This is toshwash at so many levels. Firstly, regardless of the constitutionality of a fiat currency, a fiat currency IS superior to a gold standard and therefore we SHOULD have fiat money rather than a gold standard. The problem with a gold standard is that it makes it too difficult for the government to finance its expenditure, and tax revenues tend to be low in times when high spending is necessary and therefore it is often required to print money.
Not to mention the states originally made paper money was well, so article 1 section 10 made it illegal for the states to emit bills of credit.
using the logic of the tenth amendment, the federal government cannot make paper money, as you've shown, nor can the states since it is explicitly prohibited.
however, this does imply, through the 9 and 10 amendments that the people can make privatley issued money through free banking and debt obligations.
@CoombesKidd "Not to mention the states originally made paper money was well, so article 1 section 10 made it illegal for the states to emit bills of credit."
Yes, and this power was not given to the Federal government under Section 8, either.
"however, this does imply, through the 9 and 10 amendments that the people can make privatley issued money through free banking and debt obligations."
As well as section 10's prohibition of laws impairing the obligation of contracts.
BUT there's yet another way you could have shown fiat money is unconstitutional. The articles of confederation allowed the continental congress to emit bills of credit during the revolution; it said "Congress shall have power to emit bills and borrow money on credit of the US." During the consitutional convention the power to emit bills of credit was removed, and the final version was "Congress shall have power to borrow money on credit of the US"
Just read an enlightening and captivating article by constitutional monetary law scholar Edwin Vieira, "The Forgotten Role Of The Constitution In Monetary Law". You can find the article here.
Shane, I'm not trying to argue here, but I've had a different understanding of this.
I always thought the G&S clause of Art1 Sec10 was a restriction on state govts--not the citizens of a state. I was under the impression that, if their state didn't prohibit it, folks were free to use any medium of exchange (Swiss francs, Brit shillings, buckskins, whiskey, etc.) If G&S were the only legal coins people could use, then why does the Coinage Act of 1792 define a cent as 11 penny-weights of copper?
@MrPloppy1 Yes, having a legal tender doesn't mean that people can't voluntarily use something else if they want. But if you take someone to court to pay their debt to you, you get paid in the legal tender.
So legal tender was different then it is today? Today I think of legal tender as a govt saying "you can ONLY use X as a medium of exchange, anything else is illegal."
Do you know if foreign G&S coins were considered legal tender? I would think that with the understanding of money they had back then that Spanish milled dollars were just as good as US dollars, & Brit pounds were as good as $5 (Silver is silver. It's just the size of the package that is different.)
@MrPloppy1 Legal tender is how legal debts are to be paid. Both then and today, you can specify whatever currency you want at the time of sale; but of a debt is owed, although both parties could agree on a different form of payment, if legal tender is offered but refused, the debt is invalidated.
The two Clauses show that to Coin Money CANNOT entail the power to make gold or silver coin legal tender, but they do not, prima facie, exclude the possibility that the power of Congress to Coin Money DOES entail the power to make something other than gold and silver legal tender. I hope to be proven wrong on this, because I am for sound money.
@shanedk This simplistic argument does not stand up against opponents who claim "To Coin Money" entails the power to establish legal tender. The fairly robust logic you present in this video helps our case, but it might not go beyond saying that the US cannot issue legal tender in gold and silver, thus leaving the door open to other currencies. I am on your side and I want to see your logical form truly end the story. Please try to disprove my original post and bring it home. Peace
It's NOT a "simplistic argument"--it's a FOUNDATIONAL PRINCIPLE OF THE DOCUMENT! Enumerated powers means that the Constitution MUST grant a power to the Federal government in order for the Feds to be able to do it.
Section 10 shows QUITE CLEARLY that the clause YOU are using about gold and silver coin IS SEPARATE FROM the power to coin money. Your logic DOES NOT FOLLOW.
@shanedk By simplistic I did not mean non-critical, of course it is essential to our liberties, I just meant that it does not knock big enough of a blow to our opponents in this case.
I understand your logic that to coin money and to make gold and silver legal tender are distinct powers. My question is does it firmly separate the federal power to coin money and make other things legal tender?
@shanedk Great explanation. Do you mind elaborating a bit on the difference between "coining" money and "making legal tender"? It's a little confusing to figure out how that would work and the difference between the two.
@TrippingTheTube Coining money is taking a round piece of metal and stamping an image on it. Making legal tender is passing a law requiring people to use a certain money to pay off debts.
@sharperguy Our founders understood very well the importance of sound money and how ruinous fiat currency can be. They had just gone through it, after all.
@sharperguy Traditionally gold and silver are used as legal tender because they're pretty scarce and have little application in other uses. You could also use something like platinum, I suppose, but you'd have a REALLY limited money supply. Really anything can be used as currency (some early colonies used tobacco, which worked pretty terribly, but it illustrates the point), but gold and silver work exceptionally well.
@aggrajag2813 Yeah I get how they are good monies, I just don't see why it should be prescribed by any law. If it makes a good money people will use it.
@andrewhirsch The difficulty isn't collecting taxes. The government could easily decree that X amount of a commodity should be payed by each person per year. People would then have to trade whatever currency they had for this commodity to pay the government. The difficulty would be in determining people's wealth - however this was never really possible, the existence of a standard currency only made it appear possible.
@sharperguy This seems like a tyrannical plot. First the government taxes the people in the form of a commodity and then later requires them to buy back their own product with money? Through this double-taxation the government will come to enslave the people.
@andrewhirsch They already do that in a manner of speaking. Except the taxing is in the form of money and the buying back is in the form of commodities payed for by the taxes.
@sharperguy If we could, let's put this debate on hold for a sec. Please jump into the debate I am having with Shane and see what you think about the merits of his logical form. Thanx
@shanedk Technically yes, although a valid one. You're right - in some contexts it's relevant. I'm just plainly not that interested in it. It's like debating the intricacies of copyright law when really I just want it abolished.
