What is Constitutional Money?

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Constitutional money is identified in the plain and unambiguous language of the U. S. Constitution itself. Article I, Section 8, clause 4 contains the following clause:

The Congress shall have power to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.

This means that the Congress, elected to represent the interests of the citizen, has the responsibility to regulate the value of our money. The value of money is regulated by how much or how little money is created. If too much money is created than the value and therefore the purchasing power of money goes down. If too little money is created than the value of money goes up, money becomes scarce, and bankruptcies and foreclosures ensue.

How should Congress decide how much or how little money should be created? The amount of money created by Congress should not exceed or be less than the Gross National Product of the nation. Money should be issued by Congress based on as close to an exact estimate as possible of what is needed for Americans to transact their business, accumulate and maintain savings, and obtain credit based upon clearly defined terms of credit-worthiness. Congress could issue this money interest-free.

Congress should be permitted this important function within certain laws and constitutional amendments including a balanced budget amendment, a line item veto, and laws that ban the creation of money above set limits. In times of war or national emergency, Congress could create or borrow money or raise taxes. If the money supply exceeded the GNP, immediate inflation would result and the Congress would be held accountable.

Other than coins in denomination of the Dollar, Congress does not presently issue our money or control its value. Instead, that responsibility has been vested in the unelected and unaccountable consortium of private banks and investors known as the Federal Reserve Bank. Our money is controlled by private bankers who issue it to Congress and charge our government interest for the privilege. The Federal Reserve Bank bailed out Fannie Mae and Freddie Mack and the Federal Reserve is presently bailing out European central banks.

Private bankers thus control our money and, by extension, private bankers control our property, our businesses, and our lives. This constitutes, in the real sense, “public ownership of the means of production” which is the definition of Socialism. This was why Karl Marx was in favor of the private central banking system. The private bankers have used their virtual monopoly powers to create money to cause booms and busts and property confiscations which have benefited themselves and their international elite friends and allies.

The Occupy Wall Street movement is right. 1% of people control the vast majority of the wealth of the world. That 1% is either apart of or allied with an international network of privately owned central banks that have caused crushing deficits in industrialized nations and debt in the third world. As Americans, we need to take back our money by demanding that our Congress re-assert its constitutional prerogative to issue currency and to end the practice of fractional reserve banking. Banks should be limited to issuing loans based on assets at hand as opposed to what they do now which is to create money out of thin air.

What would constitutional money mean to the economy and to working people? First and foremost, a dollar would be worth a dollar. The economy would be based upon savings and capital accumulation as opposed to what we have now which is a system based upon debt. This would mean that the purchasing power of the dollar would find its true value and this would improve the financial condition of all Americans including the most destitute. The government would carefully and gradually pay off the national debt with congressional currency so as to not cause inflation. Foreign debts could be paid off with specie, which is to say with gold, silver, and/or other agreed upon commodities. The massive bureaucracy, and the Welfare State, would be substantially curtailed as it would no longer be required.

Toward a Constitutional Monetary System

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With a 16 Trillion dollar national debt, a high level of joblessness, a looming threat of inflation, and with Europe teetering on bankruptcy, it is entirely appropriate in these times to question the fundamentals of our monetary system. It should be noted that the present system in the US and in most of the western democracies is one that is run by consortiums of private banks, known as central banks, which have monopoly power over the issuance of currency. The American central bank is called the Federal Reserve Bank. While private banks ought to play a significant role in public finance, the salient question is whether or not it is appropriate for these private institutions to issue currency and to then charge interest for the privilege.

This is not to say that central banks have not played an important and historic role in terms of marshaling capital for great historic projects that have advanced civilization. Indeed, President George Washington, at the urging of his Treasury Secretary Alexander Hamilton, authorized the chartering of the first national Bank of America. At the founding of the American Republic the central bank played a key role in terms of consolidating the debts incurred by the individual states during the American war for independence. This consolidation of debt contributed to national economic unity. The central bank also provided the capital needed for the internal improvements that advanced America.

