The Constitution vs. the Federal Reserve

The Republican Party (a.k.a. the "Stupid Party"), which supposedly stands in support of the Constitution, limited government, and free-market economics, must have just forgot that the Jeffersonian tradition is a tradition against backless paper money and central banking. They must have not noticed that their economic views are almost identical with left-liberal, big government, big spending Keynesianism: Government can inflate our way to prosperity! When your family is in debt, spend your way out of it! When the economy is in hard times, don't save, spend-spend-spend!

It thus appears that the so-called "Stupid Party" and "Evil Party" really are, as Dr. Butler Shaffer says, two wings of the same bird of prey. They both are Stupid and Evil at the same time. While the two major political parties have socialistic views on money and banking, here is what Thomas Jefferson had to say:

"[Gold] is the most perfect medium," said Jefferson, "because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands. ... [Paper money] is liable to be abused, has been, is, forever will be abused, in every country in which it is permitted." [[From Ron Paul's Gold, Peace, and Prosperity.]]

Not surprisingly, Karl Mark took a view that is at odds with the Jeffersonian tradition:

In his 1848 Communist Manifesto, Karl Marx urged: "Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly." Sixty-five years later, the United States followed his advice, and passed the Federal Reserve Act of 1913. [From Ron Paul’s pamphlet as well.]

In Llewellyn Rockwell's (ed.) The Economics of Liberty, an essay titled "The Key to Sound Money" by Edwin Vieira explains the unconstitutionality of the current monetary order. The following is an excerpt:

Rightly understood, the Constitution authorizes----and indeed, requires----the government to mint silver and gold coins denominated only by weight and fineness, but denies it any power to emit paper money. (Article I, Sec. 8, cls. 2 and 5; Article I, Sec. 10, cl. 1). It denies the government any power to enact legal-tender laws (except for "gold and silver Coin"), or laws preventing specific performance contracts (Article I, Sec. 8, cl. 5; Article I, Sec. 10, cl. 1; Amendments V and XIV). It permits private banks to issue their own nonfraudelent monetary notes, and deal honestly in deposits denominated in silver, gold, or foreign currencies (Article I, Sec. 8, cl. 3, Amendments IX and X). It permits free entry into private banking, throughout the United States (Article I, Sec. I, cl. 3; Article IV, Sec. 2, cl. 1; Amendments V, IX X and XIV). It outlaws any government sponsored banking monopoly or banking cartel, such as the present-day Federal Reserve System (Amendments V and XIV). And it disables the government from levying discriminatory taxes on privately issued money (Amendments V and XIV).

Thus, in the most fundamental sense, the United States needs no reform law, or restoration law, to return to sound money. For the necessary law already exists, in the Constitution itself.

So as the politicians swear to uphold the Constitution, their actions repudiate their promise. Now personally I think that even this is too much power, but following these guidelines would be a definite step in the correct direction. If we accept the notion of a small, limited government that is a property protector, then, it seems to me, it should only enforce laws against fraudulent practices, such as, fractional reserve banking. Government should not be minting money. In short, we need money and government separate.

I would like to add, parenthetically, that all of this just comes to show, as many radical libertarians have pointed out, that the Constitution, as a piece of paper (or, as Dictator President Bush allegedly put it, a "G. D." piece of paper), cannot enforce itself. Imagine that I needed to go on a diet and wrote a constitution to myself saying that I would limit myself in what I eat and so forth. Ultimately, though, this paper itself cannot force me to eat certain foods and to avoid others. And, as we have seen, the U.S. Constitution has not limited government. Government keeps on interpreting it, and only they have the power to interpret it and to implement policy, in a way that benefits them. All things considered, like everyone else, government officials prefer greater as opposed to lesser wealth. (Government officials, after all, are not angelic, as some statists would have you to believe.) Take the Supreme Court's judges, for instance. They get their power and wealth from the government, just like all other government officials. It therefore follows that they will have the motivation to interpret the Constitution in a way that benefits them. Handing over all decision making ability or all the guns to a coercive (non-voluntary) monopolist is a recipe to tyranny. It is the voluntary and competitive condition on the free market, in contrast, that is the best fighter against abuse and corruption. Consequently, it certainly seems, in retrospect, that the Constitution was a failed attempt to limit the size of government and, even more fundamentally, that it was destined to be one. (And, hey, the Articles of Confederation was superior. Why adopt a Constitution?)