Introducing the Utah Sound Money Act

photo credit: Corey Holmes

In 1980, Zimbabwe became a sovereign African nation, gaining its independence from the United Kingdom. At that time, their dollar was valued at a higher rate than the U.S. dollar, at a rate of 1 to 1.25. Earlier this decade, President Mugabe—in power since 1987—began to fulfill a long-standing campaign promise to equalize land ownership, through a campaign called Fast Track Land Reform. While white Zimbabweans constituted less than 1% of the population, they owned around 70% of the land. In 2000, Mugabe began to seize and redistribute land owned by whites to black Zimbabweans.

The economy quickly tanked in response to these moves, as well as the resulting sanctions imposed by several Western nations. That year it declined by five percent, then by eight percent in 2001, then twelve percent in 2002. Inflation quickly surpassed normal percentages and increased into the tens, then hundreds, then thousands, and then like an asymptote, skyrocketed towards infinity. At its highest rate, Zimbabwe’s inflation reached a monthly high of nearly 80 billion percent.

I carry in my wallet one of the most potent objects that can be used in teaching others the nature and importance of sound money: a 100 Trillion Zimbabwe Dollar note—the highest amount ever printed. (Get your own!)

In the months prior to the collapse of their currency, Zimbabweans began using foreign currencies as a more stable medium of exchange. The government was quickly forced to legalize such alternative currencies, first licensing hundreds of businesses to sell their wares in foreign currency, and later suspending their currency altogether, legalizing the foreign currencies themselves for use in the country. Gold has become a coveted commodity as individuals look for a more reliable currency with which to engage in commerce.

Zimbabwe is just the latest of a long string of failed fiat currencies. A currency need not undergo hyperinflation, however, to be rendered worthless. Since its inception in 1913, the Federal Reserve Note (“U.S. Dollar”) has lost 96% of its value through a steady (and sinisterly mis-reported) inflation.

As with Zimbabwe, countries with central banks seek to enforce their monopoly on creation (counterfeiting) of the official currency through legal tender laws. In other words, alternative currencies are outlawed as a medium of payment; the legalization of competing currencies would, through the open market, result in the government losing its monopoly and ending up with a “continental”-like pile of paper with little to no value. (So concerned were the early leaders of the United States with this issue [they had learned from personal experience] that the U.S. Coinage Act of 1792 instituted the death penalty for anybody found counterfeiting the currency.)

Whether hyperinflation is in the future for the Federal Reserve Note or not, its eventual demise is near certain. Positioning ourselves through preparation and wise financial management to proactively respond to such events on the horizon is wise counsel—should not the same apply to our government?

Last year, Rep. Ron Paul (R-TX) introduced the Free Competition in Currency Act which would, in his words, “allow[] for competing currencies [which would] allow market participants to choose a currency that suits their needs, rather than the needs of the government.” Gold, silver, or any other form of currency would be acceptable, under this proposal, for engaging in commerce.

While we wait for the federal government to do nothing to stem the tide of Federal Reserve Notes that will likely soon capsize our ship of state, states can, like individuals, position themselves to proactively prepare for any problem with the dollar, rather than later be forced to react under troublesome circumstances. Article I Section 10 of the U.S. Constitution says that “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts…” Additionally, no power was delegated in the Constitution to allow for the federal government to make anything but gold and silver coin a legal tender for commerce. That this limitation has long been ignored is no excuse for its ongoing abuse.

In the 2011 general legislative session, Utahns will have an opportunity to position themselves and their state on better financial footing by infusing the system with sound money—to the degree that willing participants choose to use either gold or silver as alternative currencies. The Utah Sound Money Act will soon be introduced to initiate this opportunity.

This bill is designed to reinstate gold and silver coin as an optional medium of exchange for use in commerce within the state of Utah. It nullifies legal tender laws for intrastate commerce, recognizing the inherent, inalienable right of individuals to engage in specie-based exchanges with each other on mutually agreeable terms. You can read the bill here (PDF).

The bill goes further. Among other things, it:

• exempts gold and silver from sales and capital gains tax when used in intrastate commerce;
• provides standing for Utah court declaratory relief from intrusive federal regulation;
• outlaws searches and seizures, as well as disclosure, of gold and silver coin without a lawful warrant from the county sheriff;
• makes use of the long-defunct Utah State Defense Force to store, safeguard, protect, and transport Utah’s specie holdings;
• allows any Utah taxpayer to discharge his/her financial obligations to the state government in gold or silver coin, should they so choose;
• establishes cooperatives (LLCs) to facilitate and promote intrastate commerce using gold and silver coin; and
• allows for this increase in liberty at no direct nor initial cost to the state of Utah.

This bill does nothing to the federal government’s use of Federal Reserve Notes and monopoly over creating that fiat currency. This bill does not impose a gold standard, nor remove the dollar as a legal tender to be used in commerce. This bill does not do anything, really, other than increase the liberty of each individual to determine how they would like to engage in commerce, and with what currency.

On what rational grounds can an idea like this be opposed?

This is not to say that the language or implementation of the bill is perfect. I’ve had the opportunity to review the draft for several weeks and offer input to the author, and I have to say, the bill is fairly solid. Nonetheless, improvements may yet be suggested and incorporated—and that would be a good thing. But considering the state of the dollar, the liberty-suppressing imposition of legal tender laws, and the stranglehold over commerce (interstate or otherwise), this idea is one whose time is come.

Ayn Rand’s quote on gold speaks many truths about our current situation:

Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims.

This bill seeks to impose a protecting shield around those who wish to voluntarily engage in commerce under its provisions by defending against the destroyers whose counterfeiting operations oppose any competition. For the sake of our liberty—even if you have no desire to use gold or silver—this bill should be supported by all Utahns who have the remotest of concerns about preserving our wealth and staving off financial ruin.

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You can download the Constitutional Tender Act template here:
http://www.tenthamendmentcenter.com/legislation/constitutional-tender/

Track Constitutional Tender legislation in the states at this link:
http://www.tenthamendmentcenter.com/nullification/constitutional-tender/

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Connor Boyack [send him mail] is the state chapter coordinator for the Utah Tenth Amendment Center. He is a web developer, political economist, and budding philanthropist trying to change the world one byte at a time. He lives in Utah with his wife and son. Read his blog.

