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 federal government today can wage wars without the consent of our congressional representatives, overthrow foreign governments, tax nearly half of national income, abolish civil liberty in the name of “homeland security” and “the war on drugs,” legalize and endorse infanticide (“partial-birth abortion”), regulate nearly every aspect of our existence, and there’s little or nothing we can do about it. “Write your congressman” is the refrain of the slave to the state who doesn’t even realize he’s a slave (thanks to decades of government school brainwashing).

But Americans were not always slaves to federal tyranny. Perhaps the best illustration of this is how Americans once utilized the Jeffersonian, states’ rights traditions of nullification and interposition to assist President Andrew Jackson in his campaign to veto the re-chartering of the Second Bank of the United States (BUS) in 1832. Jackson essentially ended central banking in America until it was revived thirty years later by the Lincoln administration. The story is told in James J. Kilpatrick’s wonderful 1957 book, The Sovereign States: Notes of a Citizen of Virginia.

The Bank was notorious for fraud, mismanagement, corruption, and attempts to engineer a “political business cycle.” Prior to 1861, the American people were still sovereign over their government. They exercised that sovereignty in the way the founders intended: through state political conventions or legislatures. The federal government was their agent.

Consequently, as early as 1816, Indiana and Illinois amended their state constitutions to prohibit the BUS from establishing branches within their jurisdictions. North Carolina, Georgia, and Maryland imposed heavy taxes on BUS branches within their states in attempts to tax them out of existence (A tax that even libertarians could love!). Knowing that such taxes could destroy the central bank, the federal government brought suit in Maryland (McCulloch vs. Maryland), confident that John Marshall, chief justice of the Supreme Court and a proponent of the BUS, would rule in its favor. He did, coining the famous phrase that “the power to tax involves the power to destroy” in his decision. He wasn’t expressing a fear that taxation could destroy private initiative and private enterprise, but that it could limit the federal government’s monetary monopoly.

Despite Marshall’s opinion that state taxes on the BUS were unconstitutional, numerous states continued to harass the bank. Until 1865, the Supreme Court’s opinion was just the Supreme Court’s opinion. The citizens of the states reserved the right to offer their own opinions on constitutionality, which they often considered to be every bit as valid as the Court’s. The same was true of certain presidents: Andrew Jackson essentially said “thank you for your opinion” and then thumbed his nose at the Court when it ruled that the BUS was constitutional.

After Marshall’s 1819 opinion, Ohio enacted a $50,000 per year tax on the BUS. The Bank refused to pay, so the Ohio state auditor ordered a deputy, one John L. Harper, to collect the tax. As Kilpatrick (p. 151) explains it:

[O]n the morning of September 17, Harper made one last request for voluntary payment. When this was denied, he leaped over the counter, strode into the bank vaults, and helped himself to $100,000 in paper and specie. He then turned this over to a deputy . . . stuffing this considerable hoard into a small trunk, with which the party thoughtfully had come equipped . . .

This would be the equivalent of today’s governor of Ohio ordering state troopers to enter the Cleveland Fed and strip its vaults of over a million dollars. The BUS sued Ohio, relying on Marshall’s opinion. The Ohio legislature considered such a lawsuit to be a threat to citizen sovereignty and a dangerous precedent to all Americans, not just Ohioans. It issued a statement saying, “To acquiesce in such an encroachment upon the privileges and authority of the States, without an effort to defend them, would be an act of treachery to the State itself, and to all the States that compose the American Union (emphasis added).”

The legislature stated that it was aware of the theory that the Supreme Court is to be the interpreter of the Constitution, but declared that “to this doctrine . . . they can never give their assent” (Kilpatrick, p. 152). The legislature quoted Jefferson’s Kentucky Resolve of 1798, which said that “as in all other cases of compact among parties having no common judge,” each party “has an equal right to interpret the Constitution for themselves, where their sovereign rights are involved . . .”

