During The Revolutionary War, The Continental Congress issued approximately $240 million in paper money, called Continentals. The understanding was that, after the war, this money could be redeemed in gold or silver. The states, thinking this was a great way to create money, also began printing money. On top of that, The British created counterfeit Continentals, and used them to buy supplies from The Americans.
With a weak Articles of Confederation, and the printing of these bills, The United States nearly lost the war for independence. And, not too long after, confidence in these Continentals had gotten so low, that by 1780, each bill was barely worth one cent.
Even though God’s grace was with our country, and the war for independence was won – due to this practice of printing money, the newly formed United States suffered a period of real financial depression. It was so bad that foreign nations were hovering over us, like vultures, waiting for the new United States to collapse.
Fortunately, God’s grace was still upon our new country, and James Madison, along with George Washington, formed what we now know as The Philadelphia Convention, where our Constitution was written, and a true miracle took place. That document, and the subsequent ratification, by the states, transformed The new United States from a country near collapse, to a prosperous, and free Republic.
The framers of our Constitution, now knowing the evils of printing paper (fiat) money, which is not based, firmly, on a tangible asset, decided against the usage of any fiat money for the currency of The United States, and elected only to use gold and silver coinage for our currency.
This wisdom was enshrined in Article 1, Section 8, Clause 5, of The United States Constitution – which grants these powers, explicitly, to The United States Congress:
• To “coin Money,” regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
Our founders were so serious about having sound money, that Congress was also given the power to punish any counterfeiting, or debasing, of United States currency:
• To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
In fact, in The Coinage Act of 1792, Congress even prescribed the death penalty to anyone who counterfeited or deliberately debased our currency.
Beyond that, Article 1, Section 10, Clause 1, made it illegal for the states to except anything but gold and silver coins as a system of payment:
• “No State shall” … coin Money; emit Bills of Credit; “make any Thing but gold and silver Coin a Tender in Payment of Debts”
Today, The Federal Reserve (as opposed to Congress, as directed by our Constitution), not only directs the printing of paper (fiat) money, but they also set the monetary value of all United States currency. Not only does Congress not do what it has been Constitutionally mandated to do, but Congress can not even audit The Federal Reserve! Therefore, unbelievably, our own “elected” officials can not even see what is going on with OUR monetary policies.
Beyond that, all 50 states, and beyond, are distributing the very currency that our Constitution prohibited from ever being created and distributed in the first place.
Therefore, our entire monetary system is not only being regulated by an un-Constitutional agency, that can not be audited, but the states are, unknowingly, or complicitly, allowing this currency to be distributed! However, as we have seen in Article 1, Section 10, the states are not allowed, Constitutionally, to coin their own money – which doesn’t leave the individual states with very many options.
At some point, the very thing that our founders learned, and warned us against, with regards to fiat money, is the very thing that could be leading The United States, today, into another horrible – financial crisis.
God help us ALL!