@shanedk I wouldn't make that assertion in front of a lawyer. Seriously. Especially with the ban on member states designating anything other than gold or silver as legal tender.
The point is not what *has* been ruled on this, it's what can be read into it.
This clause may be reasonably interpreted to empower the US to print paper money, but it does not it any way empower the US establish anything as legal tender.
@shanedk Only gold and silver can be used as legal tender BY THE STATES, but that does not directly implicate the US. My point is, while your logic proves that the US cannot issue legal tender in gold or silver, it fails to prove that the US cannot issue legal tender in other forms. Please remember that I am only critiquing the value of the logical process employed in this video and am not completing other factors. All respect.
@andrewhirsch "Only gold and silver can be used as legal tender BY THE STATES, but that does not directly implicate the US."
The US IS NOT GIVEN THE POWER TO DO IT AT ALL! It's NOT THERE! It DOESN'T EXIST!
Remember that the claim is that the US has the power to establish a legal tender because it's included in the power to coin money. As I DEFINITIVELY showed, IT ISN'T! And if it's not in the Constitution, the Federal government CAN'T DO IT!
Why is this so difficult for some people to grasp?
@shanedk The negative power on the States can be restated as a positive one that they do have the power to make gold and silver legal tender. Therefore, to coin money and to make gold and silver legal tender are two distinct powers, but that is not to say that to coin money and to make other things legal tender are distinct powers. Your logical flaw is that you take "power to make gold and silver legal tender" to mean "power to make legal tender". I want YOU to be right on this.
@andrewhirsch "Therefore, to coin money and to make gold and silver legal tender are two distinct powers, but that is not to say that to coin money and to make other things legal tender are distinct powers."
That's a COMPLETE perversion of the clause! "...make no thing but gold and silver coin a tender" is a RESTRICTION. Meaning they HAVE the power to make a tender (DESPITE the prohibition on coining money), hence the NEED for that power to be restricted!
@shanedk Please calm down. I am analyzing logical form, not constitutional morality. The way you interpret A1.S10 is "the States may make legal tender, but legal tender can only be gold or silver". U juxtapose the first part of that premise against "shall not coin money" to conclude that "to coin money" and "make legal tender" are distinct powers. That is fine, and perhaps the gold and silver limitation has no effect. But...
@shanedk Some may argue that your logic is false, saying that A1.S10 means "the States may make gold and silver legal tender". If you juxtapose this premise against "the States shall not coin money" then the necessary and only possible conclusion is: "to coin money" and "to make gold and silver legal tender" are distinct powers, saying nothing of making other things legal tender. Continue...
@andrewhirsch "Some may argue that your logic is false, saying that A1.S10 means "the States may make gold and silver legal tender"."
And that argument would be wrong. The Constitution does not grant powers to the states; it only restricts state powers. The only way to get there would be to grossly misquote the Constitution. "May make gold and silver legal tender" from a logical POV is VERY different from "make no thing other than gold and silver legal tender."
@shanedk Great! "The Constitution does not grant powers to the states; it only restricts state powers." This is indeed a fundamental principle of our Constitution, and it is a cornerstone of your argument because it means the States were originally endowed with the power to make legal tender; the Constitution just limits that power to gold. Still though...
@Shanedk "May make gold and silver legal tender" from a logical POV is VERY different from "make no thing other than gold and silver legal tender."
I still fail to totally grasp this. Do you mind elaborating?
Also, I think you should make more videos about the Constitution and our monetary system. There is a lack of such systematic legal analysis on Youtube.
@shanedk I am on your side philosophically, but there are no sides in logic. I have been playing the devil's advocate throughout this debate to help you realize the possible weakness in your argument, that way you might be more able to be more successful in your mission to defend the Constitution. God Bless America!
I think it's a waste to use gold and silver on something as frivolous as money. Both of those metals are some of the best conductors on the periodic table, and very malleable, they would better serve for making electronic components or other practical purposes.
Think of it in terms of marginal utility. If the next best conductor is copper, which is a significantly worse but still servicable conductor, and the next best money is FRN notes, which have funded massacres and social engineering and amplified the business cycle for a century, then I'm sure you'll agree with my subjective value judgment that silver wiring in some electronics is a lower-rated marginal use than stable currency.
@PanzerDivisionBOM While you do want some industrial use for your monetary metal, you don't want it to be TOO useful, because then your currency will be vulnerable to the economic conditions of that industry.
@PanzerDivisionBOM Gold is useful for certain, quite limited applications in electronics because of its' low melting point (which makes it useful for wiring ICs to their packages because you can pretty much spin it into wires directly from the molten state) and immunity to normally occurring corrosives (which makes it good for plating connectors). Other than that, it's really not useful in electronics. Copper is much more cost effective elsewhere.
@wakeangel2001 I think silver has enough uses nowadays to make this a good point, but in the case of gold it's still primarily used as a monetary metal, and only incidentally as an industrial metal.
@wakeangel2001 Gold and silver are actually not particularly good conductors. They're used in electronic components usually as a means to prevent corrosion. There are plenty of substitutes for their use there.
@aggrajag2813 Not silver. Silver corrodes like a bastard unless it's in a sealed environment with no water or sulfur. It's a better conductor than copper, but not as good as gold. (Trivia: The Manhattan Project needed HUGE electromagnets for one of their isotope separation processes. They used all the available government gold reserves and a substantial portion of the silver reserves.)
@aggrajag2813 I just looked it up: silver is the best conductor at 6.30×10^7σ at 20 °C, whereas copper is 5.96×10^7 and gold is 4.52×10^7. So copper is a better conductor than gold.
That is true. I suppose we must determine whether the substances are more useful as the backbone of prosperity or as conductors of innovation. Personally, I choose the former.
@Desertphile And I agree 100%. That's why I base everything in these videos on logic and reasoning, and not any kind of assertive authority (because I ain't one).
