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by Free Market Duck

Why President Obama’s Trillion Dollar “Stimulus” Package is Unconstitutional
Part 1
Feb 12, 2009

Congress and President Obama’s – as well as former President George Bush’s -- trillion dollar Economic “Stimulus” Packages not only violate Article 1, Sections 8, 9, and 10 of the U.S. Constitution, they are in direct contradiction to what the authors of The Federalist Papers stated about why they inserted their monetary clauses into the U.S. Constitution.

   And since the Federal Reserve, the Treasury, and Congress already destroyed the value of the U.S. Dollar with Keynesian pseudo-economics, it is not surprising that graduates of this philosophy from our major universities gravitated to Wall Street where they extrapolated these same deficit concepts to what we now call “toxic derivatives,” which – like the Dollar – also have no value and thus precipitated our current financial crisis.

Washington, DC – The authors of the U.S. Constitution foresaw opposition to the ratification of their new document in 1787.  In an effort to explain the Articles and Sections comprising the new Constitution, three men – Alexander Hamilton, James Madison, and John Jay – writing under the pseudonym of Publius, produced a series of 85 essays, the collection of which resulted in The Federalist Papers.  The Federalist Papers stand as an authoritative analysis and explanation of the Constitution of the United States since they were penned by the authors of the Constitution and thus take their place of political importance third only to the Declaration of Independence and the final document itself:  the U.S. Constitution.

   You may ask, why did Hamilton, Madison, and Jay write The Federalist Papers under a pseudonym?

   The answer is:  for many of the same reasons that the author of this Web Site, Free Market Duck, writes under a pseudonym:  so the readers will concentrate on what is being said rather than the persona of who is saying it.  In the case of Hamilton, Madison, and Jay, the framers of the new Constitution had a British price on their heads for treason against King George.  If the Constitution and new nation had failed, authorship of the essays comprising The Federalist Papers could, in future courts, become just that much more evidence of the authors’ treason against the British Empire.  As an aside, or for your next game of Trivia Pursuit, Benjamin Franklin authored letters to newspapers using 13 different pseudonyms, including as a woman named Silence Dogood to chastise local leaders who were less than virtuous in getting unmarried ladies pregnant and then refusing to acknowledge their deeds of conjugal endearment or support the women and their progeny.

   Back to the scene of today’s “Stimulus” Package crime.

   What, exactly, does Publius – authors Hamilton, Madison, and Jay -- have to say about money, economics, and contractual obligations in the U.S. Constitution?  And how is it relevant to America’s current economic recession and proposed trillion dollar “Stimulus” packages in the year 2009?

   First, let’s look at the pertinent Sections in the U.S. Constitution and see what it says about money:

“Article 1, Section 8.  Powers of Congress (1) The Congress shall have the power…
(4) To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
(5) To provide for the punishment of counterfeiting the securities and current coin of the United States;

Section 9.  Powers denied Congress.  (7) No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of the receipts and expenditures of all public money shall be published from time to time.

Section 10.  Powers denied the states.  (1) No state shall… coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any law impairing the obligation of contracts, or grant any title of nobility.”

   The above clauses are the monetary clauses of the U.S. Constitution.

   Now let’s ask ourselves, does Congress and President Barack Obama’s trillion dollar Economic “Stimulus” Package violate any Sections of the U.S. Constitution or contradict The Federalist Papers?

   Let’s start with the U.S. Constitution, Article 1, Section 8.  POWERS OF CONGRESS.  Congress is granted the power to coin money and regulate its value by fixing its standard weight and measure.  Unfortunately, Congress has since illegally delegated that power to a private corporation called The Federal Reserve, now commonly called America’s central bank.  But this is blatantly unconstitutional.  Congress no more has the right to delegate its primary monetary authority to a private corporation to establish the value of U.S. coin and paper currency than it has the right to delegate its voting rights on Bills to winos off the street.  This represents Congress’ initial violation of the U.S. Constitution’s monetary clauses and lays the groundwork for all subsequent violations that one can trace to our current financial meltdown and economic recession.

   America’s central bank, The Federal Reserve, has, since its inception in 1914, taken on much more responsibility than what the U.S. Congress illegally granted to it, all in direct violation of Article 1, Sections 8, 9, and 10, of the U.S. Constitution and also in direct contradiction to the reasons stated in The Federalist Papers.

   For example, The Federal Reserve draws money from, or shoves money into, the U.S. Treasury – or simply creates it out of thin air with no authority whatsoever through various tricky mechanisms – and does not provide a “regular statement and account of the receipts and expenditures of all public money” which “shall be published from time to time,” as required in Article 1, Section 8, Paragraph (5) of the U.S. Constitution.  The Federal Reserve is more secretive than the CIA.  They inflate our money at will and provide no oversight or accountability of their monetary manipulations to either the U.S. Congress or the people of the United States.

   In addition, The Federal Reserve in conjunction with the U.S. Treasury, has debased our coins from gold and silver to cupro-nickel, and removed the contractual wording on our paper money so that the Federal Reserve Note – the U.S. paper dollar – is no longer redeemable at any U.S. Treasury for gold or silver coins.  We are officially off the gold standard and this is in direct violation of Article 1, Section 10, which states, “No state shall… coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts… .”  

   The emphasis in Article 1, Section 10, above is not to be interpreted as a prohibition ONLY against the individual States issuing their own coin or credit but rather upon ALL the States individually AND collectively, i.e. prohibiting the federal government itself, from making anything but gold and silver coin – coin, not paper – a legal tender in payment of debts.  Obviously, if no State is allowed to “make anything but gold and silver coin a tender in payment of debts,” then it logically follows – and The Federalist Papers support this interpretation – that copper, nickel, paper, or plastic federal money would also not qualify as legal tender in any of our States whether it is printed by the States or the federal government.  The only argument that paper money can legally be issued by the federal government is if said paper certificates -- or any other form of money -- are fully backed by, and redeemable in, gold or silver coin. 

