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...

Perry, Some Lawmakers Want State's Gold Back in Texas

Call it the Rick Perry gold rush: The governor wants to bring the state’s gold reserves back from a New York vault to Texas.

And he may have legislative support to do it. Freshman Rep. Giovanni Capriglione, R-Southlake, is carrying a bill that would establish the Texas Bullion Depository, a secure state-based bank to house $1 billion worth of gold bars owned by the University of Texas Investment Management Company, or UTIMCO, and currently stored by the Federal Reserve.

The idea isn’t entirely new. Some Republican members worked on a gold bill last session that was never filed. And gold-standard-backing Ron Paul, the former Texas congressman, has raised repeated concerns about the safety of states' gold supplies.

"If you think gold is a hedge, or a protection, you always want it as close to the individual and the entity as possible," Paul told the Tribune on Thursday. "Texas is better served if it knows exactly where the gold is rather than depending on the security of the Federal Reserve.”

Bringing Texas' gold home has gained more traction this legislative session because of Perry’s vocal support for it. On conservative radio host Glenn Beck’s show  on Tuesday, the governor said Texas was “in the process” — the legislative process, he later clarified — of “bringing gold that belongs to the state of Texas back into the state.” He argued that the state was at least as capable as the Federal Reserve of safeguarding Texas’ “physical gold.”

“If we own it,” Perry said, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”

State Rep. Lon Burnam, D-Fort Worth, said he was familiar with Capriglione's bill but was skeptical that it addresses a legitimate problem facing the state.

“We’ve got plenty of real problems that we’re not going to deal with this session," Burnam said. "Let’s deal with them.”

Capriglione said he was at a Tea Party event in Tarrant County earlier this year where Perry spoke about the state’s gold investments as an economic development tool. Since then, he has been working with Perry’s office on the bill. 

“Something on the scorecards of a lot of these businesses in deciding whether they want to come to Texas is stability and gold as being one of those items,” Capriglione said. “I think it’s been in his consciousness for a while in trying to get some sort of depository in the state of Texas.”

He has also spoken with UTIMCO, which owns the 6,643 gold bars currently housed underground in New York City.

“We’re trying to figure out the right amount of gold to have here in Texas,” Capriglione said. “'We don’t want just the certificates. We want our gold. And if you’re the state of Texas, you should be able to get your gold.”

The United States and many other countries stopped pegging their currencies to the gold standard decades ago. Capriglione said the bill is not about putting Texas on its own gold standard. Rather, a depository would give the state a reputation as being more financially secure in the event of a national or international financial crisis.

“For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up,” Capriglione said. “So I think this cures a problem before it can happen.”

Physically transporting gold that various state entities own from New York City or other banks to Texas would be impractical from a security and logistics standpoint, Capriglione said. He believes it makes more sense to sell the gold Texas has elsewhere and repurchase it within state lines.
He said he doesn't think the measure would be a significant expense, because the gold bars could be safeguarded in a small area, no bigger than 20 square feet.

Capriglione said he is working on revisions to the bill to address some concerns he has heard. He plans to make sure the bill would not cause the state to change its overall asset portfolio to be more heavily invested in gold. Also, to lower the bill’s costs, he expects to change the language to allow some of the administrative costs of building and running the depository to be handled by the private sector.

Such a bill might not divide lawmakers along strictly party lines. State Sen. Rodney Ellis, D-Houston, called the bill "an interesting concept" but said he would want to learn more about it and talk to "colleagues in the financial industry" before weighing in on its merits.

READ THE FULL ARTICLE HERE...

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...

End the Fed! Whether Congress Wants us to or Not! (@TenthAmendment Center #nullification)

Today was a big day for supporters of Sound Money – as Ron Paul’s Audit the Fed Bill passed the House 326-99. But, it still needs to get through a very hostile Senate, where it will likely never see the light of day. So in closing tonight, a new approach – Ending the Fed. Whether Congress Wants us to or Not!

Since its inception, the 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 reduce or even eliminate the Federal Reserve’s powers...