No one should accept everything ANYONE says. We weigh everything we hear and try to be objective. Shane knows what he's talking about even if he's not infallible.
@Desertphile Do you have a problem with what Shanedk says in his videos? If so, why not make video responses. Frankly, off-hand remarks such as this seem a bit petty.
@Desertphile That impression is also compounded a bit by the fact that you won't comment on the actual content of the video in any meaningful way, or even reply to Shanedk when he responds to your comments. That's the behavior of a high schooler, not a respected skeptic. Well, maybe Thunderf00t, but nobody's perfect. =P
Very eye-opening. I _almost_ wonder why constitutional studies aren't a bigger part of the public school system; they certainly weren't that important when I went through it.
@Altimadark Actually, that got me wondering; why doesn't the government-run public school system put more focus on the constitution, the very document which is supposed to define that government?
@Altimadark For the same reason the Catholic church doesn't want people to read the Bible: they want to be able to TELL you what it says instead of you thinking for yourself.
What if there was a state that didn't consider gold or silver a viable tender, would it be OK for them to reject any "money" based on gold and/or silver? Just curious.
@OtherGonzo They can make the coins, which means they can define the quantity of metal in the coins. Laws against things like coin shaving and counterfeiting come out naturally as part of the general power to prohibit frauds.
I believe that power only means the metal amount to which the unit of exchange (i.e., dollar) is set, e.g., $1 shall equal 1/20 oz. of gold. The value of the coin is thus established, but the value of the gold of which the coin is made is determined by the gold market, meaning that the coin's purchasing power is also determined by the gold market. Then again, I am no expert.
I have noticed that anytime someone has challenged Ron Paul on the constitution, they lose miserably. I wouldn't be surprised if he was the only one in congress that has even read it. Except maybe his son. Anyways interesting video Shane. I have learned a lot from watching your videos.Keep up the good work!!
I didn't know that states could establish legal tender (even if it's only in Gold and Silver), I always thought that the Federal Government could mint coins, but not force it on people as legal tender.
As much as I would like to agree with this, the federal gov is not creating any fiat money, the federal reserve, a private/public bank issues the fiat currency. To further illustrate this, the federal gov has to pay interest on any money the fed creates to buy bonds. If the fed gov were issuing dollars, it wouldn't make any sense to pay interest to itself.
@shanedk No it isn't. It is only quasi public since it has to turn over it's profits to the treasury. It is owned by it's member banks and is not subject to federal oversight. While the president and congress appoint the chairman, they can't simply remove him at will or install a new one at will.
"The Federal Reserve Act [reference number in the US code] is an Act of Congress that was written by Carter Glass that created and set up the Federal Reserve System, the central banking system of the United States of America, and granted it the legal authority to issue Federal Reserve Notes (now commonly known as the U.S. Dollar) and Federal Reserve Bank Notes (a.k.a. Red Seal Notes) as legal tender. The Act was signed into law by President Woodrow Wilson." -
- This beast was made by an act of Congress. Its legal tender is enforced by force of law. Its competitors - e.g. the Liberty Dollar - are persecuted by the monopoly courts and their police force. Under catallactic conditions, it wouldn't last a week, because a team of lightly trained monkies could figure out a better currency.
@PanzerDivisionBOM I will agree that I am not sure Congress ever had the authority to create the system in first place. While it isn't exactly a private bank, it isn't exactly a national state bank either, it's a quasi-public institution. I agree with Shane that it was created in this way to get around the constitution, but obviously it was effective.
I thought of this same dilemma, but although the US is not directly producing FRNs, it statutorily establishes FRNs as legal tender, which is really no different than producing the notes itself. We must admit that, in reality, the US government is printing paper money.
@andrewhirsch This is only true to a degree. Congress was calling for Paul Volker's head on a platter when he raised the fed target rate to over 20%, but they were unable to stop him (he did have the support of Reagan though, the ONLY good thing Reagan did while in office). This was necessary to restore confidence in the USD and get inflation under control after the 60's and 70's inflation and led to high savings which financed the boom of the mid 80's.
@christo930 And the same thing needs to have now--I seriously doubt as high as 20% (that was because inflation was 15% then), but interest rates DO need to go up. Who's going to invest when the interest rates are below the rate of inflation?
@shanedk I agree with you that we need higher interest rates and greater savings, but right now, the gov is doing everything they can to stifle savings and keep interest rates artificially low. Unfortunately, if the Fed defends the dollar and raises interest rates substantially, the banks we just bailed out will all be insolvent because they are loaded up with low interest bearing bonds (private and gov) as well as mortgages and those low interest bonds will collapse in price.
@shanedk I think it will take the global economy down with it, that is, if the fed raises interest rates. If the dollar starts to collapse, if they keep printing money (though it has slowed down a great deal), it will collapse the dollar and by extension, the world's banking system.
@christo930 But they do that by keeping interest rates low. Printing money increases the Supply of Loanable Funds, lowering interest rates. Raising interest rates would reverse that.
@shanedk Raising interest rates would encourage savings and investment. If the printing press could create capital, all countries would be wealthy. All printing money does is distort the market and causes bubbles and inflation.
3. In that framework the Fed gov is forced to pay in hard currency and at least part in G&S. The part that is not G&S must be convertible and be as good as G&S. Otherwise, Fed gov will never get payment back in G&S from people (law: bad currency drives good one out.) Knowing how difficult to balance silver and gold, another media wont be feasible except platinum.
Good point. Strictly following the constitution would be a good thing and severely limit our government. The printing of money I see as less of an issue than the unconstitutional nature of our military, courts, and police. The questionable constitutionality of our tax system and political system. Simply put there are much bigger fish to fry than our currency.
@SpamSpamNEggs But they go together. Without the ability to create money hand over fist, do you honestly think the government would be able to afford to get us in all these foreign entanglements? If you look at history, the history of war coincides very well with the history of fiat currency, like the Continental during the Revolutionary War or the Confederate money during the Civil War.