Marshall was wrong, the Ohioans said, because his opinion unconstitutionally encroached upon the sovereignty of the states. Therefore, they were under no obligation to acquiesce in his ruling.

The Ohio legislature promised to return the $100,000 if the BUS left the state. If not, it proposed a law forbidding “the keepers of our jails” from imprisoning any person “committed at the suit of the Bank of the United States”; prohibiting Ohio courts from “taking acknowledgements of conveyance where the Bank is a party”; and forbidding “our courts, justices of peace, judges and grand juries from taking any cognizance of any wrong alleged to have been committed upon any species of property owned by the Bank.” Invoking Jefferson’s “Doctrine of ’98,” the Ohioans concluded by “denouncing the Federal courts for violation of the Constitution” (p. 154).

The BUS persisted in its lawsuit, and eventually had the state treasurer arrested and imprisoned. While in prison, the keys to the state vaults were physically taken from him and the feds took back the $100,000, apparently still in the same trunk.

This act infuriated the Ohioans even more, and they continued to harass the Bank, as did many other states. Kentucky and Connecticut adopted Ohio’s states’ rights stand toward the Bank in 1825. In 1829, South Carolina imposed a tax on stockholders of the Bank within the state. New York and New Hampshire enacted resolutions urging that the Bank not be re-chartered. As Kilpatrick concludes:

In the face of this unrelenting warfare, the bank could not survive. Withdrawal of the public deposits began in August of 1833, under Jackson’s order; and when Pennsylvania governor Wolf, who had been one of the bank’s staunchest supporters, denounced the institution in . . . March of 1834, public opinion was fatally influenced against the bank. The Pennsylvania Senate adopted fresh resolutions urging that the bank ought not to be re-chartered. The following month, the United States House of Representatives adopted the same view, and the bank’s days came to an end (p. 157).

Andrew Jackson is usually given credit for (temporarily) ending central banking in America in the nineteenth century. But he had help. It was this expression of citizen sovereignty, in the spirit of the Jeffersonian states’ rights tradition, that made Jackson’s veto of the bank politically possible.

States’ rights as a check on the tyrannical proclivities of the central government ended in 1865, of course. As Forrest McDonald noted in States’ Rights and the Union (p. 224), after Lincoln’s war the Supreme Court “became the sole and final arbiter of constitutional controversies. No longer could a Jefferson arise to insist that the other branches of the federal government had coequal authority to determine constitutionality. No more could a Calhoun arise to defend a doctrine of interposition or nullification.”

The imperious Woodrow Wilson would celebrate this fact in his 1908 book, Constitutional Government in the United States, where he wrote (p. 178) that “the War between the States established . . . this principle, that the federal government is, through its courts, the final judge of its own powers.”

In A View of the Constitution, published a century earlier, the Jeffersonian legal scholar St. George Tucker cited this phenomenon as the very definition of tyranny. If the federal government ever became the final judge of the limits of its own powers, Tucker warned, then constitutional liberty would become an empty phrase. The federal government would inevitably conclude that there are, in fact, no limits to its power.

Thomas J. DiLorenzo is professor of economics at Loyola College in Maryland and the author of The Real Lincoln; Lincoln Unmasked: What You’re Not Supposed To Know about Dishonest Abe and How Capitalism Saved America. His latest book is Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution – And What It Means for America Today.

Note: This article was originally published on May 9, 2003

Copyright © 2003 LewRockwell.com  Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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.

I have been very pleased with the progress of my legislation, HR 1207, which calls for a complete audit of the Federal Reserve and removes many significant barriers towards transparency of our monetary system. This bill now has nearly 170 cosponsors, with support from both Republicans and Democrats.

Senator Bernie Sanders has introduced a companion bill in the Senate S 604, which will hopefully begin to gain momentum as well. I am very encouraged to see so many of my colleagues in Congress stand with me for greater transparency in government.

Some have begun to push back against this bill, and I am very happy to address their concerns.

The main argument seems to be that Congressional oversight over the Fed is government interference in the free market. This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time.