... Not to say that you should want a secret national bank, but rather – is this kind of activism the best place for you to put your energy…and hope? Will lobbying the Senate get Harry Reid to allow a vote? Will calling Mitch McConnell change anything? Will Barack Obama or Mitt Romney allow such a bill to pass without their veto?

I believe the answer to all these questions is a big, fat NO.

PULLING THE RUG OUT

On the other hand, in contrast to attempts to put a stop to the Fed at the national level, a paper that William Greene 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” is a bill template that can be introduced in every State legislature in the nation. Passage would return each of them to the Constitution’s “legal tender” provisions of Article I, Section 10:

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

Such a tactic would 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...

Tenth Amendment Center podcast:

READ THE FULL ARTICLE HERE...

[VIDEO] "Ron Paul Explains His Plan For 'Monetary Freedom' And Returning To The Gold Standard" #ronpaul #GOP2012

From the Zero Hedge partial transcript:

Ron Paul lays it out: "We know what to do - we did it once after the Civil War period, we went from a paper standard back to the gold standard, and the event wasn't that dramatic. But today the big problem is that both the conservatives and liberals have an big apetite for big government for different reasons, therefore they need the Fed to tie them over and monetize the debt. So if you don't get rid of that appetite it's going to be more difficult, but the transition isn't that difficult. You have to get your house in order; you have to balance the budget, you have to not run up debt, and you have to promise not to print any more money... I would like to have a transition period and just legalize gold money, gold and silver as legal tender, and work our way back... We want to legalize the use of gold and silver as the constitution dictates, rather than punishing the people who try to do that... I am quite convinced that the system we have will not be maintained - that's what these last 4 years was all about, and that's what the turmoil in Europe is all about. The question is are they going to move toward a constitutional form of money. or are we going to go another step further into international money - instead of having an international gold standard based on the market, are we going to go toward a UN, IMF standard where they are going to control with the use of force another fiat standard. I consider that a very, very dangerous move."

ORIGINAL VIDEO HERE...

Ron Paul's Statement at Hearing on "Free Competition in Currencies Act" (HR 1098)

John Maynard Keynes once stated that “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Such a situation is exactly what faces this country today, as the Federal Reserve seems hell-bent on destroying what little purchasing power remains of the U.S. Dollar...

... Economics teaches that monopolies produce fewer goods and sell them at a greater price than in a competitive market. This leads to inefficiency, deadweight losses, and over time complacency on the part of the monopolist. Most mainstream economists fail to extend the theory of monopoly to the market for money. Government monopolization of the issuance of money fails to produce the sound money the market demands. The poor-quality money that is issued continues to lose its value, and the American people must work longer and harder for money that continues to decline in purchasing power. Meanwhile, government agencies and the banking system benefit from the first use of that money, being able to spend it and lend it before it circulates through the rest of the economy and before prices increase in reaction to this inflation.

The only way to counteract this problem is to break the government monopoly on the issuance of money. The Constitution does not grant the federal government this monopoly, a fact which was not in dispute for nearly a century after this country's founding. The federal government has become complacent, forgetting the need for sound money, and the only way to break this complacency is to break the monopoly. HR 1098, the Free Competition in Currency Act, intends to do just that...

...I hope that this hearing will start a vigorous discussion of currency competition, sound money, and how to return to a sound dollar. HR 1098 is certainly not a panacea, as there remain significant structural problems in our banking and monetary system that still need to be addressed. But allowing for competing currencies will enable Americans to choose a currency that suits their needs, rather than the needs of the government. The prospect of Americans turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system.

READ THE FULL ARTICLE HERE...

"Five Myths About the Gold Standard"

By Congressman Ron Paul | Congressional Record, February 23, 1981

A CLASSIC THAT HAS STOOD THE TEST OF TIME!

MYTH NO. 1: THERE ISN'T ENOUGH GOLD

MYTH NO. 2: A GOLD STANDARD WOULD ENABLE RUSSIA AND SOUTH AFRICA TO HOLD US HOSTAGE

MYTH NO. 3: GOLD CAUSES DEPRESSIONS

MYTH NO. 4: GOLD CAUSES INFLATION

MYTH NO. 5: GOLD WOULD BE SPECULATIVE

READ THE FULL ARTICLE HERE...