Copyright © 2011 by TenthAmendmentCenter.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

The following article, “Ending the Fed from the Bottom Up,” by Dr. William Greene, was originally published here at the Tenth Amendment Center on 04-11-10. We’re proud to present it here again on this sad, but historic anniversary – with hopes that you will take action today to push your state to consider the Constitutional Tender Act, and start the process of bringing the Federal Reserve System to it’s much-needed demise.

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Ending the Fed From the Bottom Up
by William Greene

Since its inception, the U.S. Federal Reserve’s monetary policies have led to a decline of over 95% in the purchasing power of the U.S. dollar. As a result, there have been several attempts to curtail or eliminate the Federal Reserve’s powers (for example, the efforts of Rep. Louis T. McFadden in the 1930s; the efforts of Rep. Wright Patman in the 1970s; the efforts of Rep. Henry Gonzalez in the 1990s; and the efforts of Rep. Ron Paul since the 1990s); however, none have proven successful to date, due mainly to the constraints of strong political opposition at the national level.

In contrast to these attempts at the national level, a paper I recently presented at the Mises Institute’s “Austrian Scholars Conference” proposes an alternative approach to ending the Federal Reserve’s monopoly on money: the “Constitutional Tender Act,” a bill template (first introduced by Georgia State Rep. Bobby Franklin) that can be introduced in every State legislature in the nation, returning each of them to adherence to the U.S. Constitution’s “legal tender” provisions of Article I, Section 10.

Such a new tactic could achieve the desired goal of abolishing the Federal Reserve system by attacking it from the “bottom up” – “pulling the rug out from under it,” by working to make its functions irrelevant at the State and local level. Under this Act, the State would be required to only use gold and silver coins (or their equivalents, such as checks or electronic transfers) for payments of any debt owed by or to the State (e.g., taxes, fees, contract payments, etc.).

All contracts, tax bills, etc. would be required to be denominated in legal tender gold and silver U.S. coins, including Gold Eagles, Silver Eagles, and pre-1965 90% silver coins. All State-chartered banks, as well as any other bank that is a depository for State funds, would be required to offer accounts denominated in those types of gold and silver coins, and to keep such accounts segregated from other types of accounts such as Federal Reserve Notes.

Upon going into effect, the Constitutional Tender Act would introduce currency competition with Federal Reserve Notes, by outlawing their use in transactions with the State. Ordinary citizens of the State, being required to pay their State taxes in gold and silver coins, would find it necessary to open bank accounts in those denominations.

Businesses operating within the State, being required to pay their State sales taxes and license fees in gold and silver coins, would need to do the same; and in order to acquire such coins, they would begin to offer their goods and services in “dual currency” denominations, where customers could choose to pay in Federal Reserve Notes (which would still be necessary to pay Federal fees and taxes) or gold and silver coins (including checks and debit cards based on bank accounts denominated in such coins). Customers, having found the need to open such accounts in order to deal with the State, would be able to engage in commerce using those accounts.

Over time, as residents of the State use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the State’s treasury, an influx of banking business from outside of the State (as citizens residing in other States carry out their desire to bank with sound money), and an eventual outcry against the use of Federal Reserve Notes for any transactions.

At that point, the Federal Reserve system will have become unwanted and irrelevant, and can be easily abolished by the people’s elected Representatives in Washington, D.C.

I believe this “bottom up” approach to ending the Fed would have a greater likelihood of success than a “top-down” approach for a number of reasons. First, it is decentralized: rather than facing concerted political opposition at a single Federal level, it attacks the issue at the State level, where strategies and tactics can be adapted to the types and amount of political opposition they encounter.

Second, it is diffused: it can be attempted in any number of States, which can cause the opposition to spread its resources much more thinly than would be necessary at the Federal level. Finally, it is legally sound: it relies on the U.S. Constitution’s negative mandate in Article I, Section 10, that “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”

Under this Act, not only would the use of FRNs by the State be made illegal; the use of legal tender U.S. gold and silver coins would be encouraged amongst the general population as well, along with any other currency that parties mutually consent to using.

This will have three immediate effects: the elimination of Federal Reserve Notes from State transactions; the requirement of individuals and businesses to cease using FRNs in their transactions with the State; and the introduction of competition in currencies amongst the general population.

With all three effects working in tandem, the use of low-value pieces of paper issued by the Federal Reserve will become irrelevant, and an emaciated Federal Reserve system can be brought to a welcome, if inglorious, end.

You can download the full paper at this link (.pdf)

You can download the Constitutional Tender Act template here:
http://www.tenthamendmentcenter.com/legislation/constitutional-tender/

Track Constitutional Tender legislation in the states at this link:
http://www.tenthamendmentcenter.com/nullification/constitutional-tender/

Bill Greene is a Professor of Theology at Miami Christian University, teaches Social Sciences at the Verity Institute, and is the founder of ConstitutionalTender.com.

The United States Constitution declares, in Article I, Section 10,

“No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”

State-Level Constitutional Tender laws seek to nullify federal legal tender laws in the state by authorizing payment in gold and silver or a paper note backed 100% by gold or silver.

The concept of Honest Money is lost on most US citizens, thanks in part to a complete and utter lack of discussion in public schools and universities, but certainly not lost on the elite financial organizations who vehemently oppose such reform. When Nixon decoupled the dollar from its traditional gold backing and replaced it with fiat debt (private Federal Reserve notes) in 1971 because we could no longer cover our bets with gold, he substituted the last vestige of real value (our dollar) with a promissory note (debt) representing nothing more than the willingness and ability of US citizens to shoulder the artificially created debt burden via taxes.

The current private US Federal Reserve, the third central bank in our history, creates money from nothing but the unacceptable privilege to do so, making an arbitrarily agreed upon bookkeeping entry and thus creating an imaginary value which it then extends to their private member banks to trickle down to Main Street, or tells the Treasury they have a like amount of credit to either print money or issue Treasury bills with nothing to back it but an elaborate accounting and taxing scheme which can be viewed as a tenuous financial house of cards.