@shanedk Yes, the government would be able to do all the foreign entanglements and wars and everything else without the ability to print money. The Guns are not a product of money, but a product of industry. We have the guns, therefore we have the ability to make the guns. Money, specifically the ability to print money only makes it easier. It is feeding the beast that is our unconstitutional military that lead to fiat currency, not fiat currency creating the beast.
@SpamSpamNEggs I think you've missed the point slightly.
Wars, particularly wars far from your own territory, are ferociously expensive things to carry out. If you have the ability to simply create, from absolutely nothing, money that people will take as payment, it becomes much easier to accomplish. You don't have to have the real wealth stored away to pay for it, you see.
@evensgrey I agree that wars are expensive and that printing money helps. Wars are not fought with $, but guns and tanks. Guns and tanks are a factor of production not money. We could, and probably would, make the same amount of guns and tanks with out fiat currency.
The government is like a drunk, and fiat currency is like an ABC store that delivers. The deliveries from the ABC store enable the drunk and make it easier, but by stopping deliveries will not stop the drunk from drinking.
@SpamSpamNEggs As wars are now fought, acquisition of weaponry doesn't depend on the burst spending that fiat currency allows. (For instance, all the bombing done in the first Gulf War resulted in almost no extra spending on munitions, except for some special anti-bunker bombs needed to destroy bunkers designed to be resistant to the standard ones.) However, it's still HORRENDOUSLY costly to put all those people and equipment all that way away and supply them. It's a huge burst of spending.
@SpamSpamNEggs As wars are now fought, acquisition of weaponry doesn't depend on the burst spending that fiat currency allows. (For instance, all the bombing done in the first Gulf War resulted in almost no extra spending on munitions, except for some special anti-bunker bombs needed to destroy bunkers designed to be resistant to the standard ones.) However, it's still HORRENDOUSLY costly to put all those people and equipment all that way away and supply them. It's a huge burst of spending.
@shanedk Not just the Confederate money, but it was also the time of the introduction of the Greenback (grey scale on one side, and green-scale on the other, apparently it was cheaper to print them this way).
@evensgrey It also made it easier to phase them out after the war and return to sound money, which was done.
The Confederacy had no sound money, only fiat money. The Confederate government exchanged dollars for the Confederate money but didn't get the gold or silver backing them up. HUGE mistake!
This is toshwash at so many levels. Firstly, regardless of the constitutionality of a fiat currency, a fiat currency IS superior to a gold standard and therefore we SHOULD have fiat money rather than a gold standard. The problem with a gold standard is that it makes it too difficult for the government to finance its expenditure, and tax revenues tend to be low in times when high spending is necessary and therefore it is often required to print money.
shchpendrop 3 months ago
@shchpendrop "The problem with a gold standard is that it makes it too difficult for the government to finance its expenditure"
That's a feature, not a bug.
"and tax revenues tend to be low in times when high spending is necessary"
BULLSHIT. EVERYONE needs to cut back in a recession, ESPECIALLY government!
shanedk 3 months ago
@shchpendrop You've just made the case for the gold standard. Congratulations.
TrippingTheTube 3 months ago
Not to mention the states originally made paper money was well, so article 1 section 10 made it illegal for the states to emit bills of credit.
using the logic of the tenth amendment, the federal government cannot make paper money, as you've shown, nor can the states since it is explicitly prohibited.
however, this does imply, through the 9 and 10 amendments that the people can make privatley issued money through free banking and debt obligations.
CoombesKidd 4 months ago
@CoombesKidd "Not to mention the states originally made paper money was well, so article 1 section 10 made it illegal for the states to emit bills of credit."
Yes, and this power was not given to the Federal government under Section 8, either.
"however, this does imply, through the 9 and 10 amendments that the people can make privatley issued money through free banking and debt obligations."
As well as section 10's prohibition of laws impairing the obligation of contracts.
shanedk 4 months ago
great job Shanedk, great minds think alike.
BUT there's yet another way you could have shown fiat money is unconstitutional. The articles of confederation allowed the continental congress to emit bills of credit during the revolution; it said "Congress shall have power to emit bills and borrow money on credit of the US." During the consitutional convention the power to emit bills of credit was removed, and the final version was "Congress shall have power to borrow money on credit of the US"
CoombesKidd 4 months ago
Just read an enlightening and captivating article by constitutional monetary law scholar Edwin Vieira, "The Forgotten Role Of The Constitution In Monetary Law". You can find the article here.
andrewhirsch 4 months ago
Shane, I'm not trying to argue here, but I've had a different understanding of this.
I always thought the G&S clause of Art1 Sec10 was a restriction on state govts--not the citizens of a state. I was under the impression that, if their state didn't prohibit it, folks were free to use any medium of exchange (Swiss francs, Brit shillings, buckskins, whiskey, etc.) If G&S were the only legal coins people could use, then why does the Coinage Act of 1792 define a cent as 11 penny-weights of copper?
MrPloppy1 4 months ago
@MrPloppy1 Yes, having a legal tender doesn't mean that people can't voluntarily use something else if they want. But if you take someone to court to pay their debt to you, you get paid in the legal tender.
shanedk 4 months ago
@shanedk I think I understand.
So legal tender was different then it is today? Today I think of legal tender as a govt saying "you can ONLY use X as a medium of exchange, anything else is illegal."
Do you know if foreign G&S coins were considered legal tender? I would think that with the understanding of money they had back then that Spanish milled dollars were just as good as US dollars, & Brit pounds were as good as $5 (Silver is silver. It's just the size of the package that is different.)
