FFF: Monetary Destruction in America

Jacob G Hornberger at the Future of Freedom Foundation has a well written article detailing Monetary Destruction in America. It’s a bit of a long read, but worth the Constitutional and monetary education.

The Constitution made it crystal clear what the official money of the United States was to be when it called the federal government into existence. That money was to be gold coins and silver coins, not paper money.

Article 1, Section 10, of the Constitution, which is a restriction on the power of the states, states, “No State shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts….”

What were “bills of credit”? That was the term used at that time for paper money. Through that provision in the Constitution, the Framers expressly prohibited the states from issuing paper money. It prohibited them from making anything but gold coins and silver coins legal tender or official money. It prohibited the states from issuing their own coins, leaving that power and responsibility to the federal government.

With respect to the federal government, Article 1, Section 8, states, “The Congress shall have Power …To coin Money, regulate the value thereof, and of foreign Coin…. To provide for the Punishment of counterfeiting the Securities and current Coin of the United States.”

Why wasn’t there an express prohibition on the power of the federal government to emit “bills of credit” or paper money? The reason is that the Constitution established a government of limited, enumerated powers. The federal government’s powers were limited to those listed in the Constitution. If a power wasn’t enumerated, it couldn’t be exercised. Since there was no power to issue paper money given to the federal government, it couldn’t exercise such power.

It was different with the states. Under the Constitution, they were to have whatever powers they wished to exercise, unless there was an express restriction on a particular power within the Constitution. That was why the Framers deemed it necessary to restrict the powers of the states when it came to money: no printing of paper money, no coining of money, and no making anything but gold coins and silver coins official money.

The federal government, on the other hand, was given the power to coin money, not print money, and to regulate the value of such money. It was also given the power to punish people for counterfeiting “the Securities and current Coin of the United States.”

Article 1, Section 8 of the Constitution also gave Congress the power “To borrow Money on the credit of the United States.” That’s what counterfeiting “the Securities” of the Constitution was referring to — debt instruments of the United States, such as bills, notes, and bonds.

There is something important to realize about the federal government’s debt instruments: It was understood that they were not money or “legal tender” but rather promises to pay money — i.e., promises to pay gold coins and silver coins.

When we consider all of these constitutional provisions, it is easy to see that the Framers intended to establish a monetary system in which gold coins and silver coins were to be the official money of the United States. And, in fact, that is precisely what happened after the federal government was called into existence. The Coinage Act of 1792 established the first mint in Philadelphia for the purpose of issuing coins. The silver dollar was the first unit of money issued. That would be followed by the silver half-dollar, quarter-dollar, dime, and half-dime. Gold coins consisted of the $10 gold Eagle, $5 Half-Eagle, and $2.50 Quarter-Eagle.

That gold-coin, silver-coin system remained the monetary system of the United States for more than 125 years. It turned out to be the most stable monetary system in history, one that, along with no income taxation, no welfare state, no warfare state, no immigration controls, and very few economic regulations, played an important role in the tremendous rise in economic prosperity and rising standards of living in the United States throughout the 19th and early 20th centuries.

It is often said that America’s “gold standard” was a system in which paper money was “backed by gold.” Nothing could be further from the truth. There was no paper money. There were only debt instruments promising to pay gold and silver. The system was one in which gold coins and silver coins were the official money of the United States.

Paper money

Why did our American ancestors have such a deep antipathy toward paper money? They knew that throughout history public officials had plundered and looted people through the use of paper money. To finance their ever-burgeoning expenses, public officials, of course, would first resort to tax increases. At some point, however, taxes would get so high that people would begin to resist, cheat, or, in extreme cases, violently revolt. That’s when kings and other regimes would resort to the printing press to finance their expenditures. They would simply crank up their printing presses, print whatever amount of money they needed, and go spend it.

The result would be a devaluation of everyone’s else’s money…(continues)

Click here to read the entire article at the Future of Freedom Foundation.

FFF: America Is and Has Been a Socialist Country

In Socialism in America, author Jacob Hornberger of The Future of Freedom Foundation discusses the idea that America is a preeminent socialist country and has been for some time, but Americans live in denial of this truth. There are no pure socialist countries, though North Korea comes closest, because they are doomed to failure and always require some private enterprise to be allowed in order to be taxed to fund the rest of the socialist enterprise.