• February 25, 1791
  President Washington asks his cabinet members for opinions on the National Bank. Thomas Jefferson submitted that such a Bank was unconstitutional and would also violate the yet to be ratified 10th Amendment. Alexander Hamilton submitted that Congress’s power to collect taxes was also power to create a national bank. Not convinced by either side, Washington sided with Hamilton as it was Hamilton’s job as Secretary of the Treasury to know what he was doing.
• December 12, 1791
  The Bank of the United States opens its doors in Philadelphia.
• January 21, 1793
  Hamilton and the National Bank are accused of corruption and mismanagement. Opponents to the National Bank call for the demise of the unconstitutional Bank. Congress fails to act.
• February 20, 1811
  Congress refuses to let the National Bank renew its Charter on the grounds that the Bank is unconstitutional.
• March 4, 1811,
  The Bank of the United States is dissolved.

What is astounding about our current situation is the continued willingness of Congress to take one of the highest powers granted them in the Constitution and surrenders it to the private Federal Reserve. This being the same body which consistently erodes our basic rights and freedoms with powers they do not have, passing unlawful legislation such as the Patriot Act and nebulous health care reform, yet it hands away a rightful power they do have to a highly secretive and self-serving third party. One would almost believe there was a parallel government in DC.

In fact, Wright Patman, Chairman of the United States House Committee on Banking and Currency, had this exact sentiment in when he stated in 1964, “In the US today, we have in effect two governments. We have the duly constituted government, then we have an independent, uncontrolled and uncoordinated government in the Federal Reserve, operating the money powers which are reserved to congress by the Constitution.”

He went on to say, “”The dollar represents a one dollar debt to the Federal Reserve System. The Federal Reserve Banks create money out of thin air to buy Government Bonds from the U.S. Treasury … and has created out of nothing a … debt which the American people are obliged to pay with interest.”

US monetary policy, the resultant money supply and interest rates are the life’s blood of our economy. From providing for the national defense to underwriting Main Street, nothing happens in our market without this critical resource. We depend on a stable and legitimate money supply for our basic pursuits of life and liberty and to divorce ‘We the People’ from our basic right of influence and understanding of this critical element of our lives is simply unthinkable. But it is our economic reality; all by the design of an unaudited cabal of bankers who answer to no one.

There is no elected US official who has the power of the Chairman of the Fed. He dictates our monetary policy and answers to no one. It is interesting to watch the omnipotent Fed Chairman, when asked by Congress to delve into details of our current monetary state. His typical condescending reply is that the inner machinations of his private financial gambling house are simply too complex for the average citizen to understand, that it is beyond our modest comprehension, and to ‘just trust us’, they have our best interests at heart and are doing a fine job. So let’s take a quick look at exactly how this financial behemoth evolved and what our trust and ignorance of it has wrought since we lost our financial sovereignty to it in 1913.

Get the New Book Today!

Within 20 years of its inception, the US Federal Reserve had managed to finance a world war which very well never would have happened without it, incurred a record $24b war debt which caused major US inflation and halving the net worth of the nation, then facilitating a bubble economy followed immediately by a devastating manufactured depression which literally redrew the face of the nation, allowed insider elites to plunder assets, and finally to underwrite an emerging Germany which set the stage for yet another world war.

All by an organization that was simply to insure reliable and secure money supply. So rather than serving we people, instead the Federal Reserve has not only been a failure in monetary policy and controlling inflation, it has literally been an instrument of tyranny on the populace and a parasitic drain on national finance.

The 10th Amendment and honest money can bring this 97 year Federal Reserve crime wave to an end, by first creating, at the state level, a competing currency to inhibit the Federal Reserve from continuing to debase the currency. Contact your State Representative and ask them to support a Constitutional Tender Law, model legislation is provided here for you.

Paul Warren [send him email] is the Communications Director for the Colorado Tenth Amendment Center.

Since its inception, the U.S. Federal Reserve’s monetary policies have led to a decline of over 95% in the purchasing power of the U.S. dollar. As a result, there have been several attempts to curtail or eliminate the Federal Reserve’s powers (for example, the efforts of Rep. Louis T. McFadden in the 1930s; the efforts of Rep. Wright Patman in the 1970s; the efforts of Rep. Henry Gonzalez in the 1990s; and the efforts of Rep. Ron Paul since the 1990s); however, none have proven successful to date, due mainly to the constraints of strong political opposition at the national level.

In contrast to these attempts at the national level, a paper I recently presented at the Mises Institute’s “Austrian Scholars Conference” proposes an alternative approach to ending the Federal Reserve’s monopoly on money: the “Constitutional Tender Act,” a bill template (first introduced by Georgia State Rep. Bobby Franklin) that can be introduced in every State legislature in the nation, returning each of them to adherence to the U.S. Constitution’s “legal tender” provisions of Article I, Section 10.

Such a new tactic could achieve the desired goal of abolishing the Federal Reserve system by attacking it from the “bottom up” – “pulling the rug out from under it,” by working to make its functions irrelevant at the State and local level. Under this Act, the State would be required to only use gold and silver coins (or their equivalents, such as checks or electronic transfers) for payments of any debt owed by or to the State (e.g., taxes, fees, contract payments, etc.).

All contracts, tax bills, etc. would be required to be denominated in legal tender gold and silver U.S. coins, including Gold Eagles, Silver Eagles, and pre-1965 90% silver coins. All State-chartered banks, as well as any other bank that is a depository for State funds, would be required to offer accounts denominated in those types of gold and silver coins, and to keep such accounts segregated from other types of accounts such as Federal Reserve Notes.

Upon going into effect, the Constitutional Tender Act would introduce currency competition with Federal Reserve Notes, by outlawing their use in transactions with the State. Ordinary citizens of the State, being required to pay their State taxes in gold and silver coins, would find it necessary to open bank accounts in those denominations.

Businesses operating within the State, being required to pay their State sales taxes and license fees in gold and silver coins, would need to do the same; and in order to acquire such coins, they would begin to offer their goods and services in “dual currency” denominations, where customers could choose to pay in Federal Reserve Notes (which would still be necessary to pay Federal fees and taxes) or gold and silver coins (including checks and debit cards based on bank accounts denominated in such coins). Customers, having found the need to open such accounts in order to deal with the State, would be able to engage in commerce using those accounts.

