The Bill for America’s Sloth is Coming Due

As this column comes from the word processor, Congress is considering the massive bailout proposed by Treasury Secretary Henry Paulson a few days ago. At an entry-level cost of $700 billion, this is the most extensive, as well as blatant, scheme for looting average Americans ever seen—or ever imagined—by anyone, anywhere, at any time up until now. And, undoubtedly, even more is yet to come—because, if the bandits in the Disgrace of Columbia get away with this, the sky is truly no limit.

Mr. Paulson is quoted as saying, “It pains me tremendously to have the American taxpayer put in this position, but it is better than the alternative.” (USA Today, Monday, 22 September 2008, at 1A) Even if that feeling of regret is personally true for Mr. Paulson, it is surely the exact opposite of the sentiments of relief and glee infusing the low lives in high finance whose bacon will be saved while common Americans’ gooses are cooked by this outrageous stick-up.

But you have to hand it to them. These people have more nerve than a brass monkey: They concoct this racket in bad mortgages and “derivatives,” foist it on the markets, rake off exorbitant profits and executive compensation while the bubble is expanding, and then, when the scheme implodes, hand America a bill of astronomical proportions to pay for their own wrongdoing! And not just to bail themselves out now, either, but in addition to perpetuate their economic and political power so that they can engage in future, presumably even more abusive, financial manipulations and rake-offs to their gain and at average Americans’ expense. For, as Mr. Paulson is reported to have explained, “The key here is about protecting the system.” (USA Today at 2A)

What “system” is that, pray tell? America’s constitutional system? Her free-market system? Perhaps some insight can be gained by consulting Liu Shao-Ch’i, one time big shot of the Chinese Communist Party, who was purged by Chairman Mao Tse-tung for being “the top party person . . . taking the capitalist road”—but whose theories are guiding the Red Chinese oligarchs today:

We will make use of the free market. It will help us remedy the insufficiencies of our economy on the one hand, and provide us with its diversity and versatility on the other. Where the merchants and the free market set the pace, our socialist economy will follow and do likewise. Let the free market retain its private-trading features, its capitalist marketing methods, and its capitalist operations. . . . In the end, we will not only benefit by our emphasis on planning, but we will benefit by its diversity and versatility. [Quotations from President Liu Shao- Ch’i (New York, New York: Walker/Weatherhill, 1968), at 127.]

Liu might actually have believed that his proposal would ultimately advance a “socialist” or even a “communist” system. But the more accurate political-economic designation of what he advocated is “fascist.” Fascism, after all, is the highest form (or, put instrumentally, the inevitable fall-back position) of socialism, because can be made to work in a modern economy (albeit only after a fashion) without having to murder millions of “class enemies” in order to keep the gears grinding, but with power and wealth still concentrated in the hands of a tiny parasitic oligarchy. This is what Stalin never learned, but the Chinese communists, after the demise of The Great Helmsman, did. Apparently, too, this lesson has not been lost on America’s puppet-politicians and the special-interest schemers in the financial demi-monde who pull their strings—and who for decades have been up to their necks in “planning,” and then subverting and manipulating the free market in order to advance their plans. Not that, from the perspective of any common American, though, the label makes a base-metallic dime’s worth of difference. What possible significance does it have if the screw of financial looting—soon to be enforced with para-military police-state oppression—turns from the left rather than the right, or vice versa, when it always drives straight ahead towards the destruction of Americans’ prosperity and freedom?

Well, have you finally had enough? (Is it possible that $700 billion is not enough?!) If so, now what?

A. In the short term, one alternative for real “change we can believe in” would be for Congress, exercising its constitutional power “[t]o regulate Commerce,” to declare all “derivatives” and similar abusive “financial instruments” to be nothing more than “financial wagers”—akin to typical illegal gambling agreements—and therefore unenforceable either directly in any court of the United States or of any State, or under color of any judgment handed down by any foreign court. In addition, under its power “[t]o lay and collect Taxes . . . and Excises, to . . . provide for the . . . general Welfare of the United States,” Congress could subject the proceeds from “derivatives” and similar “financial instruments” that have been executed since (say) 1996 to a retroactive “Excise . . . uniform throughout the United States,” set at 99.99% of their transaction-values, with the proceeds to be secured in a true trust fund exclusively to compensate innocent victims of the present economic meltdown.

These would not be unconstitutional “ex post facto Law[s],” because the “ex post facto” prohibition applies only to “Law[s]” enforceable through criminal sanctions. And that many, or even all, of the “financial wagers” at issue take the ostensible form of private contracts cannot stand in the way, either. For many decisions of the Supreme Court hold that no private contract can frustrate the power of Congress “[t]o regulate Commerce.” Indeed, after what has happened as a result of these “financial instruments’” cancerous growth, Congress has a constitutional duty “[t]o regulate Commerce” in this manner. And, of course, because “the power to tax is the power to destroy,” none of the financial gamblers in the “derivatives” game can assert a right not to be taxed in whatever bracket Congress sees fit to impose.

B. In the long term, though, all this will not be enough. To forefend a recurrence of such financial abuses, America must return to constitutional fundamentals where money is concerned, by separating currency from debt. Currency cannot be debt; and debt cannot be currency. Period.

The only way to minimize irresponsible speculators’ blowing of financial bubbles is to minimize their ability to float their schemes on a rising tide of fiat currency. This requires tying the Nation’s currency to the realities of production in the free market as closely—and insulating it from political manipulations of its supply and purchasing power as much—as possible. For that reason, the only official “money” in the system must be, not simply “backed” by, but actually in the form of the most suitable commodity or commodities, the production of which requires inputs of scarce and costly capital and labor for which other uses vigorously compete. In such a system, official “money” is the commodity (fabricated in a particular form, for the purpose of easy verification of its amount and quality); and the commodity (in that special form) is “money.” And nothing else is. Period.

