Hour 1 -- Ken Swinehart (Founder/President/Owner at Amigo.Net) comes on the show to talk about constitutional money/currency
Hour 2 -- Michael Belfiore (Author, Writer) provides and update on the private space race, mainly the successful SpaceX relaunch of a rocket
Hour 3 - Davi Barker updates us on his travels
CALL IN TO SHOW: 602-264-2800
March 31st, 2017
Declare Your Independence with Ernest Hancock
on LRN.FM / Monday - Friday
9 a.m. - Noon (EST)
Studio Line: 602-264-2800
BS in Electrical Engineering
Candidate for Colorado State Rep, Colorado Senate and small town Mayor - always taking 2nd place
Been involved with various political causes from early 20s
Presently not affiliated with any political party - but identifies as a Libertarian
Founder and Owner of a telecommunication company
Founder and owner of a small town TV station
Served on many non-profit boards over the last 30 years
Written articles on many various topics, including money reform
Article by Ken...
How a State Can Create Its Own Currency
Conventional wisdom says that a state cannot create its own currency. Conventional wisdom also at one time said the world was flat. Both views are equally wrong in concept and in fact. To understand how a state can create a state-based currency, let's first review the United States Constitution and federal legislation that directly relates to this issue. Under Article 1 Section 8, the federal government was delegated the power to "To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures." Pursuant to Article 1 Section 10, the Constitution further states that "No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility." (Emphasis added). Additionally, 31 U.S.C. § 5103 states that "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts." In very plain language, the Constitution bars a State from the ability to "coin money" and "emit bills of credit." However, it does not bar a State from issuing bills of debit. The difference between a "bill of credit" and a "bill of debit" is easy to explain. When a bank issues a credit card, it is extending a client credit based upon the bank's faith that purchases will be paid back over a period of time. In comparison, a debit card's purchases are debited on an already existing asset deposited at the financial institution. Basically, a "credit card" has no asset for backing a transaction where a "debit card" does.
Over the past few years various states have made symbolic gestures through legislation to make "gold and silver" legal tender due to frustrations with the Federal Reserve System. However, creating an alternative to Federal Reserve notes, that moves beyond symbolism, requires the implementation of a mechanism to create a state-based currency. Fortunately, that mechanism is very simple to enact. This simple process can be broken down into three steps: (1) the state creates an entity; (2) the state makes an appropriation from public funds to buy assets, such as gold and silver and transfers these assets to the newly created entity, and; (3) the state emits bills of debits (currency/notes) in various denominations that are a claim upon the gold/silver assets whereby the notes can be used in everyday transactions. A state cannot coin its own money, but the state-issued currency backed by gold and/or silver effectively does the same thing.
To provide more details for the understanding of the process, I'll use the State of Texas as an example. Recently, Texas created a state bullion depository for the storage of gold or silver. It is essential for a state-based currency to have a secure depository to develop confidence within the general public for the use of the currency. First, Texas, through legislation, would create an entity called the Texas Currency Board and make an appropriation from the public treasury to buy gold and/or silver to be deposited in the Texas Depository to fund the activities of the Currency Board. The Texas Currency Board, via its enabling legislation, would then issue currency in various dominations corresponding to an amount backed by gold and/or silver.
Once the notes are created and a mechanism is in place for their redemption, the State of Texas could require vendors who are providing goods and services to the state to be paid in the Texas currency. Additionally, to gain momentum in the use of the notes, Texas could allow taxes to be paid in the Texas currency. It can't mandate taxes to be paid only in the Texas currency as it runs afoul of 31 U.S.C. § 5103, yet a discount on taxes might be given if a person or business paid in Texas notes.
For marketing the new Texas currency, a campaign emulating the successful "Don't Mess with Texas" campaign called "Buy Texas" could be employed to get businesses to accept the Texas currency as well as encouraging people to start using it for day-to-day transactions. The ultimate goal of the marketing campaign would be to get businesses to only accept the Texas currency assuming they are not in a debt issuing business. For those skeptical as to whether a business can decide to only accept Texas notes for transactions, a visit to the Federal Reserve website which references 31 U.S.C. § 5103 states:
"This statute means that all United States money as identified above is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise." (https://www.federalreserve.gov/faqs/currency_12772.htm).
While the foregoing was a basic example of how a state could create a state-based currency, there are many other options for creating a state-based currency. For instance, for-profit businesses or non-profits could set up a currency board and issue notes based upon the same concepts. However, unless a state supports the initiative, it would likely be limited in scope. Further, it only makes sense to create some, if not most, of the currency in a digital form and use a debit card system that facilitates easier transactions for those using the state currency.
In summation, there are no legal restrictions that prevent a state from creating a state-based currency. Instead, it comes down to implementation and convincing the general public to use it after decades of using the Federal Reserve System and the momentum that it has in the marketplace.
Other misc topics covered...
News Link • Global
Why Singapore chose a currency board over a central bank
03-31-2017 • Economy Next
From a speech by Goh Keng Swee, former Finance Minister of Singapore... When the sun never set on the British Empire, the currencies of the British Colonies were issued under the CBS. This provided for 100 per cent backing of the note issue in overse