Over time, as residents of the State use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the State’s treasury, an influx of banking business from outside of the State (as citizens residing in other States carry out their desire to bank with sound money), and an eventual outcry against the use of Federal Reserve Notes for any transactions.

At that point, the Federal Reserve system will have become unwanted and irrelevant, and can be easily abolished by the people’s elected Representatives in Washington, D.C.

I believe this “bottom up” approach to ending the Fed would have a greater likelihood of success than a “top-down” approach for a number of reasons. First, it is decentralized: rather than facing concerted political opposition at a single Federal level, it attacks the issue at the State level, where strategies and tactics can be adapted to the types and amount of political opposition they encounter.

Second, it is diffused: it can be attempted in any number of States, which can cause the opposition to spread its resources much more thinly than would be necessary at the Federal level. Finally, it is legally sound: it relies on the U.S. Constitution’s negative mandate in Article I, Section 10, that “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”

Under this Act, not only would the use of FRNs by the State be made illegal; the use of legal tender U.S. gold and silver coins would be encouraged amongst the general population as well, along with any other currency that parties mutually consent to using.

This will have three immediate effects: the elimination of Federal Reserve Notes from State transactions; the requirement of individuals and businesses to cease using FRNs in their transactions with the State; and the introduction of competition in currencies amongst the general population. With all three effects working in tandem, the use of low-value pieces of paper issued by the Federal Reserve will become irrelevant, and an emaciated Federal Reserve system can be brought to a welcome, if inglorious, end.

You can download the full paper here: http://ssrn.com/abstract=1570108

Or, here at the Tenth Amendment Center:
http://www.tenthamendmentcenter.com/publications/

You can download the Constitutional Tender Act template here: http://ConstitutionalTender.com/

Bill Greene is a Professor of Theology at Miami Christian University, teaches Social Sciences at the Verity Institute, and is the founder of ConstitutionalTender.com.

Much has been made recently about the supposed economic recovery. A few blips in a few statistics and many believe our troubles are all over. Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street. But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendae.

They have even set up a commission to investigate the crisis as if it were all in the past.

The truth is that Americans are still losing jobs, the Fed is still inflating, and more regulations are in the works that will prevent jobs and productivity from coming back. We are on this trajectory for the long haul. The claim has been made many times that this administration has only had a year to clean up the mess of the last administration. I wish they would at least get started!

Instead of reversing course, they are maintaining Bush’s policies full speed ahead. They are even keeping the Bush-appointee in charge of the Federal Reserve! They are not even making token efforts at change in economic policy. And for all the talk of transparency, we hear that some powerful senators will do all they can to block a simple audit of the powerful and secretive Federal Reserve.

We have been on a disastrous course for a long time. The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington.

When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos. That is, unless we take some major steps now to allow for a peaceful transition in the future. These steps are laid out in my legislation to legalize competing currencies.

First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative. We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money. Only gold and silver can constitutionally be legal tender, not paper money. Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes.

Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office. Consequently, private mints should be allowed to mint gold and silver coins. They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit. Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money.

The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it. The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power.

Ron Paul is a Republican member of Congress from Texas.

Editor’s Note: CLICK HERE to view the Tenth Amendment Center’s Constitutional Tender Legislation Tracking Page

Last week it was revealed that when Treasury Secretary Tim Geithner was Chairman of the New York Federal Reserve, he urged AIG officials not to disclose to the Securities Exchange Commission relevant details of agreements with banks to bail out Goldman Sachs.

Apparently he felt at the time that regulators and the public would be angry that taxpayer money was used to fully compensate bankers who made some horrifically bad investment decisions. These banks should have suffered the consequences of the huge risks they were taking. After all, they kept plenty of rewards when times were good. Instead, the Fed found a way to socialize these major losses so these banks could survive and continue making more bad decisions, at the expense of the American people and the value of the dollar.

Geithner claims that they had to take politically unpopular actions to save the economy from collapse. Half of that is right – it was politically unpopular, but it is extremely premature at best, to claim the economy has been saved.

It was just reported that the economy shed 85,000 more jobs in December. Unemployment stands at 10 percent officially, and 22 percent according to more traditional calculations. It is hard to argue that this sort of government waste has done anything but harm to our economy.

Raiding Main Street to bail out Wall Street is a foolish idea. Main Street productivity and the strength of the dollar is the bedrock of the economy. You cannot gut this foundation without eventually toppling everything else.

This is what too many policy makers either don’t understand or refuse to face. Or even worse, perhaps they do understand, but don’t care!

In any case, this revelation makes precisely my point about the need for Fed transparency. This claim that the Fed should have “independence” is a canard. They very much enjoy their comfortable pattern of bailing out friends and devaluing the currency with no oversight and no accountability.

Geithner specifically asked officials at AIG not to disclose to the SEC or to the public particulars about this special deal for his friends. We only know these details now because AIG was eventually forthcoming when Congress demanded some answers.

We should be getting this information, and information on all such dealings, straight from the Fed. The Fed should be accountable to Congress because it is a creature of Congress.

The Constitution gives Congress the authority to oversee the integrity of the monetary unit. We have unwisely and unconstitutionally delegated this authority to the Federal Reserve, which has in turn devalued our dollar by 95 percent and counting.

When the Federal Reserve engages in harmful policies, Congress is still ultimately responsible. If the Fed is not made accountable through a GAO audit at least, it will continue to be accountable to no one, and that is unacceptable.

Geithner expects to be praised and thanked for his actions instead of rebuked and fired. He expects to be given more power to engage in “experimental” monetary policy in the future. But he has just given us a very good idea of what the Fed and Treasury would do with more power, what they consider good monetary policy, and why they like their so-called independence.

Ron Paul is a republican member of Congress from Texas.

Why do we have a Constitution? How and why did it come into existence? Just what, exactly, prompted the calling of the Constitutional Convention, which gave birth to it? Most Americans believe, logically enough, that with the passing of the British from the scene it was simply time to create a new government to take the place of the old. That notion, however, ignores the facts that Americans already had a functioning government at the time of the Convention and that that government had been in effect for six years following the final British defeat at Yorktown.

