The legal tender laws of the United States are found in Article I, Section 8 of the Constitution and grant power to Congress to “coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.”  Nothing more.

In the Constitution’s Article I, Section 10, the states were restricted in regard to money: “No state shall ... coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts.”  Bills of credit is a term used by the Founders to describe what we have come to know as unbacked paper currency, or fiat money.

So, we know that the federal government was never given the authority to issue paper currency, while the states were specifically prohibited from doing so. In 1792 the U.S. Mint set to work, constitutionally authorized to do so, stamping coinage of a fixed size, weight and purity for people who brought in their gold and silver. There were also private mints that did the same work.  There was no government monopoly and no unbacked paper money issued by the federal government.

However, U.S. Treasury notes, unbacked by gold or silver, were issued beginning in 1862 during the Civil War. Known as "greenbacks," this fiat paper currency was made official legal tender by an act of Congress in 1862. This legal tender status guaranteed that creditors would have to accept greenbacks despite the fact that they were not backed by gold, bank deposits, or government reserves, and bore no interest. Then in January of 1875, Congress passed the Specie Payment Resumption Act, which returned gold backing for these notes beginning the first of January 1879.

Jumping ahead to 1913 when the Federal Reserve was created, we see the Fed issuing its Federal Reserve Notes, circulated side-by-side with U.S. Treasury Notes, bearing the phrase “redeemable in gold.” That didn’t last long. In 1933 FDR’s administration outlawed possession of gold and the people were ordered to turn in all they had. Almost simultaneously, the Federal Reserve notes declared they were “redeemable in lawful money.” But gold was no longer lawful money; silver still was, but silver redemption was abolished in 1968.

The transformation, then, from honest money, backed by gold and silver, to fiat money redeemable in absolutely nothing, was complete. The nation barely noticed the new debased and devalued currency, perhaps because they were mesmerized by the growing stack of greenbacks in their pockets. The purchasing power of the dollar has shrunk by almost 95 percent since 1913 because of the takeover of the money supply by the Fed; inflation is rampant and the Fed continues to ratchet up the printing presses, further devaluing the dollar.

But there is a way out of the downward spiraling valuation of fiat money. 

Congressman Ron Paul (R-Texas), has once again prescribed just the right medicine for what ails this country’s monetary system by introducing H.R. 4248,  the Free Competition in Currency Act of 2009 (See 5-minute video explanation by Rep. Paul.). An advocate of sound money, Congressman Paul noted that, to be useful and honest, currency has to be, just as it has historically been, durable, portable, divisible, uniform, stable, reproducible and scarce -- gold and silver certainly fit the bill. “Currency, or money, is what allows civilization to flourish,” he stated upon introducing his very short, clear, precise and understandable bill.

The purpose of the Act is to reintroduce a system of competition in currencies. By eliminating legal tender laws that give the Federal Reserve a monopoly over our money supply, the Federal Reserve would lose its power to manipulate the money supply and therefore its value. Doing away with laws that prohibit private mints from creating coinage would also end the Federal Reserve’s money monopoly. Eradicating the capital gains and sales taxes on gold and silver coins, platinum palladium or rhodium bullion coins is just plain common sense -- after all, a sales tax is not applied every time we exchange a $10 bill for a roll of quarters -- and would set the groundwork for real prosperity.  And along with the above, repealing federal criminal code pertaining to precious metals would be a protection against government confiscation and penalties.

Rep. Paul’s concluding paragraph in his "Statement Introducing the Free Competition in Currency Act" properly proclaims:

Allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens 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.

A case to help illustrate what sound money can do rests in the once-great, agriculturally-based bread basket of Africa, Zimbabwe. Suffering from a dictatorship that imposed wage and price controls and bad economic policies that resulted in massive hyperinflation that destroyed the manufacturing and production base that in turn effected an enormous rise in hunger and poverty, Zimbabwe has recently seen a remarkable turnaround in the last year. 

Zimbabwe’s Finance Minister Tendai Biti suspended the use of their completely worthless currency and instead legalized the U.S. dollar as currency. Zimbabwe resident Cathy Buckle wrote that Biti’s move “eradicated the black market almost overnight, stopped super-hyperinflation instantly and put real money in people’s pockets.  But, more importantly to everyday life, Mr. Biti’s policy put food back in the shops.”  Ms. Buckle went on to relate how badly state control damaged even the communication system of the nation.  Since the introduction of the U.S. dollar, cell phones proliferate which she credits with having an impact on the reduction of crime and the increase in freedom.

Once one grasps the concept that sound money is necessary for the prosperity of any nation, that sound money can be the difference between freedom and tyranny, and that it is certainly the prescription for reversing the approaching economic tsunami created by the Federal Reserve, it becomes even more difficult to accept the current political rhetoric that emphasizes increasing the national debt, installing a national health care system through a gargantuan 2,000 page bill, increasing spending toward the idea of creating jobs, etc.