   Otherwise, non-gold and non-silver substitutes are merely serving as forced counterfeit monetary tokens, forced upon U.S. citizens by the Federal Reserve, the U.S. Treasury, and the U.S. Congress in direct violation of the U.S. Constitution.

   Today’s counterfeit monetary tokens, whether as coins, Federal Reserve Notes, Treasury-Bills, and, recently, the $700 Trillion in toxic derivatives on our nation’s bank’s off-book balance sheets comprising credit default swaps, subprime mortgages, and other cleverly-manipulated worthless “money” have no intrinsic nor collateralized value.  And that is why nobody can price either our Pulp Fiction Dollars OR the toxic derivatives sitting on our major banking institutions’ balance sheets.  Until we return to sound money – gold and silver coin or 100% backed gold and silver certificates – the United States’ economy will remain in a hyper-inflated Depression and no amount of so-called Economic “Stimulus” Packages can do anything to solve the problem.  In fact, the more counterfeit monetary tokens that Congress, President Obama, the U.S. Treasury, or the private Federal Reserve central bankers try to shove into the market – domestic and international – the worse our economic problems will become.

   In reference to the Article 1, Section 10, monetary clause, the Federal Reserve and other socialist interventionists have tried to claim that this clause only says that the States cannot issue gold and silver coins.  But, they claim, the federal government via the private Federal Reserve or Treasury somehow has the right to declare anything -- including buffalo doo-doo -- legal tender for the payment of debt.

   Now that we have discovered that various governmental and private central bankers have been “counterfeiting” our U.S. money, both coin and paper currency, Article 1, Section 8, Paragraph (5) “provides for the punishment of counterfeiting the securities and current coin of the United States.”  Therefore, all those legislators in Congress and Presidents George Bush and Barack Obama, among others, are guilty of violating the monetary clauses of the U.S. Constitution.

   As James Madison wrote in Federalist Paper No. 42:

“The punishment of counterfeiting the public securities, as well as the current coin, is submitted of course to that authority [Congress] which is to secure the value of both.”

   Remember, as we have stated over and over at this Web Site, our current recession and financial meltdown is a “VALUE” crisis, not a lack of enough money crisis.  We don’t need more fake “capital” or “more spending,” nor will it “stimulate” anything – except economic and social ruin.  Fake money does not bring prosperity or create jobs.  And injecting trillions or quadrillions of units of fake money will only exacerbate the problem, creating all sorts of trade protectionism and eventually lead to a Third World War.

   The value of our U.S. money, both coin and paper, has been debased and made worthless by the very politicians and central bankers who are now trying to “save” us with more of that which initially caused our problems:  namely, going off the gold standard and substituting ALL of our coins and paper money with counterfeit monetary tokens, commonly called Funny Money, or Pulp Fiction Dollars.

   In Federalist Paper No. 42, James Madison states:

“All that need be remarked on the power to coin money, regulate the value thereof, and of foreign coin, is that by providing for this last case, the Constitution has supplied a material omission in the Articles of Confederation.  The authority of the existing Congress is restrained to the regulation of coin struck by their own authority, or that of the respective States.  It must be seen at once that the proposed uniformity in the value of the current coin might be destroyed by subjecting that of foreign coin to the different regulations of the different States.

The punishment of counterfeiting the public securities, as well as the current coin, is submitted of course to that authority [Congress] which is to secure the value of both.

The regulation of weights and measures is transferred from the Articles of Confederation, and is founded on like considerations with the preceding power of regulating coin.”

      In Madison’s Federalist Paper No. 42, it is obvious that he is concerned with establishing the power to coin money and regulate its value at the federal level, i.e., authority vested in the U.S. Congress, rather than at the State level.  He is very concerned about the uniformity of value of U.S. coinage across all the States and, thus, explains why the framers of the Constitution established a national bureau of weights and measures:  mainly, to establish the value of our gold and silver money.

   In Federalist Paper No. 44, Madison explains why gold and silver coin should serve as money:

“No State shall… coin money; emit bills of credit; make anything but gold and silver a legal tender in payment of debts…”

“The right of coining money, which is here taken from the States, was left in their hands by the Confederation as a concurrent right with that of Congress, under an exception in favor of the exclusive right of Congress to regulate the alloy and value.  In this instance, also, the new provision is an improvement on the old.  Whilst the alloy and value depended on the general authority, a right of coinage in the particular States could have no other effect than to multiply expensive mints and diversify the forms of weights of the circulating pieces.  The latter inconveniency defeats one purpose for which the power was originally submitted to the federal head; and as far as the former might prevent an inconvenient remittance of gold and silver to the central mint for re-coinage, the end can be as well attained by local mints established under the general authority.”

   It is important to understand that Madison was putting forth the economic concept of “commodity money” vs. worthless, non-backed paper money.  The emphasis on using gold and silver as “commodity money” merely represents the fact that gold and silver are the best type of “commodity money” thus far invented, and applies even today.  Note that gold and silver money are the only forms of money that do not represent a liability for an exchange of goods or services since gold and silver are commodities themselves, as opposed to paper I.O.U.s which represent future paper debt that may or may not be repaid – especially at par (non-inflated) value.  Worse yet, today’s Pulp Fiction Dollar is not backed by, or redeemable in, anything of value.  Our paper money is not even an I.O.U.

   Remember, today’s recession is a “value” crisis, not a lack of enough paper money or lack of spending crisis.  (Part 2 continued tomorrow) – FM Duck

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