No, the overthrow of the old government and the establishment of the new were prompted by an internal tumult, by domestic corruption, oppression, and chaos, all but forgotten today, that had nothing to do with the departure of the British. That crisis revolved around the printing of paper money by some of the newly freed states. As the Federal Farmer, one of the Anti-Federalists, stated in opposition to the Constitution,

Our governments have been new and unsettled; and several legislatures, by making tender, suspension, and paper money laws, have given just cause of uneasiness to creditors. By these and other causes, several orders of men in the community have been prepared, by degrees, for a change of government; and this very abuse of power in the legislatures, which, in some cases, has been charged upon the democratic part of the community, has furnished aristocratical men with those very weapons, and those very means, with which, in great measure, they are rapidly effecting their favourite object…. The conduct of several legislatures, touching paper money, and tender laws, has prepared many honest men for changes in government, which otherwise they would not have thought of…. [Emphasis added.]

It is vital, first, to see the printing of paper money for what it was — a welfare scheme and an erosion of property rights enacted by impoverished majorities with the sole intent of taking money (property) from the creditor class. It is no exaggeration, no stretch of the imagination, no revisionist or wild-eyed conspiracy theory to state that the Constitution of the United States of America came into being, more than any other reason, to crush a welfare program, to stop the poor from ganging up on the rich and, endowed with the power of democracy, stealing their money.

In their book Decision in Philadelphia: The Constitutional Convention of 1787, Christopher Collier and James Lincoln Collier state,

What concerned Madison most in “Vices” was not only that the states were flouting national regulations, but that they were treating unjustly certain minorities within their own borders…. Madison was especially troubled by the stay laws and tender laws and the paper money that so many of the plain people of the country were clamoring for. These laws, Madison believed, were “oppressing” the creditor minority. [Emphasis added.]

Edward J. Larson and Michael P. Winship stated in The Constitutional Convention,

In several state legislatures, a new breed of politicians, often from lower social backgrounds, was passing debt-relief measures, most notoriously by issuing inflationary paper money. Such legislative action, Madison believed, was an attack on the rights of creditors and amounted to the few being plundered by the many.

The story of paper money is a simple one of greed and corruption fueled by the power of unchecked democracy degenerating into oppression and turmoil. For the Framers, the paper-money crisis was the manifestation of all their fears of mob rule followed by chaos, and it was paper money, far more than anything else, that prompted them to convene the assembly that gave birth to the Constitution. Yes, there were other issues and concerns, chiefly the tendency of the states to strangle interstate trade, and the fear that 13 separate states would constantly war with each other, much like the European powers, or be weak in the face of foreign attack; but, other than the trade issue, those things were merely theoretical in nature, while paper money was all too real.

As you read of paper money, you might wonder just exactly what all the fuss was about. After all, in 21st-century America, when debt-relief measures to the detriment of creditors are this very hour in front of Congress; when battling over which legislator gets the biggest share of your paycheck for distribution to his constituents is all government seems to do; and when there’s a welfare program for virtually every ill that can be imagined by even the most creative among us, — I recently read of the California legislator who has secured funds to pay for tattoo removal because tattoos might hurt a job applicant’s chance of getting hired — just exactly what physical form state-issued money takes might not seem to be the kind of thing over which to change governments. But if the paper-money shenanigans outlined below seem rather tame to the modern American reader, that just goes to show how very far we’ve fallen from the days when the Framers had “an almost religious respect” for property rights.

Paper money and the Articles of Confederation

Paper-money schemes could not stand on their own and necessarily spawned a whole series of additional laws, each one more odious than its predecessor, to prop up the whole corrupt edifice. Property rights aside, the Framers believed that the baneful effects of all the legislative chaos, the internal turmoil, and the international ridicule and disrepute generated threatened the very existence of the nation.

So frightening was the specter of paper money that one Convention delegate said that granting the federal government the power to issue it “would be as alarming as the mark of the Beast in Revelation.” Another delegate said he would “rather reject the whole” Constitution than see the federal government granted that power.

The paper-money crisis began when debtors, usually farmers struggling to make loan payments, would turn to their state legislatures and push for the creation of paper money. That was welfare pure and simple, as the paper money had nowhere near the worth of the gold, silver, or other medium of payment specified in original loan documents, and that, of course, was exactly the idea behind the legislation. Debtors also forced the creation of such extraordinary measures as “stay laws,” which postponed or even canceled debt collection. Then there were the awful “tender laws,” and “ex post facto laws,” which actually compelled unwilling creditors to accept the newly printed paper money regardless of what the preexisting contract specified. Printing paper money was one thing, but to actually nullify preexisting contracts and force creditors to accept it in payment was simply more than the Framers could tolerate.

But it was the example of Rhode Island that most horrified the Framers. The legislature, dominated by indebted farmers, circulated paper money that creditors naturally refused to accept. The legislature then made acceptance mandatory. Many creditors at this point actually fled the state to avoid the dreaded paper. The government’s answer was simply to pass more corrupt legislation, this time allowing debtors to legally discharge the debt by depositing money with courts and posting an advertisement attesting to such in newspapers. Things got nastier still. When Rhode Island’s supreme court declared the paper-money law unconstitutional, the legislature threw the court out of office and replaced the justices.

Paper money and the Constitution

Study of Madison’s Notes of Debates in the Federal Convention of 1787 reveals a fascinating obsession on the part of the Framers with paper money. Amazingly, proposed legislative schemes, philosophies of representation, and existing political arrangements were all judged good or bad almost solely on whether they were likely to lead to or had already led to the creation of paper money. On page after page of the Notes we find that paper money is the overriding, all-important litmus test for analyzing the compositions and powers of state legislatures, the courts, and internal police; determining the rules of a quorum; and debating the proposed federal veto on state law.

Virtually every time the Framers sought to find an example of something “wicked” to be avoided, something they wished the Constitution to repress, some terrible failing of the state government or the Articles of Confederation, they turned to paper money. Mention of the rights with which we are today so obsessed, and those most commonly associated with the Framers, are conspicuous only in their absence.