H.R. 4248 was introduced in early December and as yet has no cosponsors. It probably won’t see the light of day as it is buried in several committees -- Financial Services, Ways and Means, and Judiciary -- unless Americans make clear to their elected representatives that a true stimulus is needed, in the form of sound money that can only come about by eliminating the Federal Reserve’s current chokehold on the money system.

Contact your representative and senators today and urge them to commit themselves to really stimulating the economy by supporting H.R. 4248. Any other policy or program is disingenuous, no matter how it’s sugarcoated, painted, or marketed to we, the people.

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RP said:

... "The purchasing power of the dollar has shrunk by almost 95 percent since 1913 because of the takeover of the money supply by the Fed;" Actually, the figure currently stands at approximately 96%. So, what's the difference... one measly percentage point? At 95%, the ration of current dollars to 1913 dollars was 20:1. At 96%, the ratio is 25:1. When the ratio hits 97% (and it will), the ratio will be 33:1. If it hits 98%, the ratio goes to 50:1, and at 99% the ratio jumps again to 100:1. If you are interested, 99.9% is 1000:1, 99.99% is 10,000:1. You don't want to know what 100% is. The process starts very slowly and increases until become noticeable, then noteworthy, followed by concern, followed by frightening. Then things become frantic. We are in the beginning of the frightening stage.

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February 03, 2010
Votes: +48

Poor Interpretation, Lowly rated comment [Show]

Dwight lane said:

... I do believe you are wrong on the assertion that if we held to a strict money standard (backed by gold or other metals in coin form) "our country would fall apart"! If we held to that, it is easy to realize that everything would be much more stable and would severely limit the ability of greedy people (including government) to manipulate the value of currency! The bottom line is this; normal, everyday, hardworking, blue collar folks, have no problem dealing in stable currency (coins) to mediate trade. We could go back to basic trading of say, potatoes for beef please, but the coins help make every transaction easier. The printing of any fiat currency leaves all hard working people vulnerable to con artists and elected officials. The desire of mentally elevated (egotistical) people, to play games with money is massive. The problem is when they do that and lose, we, the worker bees, are required by the people that write the laws to repay it! Our government is for the most part, a rogue government! We must end them, move them to an island that they already own, somewhere, and let them feed off of each other like the vampires that they are! I DON'T WANT TO BE A SLAVE ANYMORE, PERIOD........ And yes, unless you are a sellout to the establishment, we need you to do some more thinking, and join the movement of truth to help us get our country back!

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February 04, 2010
Votes: +43

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Peter Courtenay Stephens said:

... We can do what Ron Paul has proposed or we can wait for an economic collapse that is under way. If we do what Ron Paul recommends we will have balance and the Rule of Law. If we wait for the criminal class in the White House, Congress and Wall St. to act, we will have total panic and chaos. That is inevitable. The end result will be that we will use G&S again any way, but we could prevent the chaos if we accepted Ron Paul's legislation. The Congress and the White House are too stupid to do this and it does not fir into their Marxist agenda. Wall St. is too greedy to do it. In the final analysis we are screwed because Ron Paul's legislation will not be passed. Enjoy your servitude. Death to Tyrants and Corrupt Politicians.

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February 05, 2010
Votes: +29

Don Clements said:

	TAXPAYER If anyone is aware of any legislation that can help all Americans more than this Resolution, you had better spread the word. In the mean time this is the only chance the USA has of righting the ship. Most commitees have web forms you can fill out for comments. The Judiciary Commitee only takes snail mail and faxes. The fax number is: 202-225-7680
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February 05, 2010
Votes: +16

looking forward to armageddon said:

looking forward to armageddon Mr. Paul has been pushing for these changes almost as long as I have been alive. The man is right and knows what he is talking about. However, most people are either too stupid to understand, or too gutless to care. In the mean time, I will continue to position myself for the inevitable crisis that will ultimately unfold. Then when the system finally cuts the balls off of almost everyone--and its too little late to save--I will giggle a little

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February 05, 2010
Votes: +10

Mike Chase said:

Chief everything Look at the situation in Europe and the reluctance of investors to purchase the bonds of even Eurozone countries like Greece, Portugal and Spain. At the same time the Chinese defend the Rhumbi vigorously and keep it undervalued against the dollar. Are we at the edge of the abyss that will bring in a new world order. Add to the economic and financial turmoil the pressure of religious extremists and we could be on the brink of a world problem that could make World War II look like a minor disagreement. A return of fiscal sanity would possible help, but would not in and of itself solve the problem

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February 05, 2010 | url
Votes: +2

Edward Boido said:

... Just about Zimbabwe's case the introduction of U$S dollar as currency stops the hyperinflation but the cost is going to be the country itself because Zimbabweans will have to pay in U$S dollars for everything and they will be never be paid in the same currency for anything they may export or provide. Then everything inside Zimbabwe is going to be expropriated by the ones who are providing the initial amount of dollars to start the process.