MrPloppy1 4 months ago
@MrPloppy1 Legal tender is how legal debts are to be paid. Both then and today, you can specify whatever currency you want at the time of sale; but of a debt is owed, although both parties could agree on a different form of payment, if legal tender is offered but refused, the debt is invalidated.
shanedk 4 months ago
The two Clauses show that to Coin Money CANNOT entail the power to make gold or silver coin legal tender, but they do not, prima facie, exclude the possibility that the power of Congress to Coin Money DOES entail the power to make something other than gold and silver legal tender. I hope to be proven wrong on this, because I am for sound money.
andrewhirsch 4 months ago
@andrewhirsch The Constitution is based on enumerated Federal powers. If it's not an enumerated power, the Feds can't do it. End of story.
shanedk 4 months ago
@shanedk This simplistic argument does not stand up against opponents who claim "To Coin Money" entails the power to establish legal tender. The fairly robust logic you present in this video helps our case, but it might not go beyond saying that the US cannot issue legal tender in gold and silver, thus leaving the door open to other currencies. I am on your side and I want to see your logical form truly end the story. Please try to disprove my original post and bring it home. Peace
andrewhirsch 4 months ago
@andrewhirsch "This simplistic argument"
It's NOT a "simplistic argument"--it's a FOUNDATIONAL PRINCIPLE OF THE DOCUMENT! Enumerated powers means that the Constitution MUST grant a power to the Federal government in order for the Feds to be able to do it.
Section 10 shows QUITE CLEARLY that the clause YOU are using about gold and silver coin IS SEPARATE FROM the power to coin money. Your logic DOES NOT FOLLOW.
shanedk 4 months ago
@shanedk By simplistic I did not mean non-critical, of course it is essential to our liberties, I just meant that it does not knock big enough of a blow to our opponents in this case.
I understand your logic that to coin money and to make gold and silver legal tender are distinct powers. My question is does it firmly separate the federal power to coin money and make other things legal tender?
andrewhirsch 4 months ago
@shanedk Great explanation. Do you mind elaborating a bit on the difference between "coining" money and "making legal tender"? It's a little confusing to figure out how that would work and the difference between the two.
TrippingTheTube 4 months ago
@TrippingTheTube Coining money is taking a round piece of metal and stamping an image on it. Making legal tender is passing a law requiring people to use a certain money to pay off debts.
shanedk 4 months ago
Comment removed
TrippingTheTube 4 months ago
Not sure how the constitution really applies to anything. Also why should gold and silver be legal tender over anything else?
sharperguy 5 months ago
@sharperguy Our founders understood very well the importance of sound money and how ruinous fiat currency can be. They had just gone through it, after all.
shanedk 5 months ago
@sharperguy Traditionally gold and silver are used as legal tender because they're pretty scarce and have little application in other uses. You could also use something like platinum, I suppose, but you'd have a REALLY limited money supply. Really anything can be used as currency (some early colonies used tobacco, which worked pretty terribly, but it illustrates the point), but gold and silver work exceptionally well.
aggrajag2813 5 months ago
@aggrajag2813 Yeah I get how they are good monies, I just don't see why it should be prescribed by any law. If it makes a good money people will use it.
sharperguy 5 months ago
@sharperguy It's not about what people will use; it was about preventing the government from running a fiat money.
shanedk 5 months ago
@sharperguy Ah, OK, I see what you mean. So you're not against sound money, just a legal tender, then?
aggrajag2813 5 months ago
@aggrajag2813 yeah
sharperguy 5 months ago
Yeah, but what is to be collected as taxes?
andrewhirsch 4 months ago
@andrewhirsch Preferably nothing.
sharperguy 4 months ago
@sharperguy I expect such a response, but I am not an anarchist, so...
andrewhirsch 4 months ago
@andrewhirsch The difficulty isn't collecting taxes. The government could easily decree that X amount of a commodity should be payed by each person per year. People would then have to trade whatever currency they had for this commodity to pay the government. The difficulty would be in determining people's wealth - however this was never really possible, the existence of a standard currency only made it appear possible.
sharperguy 4 months ago
@sharperguy This seems like a tyrannical plot. First the government taxes the people in the form of a commodity and then later requires them to buy back their own product with money? Through this double-taxation the government will come to enslave the people.
andrewhirsch 4 months ago
@andrewhirsch They already do that in a manner of speaking. Except the taxing is in the form of money and the buying back is in the form of commodities payed for by the taxes.
sharperguy 4 months ago
@sharperguy If we could, let's put this debate on hold for a sec. Please jump into the debate I am having with Shane and see what you think about the merits of his logical form. Thanx
andrewhirsch 4 months ago
@andrewhirsch I don't really think the constitution is relevant. It's simply an appeal to authority.
sharperguy 4 months ago
@sharperguy The Constitution is THE LAW. If someone robs a store, and a policeman arrests him for breaking the law, is it appeal to authority?
shanedk 4 months ago
@shanedk Technically yes, although a valid one. You're right - in some contexts it's relevant. I'm just plainly not that interested in it. It's like debating the intricacies of copyright law when really I just want it abolished.
sharperguy 4 months ago
@sharperguy So the law is a fallacious appeal to authority when you don't like the implication, but a valid appeal to authority when you do.
johnrainrules 4 months ago
@johnrainrules No I was conceding his point but explaining my actual position. I'm also not taking this that seriously.
sharperguy 4 months ago
Heheheh "to coin money, and regulate the value thereof"
In other words, to establish it as legal tender.
teapotstrikesback 5 months ago
@teapotstrikesback Um, no, not in ANY WAY.
shanedk 5 months ago
@shanedk I wouldn't make that assertion in front of a lawyer. Seriously. Especially with the ban on member states designating anything other than gold or silver as legal tender.
The point is not what *has* been ruled on this, it's what can be read into it.
teapotstrikesback 5 months ago
This clause may be reasonably interpreted to empower the US to print paper money, but it does not it any way empower the US establish anything as legal tender.
andrewhirsch 4 months ago
@andrewhirsch Since only gold and silver could be used as legal tender, that's the only kind of money the Federal government could create.
shanedk 4 months ago
@shanedk Only gold and silver can be used as legal tender BY THE STATES, but that does not directly implicate the US. My point is, while your logic proves that the US cannot issue legal tender in gold or silver, it fails to prove that the US cannot issue legal tender in other forms. Please remember that I am only critiquing the value of the logical process employed in this video and am not completing other factors. All respect.
andrewhirsch 4 months ago
@andrewhirsch "Only gold and silver can be used as legal tender BY THE STATES, but that does not directly implicate the US."