VIEW THE ORIGINAL CONGRESSIONAL RECORD HERE...

VIDEO: Ben Bernanke and Ron Paul face off over whether or not gold is money

Well, let's join the ever-accelerating march towards hyperinflation:

Subcommittee Chair Rep. Ron Paul (R-TX): “Do you think gold is money?”

Federal Reserve Chairman Ben Bernanke: “No.”

"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...

"The Gold Standard: A Litmus Test For GOP Candidates"

by Ralph Benko (@TheWebster)

...More than half of the current Republican aspirants have moved monetary policy — and the strong dollar — as a key campaign plank, half of these calling for the gold standard. More are likely to weigh in. The gold standard, in only two years, has moved from a perceived-fringe prescription to the mainstream. How?

Fed Chairman Ben Bernanke “primed the pump,” not in a good way, of public interest with his two QEs. This raised popular awareness of, and ire about, monetary policy. The record shows that a small group of thought leaders effectively championed the gold cause.

In roughly chronological order this may be said to have begun with the forum which John Tamny, on Forbes’ Opinion pages and at RealClearMarkets, gave pro-gold advocates such as Brian Domitrovic, Charles Kadlec and Nathan Lewis — and with consistently savvy support for gold from the New York Sun under the editorship of Seth Lipsky.

Onto this fertile ground came Princeton Professor Robert George’s American Principles Project, chaired by Sean Fieler; then Judy Shelton’s Atlas Sound Money Project. The dynamic was supercharged by World Bank Group’s president Robert Zoellick’s famous gold FT op-ed; then by the formation of the Lehrman Institute’s The Gold Standard Now (for which this writer serves as editor); a call for gold by conservative champion Rep. Mike Pence in a major speech before the Detroit Economic Club; major op-eds by Sean Fieler and Jeff Bell, Charles Kadlec and Lewis Lehrman, in the Wall Street Journal; an important Reagan centennial gathering of supply side titans at the Manhattan Institute; an endorsement by the Weekly Standard‘s Bill Kristol; the most important Congressional hearing on monetary policy in at least a generation conducted by domestic monetary policy subcommittee chair Ron Paul; the high-profile championship by former presidential candidate and CEO Steve Forbes; and, most recently, an endorsement by Mundell...

...Stir in the populist power of the Tea Party, especially that of electoral bellwether Iowa’s Tea Party coordinated by Ryan Rhodes and April Linder. Add a sprinkle of state activists, such as Larry Hilton, who have, with assistance from American Principles In Action, moved gold standard legislation originally inspired by Dr. Edwin Vieira into law in Utah and are moving it forward elsewhere.

This is what moved the gold standard, decisively, from the realm of mavericks and social dystopians to mainstream conservative, and even Republican presidential candidate, policy. The gold standard’s momentum is building fast.

READ THE FULL ARTICLE HERE...

Edwin Vieira Interview with James Turk

James Turk interviews Edwin Vieira, author of "Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution". For more info visit http://www.goldmoney.com/goldmoney-foundation/books.html

Edwin talks about how his book came to be and the new editions. Edwin explains the role that the gold commission hearings and Ron Paul played. He also says how important and urgent monetary reform is for the United States and how the best chance of reform comes at the state level.

They discuss constitutional money in the USA and the authority of states to use gold and silver as legal tender, as well as legal precedent from the Supreme Court. He talks about how several states are contemplating legislation to allow gold and silver as alternative currencies.

Edwin explains the Treasury's legal obligation to maintain parity between all forms of US currency, about Roosevelt's gold seizure, the gold reserve act and the abolition of the gold clause. They talk about the need for insurance against a currency collapse and how alternative currencies could play that role. They discuss the stark choice that follows a currency collapse: How the US reacted after the collapse of the Continental Dollar by enshrining sound money in the Constitution vs. how Weimar Germany drifted into fascism.

He explains how States have the legal duty and authority to carry out monetary reform and given the deadlock in Washington must take the initiative to prepare for the coming crisis. They stress the need for a rational currency system which allows for economic calculation, and decry the current fiat, politically driven, irrational monetary system as incompatible with a free market and a focus of financial instability.