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February 05, 2010
Votes: +1

Kenneth L Lowndes said:

	Intrinsic Value Added Monetary Unit This item is not backed by gold, it contains it! It is the Future of Money itself. It is money literally re-invented. http://www.ivamu.com/ "Despise not the day of small beginnings." -- God.
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February 05, 2010 | url
Votes: +2

Dolf Dieudonné said:

	For the present no hyperinflation in the USA Stimulus money (dollars) which will raise the consumer confidence will in turn raise the profitablity of companies. These profits will for the most flow into the pockets of the very rich people which will reinvest their money mainly outsite the USA reducing again the amount of money in circulation.
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February 06, 2010
Votes: +1

RP said:

Dolf Dieudonné "Stimulus money (dollars) which will raise the consumer confidence..." So why is consumer confidence falling? "...will in turn raise the profitablity of companies." So why is profitability falling? "These profits will for the most flow into the pockets of the very rich people..." Which benefits us how? (Answer: It doesn't) "...which will reinvest their money mainly outsite the USA..." Again, which benefits us how? (Answer: It doesn't) "...reducing again the amount of money in circulation." For now. What happens when the chickens (money invested outside the US) comes home to roost? (Answer: Hyperinflation)

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February 06, 2010
Votes: +4

Dolf Dieudonné said:

... RP, I have to be more specific: Stimulus money will promote work, so as well consumer confidence(not falling) So the companies will earn more, profitability is rising (not falling) These very riche people have high percentages stakes of compamies all over the world. These people, which number increases up to now, will not return the earnings of their investments to the USA because of the expectations of a possible hyperinflation over there. In the meantime goverment may start again a stimulus package. It is a spiral development.

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February 07, 2010
Votes: +1

Jerci said:

	... I think Ron Paul should hammer this topic home until he gets some attention. As things go to hell in a handbasket there will be some who remember his fight to get currencies stable. We might even change once the dust settles so as to avoid making the same mistake over and over again.
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February 08, 2010
Votes: +2

sadasivan said:

The Globalists Wreck the Constitution Deliberately! "H.R. 4248 was introduced in early December and as yet has no cosponsors. It probably won’t see the light of day as it is buried in several committees -- Financial Services, Ways and Means, and Judiciary .." This shows and the Global Financial Crisis showed that POWER is in the hands of a few in the USA.Wrecking the Constitution is the idea of the Globalists and is taking place in India too at present.The Oligarchs are fully in Control in the USA and Oligarchy is being introduced in India too,stealthily.

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February 08, 2010 | url
Votes: +3

RP said:

It is a spiral development A downward spiral. Dolf Dieudonné says consumer confidence is rising. It's not. Locally (which is economically the least depressed in the county and the county is economically the best in the state), sales are down in the stores. Some companies have closed completely. The mall has many empty stores. Other companies are downsizing, laying off people, and closing some stores. New business startups are low. Where there has been expansion, the scale of expansion has been reduced or the expansion delayed. The number of rich people is decreasing. The middle class is shrinking, the poor class is expanding. The dollars invested off shore are being converted to gold and at some point those dollars WILL come home. The government is following the same failed policies of FDR and expecting different results. The country survived the New Deal because of a large industrial base. That industrial base has evaporated. Spending your way to prosperity has never work for individuals or corporations. It won't work for government, either.

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February 09, 2010
Votes: +5

Lawrence Sarsoun said:

	There is no large, national debt Since the Constitution empowers the Congress to coin money of gold and silver, and the states can not make any thing but gold and silver coined money as legal tender, the so-called national debt is bogus because money has not been borrowed, only notes have been borrowed, and the notes are not redeemable, hence they are fraudulent
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February 13, 2010 | url
Votes: +1

Kathy Goedde said:

... I like Ron Paul greatly, and I do think that he's is finally, despite the media, despite the bipartisan politics, trying to lead the country to sanity. I voted for him for President, when the country was voting for magic tricks. However, I do hope and pray and wish that someone, somewhere will WAKE UP! While these monsters are posturing and trying find a way to suck more out of the poor, WE THE PEOPLE are starving and freezing to DEATH!!!! This is not something that you can put off for tomorrow. This is right NOW, in this country. Please, can someone get a way to send someone to find some SOLUTIONS! I've been rhetoriced and politicalized to the point of mind-bending stupidity. LISTEN, for your diety's sake, this money that we have printed is NOT flowing to the bottom. Capitalism doesn't mean that we have to stick a knife in our neighbor's back. We have a MILLION, yup, I'll say that again, we have a million "nonprofits" that are doing NOTHING, but sucking money from the poor. We have a maze of agencies that have the only agenda is supposed to "help the poor" or to "help the disabled", and even more to come, that are doing nothing but shoveled paper around. WHERE IS THE HELP? You can find million dollar CEO's all over the media and all over the internet, but where are the people that are being helped? We have spent trillions "for the poor". Ask the us where their share is. We have laws that contradict themselves to the point where no one in this country is law abiding. We have police that do little more than harrass the poor. Roll your sleeves up and find some solutions! I don't need mandated drugs, mandated tests, mandated vaccinations, and mandated invasive procedures (to enrich the monopolic, overbloated medical industry) - this fluff and governmental hate and stupidity is killing us. I need a way to survive.

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March 03, 2010
Votes: +1