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As America’s inherently self-destructive
monetary and banking systems lurch from crisis to crisis—and one
foreign country after another announces its intention to reduce its reliance
on Federal Reserve Notes as a “reserve” currency, and perhaps
soon as any currency at all—I am tempted to say, “I told you
so!”
Because
I did. I told everyone so in my book Pieces of Eight in 1983, and then
again, at quite a bit more length, in the second edition of that book in
2002. In a lighter style, in collaboration with my friend, Victor
“Trader Vic” Sperandeo, I conveyed the same message in the novel CRA$HMAKER:
A Federal Affaire in 2000. Nonetheless, I do not wish to claim too much
credit for this prescience, or just a good guess based on hindsight gleaned
from American legal history—nor do I offer it as the basis for a
“Genius Grant” from the MacArthur Foundation. After all, the
sorry lessons that fiat currency and fractional-reserve banking teach should
be obvious to anyone with an IQ higher than his age. Moreover, I am but one
of many voices that have warned of the inevitability of these problems.
Now,
inevitability has become imminence. The vultures hatched from the arrogance,
avarice, ambition, and appetite for abusive powers that have characterized
this country’s economic and political “leadership” for at
least the last one hundred years are circling above us, anticipating their
feast upon our famine. In the menacing shadows cast by their wings, the
self-styled “best and brightest” among America’s present
gaggle of “leaders” are being exposed as perhaps the worst and
stupidest ruling class ever known—a true kakistocracy. For only the
worst and stupidest “leaders” of all time could have come to the
point of destroying a country so exceedingly rich in human talents and
natural resources.
Although
this exposure is welcome, if somewhat tardy, it is not enough. That the
kakistocracy has made a first-class mess of things is obvious. That it cannot
be relied upon any longer for “leadership” is even more obvious.
That it must be separated from political power is the most pressing
imperative of this day. But exactly what must be done to correct this
situation? And who can do it?
America
needs to take action to replace the Federal Reserve System and its rotting
paper currency before the System’s house of cards finally collapses on
her head. Because, when the roof does fall in, a plethora of other very nasty
events will follow very soon thereafter. Therefore, before means now.
Even
the Establishment realizes as much, which explains its feverish construction
of a National police state under the guise of providing for “homeland
security”, and its demonization of patriotic dissenters in tirades of
hateful defamation that make Joseph Goebbels appear as a paragon of
moderation, fairness, and accuracy by comparison. The Establishment knows
that its gangrenous monetary and banking regimes cannot be saved, and must be
replaced in the near future. And the Establishment doubtlessly has a plan and
a schedule for using the collapse of the Federal Reserve System, and the
economic chaos it will engender, as the excuse for introducing a new
currency—the Amero—as a conveyor belt to move America into the supra-national
North American Union.
Events,
however, are not proceeding according to the Establishment’s timetable.
The mills of the gods do grind slowly; but they have been grinding steadily
for a long time, and their work is coming to an end. Countervailing forces
are already at work, undermining the Establishment’s position. The
present scheme of fiat currency and fractional-reserve central banking
constitutes a confidence game in both senses of those words. But if a
confidence-man can fool some of the people all of the time, and all of the people
some of the time, he cannot fool enough of the people for enough of the time
once some critical mass finally wises up. And, as cluttered with noise and
disinformation as it is, the Internet is providing the forum through which to
assemble that critical mass.
So
what is to be done? The solution to the problems the Federal Reserve System
poses is to set up a system of competing currencies: Federal Reserve Notes
and base-metallic Treasury coinage on one side, silver and gold coin on the
other. Actually, America already has all the necessary elements to put such a
system into operation:
First,
Congress is causing a standard silver coin (the “Liberty dollar”)
and a set of gold coins (“American Eagles” of various
denominations) to be minted in amounts sufficient to meet public demand. See
31 U.S.C. § 5112(e and i).This is not yet constitutional “free
coinage”, but (as the saying goes) it is “close enough for
government work” at the present time.
Second,
these coins are as much legal media of exchange, current money, and
“legal tender” as are Federal Reserve Notes and the
Treasury’s base-metallic coins. See 31 U.S.C. §§ 5101, 5103,
5112(h).
Third,
unlike Federal Reserve Notes and base-metallic coins, “Liberty”
and “Eagle” coins are economically sound, and (leaving aside
their present inaccurate denominations) basically constitutional, currencies.
Certainly they are far better on both counts than Federal Reserve Notes and
base-metallic coins.
Fourth,
any common American may enter into a “gold-clause contract”
(payable exclusively in gold), or a “silver-clause contract”
(payable exclusively in silver) that will be enforceable in the courts. See
31 U.S.C. § 5118(d)(2). Indeed, the only party in the United States that
appears to be barred by statute from making a “gold-clause
contract” or a “silver-clause contract” that is payable in
coin and enforceable in those terms is the General Government. See 31 U.S.C.
§ 5118(b and c). But this can be easily corrected.
Now,
more and more people need to be educated and encouraged to use silver and
gold coin as their common media of exchange in “silver-clause”
and “gold-clause” contracts—not necessarily to the
immediate exclusion of Federal Reserve Notes in all transactions, but in
those areas and to the degree that the free market determines is best for
society as a whole.
