“Legal Tender” Law: Opting Out
There are many monetary conferences held by people concerned about the Federal Reserve System and who believe the Federal Reserve is a bad institution for one reason or another. Economists usually take the position that the problem is that we have something called the “Legal Tender Law”, touted as compulsory “money” that must be used by common Americans. If one were to read any Federal Reserve Note, it will be imprinted with the words, “This note is legal tender for all debts public and private.” That phrase was taken from statute: Title 12 of The United States Code Section 411 and 31 USC Section 5103. So we have these economists claiming our problem is the legal tender law, and if we could just get rid of the legal tender law, then people could use alternative currencies. That is completely wrong. The legal-tender laws do not bind anyone if they choose not to use Federal Reserve Notes. Anyone can write a contract in gold, silver, yen, or even yuan (Chinese Currency). If one were to specify in that contract that the monetary unit to be used is “X” and “X” is something different from the Federal Reserve Note, that contract is valid and no one could be required to accept Federal Reserve Notes in payment of that contract. And that contract is enforceable in any court in the United States. It would be extremely rare to find an economist who knew the situation correctly. There’s a reason it doesn’t happen, but it’s not because of those statutes. It’s because most people naively believe what the economists believe. The people have been sold a “bill of goods”, but that’s not the reality.