Legal Tender or Good as Gold?

Few people have paid much attention to the paper money they use every day, or at least used to before the advent of credit and debit cards and the many new payment systems out there.

As a consequence, not many are aware that the wording on U.S. Currency has gone through a number of changes over the last 100 years.  In the beginning, any “paper” currency was essentially a promise that the government treasury held an equivalent amount of gold and/or silver equal to the face value stated on the paper.  The dollar value of gold or silver was fixed by the U.S. Treasury and known to all. 

Not too long after the creation of the Federal Reserve System in 1913, the wording on a gold or silver certificate was replaced with a “Federal Reserve Note”.  Even then it was technically supposed to represent an amount of solid (metal) currency on deposit in the Treasury of the United States.  The final blow to a valid currency was the imprint, “legal tender for all debts public or private”.  Now as citizens we had finally been had.  The paper we were using to pay bills, etc., had no intrinsic value.  The government declared it to be “legal tender” but with no backing, real or imagined.  There was no indication on the printed paper that it was convertible into “real money.”

Thus, if you wished to “convert” your paper into hard currency, you might be surprised to find out that you could not do so, even if you demanded that you receive metal in an equivalent amount to the face of the paper you wished to surrender.  The coins you would receive are no longer “solid” metal with intrinsic or real value. They are laminated metal coins (called “clad”) stamped by the same mint that used to produce real money.  Instead, because they are now bimetallic, they are worth in the marketplace only the basic value of the metals contained, irrespective of the amount stamped on their face.  By government  diktat they are useable for their face value in payment of debts, public or private!

Here are the facts: “The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures . . .”  (Art. I, Sec, 8) In short, only Congress can decide what your money is worth.  No such power is granted any other body, including the Federal Reserve.

Article I, Sec. 10 states “ . . . No States shall . . . coin money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts . . .”

Not only have we “strayed” from the direction provided by the Founders, we have been subjected to the wisdom of the liberal economist and fiat money banks where today the paper dollar you hold in your hand is worth only 2 cents in hard currency as compared to its value and, more importantly, its purchasing power in 1913.  How has this happened and why didn’t you notice?  The simplest explanation is “planned inflation.”  All governments like inflation: they can “borrow” money at the current day’s interest rate and repay it later with the same number of dollars but which cost them less since they are worth less.  The Federal Reserve has stated repeatedly that they are “shooting” for an inflation rate of 2%.  Doesn’t sound like much, but over the years it has taken its toll and we are now at the level noted above. 

 

Not a sound fiscal policy.  That’s my view.  What’s yours?  Reach me at constitutionviews@gmail.com

©Copyright 2015 Hillard W.Welch