Objection: “This Note Is Legal Tender!”

(Crossposted from the Tenth Amendment Center's Constitutional Tender Blog)




In 2009, when Georgia Rep. Bobby Franklin introduced my first version of the Constitutional Tender Act (HB 430) in the Georgia House, we knew it wasn’t just going to be difficult to get passed into law — it was going to be difficult to get any co-sponsors, it was going to bee ord in the Senate…

In short, it was going to be difficult, all around. Why? Because the bill would actually return the State of Georgia to obedience to the U.S. Constitution… and we knew that almost every single legislator there was clueless about what the Constitution actually required, at least when it came to monetary policy.

So, when the bill (which did get one co-sponsor — Rep. Barry Loudermilk, who later won a seat in the State Senate and is now running for U.S. Congress) was assigned to the Banks and Banking Committee, we were happy. Not only was that the right committee, it was a good committee, for a number of reasons… not the least of which was, because the Chairman was a friend of mine for whom I had campaigned when I lived in his district.

I knew he was a staunch limited-government conservative. I knew he took his oath to the Constitution seriously. And I knew he would be willing to at least listen to why this bill was needed. So when I asked him to actually give the bill a chance, he said he’d “do what he could”. And he did — he assigned it to not one, but two subcommittees, and we set to work with a coalition of grassroots activists across the State to pressure at least one of those Chairmen to hold a hearing.

Honestly, we didn’t hold out much hope for that happening. It was late in the session, which made it more unlikely we’d see any action at all. So, when we suddenly got word that there would be a combined subcommittee hearing for the bill — and soon — we were very happy. We quickly organized our supporters, put together our supporting speakers, and made sure we had a great turnout for the hearing.

For me, one of the most interesting aspects of that first hearing was the questions and comments made by the legislators on the subcommittees (and by the speakers in opposition). That experience helped me to draft an improved version of the bill in the next session (HB 3 — since we didn’t get a vote after the first hearing), to cover areas that obviously needed revision. It also helped me to realize that I had actually underestimated the legislators’ lack of understanding of what the Constitution requires when it comes to “legal tender” in the States.

That point was driven home when another State Representative on the committee — again, someone I had dealt with a number of times in the past, whom I knew to be a pretty strong limited-government conservative who often spoke strongly in favor of strict constitutionalism — took out a dollar bill during the hearing, held it up, and asked me point-blank:

“This Federal Reserve Note printed by the United States of America… it’s stamped on here, it says that ‘This note is legal tender for all debts, public and private’… and it has the force of law, correct?”

First, I made a small correction in his statement — Federal Reserve Notes are only technically printed by the United States government (Bureau of Printing and Engraving); they’re printed for the Federal Reserve, which of course is not an agency of that government. Then I responded that yes, it is U.S. law that FRNs are legal tender for all debts, public and private; but I also reminded him that the U.S. government is under the U.S. Constitution, so any “law” that’s passed only has the force of law if it’s Constitutional. (He asked me if it has been found to be unconstitutional by any court, to which I replied, “Not yet.”)
The point which he was trying to make, in the limited amount of time we had, was that Congress had passed a law declaring Federal Reserve Notes to be “legal tender for all debts, public and private,” and so, he believed, States are required to obey that law and use FRNs for all debts owed by and to the State. Therefore, he claimed, the Constitutional Tender Act — which would force the State to once again not “make any Thing but gold and silver Coin a Tender in Payment of Debts”, as required by Article I, Section 10 — was unnecessary, since Georgia was in compliance with federal law.

But the point which I was trying to make in response, in the limited amount of time we had, was that since that section of the Constitution has never been amended in any way, the State was still required to only use gold and silver for all of its debts, regardless of anything that Congress may tell them to do to the contrary — because Congress cannot force States to disobey the Constitution. As noted in our FAQ,

“Laws passed by Congress, such as legal tender laws, cannot contradict the Constitution. Article I, Section 10 states very clearly: ‘No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.’ Therefore, if any State accepts or pays with – in other words, “tenders” – any other ‘Thing’ (such as Federal Reserve Notes) except gold or silver coins, it is in violation of the Constitution. It’s that simple. 