The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money – the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market.

The only legitimate, Constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.

Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks who, instead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930’s. It has also inflated away the value of our currency by over 96 percent since its inception. It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problems it was meant to solve.

Detractors have also argued that the Fed must remain immune from the political process, and that that more congressional oversight would distort their very important decisions. On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee. High-level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way.

As far as the foolishness of placing complex monetary policy decisions in the hands of politicians – I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again.

To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have. They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability. Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so.

However, it is the responsibility of every member of Congress to represent the interests of the people that sent them to Washington and find out what has been happening with our money. As the branch of government with the power of the purse, we really have no other reasonable choice when the economy is in the shape it is in.

Ron Paul is a republican member of Congress from Texas.

Ron Paul in a speech before Congress on April 1, 2009

Ron Paul: I rise in opposition to this resolution. You know, they say so often that there is not enough bipartisanship around here. We hear that complaint a lot of times. But you know, when I look at it, I see that there has been too much bipartisanship in creating the problem we’ve had. And it hasn’t been the last few days. This crisis that we’re in the midst of, this financial crisis, didn’t pop up here in the last sixty days. It didn’t pop up here in the last eight years, but has taken several decades for us to get to this point where we are today dealing with a budget that is just totally out of control and a monetary and economic system that is uncontrollable as well.

They said that this budget is going to be $3.6 dollars with a $1.1 dollar deficit. And the amazing thing is that a $1.1 dollar deficit is going to be $400 billion less than this year. I’ll wait and see if that really happens, because that probably won’t work out that way. Matter of fact, characteristically, the statistics that we hear and we talk about the budget are never reliable, especially when you’re in a recession. In a recession, nobody can predict the revenues. The revenues are going to be a lot lower and the expenditures are going to be a lot higher.

So, I am making a prediction that the spending will be over $4 trillion this year, and that the deficit is going to be over $2 trillion, and that the picture that we are looking at today is much worse than we are willing to admit. Matter of fact, I think the problem we face today is not so much a budgetary problem. It’s much different than that. We talk a lot about the budget. Just think of how many hours we talked about it today. But the budget and the deficit is a symptom of something much more serious, and that is what we have allowed our government to become. I think it has been the loss of respect by us here in the Congress to understand and take seriously Article 1 Section 8. If we did that, we wouldn’t be doing all these things that we are doing.

If we understood the 10th amendment, we wouldn’t be doing all this, we wouldn’t have a deficit. If we understood monetary policy we wouldn’t have a monetary system that encourages all this that gets us off the hook.

Because conservatives like to spend a lot of money, and liberals like to spend a lot of money, and they don’t have to worry. We’ll raise taxes, we borrow it and we do it and have been doing it for decades and getting away with it. But it’s coming to an end because we’ve always been dependent on the Fed to come in and monetize the debt. Now, have they backed off in anyway? No. They are expending it. Not only do they buy in the market, they’re buying it directly from the treasury. They’re only encouraging us to do even more of this.

We have endorsed, as a Congress and as a people, a welfare-warfare state, and that is not part of what America is supposed to be. It encourages the spending and the borrowing and the deficits and all the inflation. Take for instance, we were supposed to get a lot of change with the new administration.

One thing I was hoping about is that they might look at this overseas wild spending and expansion of the war going on in the Middle East…. but the military budget, the war budget is going up 9%. And as long as we have the expansion of war, the dependency of this spending overseas, we’re spending over a trillion dollars a year maintaining the world empire. At the same time, we have runaway spending here on welfare here at home. It is unsustainable.

We have a debt that will not be paid. We know that when it reaches a certain level, it cannot be paid. But it is always liquidated. Now, if an individual or a company goes into debt, it can be liquidated in the old fashion way of bankruptcy.

Countries don’t go bankrupt. What they do is they default on the debt. It doesn’t mean they won’t pay it. They pay it off in bad money. And literally, the purpose of the Federal Reserve right now is to lower the real debt. So, if you destroy 50% of the value of the dollar in the next year or two, the real debt has gone down 50%. Literally, the Federal Reserve Board is praying for and encouraging inflation to lower the real debt because it can’t be sustained.