Lost in the ongoing debate in America as to whether the United States should embrace socialism is a discomforting fact: America embraced socialism a long time ago. The problem is that many Americans have simply not wanted to accept that fact and instead have preferred living a life of denial.

A complete socialist system would be one in which the state owns everything in society, including businesses and real estate. In a pure socialist society, the government is the sole employer, and everyone is a government employee. No private grocery stores, computer companies, restaurants, movie theaters, or anything else. The government owns and operates everything, and everyone works for the government.

Moreover, in a pure socialist society, all the homes are owned by the state. There are no private houses or apartments for sale or rent because nothing is privately owned. Everyone lives in public housing because the state owns all the dwellings. How do people determine where they are to live? The state assigns everyone his own particular housing unit.

How does the socialist state fund all this? It owns and operates all the businesses and enterprises in the hope of generating revenues to finance its socialist system. One problem, however, is that state-owned enterprises are notorious for inefficiencies and corruption, which means that they inevitably end up losing money rather than making money. Think of Amtrak and the Postal Service. Or state-owned petroleum companies in Latin America. They produce losses, not gains, for the state.

Thus, to fund its socialist enterprises, the socialist state inevitably permits a small number of citizens to engage in private enterprise. Once those people begin making money, the state taxes them and uses the money to fund its operations. The state does its best to
extract as much money as it can from these private-sector enterprises without pushing them out of business.

There are few purely socialist countries. North Korea comes closest to the socialist ideal.

There are countries, however, that adopt programs and policies that are socialist in nature. The United States is a premier example of such countries, even though many Americans are loathe to acknowledge it. They have convinced themselves that America is a “free enterprise” country and that they themselves are “capitalists.” The last thing they want to confront is that they are living a life that embraces socialism.

Let’s examine socialism in America.

Social Security

Contrary to popular opinion, especially as held by seniors, Social Security is not a retirement program. There is no investment fund into which people place their savings for retirement. There are no lock boxes at Fort Knox labeled with each person’s name and containing his “contributions.”

Social Security is a straight socialist program, one that uses the government to take money from people to whom it belongs and gives it to people to whom it does not belong. This process of coercive redistribution of wealth is based on a principle enunciated by Karl Marx: from each according to his ability, to each according to his need. The state takes money from those who have produced it and gives it to people who are said to need it more.

For more than a century after the United States was founded, Americans lived without Social Security. The idea for this particular socialist program originated among German socialists in the late 1800s. The so-called Iron Chancellor of Germany, Otto von Bismarck, adopted it into law in Germany. The program was later imported into the United States and became a legally established program in the 1930s. Today, the U.S. Social Security Administration displays a portrait of Bismarck on its website.

From its inception, Social Security has been a straight socialist, welfare-state program, one that uses the state to forcibly take money from some and give it to others. It
is no different in principle from food stamps, education grants, farm subsidies, or other socialist programs.

Seniors have a valid point when they say that the state plundered and looted them throughout their work lives, which has left them without savings for their retirement years. They say that they are just getting their money back under this program.

But that is simply not the case. Their money is long gone. It was spent in the same year that it was collected, on Social Security payments to people who are now long dead, to fund other welfare-state programs, or to fund the national-security establishment and its vast and ever-growing array of warfare-state programs. The money that is being given to seniors today is coming out of the pockets of their children and grandchildren and their friends in those generations, many of whom are struggling to make ends meet. The problem is only getting worse because seniors are demanding more, which means even more taxes must be imposed on young and middle-aged people who are still working.

Proponents of Social Security say that this socialist program reflects how good, caring, and compassionate Americans are. That’s ridiculous. Social Security is founded on force. Young people are forced to pay Social Security taxes. There is nothing voluntary about paying such taxes. If a young person refuses to pay his Social Security taxes, the authorities will come after him, arrest him, fine him, and send him to jail. If he resists with force, he might well find himself dead at the hands of some trigger-happy cop.

