State considers return to gold, silver dollars
By Drew Zahn- WorldNetDaily
A bill being considered in the Montana Legislature blasts the Federal Reserve’s role in America’s money policy and permits the state to conduct business in gold and silver instead of the Fed’s legal tender notes.
Montana H.B. 639, sponsored by State Rep. Bob Wagner, R-Harrison, doesn’t require the state or citizens to conduct business in gold or silver, but it does require the state to calculate certain transactions in both the current legal tender system and in an electronic gold currency. It further mandates that the state must accept payments in gold or silver for various fees and purchases.
While Wagner was unavailable for comment, the bill’s language clearly alleges the nation’s current financial system, with its reliance on the private Federal Reserve system for money supply, is a danger to American freedom.
“The absence of gold and silver coin, whether in that form or in the form of an electronic gold currency, as media of exchange,” the bill states, “abridges, infringes on and interferes with the sovereignty and independence of this state … and exposes this state and Montana citizens, inhabitants and businesses to chronic problems and potentially serious crises that may arise from the economic and political instability of the present domestic and international systems of coinage, currency, banking and credit.”
Further, the bill states, relying only on the depreciating legal tender issued by the Fed subjects citizens to “losses in purchasing power” inflicted by the government, a dilemma the bill says amounts to the “incremental confiscation” of property by government in violation of the U.S. Constitution’s protections for just compensation and due process.
The Fifth Amendment states, “No person shall be … deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
Critics of the current financial system argue that using Federal Reserve notes as legal tender, rather than gold- or silver-backed currency, means the value of Americans’ money (and thus their “property”) is siphoned away by inflation, a process perpetuated by the government’s reliance on legal tender. Gold and silver, critics say, don’t lose their value on the whims of the Federal Reserve.
U.S. Rep. Ron Paul, R-Texas, even favors abolishing the Fed’s system of fiat currency to return to dollars backed by gold. “Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar,” the Texas Republican said. “Since 1913 the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy.
“How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation,” he said.
Wagner joins legislators in several other states encouraging their respective governments to reconsider accepting gold as a form of payment.
Indiana’s S.B. 453, Colorado’s H.B. 09-1206, Missouri’s H.B. 0561, Georgia’s H.B. 430 and Maryland’s H.J.R. 5 are among the gold currency bills introduced just this year in various legislatures. Montana’s H.B. 639 has been referred to the Legislature’s State Administration Committee.
The Gov’ment has done a great job on having us think backwards. The Federal Reserve Note (FRN) may be legal tender, but it has NEVER been legally named a dollar. You will not find any law anywhere that states this. The FRN may be denominated in dollars but this makes it no more a dollar than calling a chicken a duck makes it a fly south in the winter. Legal Tender Laws make us use something for money even if something else may be better. It is a very important point that Legal Tender Laws are always found where Fiat Money is being used. In other words, whenever governments have DECLARED that this and only this can be used as money, they have had to back it up with penalties for those who may want to use something else.
A critic of the bill being considered in the Montana Legislature said, “Gold, and even silver, are in increasingly short supply, so how would the billions of dollars required to run the state of Montana be carried out in precious metals? Obviously, they’d have to issue some form of paper scrip in its stead.” One way to accomplish this goal is to use American Eagle’s in place of Federal Reserve Notes. This could be the answer Montana and others are looking for, and the best part is it would not require any new laws be pasted because American Eagle’s are Legal Tender. Allow me to explain.
If there were a need for “paper script” so that Montana could conduct business electronically, there is a way to set that up as I will explain. First, Montana could simply mandate that money be backed by the American Eagle (which is 1 Troy once of silver). This medium of exchange could serve as new standard for inflation proof money within Montana or any other local community. Soon any store owner could price his/her product/service in American Eagle coin, all the business owner needs to do is divide the retail price in Federal Reserve Notes (FRN) by a ‘Base Rate’ to get the price in American Eagle coin (or Montana silver backed script).
The store owner could make his “Base Rate” any amount he chooses. Should the value of silver go up against the FRN then the “Base” would also move up. The inverse is also true. No matter what happens, the consumer would always maintain his purchasing power as there is no inflation stealing his money. Obviously, the consumer will shop where he gets a better value for his money.
If you have two flower shops accepting American Eagles, one uses a base of 13 and the other a base of 15, where do you think the consumer will shop? The base of 15 gives the consumer more purchasing power, so in time the market place will find equilibrium not by central planing but rather by the market itself.
If the state of Montana used American Eagles (already legal tender) as it’s standard for money–-no new laws would need to be passed. The need for “paper script” is an easy problem to solve, a simple checking account issued from a bank which ONLY allows Silver American Eagles to be deposited is the obvious answer. This system could be legally set-up today and implemented tomorrow without a single new law being written.
The bill being considered in the Montana Legislature is attempting to make uncoined silver or gold bullion legal tender. Personally, I love the bold initiative, but sadly the critics are correct is saying there are practical problems with this idea. I suspect the initiative will fail, but if it does fails, why not implement American Eagle strategy I outlined above? If they did, Montana would set an example of sound money for the rest of the world to follow. If not Montana, then perhaps another state. The ideal place would be Nevada, after all that is the Silver State.