The US IS NOT GIVEN THE POWER TO DO IT AT ALL! It's NOT THERE! It DOESN'T EXIST!
Remember that the claim is that the US has the power to establish a legal tender because it's included in the power to coin money. As I DEFINITIVELY showed, IT ISN'T! And if it's not in the Constitution, the Federal government CAN'T DO IT!
Why is this so difficult for some people to grasp?
shanedk 4 months ago
@shanedk The negative power on the States can be restated as a positive one that they do have the power to make gold and silver legal tender. Therefore, to coin money and to make gold and silver legal tender are two distinct powers, but that is not to say that to coin money and to make other things legal tender are distinct powers. Your logical flaw is that you take "power to make gold and silver legal tender" to mean "power to make legal tender". I want YOU to be right on this.
andrewhirsch 4 months ago
@andrewhirsch "Therefore, to coin money and to make gold and silver legal tender are two distinct powers, but that is not to say that to coin money and to make other things legal tender are distinct powers."
That's a COMPLETE perversion of the clause! "...make no thing but gold and silver coin a tender" is a RESTRICTION. Meaning they HAVE the power to make a tender (DESPITE the prohibition on coining money), hence the NEED for that power to be restricted!
shanedk 4 months ago
@shanedk Please calm down. I am analyzing logical form, not constitutional morality. The way you interpret A1.S10 is "the States may make legal tender, but legal tender can only be gold or silver". U juxtapose the first part of that premise against "shall not coin money" to conclude that "to coin money" and "make legal tender" are distinct powers. That is fine, and perhaps the gold and silver limitation has no effect. But...
andrewhirsch 4 months ago
@shanedk Some may argue that your logic is false, saying that A1.S10 means "the States may make gold and silver legal tender". If you juxtapose this premise against "the States shall not coin money" then the necessary and only possible conclusion is: "to coin money" and "to make gold and silver legal tender" are distinct powers, saying nothing of making other things legal tender. Continue...
andrewhirsch 4 months ago
@andrewhirsch "Some may argue that your logic is false, saying that A1.S10 means "the States may make gold and silver legal tender"."
And that argument would be wrong. The Constitution does not grant powers to the states; it only restricts state powers. The only way to get there would be to grossly misquote the Constitution. "May make gold and silver legal tender" from a logical POV is VERY different from "make no thing other than gold and silver legal tender."
shanedk 4 months ago
@shanedk Great! "The Constitution does not grant powers to the states; it only restricts state powers." This is indeed a fundamental principle of our Constitution, and it is a cornerstone of your argument because it means the States were originally endowed with the power to make legal tender; the Constitution just limits that power to gold. Still though...
andrewhirsch 4 months ago
@Shanedk "May make gold and silver legal tender" from a logical POV is VERY different from "make no thing other than gold and silver legal tender."
I still fail to totally grasp this. Do you mind elaborating?
Also, I think you should make more videos about the Constitution and our monetary system. There is a lack of such systematic legal analysis on Youtube.
Thanx!
andrewhirsch 4 months ago
@shanedk I am on your side philosophically, but there are no sides in logic. I have been playing the devil's advocate throughout this debate to help you realize the possible weakness in your argument, that way you might be more able to be more successful in your mission to defend the Constitution. God Bless America!
andrewhirsch 4 months ago
@andrewhirsch Except that the only way you can do that is to misconstrue the clause in a way that cannot be defended logically.
shanedk 4 months ago
I think it's a waste to use gold and silver on something as frivolous as money. Both of those metals are some of the best conductors on the periodic table, and very malleable, they would better serve for making electronic components or other practical purposes.
wakeangel2001 5 months ago
@wakeangel2001
That only makes them even more suitable as money.
Think of it in terms of marginal utility. If the next best conductor is copper, which is a significantly worse but still servicable conductor, and the next best money is FRN notes, which have funded massacres and social engineering and amplified the business cycle for a century, then I'm sure you'll agree with my subjective value judgment that silver wiring in some electronics is a lower-rated marginal use than stable currency.
PanzerDivisionBOM 5 months ago
@PanzerDivisionBOM While you do want some industrial use for your monetary metal, you don't want it to be TOO useful, because then your currency will be vulnerable to the economic conditions of that industry.
shanedk 5 months ago
@PanzerDivisionBOM Gold is useful for certain, quite limited applications in electronics because of its' low melting point (which makes it useful for wiring ICs to their packages because you can pretty much spin it into wires directly from the molten state) and immunity to normally occurring corrosives (which makes it good for plating connectors). Other than that, it's really not useful in electronics. Copper is much more cost effective elsewhere.
evensgrey 5 months ago
@wakeangel2001 I think silver has enough uses nowadays to make this a good point, but in the case of gold it's still primarily used as a monetary metal, and only incidentally as an industrial metal.
shanedk 5 months ago
@wakeangel2001 Gold and silver are actually not particularly good conductors. They're used in electronic components usually as a means to prevent corrosion. There are plenty of substitutes for their use there.
aggrajag2813 5 months ago
@aggrajag2813 Not silver. Silver corrodes like a bastard unless it's in a sealed environment with no water or sulfur. It's a better conductor than copper, but not as good as gold. (Trivia: The Manhattan Project needed HUGE electromagnets for one of their isotope separation processes. They used all the available government gold reserves and a substantial portion of the silver reserves.)
evensgrey 5 months ago
@aggrajag2813 I just looked it up: silver is the best conductor at 6.30×10^7σ at 20 °C, whereas copper is 5.96×10^7 and gold is 4.52×10^7. So copper is a better conductor than gold.
shanedk 5 months ago
That is true. I suppose we must determine whether the substances are more useful as the backbone of prosperity or as conductors of innovation. Personally, I choose the former.
andrewhirsch 4 months ago
I love your constitutional lecture series. They've helped me quite a bit!
regelemihai 5 months ago
@regelemihai ; Nobody should accept everything Shanedk says in his videos.