Throughout history, silver and gold have proven themselves the commodities best suited—and specifically under America’s Constitution are required—to be money. (Lincoln Greenbacks, a nationalized Federal Reserve System, “social credit,” and like schemes rely on nothing more than one or another form of debt-currency—and worse yet, unlike the present Federal Reserve System, which is in the hands of private bankers whose business acumen is at least proportionate to their greed, each of these other arrangements suffers from the fatal defect of consigning control completely to politicians, for whom après moi le déluge are the professional watchwords.)

Today, though, silver and gold are not America’s actual currency—Federal Reserve Notes irredeemable in precious metal are. So, to return America to sound monetary foundations, We the People must re-establish the permanent political and economic use of silver and gold as money on a large scale, and in a relatively short time. As a matter of law, government is the only permanent political-cum-economic institution in society. And, in modern life, governmental operations will inevitably have significant economic effects. Therefore, silver and gold must be, as a matter of law, the only forms of money that are permissible for use by government in its transactions—at every level, National, State, and Local. In the day-to-day operations of a free society, of course, private individuals and entities may use whatever they desire as media of exchange among themselves, assuming the economic risk. But, to maintain a free and prosperous society, in all transactions involving government only official commodity money of silver and gold may be used.

Why silver and gold? Not because these metals constitute the very best money anyone might imagine (although good arguments can be advanced in favor of that conclusion). But because the Constitution requires them as official money. And the Constitution is “the supreme Law of the Land” here and now. True, judges misinterpret it, politicians and special-interest groups flout it, and all too many Americans neither comprehend it nor care to overcome their ignorance on that score. Nonetheless, it is far easier to correct misinterpretations, to enforce compliance, and to educate a critical mass of Americans as true constitutionalists on this subject so crucial to their economic survival than it would be to create a wholly new system from scratch through a constitutional convention— particularly one at which the likes of certain leading Senators and Representatives might be in attendance as the new “Founding Fathers (or Mothers).”

What would the necessary reform legislation provide, and to what end?

First, it would open the mints to “free coinage” of constitutional, legal-tender silver and gold coinage. In deference to modern technology, it would also allow for the use of private electronic silver and gold currencies that consist of fixed amounts of bullion (pure metal) held in secure storage within the United States, provided that the bullion is guaranteed to be convertible for the holders on demand into official silver and gold coins. This would cause a huge flow of silver and gold into the United States, to be coined into official money, along with the creation of new “silver and gold banks” operating on the principle of bailment, not fractional reserves.

Second, the statute would provide for a gradual “denationalization” of the Federal Reserve System’s currency, Federal Reserve Notes (FRNs), over some reasonable period of time (say, one year). On a fixed schedule, FRNs would be stripped of their character as “legal tender” (except with respect to contracts expressly made payable in them) and as “obligations of the United States,” and would cease to be “redeem[able] in lawful money” (or anything else) by the Treasury. In addition, all “gold certificates” the Treasury provides to the Federal Reserve, and the authority to do so, would be cancelled—thus negating Title 31, United States Code, Sections 5117 and 5119(a). Anyone who doubts that this can be done legally, as it were “just like that,” should consult Section 30 of the original Federal Reserve Act, in which “[t]he right [of Congress] to amend, alter, or repeal this Act is hereby expressly reserved.” Act of 23 December 1913, ch. 6, 38 Stat. 251, 275.

Third, the finances of government at every level would be moved onto the silver and gold standard, by steadily increasing the percentage of taxes paid in, and of payouts to creditors, in the precious metals. Once those finances were entirely on a full specie basis, it would be a criminal offense for any public official to receive or pay out any currency other than silver and gold, except in the case of previously existing contracts made in undifferentiated “dollars,” which may be paid in FRNs (if any such still circulated), or in the silver value of such contracts at the time they were made (if FRNs no longer circulated). (On the latter point, the reader should review how private contracts made in defunct Confederate “dollars” were revalued after the Civil War.)

Fourth, the new legislation would declare: (i) that “sovereign immunity” does not exist with respect to any governmental contract payable in money, so that payment in silver and gold will always be enforceable—thus negating Title 31, United States Code, Section 5118(b, c); and (ii) that any seizure by any public official of silver and gold from the people along the lines of the 1933-1934 raid by the Roosevelt Administration has always been, was specifically in 1933-1934, and is now unconstitutional.

All this, of course, is a very simplified overview of a process that is necessarily complicated by the requirement that the new money must be introduced at a pace sufficiently slow and steady that the free market can make the necessary adjustments in its structure of prices in order to minimize disruptions in production and distribution of vital goods and services as businesses shift from the old currency to the new. Patently clear, though, is that none of this will ever happen, or even have a chance of happening, until sound money, honest banking, and responsible financial markets become widely recognized as crucial components of constitutional “homeland security.” And that will never happen unless and until Americans are organized in “the Militia of the several States” throughout the country. And that will never happen unless one State revitalizes her Militia as an example and encouragement to the rest. And that will never happen unless enough Americans wake up, get up, and make it happen. And when will that happen?

Not having it happen years ago is about to cost this country $700 billion in one fell swoop. So sloth has its price. How much can you afford? How long dare you wait to find out?

©2008 Edwin Vieira, Jr. – All Rights Reserved.