They both talk Turk about the current lack of financial education, they liken the alternative currency initiatives by State legislatures to building lifeboats for the Titanic that is the US Dollar and talk about the different things that can be done to prepare for its impending sinking. They also return to the Continental Dollar and how America's founding fathers were able to learn from their mistakes by enshrining sound money in the Constitution and how with today's technology we could do even better.

CLICK FOR ORIGINAL YOUTUBE SITE...

GOPers embrace unorthodox tax plans

The time is politically ripe for a return to sound money. Now we need to get the candidates talking about enforcing the Constitutional requirements for that sound money: gold and silver coin.

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POLITICO: "GOPers embrace unorthodox tax plans"
By BYRON TAU & BEN SMITH | 5/20/11 6:19 PM EDT

In this Republican primary season, no economic or monetary policy is too unorthodox for an electorate hungry for change.

The Republican field is filled with potential candidates who have called for radical overhauls of the tax code, the abolition of the IRS, an end to the Federal Reserve central bank— and even a return to the gold standard... mainstream figures in the Republican Party — including [former Minnesota Gov. Tim] Pawlenty and Indiana Rep. Mike Pence — have flirted with monetary theories like the gold standard or fixing the U.S. currency to a commodities basket.

READ THE FULL ARTICLE HERE...

"The GOP's New Gold Rush: Inside the conservative plan to take down the Fed from the bottom up"

Aaaand... Mother Jones joins the chorus of left-wing publications waking up and realizing that we're making progress at the State level. It's a fairly typical media piece, not severely denigrating, but including enough silly quotes from establishment economists - "make wampum legal tender" - and getting enough facts wrong, like using "pre-1985 Golden Eagles" (what?) - to render the article pretty much useless in terms of helpful information for anyone that actually wanted to learn more. At least they included a bunch of good links. And I did like how he subtitled the article, "Inside the conservative plan to take down the Fed from the bottom up" - taken directly from my paper & article at Tenth Amendment Center. -- BG

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After three decades of railing against America's monetary policies, Congress' most famous gold bug and anti-Fed crusader, Rep. Ron Paul (R-Texas), doesn't have much to show for his efforts on the national level.

But Paul's message finally seems to be gaining traction outside Washington. Since the beginning of 2009, lawmakers in more than a dozen states, with the backing of conservative organizations like the Tenth Amendment Center and the American Principles Project, have introduced bills promoting the use of gold and silver currency for everything from buying groceries to paying taxes. Last week, Utah became the first state to enact such legislation, declaring gold and silver coins from the US mint legal tender, and creating a commission to study the efficacy of this move.

Other proposals, in Georgia and Iowa, would mandate that all state taxes be paid in gold and silver. In Montana, a "sound money" bill that would have required all taxes on cigarettes and tobacco products be paid in precious metals was narrowly defeated on Monday.

Some supporters hope the movement will succeed where Paul's efforts have fallen short—by bringing down the Federal Reserve system from the bottom up.

"It's much more difficult to be lobbying against one bill than it is against 50 bills," says Bill Greene, a conservative activist and political consultant whose sample legislation has served as a foundation for a bill that's currently before the Georgia legislature. "As soon as one state passes a sound money bill, that state is going to reap the most benefits first. That'll open the floodgates and get the ball rolling and more and more states wanting to do it."

READ THE FULL ARTICLE HERE...

Latest Issue of DGC Magazine online: "Gold & Silver Sound Money"

The February 2011 issue of Digital Gold Currency magazine is out, and it's a good one: "Gold & Silver Sound Money: A Dozen U.S. States and Their Sound Money Initiatives".

It covers the most recent sound money bills in Virginia, New Hampshire, Georgia, Delaware, Utah, Montana, Washington, South Carolina, Idaho, Maryland, Colorado, Indiana, Missouri, and Ohio, with some additional articles relating to competition in currencies, digital gold, federal bills, and more.

Best of all - it's FREE to read online, or even download and read later.

Another great job from the folks at DGC!