Yet the central bank was, and remains, essentially a consortium of private banks and investors and this places the value of the currency at risk which potentially hurts the saver, the investor, and the economy. The question posed here is whether it is appropriate in these times for this private institution to be issuing legal tender in the name of the US Government while charging the government and its citizens interest. The central bank decides the level of currency to be issued into the economy. As such the central bank is free to manipulate the currency to suit the purposes of its owners and investors. Thus the central bank is free to inflate or to deflate the dollar at will. Congress goes along because it is easier for congressman to borrow money from the Fed to increase spending while putting off the debt to future generations as opposed to raising taxes and trying to explain to their constituents what they are doing with the money. That debt is now becoming due here in the US and in Europe as the Europeans operate under the same system. Is there an alternative?

The US Constitution answers that question. Article I, Section eight, clause five reads as follows:

The Congress shall have the power to coin Money, regulate the Value thereof, and of foreign coin, and fix the Standards of Weights and Measures.

This means that the Congress, elected to represent the people, holds the constitutionally enumerated power to issue coin. This means that the Congress can directly issue currency. By regulating the value of currency, Congress holds the constitutional power to decide how much currency is issued into the economy. The amount of currency available in the economy is what determines the value of the dollar. Too many dollars in circulation causes inflation which causes the dollar to lose its worth as a storage of value and as a means of saving. The inflated dollar thus loses its purchasing power which causes prices for goods and services to go up in order to keep up with their actual cost and value of those goods and services. Conversely, too few dollars in circulation means deflation which means that there is not enough money in the economy to enable banks to offer loans and credit. The result of deflation is foreclosures, stagnation, and bankruptcies.

The Federal Reserve and the central banks of Europe have manipulated the currency over centuries, causing inflation and deflation, booms and busts, and they have done so in a calculated way so as to advantage themselves and their investors often at the expense of their nations and working people. The international banking structures, the World Bank and the International Monetary Fund among others, are also private banking consortiums and they have served to hook third world nations on debt. Thus the American people, and indeed people in many other nations have no actual control over the value of their own money.

Would a constitutional money system work in the US and what would it look like? This author suggests that currency issued directly by the US Treasury, currency issued to pay public debts and obligations, would be better and more solid than currency issued by the Federal Reserve at interest. US issued currency would be interest free and would be backed by the full faith and credit of the American people. US currency could be issued to pay for such present obligations as Social Security and Medicare. US currency, backed by a ratio of gold and perhaps other metals and certain public properties and resources, could be issued by the US government in a slow and gradual way so as to not cause inflation. By this means the government could begin to pay down the national debt while consolidating and eliminating non-productive costs.

A permanent congressional committee should be established to draft a series of simple laws that would determine how much currency would be  needed in a given fiscal year. The committee should oversee the issuance of that treasury currency in an open process involving open debate and testimony. The amount of currency that would be issued should  depend upon objective indices such as the Gross National Product. The question before this committee would be how much money would be needed for the economy to cover production and exchanges. Private banks should be required to issue a monthly report on their total outstanding credit and this credit would have to be regulated match a set ratio in terms of capital at hand. By this means our nation would benefit from honest money and the result would be greater capital accumulation at all levels, lower taxes, and more creativity and economic opportunity.

The American people deserve to know that their dollar is worth a dollar. If the government wants to spend then the government would have to raise taxes and thus be held accountable. The economy would be based upon a model of savings as opposed to the present system which is based upon debt. The American people should have honest money. This was the intent of the founding fathers when they wrote the currency clause into the US Constitution. This would be the best monetary policy today especially in these economically uncertain times. 

Mitt Romney's Tax Returns

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Democrats are all in a twitter over the recent revelation that Mitt Romney likely paid an annual average of only 15% of his income in taxes. They ignore the likelihood that he also likely paid an average of 10% of his income in annual tithing to charities as required by his Mormon faith. Democrats are banking on the premise that this sort of class envy rhetoric might help them in a year when the public has become conditioned to blame capitalism for the economic woes that have beset the country these past three years.

As a presidential candidate, how does Mitt Romney stack up in terms of wealth and taxes when compared to other presidential candidates in recent elections? Mitt Romney is, after all, being criticized for being rich but how, putting aside the fact that there is nothing at all wrong with being rich per se, does Mitt Romney compare to other recent candidates for president and how, when compared to other candidates, did Mitt Romney make his money?

