[This is Part One of a 2-part series of articles about whether or not it would best serve the United States to end fiat currency under the Federal Reserve Board and return to the gold standard.]
“No State shall make any Thing but gold and silver Coin a Tender in Payment of Debts.”
– Article 1, Section 10, United States Constitution
Does that mean that the paper bills Americans use as currency – a means of monetary exchange – are illegal? What gives?
The answer goes back, back in time, and involves one of the biggest political conspiracies in U.S. history: the hijacking of the national money system by private interests who have become rich at the expense of everyone else.
Early Europeans in Colonial America brought their gold and silver coin pieces with them from back home. They also brought the concept of bank-issued credit in the form of bank promissory notes – promises to pay the hard metal cashback on demand.
U.S. legislators had proposed adopting a gold dollar coin several times in the 1830s and 1840s with no success. But when the gold rush unearthed vast reserves of the precious metal, Congress authorized a gold dollar in 1849.
Gold coins were embraced by Americans who continued the practice of hoarding silver coins – such as the infamous pirates’ “pieces of eight” – a reference to the Spanish dollar (or peso or piece of eight), a 1.5-inch diameter silver coin that was worth eight Spanish reales.
Gold dollars circulated freely in the young United States until shortly before the Civil War which put increasingly great demands on the federal economy. Gold returned to national favor as a means of cash exchange in 1879 when the U.S. adopted the gold standard – but gold as legal tender never regained its former popularity.
The regular issue gold dollar was last struck in 1889. Congress ended the series in 1890. U.S. gold coins from the 1880s were hoarded as smaller amounts were minted and are collectible today.
For the next few decades, Americans traded with silver coins and private banknotes. Then, in 1913, everything changed.
Section 16 of the Federal Reserve Act of 1913 was a sneaky deal was ramrodded through the Senate. The legislation had passed the House but was bogged down in the Senate. No recess had been called during the Christmas holidays and most congressional members were absent from the hallowed halls.
A coterie of the new law’s backers, led by Rep. Charles Lindbergh (father of the famous aviator Charles A. “Lucky” Lindberg), took advantage of the situation. On December 23, a cabal of three senators passed the act by a unanimous vote of 3-0 with no objections. If there had been one person present in the absence of a quorum, the bill would not have passed.
President Woodrow Wilson signed the Federal Reserve Act into law, spurred by the financial panic of 1907 and a perceived need for a central bank.
The problem was – and is – that there is nothing federal about the Federal Reserve or its Banks which were thereby established (it is owned and operated by independent, non-government groups who profit from the gains) nor are there any tangible reserves (such as gold or silver) backing the currency.
The Federal Reserve Act was a conspiratorial scam from the get-go:
“The Federal Reserve Bank’s name was chosen by this group so as to deceive the American people into believing that the Federal Reserve was a branch of the U.S. government. This privately held monopoly continues even today to give enormous power to a handful of international bankers, non-Americans, to issue America’s money, to set interest rates, to finance endless wars, and to enslave the American citizens, and the other nations of the world in a state of perpetual debt.”
Federal Reserve Notes are authorized by and are issued to the Federal Reserve Banks at the discretion of the Board of Governors of the Federal Reserve System. The notes are then put into circulation by the Federal Reserve Banks, becoming liabilities of the Federal Reserve Banks and obligations of the United States.
The private Federal Reserve (Fed for short) prints Federal Reserve Notes – what we think of as legal tender: paper dollar bills with the words “This note is legal tender for all debts, public and private” printed on each note.
Before them, there were United States Notes, which were once issued by the Treasury Department. Federal Reserve Notes are backed by the assets of the Federal Reserve Banks, which serve as collateral under Section 16.
The Fed’s primary task was to stabilize gold and currency values and limit inflation. Historically, it has done neither:
“Money depends on trust — the faith that it will hold its value so that, when the time comes to spend it, it will be accepted without question in exchange for what the holder expects it to be worth. Inflation eats away at that value.”
[Part Two of this 2-part series will continuing exploring whether or not the United States should end fiat currency under the Federal Reserve Board and return to the gold standard. – right here on TheDailyConspiracy.com.]