1. Why is a large republic, spread over a great area, encompassing a multitude of various political interests a good thing? Because, as Madison notes in Federalist No. 10, “[A] rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union, than a particular member of it….”

2. Who should select U.S. senators and congressmen, the people or their state legislatures? Charles Pinkney, South Carolina delegate to the Convention, favored the legislatures because “the people in South Carolina were notoriously for paper money” while the legislature had rejected the idea.

3. Elbridge Gerry, Massachusetts delegate to the Convention, likewise favored the legislatures, because “the people are for paper money when the Legislatures are against it.”

4. Should the federal government have the power to veto state laws that offend the Constitution? Here again, paper money is the litmus test. Elbridge Gerry was generally against it, but, “He had no objection to authorize a negative to paper money and similar measures.” Madison also was for the veto power, pointing to the fate of the Rhode Island judges who had refused to uphold the constitutionality of paper money laws and noting that the newly selected judges would be “willing instruments of the wicked and arbitrary plans of their masters.”

5. Every American knows of the need for “checks and balances,” though few could name paper money as one of the evils to be checked. According to Alexander Hamilton, a lack of such checks in the state governments had led to “our paper money, installment laws, et cetera.”

6. Should the federal government have the power to “interfere” with the state governments in matters of “internal police”? According to Gouverneur Morris, Pennsylvania delegate to the Convention, the internal police “ought to be infringed in many cases, as in the case of paper money and other tricks by which Citizens of other states may be affected.”

7. Setting a quorum in the House and Senate at less than a majority of members might be a good thing. George Mason, after all, “had known a paper emission prevented by that cause in Virginia.”

8. “Proper elections” were better left to the people, if divided into large districts, than by state legislatures, thought George Mason. After all, “Paper money had been issued by the latter when the former were against it.”

Restricting the states

So what did the Framers do to rectify this situation? Where is the constitutional salvation from the evil of paper money? Relief lies in Article I, Section X. It is in Section X that we find the relatively few things that state governments may not do. Many Americans do not realize that at the time the Bill of Rights was ratified, it applied only to the federal government. In other words, until after the Constitution was amended following the Civil War, the states had absolute power to engage in censorship, regulate the press, suppress free speech, or even establish a state-supported church, which, in fact, many of the states actually did. At the time of the Revolution, for example, most of the colonies had tax-supported churches; all except Rhode Island imposed legal restrictions on various sects and “penalties for dissenters, apostates, blasphemers and idolators were numerous and severe.” (Novus Ordo Seclorum, The Intellectual Origins of the Constitution, by Forrest McDonald.)

In short, for the states, the entirety of the Bill of Rights was a nonentity. While the Framers certainly could have attempted to impose bill-of-rights-type restrictions on the states, they did not. It is instructive, then, to see just what state restrictions the Framers actually did write into the Constitution.

The Constitution expressly prohibited the states from such things as continuing to act as separate nations with treaty-making powers, engaging in war, floating a navy, and establishing tariffs. But the most significant checks on state authority, and the only checks that involved the rights and liberties of citizens, were those that would no longer allow the states to “emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts….” In other words, no more paper money and no more voiding of contracts with stay laws or tender laws.

The prohibition of ex post facto laws was instituted for the same reason, for, as previously noted, most of the legislation passed to support paper money was made to retroactively affect existing contracts, a perfect example of an ex post facto law. Bills of attainder were legislative findings of guilt (no judge, jury, or trial) for various crimes, which usually resulted in forfeiture of landed estates. These bills had been unjustly employed to seize Tory properties during the Revolution; but with infringements of property rights becoming more and more common with every passing day, the Framers feared that they could be used against the creditor class at any time.

It is very likely impossible to understand the Constitution without first understanding the importance of Article I, Section X: of all the dozens upon dozens of rights that the Framers could have attempted to prohibit states from infringing, the property rights of the minority were the only ones to make the list. Remember, the federal government could not prohibit free speech, establish or handicap a religion, or regulate the press. The states, however, (again, because the Bill of Rights did not apply to them) could do all of those things. Property rights, then, were the only rights to be protected from both federal and state action.

For those who read of the Framers and their obsession with property rights and paper money and who are tempted to look with scorn on those men for having such a monomaniacal focus on something not so high, not so enlightened or elevated, a harder look at history, a more down-to-earth approach might be necessary.

The Framers saw the entire history of government for what it was: one long, sad saga in which those in power — be they the king, aristocrat, or oligarch, the many, the few, or the one — trampled the rights of those without power. Human beings being what we are, the oppression would take a multitude of forms, but the oppression of property is almost always the first and favorite of oppressions. Anti-majoritarian measures aside, the common man, the people, the majority wielded the power under the new Constitution. History, political theory, and the contemporaneous paper-money crisis all demonstrated that a government of the people would be no different from governments throughout history. It would live down to expectations, and those in power, the numerous poor, would oppress the property rights of others. The Framers wrote the Constitution, then, to safeguard against the chief defect of democratic representative government — the oppression of the wealthy minority by the poor majority.

Rick Lynch is an author living in Virginia. He is finishing a book on constitutional issues entitled They Are Vicious. Send him email.

This article originally appeared in the January 2009 edition of Freedom Daily. Subscribe to the print or email version of Freedom Daily.

Copyright 2009 Future of Freedom Foundation

We’ve come a long way baby, in 233 years!  The elite are still controlling our money, the corrupt, in and out of government, are still making billion (or is it trillion) dollar deals with the devil and the Congress and the President are trying to strip us of our freedom and sell America’s sovereignty to the third world, along with giving away our national wealth and resources.  Other than that, not much has changed.  In fact, we continue to repeat the same mistakes, over and over and over again, to the detriment of all Americans and to the destruction of our freedom and sovereignty.

President Andrew Jackson (1829 to 1837) knew what the central banks were doing and he closed them, paid off the national debt and returned the monetary system to gold and silver coins.  He said about the central banks:

“The paper-money system and its natural associations—monopoly and exclusive privileges—have already struck their roots too deep in the soil, and it will require all your efforts to check its further growth and to eradicate the evil.”