Let’s start with Massachusetts other recent presidential nominee, 2004 Democratic nominee, Senator John Kerry. Boston radio talk show host Howie Carr likes to point out that Kerry, likely the richest person in Congress and worth an estimate just shy of a billion dollars, lives off of the fortune of “his second wife’s first husband.” While Kerry married his money, Mitt Romney was earning his as a founding partner of Bain Capital which was worth $37 million at its founding in 1983 and which is worth over $66 billion today. 

While Bain could be legitimately criticized for some of its dealings, on the aggregate, Bain Capital has been an incredible success story and is a company that has been respected by liberals and conservatives alike in Massachusetts.

The 2000 Democratic nominee, Vice President Al Gore, is another case in point. Born with a silver spoon in his mouth, Al Gore Jr. was the beneficiary of a stock portfolio set up by his late father, Senator Al Gore Sr. when Gore Sr. was CEO of the division of Occidental Petroleum that was involved in strip mining and polluting Love Canal in upstate New York.

The means of obtaining wealth and the tax returns of President Bill Clinton are the stuff of legends. Benefiting from a cattle futures trade that turned a couple of thousand bucks into a hundred thousand virtually overnight, Clinton’s wife was appointed to the board of several major corporations with lucrative benefits, including Wall Mart, while Clinton was Governor of Arkansas and the corporations in question were doing business in his state. The Clinton’s were involved in the notoriously unethical, but legal, real estate deal known as Whitewater which involved such charming aspects as throwing elderly owners of units out if they were a day or two late on their mortgage. Meanwhile, Clinton’s tax returns revealed tax deductions for soiled underwear.

Clinton and his wife went on the receive multi-million advances for their memoirs after leaving the White House and the former president garners six figure fees for speaking engagements which brings us to the present occupant of the White House. Besides making millions in advances from his books, and admitting to receiving a sweetheart real estate deal from Chicago convicted felon Tony Rezko, President Barack Obama was accused of profiting from drug company stock while a senator overseeing drug regulation. President Obama did nothing illegal as, apparently, this has been the practice of several senators and representatives of both parties in recent years.

The important question for a presidential candidate is not whether they are rich but how they earned their wealth. Romney made his money the old fashioned way, he earned it. In these times of economic dislocation, massive public debt, and financial insecurity at home and abroad, this question is important as we consider who would be the right leader for these times.

Theocracy in America?

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Many on the left obsess over this strange notion that the religious right is conspiring to turn America into a theocracy. A case in point was a recent guest on my radio program “Fairness Radio with Chuck & Patrick.” Our guest, the ultra-liberal author and columnist Frederick Clarkson, stated, in a very scholarly and suave tone that he was convinced, after decades of research, that the Christian right was plotting a takeover.

I asked him to name names and, after some hemming and hawing, he came up with Rev. Pat Robertson and the late Rev. R.J. Rushdooney. He darkly identified these two ministers as “dominionists” or as having embraced “dominionist ideas.” I responded that his incoherent rumblings reminded me of the language used to describe the communist conspiracy in the post-World War II years which employed terms like “subversion” and “infiltration.”

He stated as evidence that Robertson had referred to America as a “Christian nation” and that Rushdooney had advocated Biblical law in America including the implementation of the death penalties listed in Leviticus, death penalties that he scornfully recounted for the benefit of our listeners. I argued that Robertson and Rushdooney were strict constitutionalists and that, as such, their advocacy of public policies would be consistent with and not contradictory to the US Constitution. While I might share some of his dis-agreements with certain policies that they advocated, I nevertheless support their right to that advocacy.

I contended that these ministers were not conspiring to overthrow the Constitution and to replace it with rule by any particular religious denomination, that Robertson and Rushdooney did not believe that Americans should swear a loyalty oath to Jesus. I would argue that Clarkson and his friends on the left have either conjured up this bogey-man in their fecund imaginations or they deliberately and consciously promote this lie as a means to discredit and to silence the opinions of conservative Christians.

It occurs to me that left-wingers like Clarkson impose their own authoritarian values on the religious right which, generally, believes in limited government, that moral and ethical laws ought to be made by elected legislators on the local and state level, and that those laws ought to comport with the US Constitution. When Robertson, for example, talks of a “Christian nation” he is referring to his desire to increase the influence of Christianity on American culture. He is not calling for Christianity to be declared as the legal national religion. The left would, conversely, be oriented toward a hyper nationalist society in which the so-called progressives would run everything for the good of “the little guy.”