This
is the most prudent, if not the only realistic, route for reform, because no
viable plan exists for a direct, “top-down” replacement of
Federal Reserve Notes and base-metallic coinage with a currency of silver and
gold (or any other currency, for that matter). The free market sets daily
prices for various silver and gold coins in Federal Reserve Notes. But as
soon as silver and gold coins became common media of exchange, in direct
competition with Federal Reserve Notes for that purpose, their values will
increase, and the values of Federal Reserve Notes will decrease, to some
unpredictable degrees. The only way to determine how those relative values
should change is to allow the free market to change them, on a day-to-day and
even hour-to-hour basis, without political interference of any kind. In
particular—
Silver
and gold coin must be re-established as currencies entirely separate from and
independent of Federal Reserve Notes.
The
free market must be allowed to set the prices of all goods and services in
silver and gold, as well as in Federal Reserve Notes, simultaneously.
Common
Americans must be allowed to choose and to use whichever currency they desire
for specific transactions.
The Federal
Reserve System must be entirely separated from the General Government.
Governments
at the National, State, and Local levels must gradually phase out Federal
Reserve Notes as their media of taxation and of payments to public creditors,
and phase in silver and gold coin for those purposes.
The
free market must establish the rates at which silver and gold coins exchange
for Federal Reserve Notes (if anyone who holds silver and gold remains
willing to trade them for any amounts of such notes).
New
banks or other financial institutions dealing in silver and gold accounts,
with their demand-deposits on a basis other than fractional reserves, should
be created. And,
If
the private banks in the Federal Reserve System can find a way to make
Federal Reserve Notes honestly redeemable in silver, or gold, or both, at
whatever rates are economically viable, they should be encouraged to do so.
In
this way, an economically rational silver-and-gold price structure will
quickly evolve, common people can disconnect their financial destinies from
the Federal Reserve System in a gradual and ordered fashion, and separation
of bank and state will finally be accomplished. Whether, as the result of
this process, all, or some, or only a few of the banks in the Federal Reserve
System can continue in business is for the free market to decide.
In
principle, a program of competing currencies could be set in motion from the
District of Columbia, if Congress and the White House were populated with
patriots. Such is the scenario employed in CRA$HMAKER. Describing it
in prose is easier than doing it in the halls of Congress, however. Even if
Ron Paul were elected President in 2008, he could count on vanishingly few
co-thinkers in Congress to help him push through such a reform. (Of course,
candidate Paul should campaign on the ever-optimistic platform that he will
propose and fight for such legislation if elected.)
For
the foreseeable future, the better strategy is to promote competing
currencies in each of the States.
First,
it is perfectly constitutional for the States to use whatever constitutional
currencies they desire for their own fiscal purposes, as the Supreme Court
long ago recognized in Lane County v. Oregon, 74 U.S. (7 Wallace) 71
(1869). And the two currencies that the Constitution itself explicitly
mandates for the States are silver and gold coin: “No State shall * * *
make any Thing but gold and silver Coin a Tender in Payment of Debts.”
Article I, § 10, cl. 1.
Second,
a “bottom-up” approach can possibly work right now. Some State
legislatures contain patriots who understand the problems the Federal Reserve
System poses. And other State legislators will be compelled by their desperate
and angry constituents to take appropriate remedial action as the monetary
and banking systems go belly-up.
Third,
an approach based on reform in individual States, one by one, is the most
prudent alternative. Any attempt to create competition between silver and
gold coin and Federal Reserve Notes as America’s media of exchange is
an experiment. As such, it should be undertaken with circumspection, to
minimize the risk. Working one State at a time has two distinct advantages:
(i) It does not put all the eggs of monetary reconstruction into one basket.
And (ii) it allows for refinement of the process, from State to State, as
experience dictates.
If
this is what needs to be done, who is capable of doing it? Ron Paul, and only
Ron Paul. Ron Paul is the only candidate talking sense—or even
talking at all—about this matter. He is the only candidate with
credibility on this subject; for he alone has been warning for years,
explicitly and consistently, about the structural weaknesses in the monetary
and banking systems. The other candidates would not be even marginally
believable if they started talking about the issue. They have never said
anything before, which suggests that they know nothing about it, and probably
care less. And they are part and parcel of the Establishment that created the
problem, and intends to perpetuate it in some other form, which suggests that
they would do nothing effective to correct it, but likely would exacerbate
it. So the choice is as stark as it is simple: Ron Paul as President, or
monetary and banking crises leading to a National police state. If this
Presidential campaign is made to turn on monetary and banking reform, while
the monetary and banking systems are self-destructing before Americans’
very eyes, only Ron Paul has a chance of winning. Only Ron Paul
will deserve to win. And only if Ron Paul wins can America be saved.
That
being so, candidate Paul should go through the States explaining the dangers
in the monetary and banking systems, and promoting radical reform before it
is too late. He should tell the voters what must be done, how it can be done,
and why he is the only person who will do it—and then wait to hear what
the Manchurian Candidates opposing him, in both of the “two”
major political parties, will dare to say in response.
New
Hampshire, especially, will be an apt venue. Not only because of its important
Presidential primary, but also because, for years now, New Hampshire’s
legislature has had the opportunity to enact, or at least to study, a bill to
begin to bring the State’s finances back to a silver-and-gold standard.
(The latest draft of the bill is posted at.) To date, however, the
legislature there has done nothing positive. This no doubt reflects the
malign influence of party politics and other forms of stupid, anti-social
factionalism, and the irresponsibility of certain public officials who delight
in playing political games while their State and country are being flushed
down History’s toilet. But the time for petty party politics and silly
politicians in New Hampshire—as well as throughout the rest of
America—is over, on the monetary and banking issue more than any other.
This country can afford no more of that nonsense and those nincompoops. Ron
Paul can make that clear. And, once he does, New Hampshire can become an
object lesson in what common Americans can do at the plate when they finally
know the score.
Edwin
Vieira
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