Another thing to consider is that the U.S. Supreme Court itself has stated in Lane County v. Oregon, 74 US 71 (1868), ‘the general words “all debts” were not intended to be taken in a sense absolutely literal… the clause making the United States notes a legal tender for debts has no reference to taxes imposed by state authority, but relates only to debts in the ordinary sense of the word, arising out of simple contracts or contracts by specialty, which include judgments and recognizances.’ It also stated in Hagar v. Reclamation District No. 108, 111 U.S. 701 (1884), ‘The acts of Congress making the notes of the United States a legal tender do not apply to involuntary contributions in the nature of taxes or assessments exacted under state laws, but only to debts in the strict sense of the term; that is, to obligations founded on contracts, express or implied, for the payment of money.’”

Think of it this way: in the same section of the Constitution (Article I, Section 10), it states, “No State shall… coin Money”. Now, imagine that Congress, as a cost-cutting measure (I know, I’m dreaming here), decided to shut down the U.S. Mint, which coins all of our money (under Section 8). They realize that we all still need quarters, dimes, nickels and pennies, so they pass a law requiring every State to coin its own money.

Well, then, that means that every State would have to coin money, right? It’s the law!

Wrong. As I tried to explain to that State Representative, any “law” that’s passed by Congress only has the force of law if it’s Constitutional. Article VI, Paragraph 2 states, “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof… shall be the supreme Law of the Land.” So if a law is passed which is not made in pursuance of the clear words of the Constitution, than that “law” is not a “law” at all — as John Marshall, the first Chief Justice of the U.S. Supreme Court, said in Marbury v. Madison, 5 U.S. 137 (1803), “an act of the legislature, repugnant to the constitution, is void.” Justice Stephen Johnson Field, delivering the opinion of the court in Norton v. Shelby County, 118 U.S. 425 (1886), wrote, “An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.” Alexander Hamilton, the first U.S. Secretary of the Treasury and the man whose face graces the ten-dollar bill, wrote in The Federalist No. 33, “acts of the large society [that is, the federal government -- WG] which are not pursuant to its constitutional powers… will be merely acts of usurpation, and will deserve to be treated as such.” And Thomas Jefferson, the principal author of the Declaration of Independence and the third President of the United States, stated emphatically in the Kentucky Resolutions of 1798, “Whensoever the General Government assumes undelegated powers, its acts are unauthoritative, void, and of no force.”

Therefore, if Congress passed a law requiring every State to coin its own money, that “law” would be in direct contradiction to Article I, Section 10: “No State shall… coin Money”; that “law” would not be made in pursuance of the clear words of the Constitution, which is required by Article VI, Paragraph 2; and so that “law” would be “void,” “unauthoritative,” an act of “usurpation,” “not a law,” and “inoperative as though it had never been passed.” In other words, every State would be Constitutionally required to NOT follow that “law,” and ONLY follow the clear instructions of the Constitution itself.

The same would hold true if Congress passed laws requiring States to enter into a Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; emit Bills of Credit; pass Bills of Attainder, ex post facto Laws, or Laws impairing the Obligation of Contracts; or grant Titles of Nobility — because every one of those things is clearly and expressly prohibited for the States in Article I, Section 10… just like coining money.

So then, what about that law, which says that Federal Reserve Notes are “legal tender for all debts, public and private”? Does it mean, as that Georgia legislator implied, that States are required to obey that law and use FRNs for all debts owed by and to the State? And does it mean, as he further implied, that the Constitutional Tender Act was unnecessary, since Georgia was in compliance with federal law?

Obviously, the answer is an emphatic NO. By following that law, like every other State in America, Georgia has made some other “Thing” a ”tender in payment” (that is, they have made something else an offer as payment); they have by law declared that they will accept, and pay out, Federal Reserve Notes for any debts owed to or by them. Therefore Georgia, like every State, is in violation of Article I, Section 10 of the U.S. Constitution. That is why there is a need for the “Constitutional Tender Act” — a bill template that can be introduced in every State legislature in the nation, returning each of them to adherence to the United States Constitution’s actual “legal tender” provisions.

Hey — why not join us, and take action in your State?

(By the way, “legal tender” laws, along with the Federal Reserve Act itself, very likely are unconstitutional, so States could probably “nullify” those laws as well; but that can be saved for another article.)