Goodness, care, and compassion can come only through the voluntary choices of people. When a young person chooses to help his parents in their old age with financial assistance or personal care, that’s goodness, care, and compassion. When the IRS takes a young person’s money and gives it to seniors, that’s just political stealing.

There is no way to reconcile Social Security with the principles of a free society. Freedom necessarily entails the right to keep everything you earn and decide for yourself what to do with it…

Click here to continue reading at The Future of Freedom Foundation.

Tenth Amendment Center: Ignoring the Constitution

A couple days ago we posted an article that Jacob Hornberger had written for the Future of Freedom Foundation on the First Amendment. In Ignoring the Constitution at the Tenth Amendment Center, he reminds us of other parts of the Constitution that have been eroded and ignored over time. A constitution exists as a conveyance of authority to a government from the people it governs. It strictly limits the powers exercisable by that government. Some people believe that a constitution should be “a living document” in that the words should be re-interpreted over time to mean whatever the rulers think it should mean in the present day. This is the same as having no constitution at all. It means nothing to write things down on paper if it then becomes okay for people to “re-interpret” the text as the opposite of what was written. This is what we have today in the United States. We have a Constitution, but it has been ignored, re-interpreted, and swept under the rug. There are effectively no limits on the power of the US federal government. If you haven’t already noticed this, you haven’t been paying attention.

Constitutional violations have become so commonplace in American life that when they occur, the reaction among many Americans is ho-hum.

There are two classic examples of this phenomenon: the declaration of war requirement and gold and silver as legal tender.

Article 1, Section 8, enumerates the powers of Congress. It states in part: “Congress shall have Power To declare war.”

Article 2, Section 2, enumerates the powers of the president. It states in part: “The President shall be Commander in Chief of the Army and Navy of the United States.”

Thus, while the president is given the power to wage war, he is not given the power to declare war. The decision on whether to go to war lies with Congress. Unless Congress declares war, the president is constitutionally prohibited from waging war.

Yet, we all know that presidents ignore this constitutional restriction with impunity. They exercise both the power to declare war and wage war. There has never been a constitutional amendment authorizing this revolutionary change in our governmental structure.

Moreover, the change has come with the full knowledge and implicit consent of Congress, which has never impeached a president for illegally abrogating Congress’s power to declare war.

Additionally, despite the oath that U.S. military personnel take to support and defend the Constitution, they all blindly obey the president’s order to wage war without the constitutionally required congressional declaration of war.

Article 1, Section 10, states in part: “No state shall make any Thing but gold and silver Coin a Tender in Payment of Debts.

It goes without saying that every state in the Union blithely ignores that constitutional provision. Rather than making gold and silver coin legal tender, they all have made paper Federal Reserve notes, which promise to pay nothing, legal tender.  Many Americans, including state and federal judges, act like that constitutional provision doesn’t exist.

Article 1, Section 8, states in part: “The Congress shall have Power To coin Money, regulate the Value thereof.” There is no power given to Congress to print paper money.

Yet, here we are, living under a monetary system that is based on irredeemable paper notes issued by the federal government. Many Americans, including state and federal judges, act like all this is perfectly normal, as if these restrictions on power within the Constitution don’t matter or don’t really exist.

If public officials are empowered to ignore constitutional provisions whenever they want, then what’s the point of having a Constitution? When the Framers used the Constitution to bring the federal government into existence, their aim was to establish a limited-government republic, ones whose powers were limited to those enumerated in the document. The reason they did that was to ensure that federal officials could not destroy or abridge the freedom of the American people. The Constitution was intended as a higher law that the American people imposed on their government officials. If public officials wanted to change or expand such powers, they would be required to secure an amendment of the Constitution.

Federal officials expect us to comply with their laws. Why shouldn’t they be expected to comply with our law, the law of the Constitution?

FFF: Do We Need the First Amendment?

Do We Need the First Amendment? is a simple article by former trial attorney and professor Jacob Hornberger over at the Future of Freedom Foundation. The topic of where our rights come from, though, is vital and people constantly need to be reminded. There are both conservatives and liberals who think that our rights are from and/or are limited to the Constitution’s Bill of Rights. Some incorrectly believe that if we amend the Constitution to remove one of the listed rights, then we have done away with that right. Others wail and complain if the Supreme Court decides there is a right in existence not listed in the same Bill of Rights.