Tenth Amendment Center: "A Date that Lives in Infamy"

We are incredibly grateful for the work of the Tenth Amendment Center in promoting the Constitutional Tender Act. On this dark day in history, they are graciously doing so again.

A Date that Lives in Infamy

EDITOR’S NOTE: On December 23, 1913, Woodrow Wilson signed the act creating the Federal Reserve System. Now that Ron Paul is in a place to bring some light to the true dealings of the fed, the time is ripe to end the fed. But, the best way to get back to a proper monetary policy will likely come from a place far from Washington, D.C. – your own state.

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.

READ THE REST HERE...

How the ConTen Act can Return America to Sound Money

Ron Paul, in his paper "The Political and Economic Agenda for a Real Gold Standard" (originally delivered at the Mises Institute's 1985 conference on the gold standard), discusses the steps which the economist Ludwig von Mises laid out for us to be able to return to a sound currency (which was in his 1952 epilogue to "The Theory of Money and Credit").

What's particularly relevant about this discussion is that, where the attempts at the national level to implement these steps have been halting at best, the Constitutional Tender Act actually builds on what HAS been accomplished and uses it to implement those steps starting at the STATE level... where they actually have the chance to SUCCEED.

The first step we need to take, writes Paul, is "Gold Coinage":

The heart of Mises's proposal to restore gold to our monetary system is a gold coinage. He wrote,

Gold must be in the cash holdings of everyone. Everybody must see gold coins changing hands, must be used to having gold coins in his pockets, to receiving gold coins when he cashes his paycheck, and to spending gold coins when he buys in a store.[7]

In this one detail — the critical importance of the gold coinage — I believe lies the key to establishing a new gold standard.

We should make no mistake about it: the more progress we make toward reestablishing the gold standard, the more aggressive our opposition will become. Some vested interests, as you know, have a lot to lose if we succeed in getting the monetary system reconstructed on a gold basis. The first political step is, therefore, to get the coinage into circulation.

One objective might be to aim for every American to become a gold owner. We must encourage a broader base of political support for gold ownership and the availability of gold for personal economic objectives. Certainly a broader base of gold ownership in the country would help to reduce the threats of discriminatory taxation or regulation of gold ownership and gold coin transactions, which are seriously favored in Congress today.

Under the Constitutional Tender Act (a proposed State law which re-applies 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"), 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.

So, with the ConTen Act, the foundation is now laid. Dr. Paul goes on:

What we must first do is get the coinage into circulation, and then build the political base to lock the government's fiscal folly with golden handcuffs. People have always understood the tangible value of gold coins in circulation. They don't need to agree or even understand the fine points of monetary theory to own gold coins, trade gold coins, or use gold coins to satisfy part of their marginal-utility demand for cash balances.

Most people understand very little about economics or monetary theory. When they see supposed experts in disagreement, the status quo wins by default, because nobody with the power to change it has the courage of conviction. The majority of voters see the debate among experts and hesitate to support any leaders with comprehensive reform schemes. This is why all efforts to rebuild a gold monetary system have met with frustration and stalemate in the past.

And this is the beauty of the Constitutional Tender Act: instead of being a top-down, federal-level effort, it is a bottom-up, State-level effort, thus giving it a higher likelihood of eventual success (see my paper presented at the Mises Institute's Austrian Scholars Conference, "Ending the Federal Reserve From the Bottom Up: Re-introducing Competitive Currency by State Adherence to Article I, Section 10"). Upon going into effect, the ConTen 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). (Gresham's law is stated as, "Where legal tender laws exist, bad money drives out good money." A reverse of this would be, "In the absence of legal tender laws, when people are given the free choice between using and accepting good money or using and accepting bad money, bad money becomes less popular than good money, and is driven out of the marketplace.") 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. -- and thus open the door for a return to sound money, nationwide.

