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Money Systems

May 22, 2011

“A unique form of domestic terrorism” is the way the U.S. Attorney for the Western District of North Carolina, Anne M. Tompkins, is describing attempts “to undermine the legitimate currency of this country.” The Justice Department press release quotes her as saying: “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country.” Such language strikes us as hyperbolic. It may be that the monetary authorities in America fear that their own currency will be exposed as unsound. The monetary terror for the rest of Americans is the danger that there will be a further collapse in the value of their dollars or, conversely, a deflation that will make it even harder, or impossible, to pay back their debts.

The Founders of America understood all this. No doubt they wanted a national coinage. The Constitution they wrote forbids the states from making legal tender out of anything but gold or silver coins, and it is to the Congress that the Constitution gives the power to coin money and regulate its value. But they promptly defined a dollar as 371 ¼ grains of silver, which was the same as in a coin called a Spanish Milled Dollar, or the free market equivalent in gold. The record left by the Founders is replete with expressions of horror at paper money. They required our government officials to enforce the laws Congress has passed until a court tells them otherwise. But they would have understood the instinct of a man like von NotHaus to seek protection from a debasement that the Founders feared was, in respect of paper money, inevitable.

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