But who does that hurt? It hurts people who save. The people who save get 1% on their earnings and we tax the little bit they get and the people who are doing the right thing are being punished the most. So, the ones who lived beyond their means get bailed out. And it’s a very bad, bad system that we have and we have to decide what the role of government ought to be.

You know, we do blame the banks, we blame the business people and everybody. But you know, I have a lot of people come to my office and say, “Cut his, cut his, cut here, but don’t cut my program”. So, we have to decide as a people what should the role of government be. And if we think the role of government is going to be and should be the policeman of the world and to run a welfare state, this budgetary problem will never be solved.

Nancy Pelosi: Gentleman is recognized for 30 seconds.

Ron Paul: I thank you for yielding, and let me just close by saying that the greatest danger I see right now is the placing of the blame for the crisis that we’re in as if we had too much freedom, too much capitalism, not enough regulation. They did this in the 1930s and they are doing it even more now.

Instead of saying that we overspent, overtaxed, overregulated, we have lost our confidence and if we don’t change that attitude and if we accept this notion and accept international regulation, believe me, we’re in big trouble. We will lose our freedoms and we will lose our sovereignty as well.

If you haven’t seen it yet, Rep Michele Bachmann questioned Tim Geithner and Ben Bernanke on 03/25/09 and took a position rarely seen in Washington DC.  In short, her position is that which is enshrined in the 10th Amendment – “Where in the Constitution are the Treasury and the Fed given such powers?”

Bachmann: What provision in the Constitution could you point to, to give authority for the actions that have been taken by Treasury since March of 08?

Geithner:  Oh, uh, the Congress legislated in the emergency economic stabilization act a range of very important new authorities..

Bachmann:  Sir, in the Constitution.  What in the Constitution could you point to, to give authority to the treasury for the extraordinary actions that have been taken.

Geithner:  Every action that the treasury and the fed and the FDIC is….been using authority granted by this body…by the Congress.

Bachmann:  And in the Constitution, what could you point to?

Geithner:  Under the laws of the land, of course.

Bachmann:  And if I could move to the federal reserve chair, if you could point to what provision in the Constitution that would give authority to the federal reserve – this has been over 10 trillion dollars that we’re talking about.

Bernanke:  I don’t know where 10 trillion dollars comes from.  The congress has the right to authorize funds, which is what they did in the TARP program, and they have given us in the 1930s…they gave the federal reserve the power for emergency lending as a means of addressing financial crises which is what we’ve done.

Bachmann:  And to the federal reserve chair – Do you believe there are any limits on the authority that the Federal Reserve has taken since last March…of 08?

Bernanke:  The loans we make have to be fully secured and collateralized.  We have practical limits in terms of our ability to manage monetary policies.  So there are obviously limits. We have reported extensively to the Congress on all the actions we have taken, and the actions we’ve taken have been solely and entirely for the purpose of protecting the American economy from the effects of financial collapse.

The basic idea of the Founding Fathers was to get government as close to the people as possible. In other words, a small federal government, with strong local and state governments. Thomas Jefferson said, “When all government shall be drawn to Washington as the center of all power, it will… become as oppressive as the government from which we separated [ourselves, the government of England].”

Do you think that a bloated federal bureaucracy might be at the root of the problems we are facing today in our American Republic? Our nation’s Founders never dreamed that the federal government would become the octopus that it is, with its tentacles reaching into every facet of our lives. Is there a solution? Yes, and it’s already happening now!

Our nation’s Founders and Framers (of the Constitution) saw that with a small federal government, our Congress might not see a need to meet at all in any given year. This is why our Constitution states (Art. I, Sec. 4, Cl. 2) that, “The Congress shall assemble at least once in every year… on the first Monday in December [later changed to Jan. 3 by the 20th Amendment].” Congress was never intended to be in session all year long!

