Posts Tagged ‘legal tender’

Gary northIn his February 1, 2012 article, Ben Bernanke: The Official Counterfeiter, Gary North states:

There used to be a legal competitor issued by the U.S. Treasury. We read on Wikipedia:

A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for over 100 years, they were issued for longer than any other form of U.S. paper money. They were known popularly as “greenbacks” in their heyday, a name inherited from the Demand Notes that they replaced in 1862. Often called Legal Tender Notes, they were called United States Notes by the First Legal Tender Act, which authorized them as a form of fiat currency. On the back, they give notice that:

This Note is Legal Tender for All Debts Public and Private Except Duties On Imports And Interest On The Public Debt; And Is Redeemable In Payment Of All Loans Made To The United States.

North has been known to derisively refer to supporters of the interest-free paper money as “Greenbackers,” showing how out of touch he is in calling Ellen Brown a Greenbacker, considering she says the issuance of paper money at the federal level is unconstitutional.

Notice how he later focuses his readers’ attention on an insignificant difference between the two notes:

The Federal Reserve’s Notes looked very much like the Treasury’s greenbacks until the U.S. Notes were taken out of circulation.

As if the look of the two notes is at all significant compared to the fact that U.S. Notes are interest-free, and no interest was due — or ever will be due — on them.

For more on interest-free United States Notes, see my article, The Federal Reserve lies about United States Notes (Lincoln Greenbacks).

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I guest hosted Crash! Are You Ready? on President’s Day, February 20, 2012, and covered the following articles:

1) After 15 long years, I got Dr. Stan Monteith the interview he had wanted with Dr. Peter Duesberg on AIDS

2) Don’t just blame Lincoln for a national legal tender law — Washington signed one, too

3) Challenging Ellen Brown on how counties (can’t) use eminent domain

4) Canada’s judiciary pushing back on an overstepping federal executive

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April 30: George Washington becomes the first ...

Loyola professor and senior Mises Institute fellow, Thomas DiLorenzo, likes to attack President Abraham Lincoln for his policies of questionable constitutional authority.

What DiLorenzo won’t do, however, is attack with the same zeal, the same alleged violation of the Constitution by the first, and generally highly regarded President of the United States, George Washington.

During his presidency, Washington signed the Coinage Act of 1792 into law, which stated:

SEC. 16. And be it further enacted, That all the gold and silver coins which shall have been struck at, and issued from the said mint, shall be a lawful tender in all payments whatsoever

The term lawful connotes even stronger authority than legal, since lawful represents adherence to the spirit of the law, as well as the letter.

While prominent hard money advocates such as DiLorenzo take exception with Lincoln’s issuance of interest-free legal tender United States Notes, I have yet to see a single one of them point out with the same contempt, that George Washington was acting just as unconstitutionally, according to their own standards, as they allege Lincoln was in making United States Notes legal tender.

The issue of whether the federal government has the power to issue paper currency is separate from whether it has the power to make any currency legal tender.

As to where Washington may have believed he was acting constitutionally in signing the 1792 Coinage Act into law, and taking the view of his Treasury Secretary, Alexander Hamilton, over that of Thomas Jefferson, see my article The “necessary and proper” clause: it’s not meaningless.

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Lyndon H. LaRouche, Jr.

When Lyndon LaRouche made his second appearance on The Alex Jones Show on June 30, 2011, he made a bogus claim about America’s monetary system.

At around 42 minutes into the second hour GCN archive, he claimed that Alexander Hamilton set up a system of national credit in the U.S., and not a monetary system, like in the UK.

However, it was Hamilton who lobbied for a privately owned central bank modeled after the private Bank of England, and it is the Constitution that says that Congress alone has the power to coin money, and that states can only make gold and silver legal tender in payment for debts.

I covered LaRouche’s first interview on the Alex Jones Show in my April 9, 2011 article, Lyndon LaRouche jumps off the deep end on Alex Jones.

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Painting, 1856, by Junius Brutus Stearns, Wash...

There are a lot of different things said about what the U.S. Constitution mandates regarding the monetary system, and to clarify, here is my analysis:

  • Congress has the sole public power to strike coins from any metal. The proof that it isn’t limited to gold and silver is the plain language, “coin money,” and the first Coinage Act of 1792, which provided for the coining of bronze coins as well as gold and silver.
  • Exercise of that power is optional, just as is their power to declare war.
  • Congress does not have the power to create any non coin-based money, based on an originalist interpretation of the Constitution and a strict interpretation of its enumerated power to coin money and the 10th Amendment.
  • Individuals and non-corporate associations of individuals retain the right to mint coins or issue paper currency, as per the 9th Amendment, so long as there is no counterfeiting.
  • States have the option of enacting legal tender laws, and if they do, gold and silver must be made legal tender in payment of debts.
  • People and even businesses are allowed to accept payment for goods and services in something other than gold and silver, regardless of legal tender laws, because of the distinction between payment for goods and services and payment of debts.
  • States are prohibited from issuing “bills of credit,” which specifically refers to paper currency. Due to the Tenth Amendment, the States retain powers not delegated to Congress, and, therefore, they have the power to issue credit that isn’t backed by anything, so long as there is no paper currency associated with it.

For my other writings about a constitutional monetary system, see The U.S. Constitution doesn’t say money should be gold or silver coin, and The Constitution doesn’t insist on a gold or silver-backed currency.

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American Gold Eagle

The documentary, Fiat Empire, makes the claim:

When you suggest to people that their money should be gold or silver coin, as it says in the Constitution, they sometimes stare at you with a blank expression, or make the most extraordinary comments.

In some cases, those responses are justified, since the Constitution doesn’t say money should be gold or silver coin.

Article I, Section 8 of the Constitution grants Congress the power “To coin Money,” but nowhere is the word “money” defined in the Constitution.

The Coinage Act of 1792 provided for the coining of copper, in addition to gold and silver, and made those coins lawful tender, showing that something other than gold and silver were coined as money by Congress during the era of the Founding Fathers.

Some cite Article I, Section 10 to claim the Constitution says money should be gold or silver coin.

[No State shall] make any Thing but gold and silver Coin a Tender in Payment of Debts;

But that is a restriction on the individual States of what they can make legal tender, and not a requirement that they make gold and silver coin legal tender. In the same section is the restriction which prohibits the States from coining money, so the only money that can be coined by government is by Congress, and includes more than just gold and silver.

For more misconceptions about gold and silver in the Constitution, please read The Constitution doesn’t insist on a gold or silver-backed currency.

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I came across this May 28, 2008 article by Gary North on LewRockwell.com, where he claims gold coins produced by U.S. and Canada aren’t money.

This is what monetary policy is in the United States and Canada. Both nations produce gold coins. They are not really coins. They are not counted in the money supply. But they look like coins. People can buy them.

That’s an interesting claim — considering they are legal tender! (as the U.S. and Canadian Mint state)

On July 19, I wrote about Gary North’s claim that 21 years is a “medium term” investment in order to justify gold’s embarrassing performance from 1980-2001.

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