Clarkson attempts to impugn the integrity of the Bible when he rattles off the death penalties included in the Book of Leviticus. He fails to conceive of the fact that those death penalties, most of which were rarely if ever imposed due to the system of jurisprudence that the Bible also established, a system that called for high levels of evidence and a system of due process, were and remain a means of limiting government. Ancient nations, contrary to biblical law, lawlessly murdered their own populations at the whim of the ruler.

Likewise, many modern left-wingers turned a blind eye to “progressive” Soviet and Nazi socialism which implemented the death penalty without rules or evidence. Those “progressive” modern regimes re-introduced the ancient and pagan practices of mass murder against individuals who had committed political crimes. The American system, rejecting both the ancient pagan system and the modern so-called progressive example, embraced a biblical system of jurisprudence that utterly rejects the concept of political crimes.

It is obviously absurd to suggest that conservative Christians would seek to implement Biblical death penalties. Clarkson would stop noisy Christians by claiming that their opinions are un-constitutional because they are Christian. It is logical to assume, especially when one considers the record that, if Clarkson and his left-wing friends were ever God forbid enthroned in America, they would declare anyone expressing opposition to their views as acting against the Constitution. Those who dared to oppose their “enlightened” view would be declared as law breakers, as politically incorrect, and therefore as enemies of the state. This begs the question in terms of who actually advocates a theocracy in America.

Barney Frank and the Law of Unintended Consequences - Now on Kindle at Amazon.com

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Order Barney Frank and the Law of unintended consequences:

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A Whig solution to Voter Fraud

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There is a solution to the problem of voter fraud, an act which compromises the sacred principle of one man one vote. Liberals have accused several GOP governors of attempting to suppress Democratic votes by instituting policies that require proper voter identification. Conservatives counter with the assertion that voter ID is nessasary as a response to widespread and systemic attempts by taxpayer funded liberal groups such as ACORN to hand in forged names on the registration forms of candidates that hire them and to commit other forms of voter fraud. Liberals answer this serious charge by Conservatives with the claim that there has been no significant voter fraud but rather that this is a manufactured issue meant to serve a right-wing agenda.

To make matters worse, liberals are playing the race card in their self-serving argument against reasonable voter identification standards with the claim that a large percentage of voters who would be adversely affected by the new rules are poor minorities who don’t have a driver’s license or other valid form of identification. This charge is false or is at best greatly exaggerated. The vast majority of poor minority citizens have proper identification. But, given the remote possibility that liberals might be at least partially right, there is a simple solution, one that would diffuse the divisive race-baiting on the left while at the same time allow for proper voter identification as a means of reducing voter fraud.

That solution would be for taxpayer funded state social service workers to encourage and to offer assistance in the proper registration of citizens in their care. All 50 states, to varying degrees, employ thousands of social workers, public interest lawyers, health care workers, and poverty administrators. It should be assumed that the vast majority of poor people come into contact with any number of these public servants at some point.

State public servants and social service bureaucrats ought to be charged with the responsibility of offering to help their clients to register to vote if the client requests such assistance. If the client is an American citizen, helping them to obtain the necessary identification to register should not be too difficult to accomplish. Public servants are already paid by the taxpayer which means that the infrastructure to accomplish this task is already in place and would not require new agencies or public employees. The public servant would be less inclined to risk participating in the serious felony of voter fraud.

Once this system is in place, once the poor have access to the assistance they would need to register to vote if they chose to, assuming such assistance is necessary, than the state would be in a position to insist upon photo identification when voting and there would be no legitimate grounds for ugly rancor and accusations. With such a system in place, the state would be in a position to tighten rules around verification of absentee ballots. The state could establish standards that prevent the possibility those students and other residents that spend considerable time out of state from voting in more than one state. Standards for citizens and military personnel overseas could be established by which proof of citizenship could be more effortlessly ascertained. If a police officer can gain access to a person’s driving record when pulled over for speeding than a state should be abler to set standards by which the authenticity of an absentee ballot could be confirmed.

Voter fraud is a serious crime and as such the act of voting fraudulently threatens the very essence of our democracy. Every vote should be equal and the only way to accomplish this democratic principle of voter equality is for the government to insure that elections are not stolen by criminals.