $42-2/9 per ounce of gold, not some $1,300.00, $1,400.00, or more. With the publicity such a suit would receive in the context of the present economic crisis, the matter would become a political issue to end all political issues—in comparison to which President Andrew Jackson’s fight with the second Bank of the United States would appear to have been an exchange of pleasantries. Under such circumstances, would the Justices of the Supreme Court dare to rule that the States are not entitled to protect their own people from economic ruin caused by the incompetence or corruption of the politicians, bureaucrats, bankers, and financial manipulators in Washington, D.C., and New York City? Would the Justices dare to deny the people the right to ward off these vampires with “a cross of gold”?
And if the Justices did rule against the States’ attempts to bring about meaningful monetary reform, would not their obstructionism sweep away the very last shred of credibility in Washington, D.C.? In that event, would not the States and their citizens then put into action Nancy Reagan’s dictum—“Just say ‘No!’”—and simply refuse to comply with all demands from the General Government for payments of unconstitutional taxes that hindered the use of the alternative currency—and then back up those refusals in the most effective manner?
Actually, for numerous reasons, the Justices might be expected to rule in favor of the States: First, (as explained above) they could simply fall back on judicial precedents favorable to the States. Second, they would surely recognize their own inability to correct the underlying problem in the course of overruling those precedents and deciding the cases against the States; whereas, in reliance on those precedents, the States could take actions that might have a favorable result. Third, the Justices would be inclined to view the entire matter as constituting a “political question” at the highest constitutional level—that is, between the States and their people, on the one side, and public officials in the General Government and their clients in special-interest groups, on the other side. Ruling for the States would allow the parties to the dispute to settle it by political means, which as a practical matter would provide the only method for resolution of the controversy. Fourth, the Justices would want to avoid the loss of credibility that the Judiciary would suffer amongst the vast mass of Americans if the courts ruled against the States. And fifth, they would fear the severe economic, political, and social consequences which would undoubtedly arise if they denied the States a free hand, the present monetary and banking systems irretrievably collapsed, and no alternative currency were then available for the people’s use.
So why are not more of the champions of sound money, limited government, and free markets actively promoting the adoption of an alternative gold currency?
The present economic crisis presents the best opportunity since 1932 for taking the steps necessary and sufficient to free the American people from their thralldom to the Federal Reserve System and the vicious factions behind it. Under the pressure of this crisis, common people are finally awakening to their predicament, and sensing what needs to be done—because, as Samuel Johnson once observed, nothing focuses a man’s mind more sharply than his impending hanging. Moreover, this may be the last opportunity of its kind for a long time to come. For if “the financial community” can succeed in jury-rigging some supra-national global currency and central bank, the Ponzi scheme of fiat currency can probably be kept inflated for another generation, until a final, utterly catastrophic breakdown sweeps across the entire world.
So, the American people must be convinced now—immediately, if not sooner—ahora mismo, as our Spanish-speaking friends would say—that this country’s economy cannot be restored by mere repair or renovation of the existing edifice of money and banking, but only by its total replacement. The present structure is rotten to its very foundations, and even below. It lacks the capacity to survive—and can claim no right to be saved. A new structure must be built from the ground up, on a new site, according to a different plan, with better workmen. If this can be accomplished, then for the first time in generations Americans, indeed all of mankind, will enjoy honest weights and measures in the monetary field—and with that reform, will have a realistic hope to restore honest commerce and honest politics as well.
20. Lane County v. Oregon, 74 U.S. (7 Wallace) 71 (1869); Hagar v. Reclamation District No. 108, 111 U.S. 701 (1884).
21. U.S. Const. art. I, § 10, cl. 1.
22. U.S. Const. art. I, § 8, cl. 5; art. I, § 10, cl. 1; and art. VI, cl. 2. Of course, private parties may coin nonfraudulent moneys from gold or silver, and employ those coins as media of exchange in the free market. But as the concern of this study is how to bring the government under control in the monetary domain, details of this matter will not be considered here.
23. See U.S. Const. art. III, § 2, cl. 2: “In all Cases * * * in which a State shall be Party, the supreme Court shall have original Jurisdiction.”
24. See 31 U.S.C. §§ 5119(a) and 5117(b).
Edwin Vieira, Jr., holds four degrees from Harvard: A.B. (Harvard College), A.M. and Ph.D. (Harvard Graduate School of Arts and Sciences), and J.D. (Harvard Law School).
© 2011 Edwin Vieira, Jr. – All Rights Reserved