Tenn. Passes Resolution to Coin Its Own Money

P. Gardner Goldsmith | May 3, 2016
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In a move that echoes the 2015 actions of the Texas government, Tennessee Governor Bill Haslam on April 28 signed a resolution, passed unanimously by both houses of the Tennessee government, in favor of creating a state precious metal repository.

While it is not a bill, its significance on cannot be overstated.

First, it indicates that the U.S. Dollar is headed for trouble. Vast amounts of pretend cash created by the Federal Reserve are destined to destroy the value of our money. Second, it brings to light the barely-noticed constitutional provision allowing states or individuals to coin their own distinct currency.

First, let’s talk the future value of our money under the influence of inflation. Central banking, be it by a government or a bank licensed by the government to create money, pumps units of currency into the economy. These units are not created through productivity gains and savings, but out of thin air. Imagine a group of people ready to bid on an item at auction, each having determined his or her top price. Then imagine a politician standing outside the room and handing out money to others, telling them to bid on the item. We know what would happen to the price of the item.

Similarly, inflation of the money supply inspires businesses to erroneously anticipate more business, thus prompting them to increase stores of goods, staff, or other factors. But as that excess money works through the economy, bidding up prices and forcing down the buying power of the cash, people begin to respond to the higher prices, and they cut spending. This leaves unwanted stock in warehouses, bad loans in glorious default, and employees out of work.

But government needs a central bank to give it pretend money. As much as they love to tax, collectivist politicians can’t raise rates high enough to pay off their deficits and debt, so they turn to the easy-money spigot of their central bank.

As Tennessee State Representative Bud Hulsey appears to know, this is a swindle. And, as Hulsey also seems to know, there are numerous ways to stop it.

One key method is to allow states and private institutions to coin money.

Under the U.S. Constitution, Congress does not have the exclusive power to coin money and regulate the value thereof.  In fact, Article 1, Section 10 provides that states may coin money to pay debts, but the money must be composed of gold or silver. Likewise, the Constitution does not prohibit private entities from minting and circulating their own coins.

This means that, as Ron Paul stated in his runs for president, the people of the United States do not need to abolish the Fed through legislation. All they need to do is get Congress to allow private banks to issue their own competing currencies based on their own stores of precious metals. “Good money” (recognized by consumers as 100% tied to something of value) will be attractive to consumers and receive their business, driving out the “bad money” (such as that created out of thin air by the Federal Reserve or Treasury).

The recent, mainly symbolic, move by the government of Tennessee paves the way for real legislation. And the similar move by Texas in 2015 has allowed for the actual creation of a precious metal store upon which citizens can borrow and pay debts. These are direct and important threats to the Federal Reserve monopoly and the U.S. Treasury, both of which have, when they have had power over our money, inflated the supply of monetary units and bid up the prices of goods, thus destroying the value of our work and savings over time.

Inflation is an invisible killer of wealth. It represents an often unrecognized disease that is created by governments and government-tied agencies.

The fact that Tennessee’s governor has signed this resolution indicates that more people are beginning to recognize the danger posed by the Federal Reserve, as it makes money out of nothing and makes our own money weaker and weaker.

The state’s move could make the profligate spenders in D.C. very nervous, and inspire more people to look at the importance of wresting control of the money supply away from the federal government.