Planning for AFTER the Federal Reserve's Inevitable Demise

There are several ways to "end the Fed", that is, to finally put an end to the fiscally destructive and economically immoral Federal Reserve System. There are top-down efforts, like Rep. Paul Broun's "End the Fed" and Sen. Rand Paul's "Audit the Fed" bills (both originally Rep. Ron Paul's bills); and there are bottom-up efforts, such as the Constitutional Tender Act. There is also the "long run" approach: due to the very nature of the Fed's destructive and immoral policies, it will eventually implode and collapse under the weight of its own inflationary fiat money system (perhaps a corollary to Keynes' reassurances that "in the long run, we're all dead").

Regardless of how it's accomplished, the eventual demise of the Federal Reserve is inevitable. The question for those who recognize that truth, then, must be: with what monetary system will we replace it? As Ron Paul has repeatedly been asked, "If we get rid of the Fed, what do we put in its place?"

While the most obvious short answer (which Rep. Paul often used) is "Nothing!", we really should discuss what ought to arise in place of the worthless Federal Reserve Notes that everyone uses now. In this article from a year ago, Doug Tjaden (Founder & Executive Director of the Christian Liberty Project) discusses the need for States to implement Constitutional tender laws now, in anticipation of the end of the Fed then.

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So They Audit The Fed. Then What?
by Doug Tjaden

Let’s say for the moment that the Senate follows the House’s lead and calls for a full audit of the Federal Reserve. Let’s also dream that President Obama signs it. What are the consequences?

Rumors are, for decades the Federal Reserve has been engaged in the highest form of crony capitalism, big bank favoritism, purchase of politicians, nation building, and the bailout of foreign banks, corporations and governments.  If this is found to be true, it will add to the growing awareness of the Federal Reserve’s other nefarious activities. These include the fact the Fed and its debt-based fiat monetary system is confiscating the wealth of this nation and concentrating it in the hands of a few powerful interests. Not to mention the Fed’s money printing which enables the TSA, NSA, EPA, FDA, NEA, and USDA to unconstitutionally regulate our liberties into oblivion. Indeed, an audit could be the tipping point, generating enough public outcry to finally “end the Fed.”

It begs the question, “What’s next?”

The Federal Reserve Note is the officially recognized currency of the land, having long ago usurped the constitutional dollar as our monetary unit. The Federal Reserve system, like it or not, is responsible for insuring the flow of credit and currency around the nation and the world. Should the decision be made to end the Fed, it would take years to unwind its tentacles from the global economy and to replace Federal Reserve Notes with another currency.

As we call to “repeal and replace” the Federal Reserve System, it might be wise to think ahead and begin building that replacement system now. Unlike Obamacare, there isn’t an existing system which we can fall back on. All fifty states could nullify Obamacare tomorrow and there would be little impact on healthcare. End the Fed tomorrow, and like it or not, the global economy grinds to a halt.

The replacement monetary system that will insure the greatest long term protection of individual liberty is one built on limited regulation and sound money. The former must be dealt with at both the state and national level. The latter must be initiated by the states, and the states must maintain control over it. Centralizing monetary policy has been an abject disaster. The power it wields is too great for any one group of individuals or governmental authorities to handle. Without a broad set of checks and balances, it would fall into abusive hands again.

Seamless integration of a decentralized monetary system built on constitutional tender and controlled by the states is possible. It is what our founders intended. The first step is for states to pass sound money legislation, reinstating gold and silver coin as a tender in payment of debts. We had better begin building the replacement system soon. If you realize it or not, the unstoppable process to end the Fed is already underway as world markets prepare to reject the endless piles of debt-money the Fed is creating. And we are far from ready for it.

READ THE ORIGINAL ARTICLE HERE...

Chinese Bank introduces gold and silver coin ATMs

One of the objections we often hear to the Constitutional Tender Act is that it would force the States and their citizens to "buy silver and gold coins" and carry them around in their pockets all of the time. The only way to believe this, is if you believe that you have to "buy Federal Reserve Notes" and carry around hundreds or thousands of dollars in order to buy groceries, pay car payments, pay mortgages, etc.