All of this can take place because Dr. Paul helped bring about the minting once again of legal tender U.S. gold and silver coins, which can now be used to return every State to its Constitutional mandate for honest money. He recognized that this first step was a necessity: "There must certainly be no restrictions on the private production of coins, but I believe that getting the US Mint further into the act, producing a gold coinage with some of the mystique of the government, will be useful in the further political stages of monetary reform. Honest money, after all, is a political objective; it is fitting that people should demand honesty from their government, as well as an economic policy that permits individuals to compete honestly." Now, with the Constitutional Tender Act, that political objective is within reach.

Gold: The "New" Money

Gold: The "New" Money
by Paul Nathan

Ben Bernanke said in testimony in front of congress that he did not understand what was causing the gold price to go up. In fact he said he didn't understand gold. Larry Kudlow has been asking everyone on his program "what is causing the price of gold to move up?" The use of the term "gold standard" and "new reserve currency" has been used more in the last few months than in the last few decades. Perhaps that is the tip off...

My suggestion to Ron Paul and all those wanting to return to gold, is the best way to accomplish this is not by proclaiming your determination to replace the Federal Reserve Board with the gold standard, but to attack the legal tender laws of this country. I was one of the few back in the early 70's along with Ron Paul that fought for the legalization of gold to be allowed back into the American system. That was the first step in returning to the gold standard. Today is very much the same. The next step is to institutionalize competing monies.

The key is to go after the governments monopoly on money. If broken, gold will find it's way into the monetary system, as it is today, and reclaim it's superior role as long as it is not prevented from doing so. Legal tender laws do just that. They prevent choice.

Today, to be an advocate of a gold standard is to be laughed at and ridiculed as naive. But, to be against legal tender laws, wipes the snickers off the face of those against gold very quickly. To be against legal tender laws is to be for freedom of choice and against government coercion. You will not find the same chuckles from "intellectuals" when confronted with a proposal of this nature. On the contrary, you will find terror...

In my opinion the private market is in the process of developing a private competing money. No one can predict where this will lead us, but it is happening as we speak. We are seeing the emergence of gold ATMs whereby individuals can convert dollars for gold on demand. If those machine eventually are equipped to also accept gold for paper money, we will have the specter of convertibility on street corners everywhere.

"We are going to make gold public with these machines," said Thomas Geissler, CEO of Ex Oriente Lux AG, which owns “GOLD to go." Fifty thousand machines are being produced to be placed in countries all over the world. And retailers such as Sears and K-Mart have announced they will now be dealing in gold. Companies that buy gold are everywhere, and companies that sell gold are increasing. Convertibility is becoming an industry. This is a further sign of the establishment of the "new" private money.

How this will evolve, not even the market "knows". But it is obvious the market is telling us that there is a demand for gold as money. Will we start computing commodity prices, stock values, and possibly all prices in terms of gold as well as the dollar to know whether we have deflation or inflation and to what degree? Will credit card companies start pricing and translating purchases of goods and services in terms of dollars and gold as they do foreign currencies? Will financial institutions store gold as a new form of savings account, en masse? In a new world of modern technology there is no telling how gold will be used, but it is being explored by entrepreneurs world wide as we speak...

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Ye Olde Specie | Idaho silver-based currency bills might have failed, but the 'sound money' movement marches on | Innovation | Boise Weekly

Ye Olde Specie | Idaho silver-based currency bills might have failed, but the 'sound money' movement marches on | Innovation | Boise Weekly

On a sunny Monday in January, Reps. Phil Hart and Lenore Hardy Barrett stood on the Idaho Capitol steps and introduced a crowd of Tea Partiers to two pieces of legislation that would have remade the state's economic landscape.

The Idaho Silver Gem Act, fronted by Hart, an Athol Republican, proposed that Idaho citizens ought to be able to pay their taxes with special medallions or bars struck from silver mined in North Idaho's Silver Valley--part of Hart's home district.

The Idaho Constitutional Tender Act, introduced by Barrett, a Republican from Challis, went even further. It sought to make silver and gold--both in physical coins and electronic ounces drawn from an online exchange--just as valid as Federal Reserve notes for the purchase of everything from groceries to new cars to property.

With similar bills floated in at least seven states, Tea Partiers chanting "end the fed" and the Idaho Republican Party adding "sound money" to its platform in 2008, the gold (or silver) standard may be making a comeback.

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