Desertphile 5 months ago
@Desertphile And I agree 100%. That's why I base everything in these videos on logic and reasoning, and not any kind of assertive authority (because I ain't one).
shanedk 5 months ago
@Desertphile
No one should accept everything ANYONE says. We weigh everything we hear and try to be objective. Shane knows what he's talking about even if he's not infallible.
regelemihai 5 months ago
@Desertphile Do you have a problem with what Shanedk says in his videos? If so, why not make video responses. Frankly, off-hand remarks such as this seem a bit petty.
Virgil0211 5 months ago
@Virgil0211 ; Yes, I have only one problem with much of what Shandk says: a lot of it is silly, asinine pseudo-libertarian crap.
Desertphile 5 months ago
@Desertphile See what I mean? Petty and childish.
Virgil0211 5 months ago
@Desertphile That impression is also compounded a bit by the fact that you won't comment on the actual content of the video in any meaningful way, or even reply to Shanedk when he responds to your comments. That's the behavior of a high schooler, not a respected skeptic. Well, maybe Thunderf00t, but nobody's perfect. =P
Virgil0211 5 months ago
Very eye-opening. I _almost_ wonder why constitutional studies aren't a bigger part of the public school system; they certainly weren't that important when I went through it.
Altimadark 5 months ago
@Altimadark Actually, that got me wondering; why doesn't the government-run public school system put more focus on the constitution, the very document which is supposed to define that government?
Altimadark 5 months ago
@Altimadark For the same reason the Catholic church doesn't want people to read the Bible: they want to be able to TELL you what it says instead of you thinking for yourself.
shanedk 5 months ago
@Altimadark No, they have you do useless things like memorize the preamble.
shanedk 5 months ago
Great video! Thank you
RakishTilt 5 months ago
What if there was a state that didn't consider gold or silver a viable tender, would it be OK for them to reject any "money" based on gold and/or silver? Just curious.
squirreljester2 5 months ago
@squirreljester2 Nope. The Constitution says they can't make anything else legal tender.
shanedk 5 months ago
Such a state would then have no legal tender, thus no taxes, and thus no government by coercion - most likely anarchy.
andrewhirsch 4 months ago
How would the federal government have the power to regulate the value of coin if they did not have the power to create legal tender?
OtherGonzo 5 months ago
@OtherGonzo The way they did in the Coinage Act.
shanedk 5 months ago
@OtherGonzo They can make the coins, which means they can define the quantity of metal in the coins. Laws against things like coin shaving and counterfeiting come out naturally as part of the general power to prohibit frauds.
evensgrey 5 months ago
I believe that power only means the metal amount to which the unit of exchange (i.e., dollar) is set, e.g., $1 shall equal 1/20 oz. of gold. The value of the coin is thus established, but the value of the gold of which the coin is made is determined by the gold market, meaning that the coin's purchasing power is also determined by the gold market. Then again, I am no expert.
andrewhirsch 4 months ago
I have noticed that anytime someone has challenged Ron Paul on the constitution, they lose miserably. I wouldn't be surprised if he was the only one in congress that has even read it. Except maybe his son. Anyways interesting video Shane. I have learned a lot from watching your videos.Keep up the good work!!
skeptictom818 5 months ago
I didn't know that states could establish legal tender (even if it's only in Gold and Silver), I always thought that the Federal Government could mint coins, but not force it on people as legal tender.
baryonyx550 5 months ago
@baryonyx550 The Fed mints the coins and the states make the tender. Separation of powers.
shanedk 5 months ago
As much as I would like to agree with this, the federal gov is not creating any fiat money, the federal reserve, a private/public bank issues the fiat currency. To further illustrate this, the federal gov has to pay interest on any money the fed creates to buy bonds. If the fed gov were issuing dollars, it wouldn't make any sense to pay interest to itself.
christo930 5 months ago
@christo930 The Federal Reserve is part of the Federal government. Congress chartered it and appoints the board members and the Chairman.
And the government pulls that kind of crap all the time. Just look at Social Security.
shanedk 5 months ago
@shanedk No it isn't. It is only quasi public since it has to turn over it's profits to the treasury. It is owned by it's member banks and is not subject to federal oversight. While the president and congress appoint the chairman, they can't simply remove him at will or install a new one at will.
christo930 5 months ago
@christo930 It's not owned by them in any practical sense; it only is on paper because they were doing an end-run around the Constitution.
shanedk 5 months ago
@christo930
From Wikipedia:
"The Federal Reserve Act [reference number in the US code] is an Act of Congress that was written by Carter Glass that created and set up the Federal Reserve System, the central banking system of the United States of America, and granted it the legal authority to issue Federal Reserve Notes (now commonly known as the U.S. Dollar) and Federal Reserve Bank Notes (a.k.a. Red Seal Notes) as legal tender. The Act was signed into law by President Woodrow Wilson." -
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PanzerDivisionBOM 5 months ago
-
- This beast was made by an act of Congress. Its legal tender is enforced by force of law. Its competitors - e.g. the Liberty Dollar - are persecuted by the monopoly courts and their police force. Under catallactic conditions, it wouldn't last a week, because a team of lightly trained monkies could figure out a better currency.
It's as private as the post office.