Of course, you don't. You can use your debit card to pay almost anything nowadays. Bank computer programs automatically compute debits and credits; they can even automatically convert the cost of items from foreign currency to domestic currency, based on whatever the current market exchange rate is.

That's exactly what can be done by the banks under the Constitutional Tender Act's conversion formulas, as this story about getting gold and silver coins from ATMs in China proves. The unfortunate part of this story is that it falls into the modern trap of thinking that exchanging one form of currency -- fiat printed money -- for another form of currency -- gold and silver coins -- is the same as "buying gold or silver coins". If you go into a bank and exchange four $5 Federal Reserve Notes for a $20 Federal Reserve Note, did you just "buy an FRN"?

Of course not. If you exchange $25USD (U.S. Dollar) for $1SAE (Silver American Eagle), you aren't buying a once-ounce silver coin, you're exchanging American legal tender currency. And all you're doing at these Chinese ATMs is exchanging ¥268CNY (Chinese Yuan) for ¥10SP (Chinese Silver Panda) or other denominations -- you're not buying one-ounce silver coins, etc.

Regardless, this story once more shows how the ConTen Act could easily be implemented.

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People in Beijing can now buy gold or silver coins at ATMs after the Beijing-based Hua Xia Bank introduced five of the machines earlier this month, according to Hong Kong's We Wei Po.

The bank installed the five machines at its branches across the city in Xidan, Fangzhuang, Zhongguancun, Dongdan and on Qingnian Road.

The ATMs look like ordinary teller machines but have an additional compartment to dispense the gold and silver coins. The machines currently offer panda souvenir gold or silver coins and Year of the Snake silver coin and plate sets.

A single 1-oz panda silver coin priced at 268 yuan (US$40) is the cheapest item available, while the panda gold coin set is the most expensive at 23,800 yuan (US$3,800).

Buyers can purchase the coins using their bank cards. After they place their orders using the machine's touchscreen, their payments are verified through bank card organization China UnionPay and they can pick up their purchased items through the opening on the lower part of the machine.

If they want to purchase more than 20,000 yuan (US$3,200) worth of items, they will first need to place their ID cards on the machine's sensor to verify their identity before the order can be placed, Wen Wei Po said.

READ THE FULL ARTICLE HERE...

Virginia coin moves closer to reality

Virginia Del. Robert G. Marshall fears that a financial apocalypse is coming and only one thing can save the Commonwealth: its own currency.

The idea that Virginia should consider issuing its own money was dismissed as just another quixotic quest by one of the most conservative members of the state legislature when Marshall introduced it three years ago. But it has since gained traction not only in Virginia, but also in states across the country as Americans have grown increasingly suspicious of the institutions entrusted with safeguarding the economy.

This week, the proposal by the Prince William Republican sailed through the House of Delegates with a two-to-one majority.

“This is a serious study about a serious topic,” Marshall said Tuesday. “We’re not completely powerless.”

So far, only Utah has approved a law recognizing nontraditional currency. Four other states have bills pending this year. Marshall said he is unsure of his proposal’s prospects in the Virginia Senate. One Democrat derided it as a descent into “la-la land.”

But the fact that the debate is happening at all reflects a deep-seated distrust in the very foundation of the country’s economic system — the dollar.

Much of the anger is directed at the Federal Reserve, which controls the nation’s supply of money. Since the financial crisis, the Fed has pumped trillions of dollars into the economy to help avert what Chairman Ben S. Bernanke believed could have been the next Great Depression. Critics worry the Fed won’t ever stop.

Marshall believes that the result could resemble the Weimar Republic of Germany after World War I: a worthless currency, skyrocketing inflation and a crumbling government.

And those are only the problems that the Fed might create. Who knows what other threats may be lurking in the shadowy world of cyberattacks, Marshall said. The Fed acknowledged Tuesday that its computer systems were recently compromised, although the problems did not affect critical operations and have since been fixed.

“This is a lifeboat study; what happens if?” Marshall said.

READ THE FULL ARTICLE HERE...

You can voice your opinion about HJ 590 by contacting your Virginia Legislators. For their contact information, visit: http://conview.state.va.us/whosmy.nsf/main?openform

Tell your Delegate that this bill is about more than politics - it's about VIRGINIA, and saving the money of the citizens of this State!

