Ending the Federal Reserve from the Bottom Up: Re-Introducing Competitive Currency by State Adherence to Article I, Section 10

Abstract

Since its inception, the U.S. Federal Reserve’s monetary policies have led to a decline of over 90% in the purchasing power of the U.S. dollar. As a result, there have been several attempts to curtail or eliminate the Federal Reserve’s powers; however, none have proven successful to date, due mainly to the constraints of strong political opposition at the national level.In contrast to these attempts at the national level, this paper proposes an alternative approach to ending the Federal Reserve’s monopoly on money: the “Constitutional Tender Act,” a bill template that can be introduced in every state legislature in the nation, returning each of them to adherence to the U.S. Constitution's “legal tender” provisions of Article I, Section 10. This approach would have a greater likelihood of success for a number of reasons. First, it is decentralized: rather than facing concerted political opposition at a single Federal level, it attacks the issue at the State level, where strategies and tactics can be adapted to the types and amount of political opposition they encounter. Second, it is diffused: it can be attempted in any number of States, which can cause the opposition to spread its resources much more thinly than would be necessary at the Federal level. Finally, it is legally sound: it relies on the U.S. Constitution’s negative mandate in Article I, Section 10, that “No State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts.”The conclusion is that, in contrast to “top-down” attempts to “end the Fed,” a “bottom-up” approach using “constitutional tender” laws will find greater success.This paper was presented at the Austrian Scholars Conference at the Mises Institute in Auburn, AL, March 13, 2010.