I’m not a constitutional scholar, but couldn’t almost everything in this amendment be accomplished by legislation?
The only exception is the ridiculous idea of allow states to print fiat money (anyone want their paycheck in California Dollars?) which I can’t possibly think of a good reason to allow.
There’s nothing that makes it illegal to print your own currency. But, by federal law, it would have to look distinguishable from US currency (for obvious reasons), and you would still be potentially liable for taxes. For example, any business that accepts such currency would still have to book it as income. Also, you can’t try to pass the currency off as real legal US tender.
In fact, some states have already considered it, and there are communities that have their local currency. As long as you are not trying to pass it off as US legal tender, you’re pretty much in the clear. It seems to work well in limited circumstances for some communities.
Actually, thinking further on it, the part about the States is unnecessary, since it’s already possible for individual states to print their own (non-US) currency. But it’s a stupid idea that ignores what we’ve already learned through history.
They all stopped doing so by the 1780s because it was a damned stupid idea when they could use a common currency. It put a major damper on interstate commerce and could easily lead to abuses by taking advantage of differences in pricing across states. It was easier to allow them all to print US dollars. And even then, it became a good idea to discourage them from even doing that much (though it’s still legal for them to do so). As I mentioned in the previous post, some states are considered their own currency - usually backed by gold.
What happens when, for example, Texas debases its currency relative to Oklahoma to get a pricing advantage for exports? Or if South Dakota can’t meet its obligations and starts inflating like crazy? Or Utah pulls a China and starts buying up California-denominated debt as a reserve currency? Many would simply ditch their currencies or simply never print their own currency and return to the safety of the dollar.
No need to go to the Articles of Confederation. Nothing in the good ole US Constitution disallows the idea of states issuing their own currencies. States don’t do it because it’s stupid, not because it’s illegal.
Here’s a pretty good article on Depression-era scrip, various types of which were issued by businesses, local governments, etc. It wasn’t illegal then and, AFAICT, it’s not illegal now.
There were, however, several problems with it. One of the major ones was
Article 1, Section 10:
“No State shall . . .coin Money; emit Bills of Credit; [or] make any Thing but gold and silver Coin a Tender in Payment of Debts”
Looks like that disallows states issuing their own currencies. It’s Congress that has the power"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures"
What intrigued me most about OP is that as I started reading it I thought it to be a parody poking fun at right-wingers, but after a few sections realized it was serious.
The “paradox” is that parodies of right-wing “thought” aren’t nearly as stupid as the real thing. I found this out on Usenet when I posted hilarious right-wing parodies hoping to waken people up from their delusions … and started getting fan mail! :smack:
You are correct that a state can’t directly print its own fiat currency, but the same article has been interpreted by the SCOTUS as stating that using gold/silver coin or paper currency backed by gold/silver is an acceptable medium for states. So, no fiat currency for states but gold-standard money is ok. That’s what states like Utah or South Carolina have been thinking about. The legal argument (IANAL) seemed to be that it is reasonable for an individual depositor in a state owned bank to accept a draft (i.e. paper) for a given amount of gold/silver, rather than the metal itself, should the depositor agree to it.
I suppose this new proposal allows for state fiat currency. Still doesn’t make it a necessary or even a good idea. A simple reading of US history shows several problems that occurred near state borders due to differences in value between currencies.
Would you like to buy some Utah Money? It’s like regular money, but it’s…er, fun.
I don’t think that case is about whether a state can print its own currency, but whether a state bank is allowed to charge a fee on checks issued by the federal reserve.
This has a name:
The relevant section:
Basically, a state can set up a bank, which can issue drafts backed by gold/silver.
The bank can, yes, but that doesn’t mean the state can. When they talk about a “state bank” in there, they’re not talking about a bank owned or operated by the state. They’re talking about a bank that’s chartered and regulated by a state, rather than by the national government. That’s different than the state of West Virginia issuing “West Virginia Dollars” and requiring people to use them. It’s just saying that it’s not unconstitutional for the bank to set up checking accounts.
How do you think money gets issued?
The US government doesn’t directly issue money. It also charters banks to do so. This is always how it’s worked and how it works to this day. Our money is printed by the Bureau of Engraving and Printing but it is issued by the Federal Reserve, not directly by the government.
The restriction on states printing money is exactly this restriction on their ability to set up or charter banks to issue bills.
This isn’t just some theoretical exercise. The state of Utah has already gone in this direction. As has South Carolina and a number of other states. So, at least, there doesn’t currently appear to be a major controversy over gold/silver-backed state currencies.
Despite the spam nature of the OP, this thread has turned into an informative discussion, so I am going to leave it open.
[ /Moderating ]
Right, but the proposed amendment allows states to issue fiat money. We agree that currently they cannot do so, correct?
Hood Mountain sounds like exactly the sort of place where an end-the-fed crackpot would live. Although I must say the “end the fed and replace it with a differently named central bank” idea is a novel one.
But this new central bank would be under the thumb of Congress who could order it to hyper-inflate currency at its will or do any other thing for political purposes.
All major economies learned over 100 years ago about the importance of an independent central bank to prevent this kind of chicanery that caused severe boom and bust cycles.
Sure. They can’t currently do so, which I think I agreed to above.
And it’s still true that almost all the proposals in this amendment can already be achieved through legislative or executive action. They’re still asinine ideas.
There seems to me to be 2 reasons why a state would want to print its own legal tender currency. Both occur when the national government (or its proxy banking system) is acting irresponsibly. If the central banks were just printing money endlessly for no good reason leading to hyperinflation, a state currency would provide a more stable medium of exchange. Alternatively the central government might be refusing to print fiat money and instead insisting on a gold standard leaving people cash poor and at the mercy of creditors who could refuse to barter.
The former is hypothetical in America. The latter, unfortunately, is not.
This amendment isn’t all bad. I’m all for draining the Augean Stables (to mix a metaphor). But yeah, we don’t need a constitutional amendment for that.
The former isn’t hypothetical either, at least not the state part. One of the problems with the Articles of Confederation is that the states issued their own money. That might have been okay, except that Virginia’s currency was widely accepted and South Carolina’s and Georgia’s wasn’t.