Jackson also said, while throwing the bankers out of the oval office:

“… You are a den of vipers and thieves.  I intend to rout you out, and by the grace of the Eternal God, I will rout you out,” and he did.

Jackson called paper money “rag money”.  He was right then and he is still right now.

Thomas Jefferson said to John Taylor in 1816 that: “I sincerely believe that banking establishments are more dangerous than standing armies…”.

President James Madison (1809 to 1817) said: “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”

These men knew what they were talking about.

In the end, it only took the money changers and the power brokers 81 years to undue the actions of Andrew Jackson and get their way again, by convincing the U. S. Congress and President Wilson that we needed another central bank, euphemistically called the Federal Reserve, which isn’t federal and it doesn’t have any reserves.

Congressman Louis T. McFadden (Rep. PA – June 1932) said of the Federal Reserve:  “The Federal Reserve banks are one of the most corrupt institutions the world has ever seen.There is not a man within the sound of my voice who does not know that this nation is run by the International Bankers.” McFadden also blamed the Great Depression on the Federal Reserve.  McFadden was right then and he is still right today.

The Federal Reserve, with the help of many socialist presidents and Congresses since 1913, have turned a once prosperous and wealthy nation, into a debtor nation by corrupting the phrase in the pre-amble of the U. S. constitution where it states: ”….. and promote the general welfare“.  As a result, every dollar we spend now represents debt and does not equal a fair measure of goods and services, as it should.  You would need $21.60 in 2007 to equal what a dollar was worth in 1913, prior to the establishment of the Federal Reserve.  Since 2000, the value of the dollar, thus each American’s buying power, has eroded by over 20%.

Socialist politicians in our government, for almost 100 years, for the purposes of remaining in power by exploiting the weakness in individuals who were looking for a free handout, worked in conjunction with the Federal Reserve to expand the money supply (debt) to pay for the handouts.  Not only was the public treasury pillaged for purely political reasons (that should be treason), but the American taxpayer also picked up the tab for the interest paid to the Federal Reserve and other countries for the loans and the hidden cost of inflation because of diluting the number of dollars in circulation.  This evil is still going on today, but the numbers are escalating exponentially.

The estimated liability for actual government debt and unfunded entitlement programs (Medicare, Medicaid and Social Security) for every man, woman and child in America, is estimated to be almost $350,000.  The Social Security unfunded liability is just shy of $14 Trillion.  Medicare’s unfunded liability is over $73 Trillion.  Both numbers are rising rapidly.

In light of the nation’s current financial black hole, which we are being dragged into by the sheer gravity of it, along with the failure of most government social programs, for the government to even be contemplating, much less debating the implementation of nationalized health care and cap and trade legislation, is not only fool hardy and grossly negligent, it is outright treason.

But as long as there are corrupt politicians who will exploit the weakness in humans for their votes and conspire with special interest groups, giant, international corporations and the Federal Reserve to create money out of thin air to pay for unconstitutional welfare and environmental protection programs, America’s airplane is on fire and is in a crash dive to the deadly sea of national bankruptcy, while Americans are headed for perpetual indentured servitude.

No!  Americans are already indentured (slaves) to America’s rising debt and the relief can only come from patriotic Americans who will bring this madness to an abrupt halt, first peacefully and if that doesn’t work, by any other means.

We claimed freedom from tyranny once before and if necessary, we can and will do it again.  We cannot let the bastards win, or the Revolution from which America was born and all the lives that were sacrificed since then to maintain our freedom, will have been for naught.

It is high time that free Americans everywhere, repeat the words of President Andrew Jackson, to the politicians of Washington DC and to those politicians elsewhere in state and local governments, “… You are a den of vipers and thieves.  We intend to rout you out, and by the grace of the Eternal God, we will rout you out,” and then do it.

President Jackson also said,  “it will require all your efforts to check its further growth and to eradicate the evil”, and indeed it WILL take the efforts of millions of Americans to “eradicate this evil.”

Ron Ewart [send him email] is President of the NATIONAL ASSOCIATION OF RURAL LANDOWNERS, an organization dedicated to re-establish, preserve, protect and defend property rights.

Statement at Hearing of the House Financial Services Committee, February 15, 2007

Transparency in monetary policy is a goal we should all support. I’ve often wondered why Congress so willingly has given up its prerogative over monetary policy. Astonishingly, Congress in essence has ceded total control over the value of our money to a secretive central bank.

Congress created the Federal Reserve, yet it had no constitutional authority to do so. We forget that those powers not explicitly granted to Congress by the Constitution are inherently denied to Congress – and thus the authority to establish a central bank never was given.

Of course Jefferson and Hamilton had that debate early on, a debate seemingly settled in 1913.

But transparency and oversight are something else, and they’re worth considering. Congress, although not by law, essentially has given up all its oversight responsibility over the Federal Reserve.

There are no true audits, and Congress knows nothing of the conversations, plans, and actions taken in concert with other central banks. We get less and less information regarding the money supply each year, especially now that M3 is no longer reported.

The role the Fed plays in the President’s secretive Working Group on Financial Markets goes unnoticed by members of Congress. The Federal Reserve shows no willingness to inform Congress voluntarily about how often the Working Group meets, what actions it takes that affect the financial markets, or why it takes those actions.

But these actions, directed by the Federal Reserve, alter the purchasing power of our money. And that purchasing power is always reduced. The dollar today is worth only four cents compared to the dollar in 1913, when the Federal Reserve started. This has profound consequences for our economy and our political stability. All paper currencies are vulnerable to collapse, and history is replete with examples of great suffering caused by such collapses, especially to a nation’s poor and middle class. This leads to political turmoil.

Even before a currency collapse occurs, the damage done by a fiat system is significant. Our monetary system insidiously transfers wealth from the poor and middle class to the privileged rich. Wages never keep up with the profits of Wall Street and the banks, thus sowing the seeds of class discontent. When economic trouble hits, free markets and free trade often are blamed, while the harmful effects of a fiat monetary system are ignored. We deceive ourselves that all is well with the economy, and ignore the fundamental flaws that are a source of growing discontent among those who have not shared in the abundance of recent years.