Phase Out the Fed With State Sound Money Laws

Although it is very encouraging that the House voted 327 to 98 to audit the Fed last month, it is virtually certain that the Senate will not concur this year. Moreover, it is virtually certain that Congress will not act to end or phase out the Fed any time soon.

So, what's to be done about the impending destruction of our currency by the Federal Reserve's ongoing expansion of the money supply. Since 2010 there has been a continuation of this rapid expansion of the money supply.

The preeminent expert on Constitutional money, Edwin Vieira, has a strategy for phasing out the use of Federal Reserve Notes through new state laws providing alternative currencies, which he has been promoting via interviews and videos for the past several years.

Basically, Vieira advocates that states start taking advantage of their sovereignty as guaranteed by the Tenth Amendment and their constitutional mandate under Article I, Section 10 not to "make anything but gold and silver coin a tender in payment of debts," by passing laws providing alternative currencies in their states based on gold and silver.

A good way to understand Vieira's strategy is to view the video, "What Is Constitutional Money?", shown below, which consists of a lecture he gave last November in Washington, DC, sponsored by Congressman Ron Paul. Be sure to view all the way to the end of the question-and-answer period to get the whole story.

READ THE FULL ARTICLE HERE...

"The Constitutional Tender Movement in Georgia"

by William Greene, Ph.D.
ConstitutionalTender.com

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In early 2009, I was teaching a course on American Government at Gainesville State College here in Georgia. As I was going over with my students the powers prohibited of the States in Article I, Section 10 of the U.S. Constitution, we hit upon this one: “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts”.

A student in the back of the room raised his hand, and asked, “What does Georgia use for paying its debts – money owed to the State, and by the State?”

“Federal Reserve Notes,” I replied.

“Not gold or silver coins?” he asked.

“No, not gold or silver coins. And no, Federal Reserve Notes are not backed by gold or silver coins, either.”

He raised his hand again. “Which States DO use gold and silver coins for paying State debts?”

“None of them,” I answered. “They all use Federal Reserve Notes, which were declared to be ‘legal tender’ by the U.S. Congress.”

“When did we pass a Constitutional Amendment to change this requirement in Article I, Section 10?” He had a puzzled look on his face.

My answer seemed to puzzle him even more. “We didn’t.”

It was quiet in the classroom at that point. I waited. I didn’t have to wait for long.

“How have the States gotten away with that?”

I didn’t have an answer to that question. And it bothered me...

READ THE FULL ARTICLE HERE...

"Competing currencies: a defense against profligate spending"

By Rep. Ron Paul (R-Texas)
The Hill - 07/11/11

... Currency is sound only when it is recognized and accepted as such by individuals, through the actions of the market, without coercion. Throughout history, gold and silver have been the two commodities that have most fully satisfied the requirements of sound money. This is why people around the world are flocking once again to gold and silver as a store of value to replace their rapidly depreciating paper currencies. Even central banks have come to their senses and have begun to stock up on gold once again.

But in our country today, attempting to use gold and silver as money is severely punished, regardless of the fact that it is the only constitutionally-allowed legal tender!

... This is why I have taken steps to restore the constitutional monetary system envisioned and practiced by our Founding Fathers. I recently introduced HR 1098, the Free Competition in Currency Act. This bill eliminates three of the major obstacles to the circulation of sound money: federal legal tender laws that force acceptance of Federal Reserve Notes; "counterfeiting" laws that serve no purpose other than to ban the creation of private commodity currencies; and tax laws that penalize the use of gold and silver coins as money. During this Congress I hope to hold hearings on this bill in order to highlight the importance of returning to a sound monetary system.

Allowing market participants to choose a sound currency will ensure that individuals' needs are met, rather than the needs of the government. Restoring sound money will restrict the ability of the government to reduce the citizenry's purchasing power and burden future generations with debt. Unlike the current system which benefits the Fed and its banking cartel, all Americans are better off with a sound currency.

READ THE FULL ARTICLE HERE...

Moving Forward to a New Digital Gold Standard

This is a great article on how we can use gold & silver in everyday transactions. It answers the points raised by oh-so-many legislators:

"Gold and silver are too heavy to carry around a bag of metal to pay for everyday purchases."