One must remember that the US Constitution gave form to the government, but perhaps more importantly it listed every power that the federal government was delegated by the people. When some people complained that the proposed Constitution didn’t originally list any protected rights, the framers said “Look, we didn’t give the government to abridge any rights. See? That power isn’t listed anywhere.” But people demanded a Bill of Rights just to be extra sure that it was clear that the government had no power to legislate in those areas. Again, some people said, “But if we write down a list, then some day people might think that only the listed the rights are protected” and people replied “We didn’t give the government that power! But here’s a ninth amendment that says you keep all of those, too.” Unfortunately, people didn’t pay attention, and the government has slowly, at times, and by leaps and bounds, at other times, has encroached everything.

Many years ago, I was giving a lecture on the Constitution and the Bill of Rights to a class at a public high school here in Virginia. During the course of my talk, I made the following statement: “The First Amendment does not give people the right of free speech.”

I asked the students whether my statement was correct or incorrect. Everyone immediately told me that I was wrong. They said the First Amendment did in fact give people the right of free speech.

I held my ground. I said it didn’t, and I pressed the students to figure out why I was maintaining my position. They were just as steadfast in their position, until a girl raised her hand and said, “Mr. Hornberger is right. The First Amendment does not give people rights. It prohibits the government from infringing on rights that preexist the government.”

She was absolutely right.

The First Amendment reads:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

Notice that the Amendment does not give people rights. Instead, it prohibits Congress from enacting laws that abridge people’s rights.

But what is that all about? Why did our ancestors deem it necessary to enact such a prohibition? Isn’t Congress our friend? Isn’t it composed of people who we elect to represent us? We often hear that we should trust the government. It doesn’t sound to me that the people who enacted the First Amendment had much trust in elected representatives.

After all, the only reason for enacting such a prohibition is the concern that in the absence of such a prohibition, Congress would enact laws that abridge freedom of speech and other fundamental rights. That sounds like Americans believed that the members of Congress needed to be told that they were prohibited from doing so.

The First Amendment and the other amendments in the Bill of Rights reflect how leery people were of Congress and the rest of the federal government. They were convinced that if they approved the Constitution, the federal government they were calling into existence with the Constitution would destroy their rights and their freedom.

That was also why Americans opposed enormous, permanently standing military establishments. Given their conviction that the federal government would destroy their rights, they understood that the way governments historically had done that was through their military forces.

After all, how else to enforce a law, say, that prohibits people from criticizing the president or Congress? Sure, it would be possible to arrest, indict, convict, and incarcerate them but what if dissent became widespread among the citizenry? That’s where a massive military establishment would come into play — to use massive military force to put down dissent with round-ups, assassinations, killings, torture, executions, and other things that militaries historically have done to oppress people. That’s why all totalitarian regimes have large, permanent, powerful military establishments.

Thus, there is no possibility that our American ancestors would have approved the national-security state form of governmental structure under which we live today, a structure consisting of the Pentagon, the CIA, the NSA, and a vast empire of domestic and military bases. If the Constitution had proposed that form of governmental structure, Americans would have summarily rejected the deal and simply continued operating under the Articles of Confederation, another type of governmental system, one in which the federal government’s powers were so weak that the federal government wasn’t even given the power to tax.

The Constitution called into existence a limited-government republic, a type of governmental system that gave the federal government very few powers. There was an army, but it was relatively small — large enough to defeat Native American tribes but not large enough to threaten the American people with massive tyranny.

In fact, that’s why our American ancestors enacted the Second Amendment. It was designed to ensure that people would retain their right to keep and bear arms as a way to fight against any federal army or national police force that the Congress or the president might employ to enforce their destruction of free speech and other rights and liberties.

Thus, whenever you hear someone lamenting the lack of trust that many Americans today have in the federal government, it might be worth reminding them that the federal government was called into existence under a cloud of mistrust among our American ancestors. And they were right to have that mistrust!