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by Free Market Duck

Why President Obama’s Trillion Dollar “Stimulus” Package is Unconstitutional
Part 2
Feb 13, 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 – Madison continues with an explanation in Federalist Paper No. 44 about the difference between paper money and gold money:

“The extension of the prohibition to bills of credit [today we call it deficit financing or, as the Keynesian socialists call it, “targeted inflation,”] must give pleasure to every citizen in proportion to his love of justice and his knowledge of the true springs of public prosperity.  The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice of the power which has been the instrument of it.”

   President Obama, Congress, are you listening?  Even our framers of the Constitution knew that deficit financing was a ridiculous concept.  To extrapolate deficit financing as a positive “stimulus” is nothing short of a bad joke on the citizens of America.

   Madison continues in Federalist Paper No. 44:

“In addition to these persuasive considerations, it may be observed that the same reasons which show the necessity of denying to the States the power of regulating coin prove with equal force that they ought not to be at liberty to substitute a paper medium in the place of coin.

   President Obama, Congress, state legislatures, are you listening?  President Obama’s so-called Economic “Stimulus” Package seeks to get around the States’ printing up of their own paper money by shoveling billions of Federal Pulp Fiction Dollars to each state according to its real or imagined “needs” – Ayn Rand must be rolling over in her grave about now.  We have come full circle in 2009 and are doing exactly what the framers of the Constitution warned us not to do.

   Madison presciently continues with his foresight of what will happen in the future if we violate the basic principles of economics by not using gold and silver coin as our legal form of money:

“Had every State a right to regulate the value of its coin, there might be as many different currencies as States, and thus the intercourse among them would be impeded; retrospective alterations in its value might be made, and thus the citizens of other States be injured, and animosities be kindled among the States themselves.  The subjects of foreign powers might suffer from the same cause, and hence the Union be discredited and embroiled by the indiscretion of a single member.”

   Pay attention Obama and Congress.  Are not the countries of Europe and Asia and Africa busy blaming the U.S. for their current financial meltdown and recession, for pushing our worthless Pulp Fiction Dollars and toxic derivatives upon them?

   Madison continues:

“No one of these mischiefs is less incident to a power in the States to emit paper money than to coin gold and silver.  The power to make anything but gold and silver a tender in payment of debts is withdrawn from the States on the same principle with that of issuing a paper currency.”

   As stated above, Madison is not just concerned with the 13 States issuing their own coins or paper currency (bills of credit).  He warns us about all levels of government issuing “bills of credit.”  Today, the U.S. Congress has violated the U.S. Constitution by effectively using the federal Pulp Fiction printing presses to print up trillions and trillions of dollars in earmarks and pork barrel deficit financing to distribute as Federal Aid, Federal Grants, and all sorts of special funding to all levels of state, city, and county governments.

   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.

   Madison continues with his explanation in Federalist Paper No. 44 about why the U.S. Constitution prohibits the reneging on contracts, specifically monetary contracts such as our previous gold and silver certificates that have been replaced with non-backed, non-redeemable Pulp Fiction Dollars:

“Bills of attainder, ex post facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social contract and to every principle of sound legislation.  The two former are expressly prohibited by the declarations prefixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters.  Our own experience has taught us, nevertheless, that additional fences against these dangers ought not to be omitted.  Very properly, therefore, have the convention added this constitutional bulwark in favor of personal security and private rights; and I am much deceived if they have not, in so doing, as faithfully consulted the genuine sentiments as the undoubted interests of their constituents.  The sober people of America are weary of the fluctuating policy which has directed the public councils.”

   President Obama and Congress, are you listening?  We are tired of your Porky Pig “Stimulus” Packages and urge you to stop issuing Funny Money at once.

   Madison continues in Federalist Paper No. 44:

“They [the public] have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs [earmarks, pork, special interest cookies] in the hands of enterprising and influential speculators  [today, we call them lobbyists], and snares to the more industrious and less informed part of the community.  They [the public] have seen, too, that one legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the preceding.”

   Which is how we got to where we are today in year 2009.

“They very rightly infer, therefore, that some thorough reform is wanting, which will banish speculations on public measures [lobbyists and legislative pork barrel earmarks, special interest legislation], inspire a general prudence and industry, and give a regular course to the business of society.”

   The upshot of reneging on contracts with regard to changing the words on paper money from redeemable certificates for gold and silver represents an “impairment on the obligation of contracts” at its most fundamental level:  namely, violation of a sacred written contract between Americans and their government.  The new Federal Reserve Notes have been illegally changed from a legal receipt for real money, gold and silver coin, into ridiculous non-contracts of no redemption for anything.

   Therefore, just on the basis of Federalist Paper No. 42, today’s so-called Economic “Stimulus” Package of injecting trillions and trillions of Pulp Fiction Dollars into the U.S. economy on the premise that it can “jump-start” our economy into a condition of wealth based upon a philosophy of continual indebtedness and deficit spending is not only unconstitutional, not only contradicts The Federalist Papers that explain the provisions of the U.S. Constitution, it is just plain stupid.

   In Federalist Paper No. 44, Madison’s words of wisdom apply directly to how modern America, through the use of paper money issued by a private central bank, the Federal Reserve – by not using gold and silver -- has caused not only monetary meltdowns and our current recession but also is the cause of many social injustices, both domestically and internationally, as politicians and lobbyists pick and choose winners and losers in what used to be a private free market sector.  The United States has truly morphed into a nationalized socialist government of favoritism and bureaucratic bungling.

   In summary, Federalist Papers No. 42 and No. 44 are not just simplistic discussions about States’ rights to coin or not coin gold and silver money; it is a discussion about why gold and silver – conceptually and physically -- must be used as money because they have value, the uniformity of which must be the same across every level of government, as opposed to using worthless paper money like we use today.  Note how clearly James Madison explains, over 200 years ago, exactly the financial mess, economic ruin, unemployment, and concomitant loss of social freedoms we are experiencing today due to going off the gold standard and implementing an inflationary deficit monetary policy.

   One last note:  it is very important to understand that today’s irredeemable, non-backed, paper “money” has no value, is not “capital,” is not “capital goods,” and cannot do anything but cheat the citizens of America out of the value of their possessions through the hidden taxation of hyper-inflation.  If not curtailed, this action will result in (1) the complete destruction of our monetary unit, (2) the destruction of the free market pricing mechanism (which depends on the subjective prioritizations of freely trading individuals in a free competitive market and not central government planning), and (3) quite possibly another World War as other nations do the same and become trade protectionists.

   Finally, the upshot is that 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.

   If America continues on its current path of idiotic Keynesian Econometrics and does not return to a 100% gold standard, America’s children and grandchildren will pay a very dear price -- not only in Dollars but also in much global destruction and death. – FM Duck

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