"Gold is too valuable, we'd be using pieces the size of rice to try and pay for things."

"It's impossible to make change using gold and silver, the coins are not physically divisible at the cash register!"

The proof that we don't have to do any of that silliness is found in already-existing Digital Gold Currency. DGC lays the foundation for moving to simply doing what people are doing already - using digital money in everyday transactions - but using check cards & debit cards that are backed by gold & silver rather than Federal Reserve Notes (or whatever other government legal tender you're forced to use).

I understand - it can be difficult to wrap your head around the fact that gold and silver are money, and money doesn't have to take the form of nearly-worthless pieces of paper like we have today. But please - these legislators are Members of the BANKS AND BANKING committee. Surely...

It's time to return to sound money, that holds its purchasing value. The Constitutional Tender Act can help begin that process.

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by Mark Herpel, editor of Digital Gold Currency magazine

In my everyday conversations people always ask me, "are we going back to the gold standard? Is that what you want?"

I have to laugh and respond by saying, "yes, back to the gold standard of the 1800's and on your way out today, please turn in your car keys and pick up your horse & buggy."

We can't go back in time. We can't wake up one day and pretend that the cell phone was not invented or the Internet doesn't exist. Once the blind man gets his sight, there is no going back to the darkness.

As both Lewis E. Lehrman and Ron Paul say, we should be "going forward to a new gold standard".

The move from legal tender paper to voluntary use of gold and silver has already been occurring on a state by state basis in the U.S.

By giving people the option to use sound money over paper currency, slowly but surely, the state legislatures are offering real protection from ongoing paper money inflation. ..

READ THE FULL ARTICLE HERE...

Constitutional Tender Act Gets Georgia House Subcommittee Hearing!

On Monday, March 8, 2011, a hearing was held in the Georgia House Financial Institutions & Services Subcommittee (a Banks & Banking Committee subcommittee) on HB 3, the Constitutional Tender Act.

Testimony in favor of the bill was given by Rep. Bobby Franklin & Dr. Bill Greene, who authored the bill. There was no testimony in opposition to the bill given.



HB 3 would return the State of Georgia to adherence to the U.S. Constitution's legal tender provisions. Specifically, the U.S. Constitution declares in Article I, Section 10 that "no State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts". This means that no State can make something a "tender in payment" (which means they cannot "make something an offer as payment") for any debts, which would include debts owed by and to the State. However Georgia, like EVERY State in the United States of America, HAS made some other "Thing" an offer as payment - they have by law declared that they will accept, and pay out, Federal Reserve Notes for any debts owed by or to them. Therefore, Georgia is in violation of Article I, Section 10 of the U.S. Constitution. Therefore, this bill would require Georgia to ONLY use gold and silver coins in payments to and by the State. Federal Reserve Notes could still be used by the people of the State in personal and business transactions, if they so choose; but with the introduction of competition with REAL money, FRNs will likely soon go the way of the dodo bird.

The witnesses testified and explained to the Members of this subcommittee the absolute requirement of the U.S. Constitution for the State of Georgia to ONLY use gold and silver coins in its transactions, and a dialogue was begun in the best MEANS by which this should be done. The legislators present (only 5 of 13 members showed) asked a good number of questions, many of which were already answered in the handouts they had been given in advance.

Rep. Franklin and Dr. Greene explained to the Members the need to return to fidelity to the Constitution quickly, in order to reap the greatest benefits from such an action. The likely complete devaluation of Federal Reserve Notes, and thus the need for Georgia to protect its citizens via returning to Constitutional Tender, was also explained.

No vote was taken at this hearing.

Further testimony by additional witnesses also followed, which will be uploaded as separate videos.

View the bill here.
Citizens of Georgia: Contact your State Representative here to ask they co-sponsor this bill!

Every American citizen TODAY needs to contact the Leaders of the Georgia House and ask them to support this bill -- CLICK HERE to take action NOW!

View last session's hearing & testimony here.

