The legislature of Washington State is considering a bill that will declare gold and silver legal tender within the state.
This ought to have been done long ago, by all the states. Long ago, I mean, as early as 1871 when the Supreme Court overruled its own decision of two years earlier in Hepburn v. Griswold that the Federal government had no Constitutional authority to declare the “greenbacks” a legal tender. In Knox v. Lee the decision was that the U.S. Government, after all, had such authority.
Which meant that after 1871 the door was opened for the Federal government to manipulate the currency. It led to the creation of the Federal Reserve, the largest system of currency counterfeiting the world has ever seen. It led to the confiscation of all private gold by the Federal government under FDR.
And it led to the consistent inflation of the money supply by the Federal Reserve in the last one hundred years, leading to the devaluation of the dollar, the wiping out of the savings of millions of American families, and to the enrichment of Wall Street at the expense of Main Street.
The bill, as it is, won’t magically solve the problems overnight. It will at least legalize competition of currencies. Under the present Federal laws, companies and individuals can contract to make payments for goods and services in any currency they want; but legally enforceable are only the payments in Federal Reserve notes. That means that if an employer and an employee agree for the employees wages to be paid in gold, the employer later can change his mind and pay in paper dollars, and the employee can’t sure the employer. (The issue in Hepburn v. Griswold was that Mrs. Hepburn wanted to pay her debt to Henry Griswold in greenbacks, not in the contracted currency.)
This system, of course, is perfect for the debtors, especially if the Federal Reserve keeps inflating the currency. Money borrowed today will be worth less tomorrow, which leaves the debtor better off. But the creditor – the person who has supplied goods or services, and had to pay for them earlier; or the person who has saved money and loaned it to others for interest – loses. At the end, the system encourages more debt and less savings; more laziness and less productivity; more short-term orientation to instant gratification and less long-term orientation to investments, entrepreneurship, and innovation. It wipes out savings and retirements; and it leaves a trail of ever-growing private and government debt, until the whole economy collapses under its weight.
Some states are beginning to see it, and take steps to protect their residents and their economies. The Federal government can collect its taxes in its depreciating dollars. But the local economies will be based on sound money. This will decrease the demand for US dollars and will additionally drive the value of the dollar down. If free competition is allowed, the Federal Reserve dollar will become even more worthless, until the Federal government runs out of means to pay its own employees, or bribe the welfare recipients. Obviously, if the efforts to audit and end the unconstitutional Federal Reserve fail, something must be done to stop the madness.
Our job is to support the local legislatures when they act to protect us. Now, before it’s too late for us and our children.