Nevada - calling Congress to the carpet

[FoundingFathers]

With the recent discussion on the Nevada Silver Coin Act, I wanted to add my thoughts.

Many gold/silver bugs have criticized the Nevada $20 silver coin act. The general argument seems to be that these coins are just "tokens" or "souvenirs" and therefore mearly another form of fiat currency.

Although there is some truth in this viewpoint, I believe the most significant aspect of the Act is being
forgotten.

Article 1, Section 8 of the Constitution...

The Congress shall have Power to....coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; ...

The Nevada Coin Act states that Congress has defaulted on this Power granted to it by the Constitution by giving this Power to the private Federal Reserve Bank in 1913. This is the primary justification for this new coin act. The Constitution served as a contract between the State powers and the Federal Congress whereas the States gave up the power to issue currency to the Federal government per Article 1, Section 8. This is additionally addressed in Article 1, Section 10...

No State shall ....coin Money; emit Bills of Credit; make any thing but gold and silver Coin a Tender in Payment of Debts;...

The gold and silver Coin mentioned here pertains to that issued by Congress. The Nevada Coin Act claims justification for issuing the silver coin by specifically spelling out that Congress has broken their end of this Constitutional agreement. This act has put into writting what we have been saying " the Federal Reserve Bank is unconstitutional!". The significance of this cannot be overstated!

As for the coin being just another form of "fiat". This is not entirely true. Fiat currency is based purely on faith - with no backing whatsoever. The current US dollar cannot be redeemed for gold or silver - it is pure fiat. The Nevada Silver coin is at least partially backed by 1 oz of silver. Although the market price of silver is lower than $20/oz, one could say that this coins value is 25% real money and 75% fiat. Nevertheless, it is a step in the right direction. In fact, a similar type "revaluation" would have to occur if the US dollar was ever put back onto a precious metals backing. (Gold valued at $750??).

Therefore, IMO the significance of the Nevada Coin Act is two-fold;

1) A State government has declared that Congress has defaulted on its Constitutional obligations regarding monetary policy by creating the private Federal Reserve Bank.

2) It is a small baby step towards currency backed (at least partially) by precious metals.


FF

[G-khan]

It is a small step but it is a claim on the States right to coin money as provided in the Constitution. I hope more States will follow the example of Nevada. This also has another plus to it for holders of Silver - it adds to the demand.