Constitution Lecture Extra: Coining Money and Legal Tender

Not a part of the normal lecture series, but an applied exercise. This deals with Congress's power to coin money, and whether or not it includes the power to establish a legal tender.

This is made in response to a video by Dr. Tom Woods, who in turn was responding to people criticizing Ron Paul for saying that the Federal government has no power to establish a fiat money as legal tender. You can see his video here: http://www.youtube.com/watch?v=40MBdt1BQgE

Category:

Education

Tags:

• freedom
• liberty
• lecture
• constitution
• politics
• money
• gold
• silver
• legal
• tender
• fiat
• economics
• dollar
• federal
• reserve

[shchpendrop]

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.

[shanedk]

@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!

[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Not to mention the states originally made paper money was well, so article 1 section 10 made it illegal for the states to emit bills of credit.

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.

[shanedk]

@CoombesKidd "Not to mention the states originally made paper money was well, so article 1 section 10 made it illegal for the states to emit bills of credit."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.

[TrippingTheTube]

@shchpendrop You've just made the case for the gold standard. Congratulations.

[CoombesKidd]

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"

[andrewhirsch]

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]

@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]

@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]

@christo930 Correct.