And Congress is only authorized “to exercise exclusive legislation… over such district (not exceeding ten miles square)…(Art. I, Sec. 8, Cl. 17).” Ten miles square is not the same as ten square miles. Ten miles square is ten miles by ten miles, or 100 square miles, which is the exact size of the District of Columbia, and that is the only place, repeat, the only place that Congress has jurisdiction over, except military bases, etc., within the States.

Congress was never authorized to make laws and legislation for the States with respect to gun ownership, school curriculums, the rights of the people, federal drug laws, or any of a whole slew of other insidious laws and legislation now in place.

We The People run this country, and Our Constitution is quite clear about all of this. That is exactly why Our Tenth Amendment states, “The powers not delegated to the United States by the Constitution… are reserved to the States respectively, or to the people.”

What is happening today to correct this problem is that the people are becoming informed about all of the above and are requesting (or demanding) that their State legislatures put a stop to the federal encroachment. On Feb. 2, 2009, the New Hampshire state legislature took an unbelievably bold step by introducing a Resolution declaring that certain actions by the federal government are totally void, and warning that certain future acts, if taken by the federal government, will be viewed as a “Breach of Peace” against the States.

Remember, it was our federal Congress that gave us the Federal Reserve Act of 1913, which took the power and control of our money system away from the Congress and the Treasury, and illegally and unconstitutionally gave it to a foreign corporation, headed by greedy foreign international bankers, called the Federal Reserve, which is not, repeat, is not a part of the federal government and is no more federal than Federal Express. The Federal Reserve runs the biggest confidence game (con game) in the history of the world, and it is now attempting to collapse America before the States can save it. (This is the final step in achieving a One World Government.)

New Hampshire is not alone, however. In an article from www.infowars.com , titled “Increasing Number of States Declaring Sovereignty,” we read, “Although Fox News and CNN are not telling you about it, a growing number of states are declaring sovereignty. Washington, New Hampshire, Arizona, Montana, Michigan, Missouri, Oklahoma, California, and Georgia have all introduced bills and resolutions declaring sovereignty under the Tenth Amendment. Colorado, Hawaii, Pennsylvania, Arkansas, Idaho, Indiana, Alaska, Kansas, Alabama, Nevada, Maine, and Illinois are considering such measures.”

People see the federal government today as an entity beholden only to itself, with a blatant disregard for the expressed interests of the majority of citizens. The vote in Congress in October of 2008 to bailout the banks illustrates the point exactly. Just before the Senate vote on the $700 billion dollar bailout (of the very banks that created the financial dilemma, headed by the Federal Reserve), Sen. Diane Feinstein asked for 3 minutes to speak. She said she had received 91,000 faxes, emails, and phone calls from Californians, and that 85,000 of those were totally opposed to any bailout whatsoever. Then she said the people don’t understand the situation, and she voted for it anyway. And remember, both McCain and Obama interrupted their campaigns to fly back to Washington to vote for the bailout.

If there is any hope for America, it lies with We The People taking back our country from the crooks and criminals in Wash., D.C. who are running our country into the ground. Instead, we need to make America SOAR into the stars. It almost seems like a miracle that the people are having their state legislatures divorce themselves from the totally corrupt policies of the federal government.

There is a new hope for America, with a great light at the end of the tunnel, and it involves the states and the people working together, as the Founders intended, to make the America of all our dreams.

Ray Bilger [send him email] is a freelance writer and investigative journalist. Mr Bilger’s articles are first published at The Loop Newspaper in Tehachapi, CA.

The stock market rises and then crashes. Housing prices soar and then plummet. The Federal Reserve causes these booms and busts by constantly expanding and contracting the supply of money and credit.

Credit expansion by the Federal Reserve increases the demand for producer assets and investment instruments. This causes bubbles in things like stocks and housing. When the Fed then contracts credit to avoid systemic price inflation the asset bubbles burst.

