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 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.

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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.

Last week I discussed how sound money contributes to peaceful relationships around the world.  It is not gold, in and of itself that excites me, but the many benefits of sound money.  Another benefit is financial security.

Can sound money give you financial security?  There is something very comforting in knowing that what you earn today will retain its purchasing power in the years to come.  Indeed, the same silver dime that bought a loaf of bread in the 1960′s can still buy a loaf of bread with its precious metal content – which is worth about $1.00 today. 

An ounce of gold has always been about evenly exchangeable for a finely tailored men’s suit, which these days is roughly $800.  And in these days of fluctuating gas prices, when priced in gold, oil has been stable.  Meanwhile, since the creation of the Federal Reserve, the fiat dollar has lost 94?f its purchasing power.  The erosion of purchasing power rapidly accelerated when it was completely uncoupled from gold in 1971.

This sort of fluctuation in the medium of exchange creates a lot of uncertainty in the marketplace and necessitates that you either take extraordinary defensive maneuvers, or face financial ruin.  Trusting in government for financial security in retirement is not a safe option.  Indeed, a recent study by the Consumer Bankruptcy Project shows that bankruptcies among those 75 and older has more than quadrupled since 1991.

This represents wealth and savings that have been eroded by inflation, and trust in entitlement promises that were more fantasy than reality.  Even with the pittance that social security pays to seniors, it is bankrupt and bringing the economy to its knees.  It is no wonder that many in the younger generations want no part of it, and they should not be forced into a failed system.

On the other hand, holding physical gold can defend against aggressive government monetary policies that threaten to inflate away the value of your life savings.  During the hyperinflation in post WWI Germany, what used to be a comfortable nest egg was suddenly the value of a postage stamp.

If one held just a portion of their savings in precious metals, the crisis was greatly softened.   Gold will never be worth nothing, even if the exact price fluctuates.  There is a famous photograph, however, of a German woman during this time period burning piles of tightly bound banknotes to keep warm.

Imagine if the money you earned had honest, stable value, or even appreciated like an investment!  No such special measures, like converting dollars to gold, would be required to ensure that your savings would sustain you in your golden years.

That is the way it could be and is supposed to be.  However, the government’s thirst for power will not be easily, or cheaply, quenched.  Fiat currency is one tool governments have to extract wealth quietly from the working class.  It is time for the people to wake up to this ruse and look to the Constitution to restore sound currency.

Ron Paul is a republican member of Congress from Texas.