PanzerDivisionBOM 5 months ago
@PanzerDivisionBOM I will agree that I am not sure Congress ever had the authority to create the system in first place. While it isn't exactly a private bank, it isn't exactly a national state bank either, it's a quasi-public institution. I agree with Shane that it was created in this way to get around the constitution, but obviously it was effective.
christo930 5 months ago
I thought of this same dilemma, but although the US is not directly producing FRNs, it statutorily establishes FRNs as legal tender, which is really no different than producing the notes itself. We must admit that, in reality, the US government is printing paper money.
andrewhirsch 4 months ago
@andrewhirsch This is only true to a degree. Congress was calling for Paul Volker's head on a platter when he raised the fed target rate to over 20%, but they were unable to stop him (he did have the support of Reagan though, the ONLY good thing Reagan did while in office). This was necessary to restore confidence in the USD and get inflation under control after the 60's and 70's inflation and led to high savings which financed the boom of the mid 80's.
christo930 4 months ago
@christo930 And the same thing needs to have now--I seriously doubt as high as 20% (that was because inflation was 15% then), but interest rates DO need to go up. Who's going to invest when the interest rates are below the rate of inflation?
shanedk 4 months ago
@shanedk I agree with you that we need higher interest rates and greater savings, but right now, the gov is doing everything they can to stifle savings and keep interest rates artificially low. Unfortunately, if the Fed defends the dollar and raises interest rates substantially, the banks we just bailed out will all be insolvent because they are loaded up with low interest bearing bonds (private and gov) as well as mortgages and those low interest bonds will collapse in price.
christo930 4 months ago
@christo930 That's inevitable anyway. The question is, do we take the rest of the economy down with them?
shanedk 4 months ago
@shanedk I think it will take the global economy down with it, that is, if the fed raises interest rates. If the dollar starts to collapse, if they keep printing money (though it has slowed down a great deal), it will collapse the dollar and by extension, the world's banking system.
christo930 4 months ago
@christo930 But they do that by keeping interest rates low. Printing money increases the Supply of Loanable Funds, lowering interest rates. Raising interest rates would reverse that.
shanedk 4 months ago
@shanedk Raising interest rates would encourage savings and investment. If the printing press could create capital, all countries would be wealthy. All printing money does is distort the market and causes bubbles and inflation.
christo930 4 months ago
@christo930 Correct.
shanedk 4 months ago
1. My argument is as follows. From Sec 8 & Sec 10 we have
1) Congress: can make ANY coin money, but not bills of credit (no explicit authorization means going to States)
2) States: cannot make any coins or bills of credits, but can use only gold & silver [G&S] as money.
ForLiberty888 5 months ago
2. RESULT:
- Any person-to-state exchange must be in G&S
- Federal gov will be forced to pay some of the salaries of fed employees in G&S, so they can pay local taxes & dues.
- People should be free to ANY exchange medium between themselves.
ForLiberty888 5 months ago
3. In that framework the Fed gov is forced to pay in hard currency and at least part in G&S. The part that is not G&S must be convertible and be as good as G&S. Otherwise, Fed gov will never get payment back in G&S from people (law: bad currency drives good one out.) Knowing how difficult to balance silver and gold, another media wont be feasible except platinum.
ForLiberty888 5 months ago
Good point. Strictly following the constitution would be a good thing and severely limit our government. The printing of money I see as less of an issue than the unconstitutional nature of our military, courts, and police. The questionable constitutionality of our tax system and political system. Simply put there are much bigger fish to fry than our currency.
SpamSpamNEggs 5 months ago
@SpamSpamNEggs But they go together. Without the ability to create money hand over fist, do you honestly think the government would be able to afford to get us in all these foreign entanglements? If you look at history, the history of war coincides very well with the history of fiat currency, like the Continental during the Revolutionary War or the Confederate money during the Civil War.
shanedk 5 months ago
@shanedk Yes, the government would be able to do all the foreign entanglements and wars and everything else without the ability to print money. The Guns are not a product of money, but a product of industry. We have the guns, therefore we have the ability to make the guns. Money, specifically the ability to print money only makes it easier. It is feeding the beast that is our unconstitutional military that lead to fiat currency, not fiat currency creating the beast.
SpamSpamNEggs 5 months ago
@SpamSpamNEggs I think you've missed the point slightly.
Wars, particularly wars far from your own territory, are ferociously expensive things to carry out. If you have the ability to simply create, from absolutely nothing, money that people will take as payment, it becomes much easier to accomplish. You don't have to have the real wealth stored away to pay for it, you see.
evensgrey 5 months ago
@evensgrey I agree that wars are expensive and that printing money helps. Wars are not fought with $, but guns and tanks. Guns and tanks are a factor of production not money. We could, and probably would, make the same amount of guns and tanks with out fiat currency.
The government is like a drunk, and fiat currency is like an ABC store that delivers. The deliveries from the ABC store enable the drunk and make it easier, but by stopping deliveries will not stop the drunk from drinking.
SpamSpamNEggs 5 months ago
@SpamSpamNEggs As wars are now fought, acquisition of weaponry doesn't depend on the burst spending that fiat currency allows. (For instance, all the bombing done in the first Gulf War resulted in almost no extra spending on munitions, except for some special anti-bunker bombs needed to destroy bunkers designed to be resistant to the standard ones.) However, it's still HORRENDOUSLY costly to put all those people and equipment all that way away and supply them. It's a huge burst of spending.
evensgrey 5 months ago
@SpamSpamNEggs As wars are now fought, acquisition of weaponry doesn't depend on the burst spending that fiat currency allows. (For instance, all the bombing done in the first Gulf War resulted in almost no extra spending on munitions, except for some special anti-bunker bombs needed to destroy bunkers designed to be resistant to the standard ones.) However, it's still HORRENDOUSLY costly to put all those people and equipment all that way away and supply them. It's a huge burst of spending.
evensgrey 5 months ago
@shanedk Not just the Confederate money, but it was also the time of the introduction of the Greenback (grey scale on one side, and green-scale on the other, apparently it was cheaper to print them this way).
evensgrey 5 months ago
@evensgrey It also made it easier to phase them out after the war and return to sound money, which was done.
The Confederacy had no sound money, only fiat money. The Confederate government exchanged dollars for the Confederate money but didn't get the gold or silver backing them up. HUGE mistake!
shanedk 5 months ago