Radio Interview: "Freedom Files" syndicated radio program

The latest interview with Bill Greene on the Constitutional Tender Act - from the "Freedom Files" Radio Show, with host James Burns:

Changing to a "Legal" Gold & Silver Economy

Prof. Michael S. Rozeff recently wrote an article at LewRockwell.com entitled, "Changing to a Silver Economy". It's an excellent exercise in thinking about how to return to an economy based on sound money:

A libertarian in Columbia, South Carolina sent me a message recently. He works at a convenience store. He was interested in introducing silver as a means of payment or currency at this store. His specific ideas I thought would not work because of the taxes on silver. The government treats silver as a collectible subject to income taxes at ordinary rates. He had some ideas of buying bullion and then setting up a market in it by buying at a small discount to the spot price and selling at a small premium, thereby creating a bid-ask spread. He had some idea of getting people to transact in silver.

Instead I spun out the following proposal. It too has the fatal flaw that taxes on silver dealings occur, but thinking about this process is very useful anyway. It shows how stores might become 100% reserve banks and how the economy might transition from paper and slug coin currency to silver money. And, if this skeletal proposal has flaws, others can possibly improve on it. I merely want to demonstrate a degree of feasibility, so that the possibilities become more tangible.

The basic idea is that silver is the unit of account, but silver is not necessarily used as the medium that is used for redemptions.

Prof. Rozeff's idea is a good one, but it's also a little complicated and potentially legally hazardous - we all know how our wonderful federal government likes "competition" in currency, and the Secret Service and IRS are used quite effectively to squelch such attempts. So instead of trying to swim upstream like so many others have attempted... how about using the government's own "legal tender" laws against it, as an alternative?

Step 1. Make the units of account (currency accepted) in the store both "legal tender" Federal Reserve Notes (FRNs) and "legal tender" Gold & Silver Coins (99.9% Eagles & 90% pre-1965 "junk" silver).

Step 2. Price everything in the store in both FRNs and Gold/Silver coins. This is not difficult; pricing in two currencies is done all the time at heavy tourist locations in Europe, the Caribbean, Mexico, and elsewhere. Exchange rates don't fluctuate dramatically enough on a daily basis to change pricing too frequently; and in reality, it would only be the price in FRNs that would need to be changed.

Pricing is fairly easy to calculate: Go to the Solaris "Silver and Gold Payment Calculator" and simply enter the FRN cost to get the converted cost. For example, if an item costs $25 FRN, also label it at $1.25 pre-65-silver; if an item costs $5.99 FRN, also label it at 30¢ pre-65. More expensive items like TVs might cost $259; it can also be labeled at either $12.96 pre-65, or [$5 Gold Eagle + $6.30 pre-65], or [$5 Gold Eagle + $4 Silver Eagles + 70¢ pre-65]. (If a premium needs to be added, that can also be incorporated in the exchange rate.)

Step 3. Offer change in either FRNs or Eagles & pre-65 coins (again, calculated online). Since these are LEGAL TENDER coins under U.S. law, if they are used in actual purchasing transactions (and not just conversion transactions - in other words, "buying" gold or silver coins using FRNs), they have been specifically declared to be NON-taxable (except for sales tax, of course; that would be done based on whatever the final face value of the sale was, as always).

All the store is doing would be to follow the legal tender laws of the U.S. government in pricing, giving change, and paying sales taxes. No one HAS to pay in gold or silver; the store would stay in business with its FRN-using customers. However, those customers would also see the price in FRNs rising on a regular basis, while the price in gold & silver remains fairly constant from week to week. Thus, this would also be a hands-on method of educating the public on the benefits of sound money; you would likely see people going out and getting as much gold & silver coins as they could, knowing that a week later the price in FRNs would be going up, but they could still buy their goods at the store for the same amount of gold & silver that's now worth more (instead of the FRNs which they would need more of).

To put it more simply: what we've done here is introduce competition in currency, between legal tender MONEY and legal tender pieces of paper. I believe MONEY will win.

A lot of this falls in line with what would most likely happen if a State passes the Constitutional Tender Act, which would require States to adhere to Article I, Section 10 of the U.S. Constitution, and use ONLY gold & silver coins in State transactions. Check out the paper "Ending the Federal Reserve from the Bottom Up" for a more detailed explanation of how this would lead to a "legal" gold & silver economy in the U.S.

