Last year, Larry Greenley at the John Birch Society penned a prescient piece in relation to the overwhelming passage of the “Audit The Fed” bill (H.R. 459) in the U.S. House of Representatives. He wrote that, while it was very encouraging that it passed in a bipartisan fashion by such a large margin (327-98, with 238 Republicans and 89 Democrats in the affirmative), “it is virtually certain that the Senate will not concur this year. Moreover, it is virtually certain that Congress will not act to end or phase out the Fed any time soon.”
How right he was. The companion bill in the Senate, S. 202, was sent by Majority Leader Harry Reid to the Committee on Banking, Housing, and Urban Affairs, and allowed to die. It was introduced again this year as S. 209, but once again Sen. Reid has refused to bring it up for debate and a vote (yes, this is the same Harry Reid who called for an Audit of the Fed back in 1995). Its sponsor, Sen. Rand Paul (R-KY), has now announced that he’s placing a Senatorial Hold on Janet Yellen’s nomination as the new Chair of the Federal Reserve, unless and until his bill gets a vote. (Like a filibuster, a Senatorial Hold can only be broken by a cloture vote of 60 Senators.)
Will Sen. Paul get a vote on his bill? It’s doubtful. Even if he does, it’s virtually assured that the Fed-loving majority of Senators would vote it down. And if they won’t even vote for transparency in the Federal Reserve, does anyone seriously believe they’d ever vote to END it?
Greenley was (and is) correct: it’s just not going to happen, certainly not “from the top down”. Which is why we need a bottom-up strategy instead:
The preeminent expert on Constitutional money, Edwin Vieira, has a strategy for phasing out the use of Federal Reserve Notes through new state laws providing alternative currencies, which he has been promoting via interviews and videos for the past several years.
Basically, Vieira advocates that states start taking advantage of their sovereignty as guaranteed by the Tenth Amendment and their constitutional mandate under Article I, Section 10 not to “make anything but gold and silver coin a tender in payment of debts,” by passing laws providing alternative currencies in their states based on gold and silver.
That’s exactly what the Constitutional Tender Act is all about: returning each State to adherence to the United States Constitution’s actual legal tender provisions. This tactic could achieve the desired goal of abolishing the Federal Reserve system by attacking it from the “bottom up” — “pulling the rug out from under it,” by working to make its functions irrelevant at the State and local level.
The ConTen Act also has an advantage over more “watered down” State Legal Tender bills, such as the one passed into law in Utah, in that it creates a true competition in currency by strictly adhering to the Constitutional ban on States using Federal Reserve Notes at all in their official transactions. Greenley went on to explain:
The only state to pass its alternative currency bill and get the governor’s signature was Utah in 2011. Utah’s bill, HB317, provides a model bill for other states to consider introducing. Although Georgia didn’t pass its alternative currency bill, HB3, in the 2011-12 session, its bill also provides another good model bill for other states to consider. While the Utah bill is stronger in its attention to the tax treatment of silver and gold money, the Georgia bill is stronger in its attention to the valuation of silver and gold money and in its requirement that state debts be paid in gold and silver.
As I’ve explained in more detail elsewhere regarding how the Constitutional Tender Act would work, over time, as residents of the State use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a “reverse Gresham’s Law’” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes). This will lead to an eventual outcry against the use of Federal Reserve Notes for any transactions; the use of low-value pieces of paper issued by the Federal Reserve will become irrelevant, and an emaciated Federal Reserve system can be brought to a welcome, if inglorious, end.
Sen. Paul’s “Audit the Fed” bill is a great bill, as far as trying to bring transparency to a banking cartel goes. But a “bottom up” approach to ending the Fed would have a much greater likelihood of success than a “top-down” approach (because it’s decentralized, diffused, and legally sound, as I noted in the paper I presented at the Mises Institute), and we need to push our State legislators to pass the Constitutional Tender Act in every State — NOW.