Friday, February 19, 2010
A Return to Constitutional Legal Tender
Congrats to South Carolina for reviving what the Constitution says about legal tender: "No State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts." However, thanks to the central planning of our money supply and interest rates set by our Central Bank (the Fed), it illegal to accept anything but fiat Federal Reserve Notes as legal tender. Any free society must have a sound and stable currency and the U.S. Dollar has been devalued from $20/oz of gold in 1913 to $1100/oz of gold in 2010. Fantastic job Fed.
The founders knew the history of paper money and its consequences: inflation and devaluing of the currency through government manipulation. We can see over the horizon the amount of money printing that has already happened through Bernanke's helicopter monetary policies and pump priming. To think that hyperinflation is an actual possibility strikes me as fascinating, yet this scenario is absolutely on the radar screen. Anyone who has followed the actions and words of Ben Bernanke knows he wouldn't defend the dollar if his life depended on it. He wants a cheap dollar like all of the other Keynesians since that will allow the U.S. to pay off its debt obligations in devalued money.
Let us hope that the South Carolina legislature signs this bill into law and sends a message to the Federal Reserve, Congress, and the President that the States have dual sovereignty and have every right to protect themselves, their citizens, as well as the purchasing power of their goods and services produced in that state against fiat paper money.