Few understand that our consumption and apparent wealth is dependent on a current account deficit of $800 billion per year. This deficit shows that much of our prosperity is based on borrowing rather than a true increase in production. Statistics show year after year that our productive manufacturing jobs continue to go overseas. This phenomenon is not seen as a consequence of the international fiat monetary system, where the United States government benefits as the issuer of the world’s reserve currency.

Government officials consistently claim that inflation is in check at barely 2%, but middle class Americans know that their purchasing power – especially when it comes to housing, energy, medical care, and school tuition – is shrinking much faster than 2% each year.

Even if prices were held in check, in spite of our monetary inflation, concentrating on CPI distracts from the real issue. We must address the important consequences of Fed manipulation of interest rates. When interest rates are artificially low, below market rates, insidious mal-investment and excessive indebtedness inevitably bring about the economic downturn that everyone dreads.

We look at GDP numbers to reassure ourselves that all is well, yet a growing number of Americans still do not enjoy the higher standard of living that monetary inflation brings to the privileged few. Those few have access to the newly created money first, before its value is diluted.

For example: Before the breakdown of the Bretton Woods system, CEO income was about 30 times the average worker’s pay. Today, it’s closer to 500 times. It’s hard to explain this simply by market forces and increases in productivity. One Wall Street firm last year gave out bonuses totaling $16.5 billion. There’s little evidence that this represents free market capitalism.

In 2006 dollars, the minimum wage was $9.50 before the 1971 breakdown of Bretton Woods. Today that dollar is worth $5.15. Congress congratulates itself for raising the minimum wage by mandate, but in reality it has lowered the minimum wage by allowing the Fed to devalue the dollar. We must consider how the growing inequalities created by our monetary system will lead to social discord.

GDP purportedly is now growing at 3.5%, and everyone seems pleased. What we fail to understand is how much government entitlement spending contributes to the increase in the GDP. Rebuilding infrastructure destroyed by hurricanes, which simply gets us back to even, is considered part of GDP growth. Wall Street profits and salaries, pumped up by the Fed’s increase in money, also contribute to GDP statistical growth. Just buying military weapons that contribute nothing to the well being of our citizens, sending money down a rat hole, contributes to GDP growth! Simple price increases caused by Fed monetary inflation contribute to nominal GDP growth. None of these factors represent any kind of real increases in economic output. So we should not carelessly cite misleading GDP figures which don’t truly reflect what is happening in the economy. Bogus GDP figures explain in part why so many people are feeling squeezed despite our supposedly booming economy.

But since our fiat dollar system is not going away anytime soon, it would benefit Congress and the American people to bring more transparency to how and why Fed monetary policy functions.

For starters, the Federal Reserve should:

• Begin publishing the M3 statistics again. Let us see the numbers that most accurately reveal how much new money the Fed is pumping into the world economy.
• Tell us exactly what the President’s Working Group on Financial Markets does and why.
• Explain how interest rates are set. Conservatives profess to support free markets, without wage and price controls. Yet the most important price of all, the price of money as determined by interest rates, is set arbitrarily in secret by the Fed rather than by markets! Why is this policy written in stone? Why is there no congressional input at least?
• Change legal tender laws to allow constitutional legal tender (commodity money) to compete domestically with the dollar.

How can a policy of steadily debasing our currency be defended morally, knowing what harm it causes to those who still believe in saving money and assuming responsibility for themselves in their retirement years? Is it any wonder we are a nation of debtors rather than savers?

We need more transparency in how the Federal Reserve carries out monetary policy, and we need it soon.

Ron Paul is a Republican member of Congress from Texas. His “Audit the Fed” bill, HR1207, currently has over 290 co-sponsors in the House of Representatives.  He is the author of seven books, including “The Revolution: A Manifesto,” and his latest, “End the Fed.”

Last week I was very pleased that hearings were held on the independence of the Federal Reserve system.  My bill HR 1207, known as the Federal Reserve Transparency Act, was discussed at length, as well as the general question of whether or not the Federal Reserve should continue to operate independently.

The public is demanding transparency in government like never before.  A majority of the House has cosponsored HR 1207.  Yet, Senator Jim DeMint’s heroic efforts to attach it to another piece of legislation elicited intense opposition by the Senate leadership.

The hearings on Capitol Hill provided us with a great deal of information about the types of arguments that will be levied against meaningful transparency and how the secretive central bankers will defend the status quo that is so beneficial to them.

Claims are made that auditing the Fed would compromise its independence.  However, by independence, they really mean secrecy.  The Fed clearly cherishes its vast power to create and spend trillions of dollars, diluting the value of every other dollar in circulation, making deals with other central banks, and bailing out cronies, all to the detriment of the taxpayer, and to the enrichment of themselves.  I am happy to challenge this type of “independence”.

They claim the Fed is endowed with special intellectual abilities with which to control the market and that central bankers magically know what the market needs.  We should just trust them.  This is patently ridiculous.  The market is a complex and intricate thing.

No one knows what the market needs other than the market itself.  It sends signals, such as prices, that should be reacted to and respected, not thwarted and controlled.  Bankers are not all-knowing and cannot ignore the rules of supply and demand.  They might act as if they are, but their manipulation of the market just ends up throwing it wildly off balance, which gives us the boom and bust cycles.

They claim the Fed must remain apolitical.  No organization is apolitical that relies on the President to appoint the Chairman.  In fact, it is subject to the worst sort of politics – power to create trillions of dollars and affect the value of every dollar in the country without the accountability of direct elections or meaningful oversight!

The Fed typically enacts monetary policy that is favorable to particular administrations close to elections, to the detriment of long term considerations.  They do this partly because of the political appointee process for the Chairmanship.

The only accountability the Federal Reserve has is ultimately to Congress, which granted its charter and can revoke it at any time.  It is Congress’s constitutional duty to protect the value of the money, and they have abdicated this responsibility for far too long.

This was the issue that got me involved in politics 35 years ago.  It is very encouraging to finally see the issue getting some needed exposure and traction.  It is regrettable that it took a crisis of this magnitude to get a serious debate on this issue.

Ron Paul is a republican member of Congress from Texas.