This is the history of the Federal Reserve — booms and busts, mixed with episodes of economic stagnation and high inflation like the 1970s.

Even before the Fed was created in 1913 government manipulation of money and credit caused repeated bubbles and contractions. One big source of this mischief was government imposed exchange ratios between gold, silver, and the U.S. dollar. When these hardwired exchange ratios didn’t match reality, problems ensued.

It’s important to recognize that economic perfection isn’t possible. Investors will always make mistakes. But we would expect these mistakes to be randomly distributed throughout the economy, and occur at different times. What causes a bunch of investment mistakes to cluster in particular sectors at a specific time, causing systemic problems?

Only government has the power to impose universal conditions on the economy, from the top down, causing investment mistakes to cluster, like they have in the housing market. The government can do this by passing laws and creating programs that favor one type of investment over others, causing a boom in those sectors.

But the Federal Reserve, with its monopoly control over the supply of money and credit, is an even more powerful mechanism for causing investment errors to cluster.

We need to get off the Federal Reserve roller coaster. We need to end centralized top-down control of the money supply and interest rates. We need a true free market in money and banking. We must abolish the Federal Reserve.

Congressman Ron Paul has a bill to accomplish this. It’s called the “Federal Reserve Board Abolition Act,” and a national coalition called “End the Fed” is working to bring attention to this bill.

Please use our quick and easy Educate the Powerful System to ask your elected representatives to co-sponsor the “Federal Reserve Abolition Act” when Congressman Paul re-introduces it in this Congress.

With news this week that Congress is poised to consider a new stimulus package, I am forced to again ask a question that seems silly in Washington:  How will we pay for this?

While a few Members of Congress have raised the issue, it certainly was not the primary concern of the House Budget Committee when they interviewed Ben Bernanke on Monday.  And, when they did direct this question to the Chairman of the Federal Reserve, his answer was the standard rhetoric about how Congress needed to make tough choices.  Needless to say, not many specifics were discussed.

One of the most liberal members of the House, Barney Frank, has at least volunteered something of a suggestion: “We can let Iraq take care of itself.”  This, of course, goes in the right direction, but hardly far enough.

We need to declare the facts and their obvious consequences.  The deficit of the United States is now spiraling out of control, and the recent bailout package has only made it worse.  Our crushing federal debt is one key reason behind our current economic turbulence.

As Congress begins to consider the third “stimulus package” of the year, we need to realize it is time to start setting priorities.  Priority number one should be cutting spending in foreign countries. This does not simply mean Iraq, but everywhere.

The next stimulus package is likely to include money for infrastructure.  While these investments are, constitutionally speaking, supposed to be made by state and local governments, it is not likely that Congress will suddenly begin to pay heed to the document we are all sworn to uphold.  Still, we need to acknowledge the fact that the current Congress and Administration are rushing the nation toward bankruptcy.

This being the case, we could hope they would at least come to their senses regarding our debt and foreign spending sprees.  Our nation’s foreign-held debt is at record highs and moving ever higher.  Continuing to borrow money from Red China and others in order to pay “dues” to the United Nations and run “Plan Colombia” makes no sense at all.

Our whole carrot-and-stick approach to foreign policy makes no sense.  The US government simultaneously gives money to Israel, and to Egypt.  We send AIDS money to Africa while AIDS clinics in America shut down.  “Millennium challenge” funding goes to countries which enact “market based reforms” as we push our own country further and further into a centrally planned economy.

Economic recovery will only come through financial prudence, savings and getting back to producing things of value again.  But it seems to be a foregone conclusion that we are about to enact another government initiative to “stimulate the economy.”   Instead, there should be some serious talk about cutting all of these foreign giveaway programs.  But, alas and again, we should not hold our breath.  Congress is still not close to being serious about ending its addiction to debt and spending, and is again faced with the deadly temptation to attempt to spend us out of a recession.  We should not forget that in the 1930’s those types of efforts gave us the Great Depression.

Ron Paul is a republican member of congress from Texas.