ALL of these are the kinds of ideas that need to be "kicked around" as much as possible, as the present currency crisis descends upon us. Sound money is, of course, the answer; the question is, how do we get it re-introduced effectively, and quickly. The ConTen Act is most likely to achieve that goal.

Video: "Sound Money Rings True"

Latest video from the folks at Utah Sound Money!

The Utah Sound Money Act - Utah 10th Amendment Center

Written by: Connor Boyack

...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).

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Constitutional Tender for Georgia? 10th Amendment Center

Written by: Michael Boldin
posted on 12/27/10 at the Tenth Amendment Center Blog

The United States Constitution states, in Article I, Section 10, “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”

When was the last time your state followed this? For most living humans – never. In recent years, though, a number of states have seen Constitutional Tender Acts introduced with the goal of righting this wrong. Passage would nullify federal legal tender laws that prevent states from abiding by Article I, Section 10 of the Constitution.

In the 2011 legislative session, Georgia will consider House Bill 3 (HB3), which states, in part:

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Another step towards Gold as Money: Boca Raton mall unveils ATM that dispenses gold

One of the most important aspects of restoring sound money to our country is the need for people to "wrap their heads around" the idea that gold and silver are money, and not just commodities. The Constitutional Tender Act does that by returning the State back to obedience to the Constitution's Article I, Section 10 negative mandate ("No State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts").

By doing this, as I explained in a recent article, precious metal coinage could return, because 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. All contracts, tax bills, etc. would be required to be denominated in legal tender gold and silver U.S. 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.

The State would use gold and silver coins as money; the public and businesses would start using gold and silver as money, in addition to Federal Reserve Notes; and the use of sound money would return to America, one State at a time.

But with all of that said, one of the most interesting things to come out in the subcommittee hearing that the ConTen Act received here in Georgia, was the idea in those legislators' heads that gold and silver simply could not be USED as money, PERIOD. We heard comments like these:

• "Where would the State keep all of its gold and silver coins?" (Answer: Where does the State keep all of its Federal Reserve Notes? In a BANK, of course - just like they would under this Act.)
• "How would people be able to carry around all of those heavy gold and silver coins?" (Answer: How do they carry tens of thousands of dollars in Federal Reserve Notes around? They DON'T - they carry checkbooks and debit cards - just like they would under this Act.)
• "How would people buy things at the grocery store?" (Answer: How do people buy things at the grocery store now? With physical cash, or with a check, or with a debit card, or with a credit card - just like they would under this Act.)

What do all of these kinds of questions have in common? They're based on a narrow view of what money is. Too many people have simply gotten used to the idea that pieces of green paper with dead presidents' pictures on them, and that aren't backed by anything of value, are "money," and gold and silver are "commodities." But that's a rather new idea, historically speaking; fiat money (pieces of paper backed by nothing, and declared "legal tender" by the government) was very much frowned upon by our Founders - which is why they explicitly denied to the States the power to use it. Until the past century or so, you could always pay for things with actual gold and silver coins. But, the general population has been trained by our "modern" government to throw that notion away, and to keep using those pieces of paper that lose more and more of their value every day... while gold and silver keeps its value.

Which brings me to the reason for this post: If you look back, I've written several times (for example, here and here) about the coming of ATMs that exchange paper fiat money for actual gold. This is just a precursor -- a taste -- of what I'm talking about here: modern banking based on sound money. Well, those gold ATMs have arrived on our shores:

Boca Raton mall unveils ATM that dispenses gold
By Frank Cerabino
Palm Beach Post Staff Writer
Thursday, Dec. 16, 2010

At 10 a.m. today, the Town Center Mall in Boca Raton will unveil a vending machine that dispenses gold bullion. That's right: You put in your money or your credit card, and you get wafer-thin gold bars or coins from the machine...

The gold ATM is made by a German company called Gold on the Go, which had its first machine operational in Abu Dhabi this year, and has had its gold vending machines operating in Germany, Italy and Spain. The one in Boca Raton will be the company's first in America.

Like I said, this is just a "taste" of the modern specie-based banking we can look forward to, if we implement ideas like the Constitutional Tender Act. But that's why this idea is key: the more we get used to the notion of gold and silver being money, the sooner we'll finally return to sound money that holds its value -- and the sooner we can save our trashed economy.