Now that one state legislator has been re-elected, he wants to be paid in cold, hard cash, literally.
Montana citizens got a heck of a bill this week from Jerry O’Neil, a representative from one of the state’s northernmost districts. Following his re-election, O’Neil stated that he requested the Montana government pay him in gold instead of dollars, saying his constituents have complained to him about not upholding the letter of the U.S. Constitution. According to a statement by O’Neil to the Daily Inter Lake, a newspaper serving O’Neil’s home district, the U.S. dollar is due for a collapse, but many believe his request to be somewhat ridiculous.
“It is very likely the bottom will fall out from under the U.S. dollar,” O’Neil told the newspaper, which covers northwest Montana. “Only so many dollars can be printed before they have no value.”
Forgive the pun, but O’Neil, who campaigned for former presidential candidate Ron Paul, may be right on the money with his legal argument. Article 8 of the United States Constitution states that while the Legislative Branch has the power to establish the value and coinage of money, the Constitution is also specific as to how individual states can pay their own debts.
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
The nation’s economic ills and skyrocketing federal deficits have led to renewed calls for states to begin coinage of their own money as a hedge against a potential mass federal default and dollar crash. In a February article published by CNNMoney, Representative Glen Bradley (R-NC) sponsored a bill aiming to allow states to do just that and bypass the Federal Reserve.
“In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System … the State’s governmental finances and private economy will be thrown into chaos.”
This fall, the Federal Reserve added fuel to this debate by announcing its monetary policy of near-zero interest rates, which gold advocates say is bankrupting the United States, will continue into 2015 and possibly beyond. This decision may have emboldened gold standard advocates such as O’Neil, Bradley and former presidential candidates Ron Paul and Newt Gingrich to continue their push to not only allow states to make their own gold and silver coins, but to also abolish the Federal Reserve.
The loss of faith in paper fiat currency is not new. In the late 1800s, speculators and investors drove the price of gold so high in an attempt to corner the market, the U.S. Government had to go, hat in hand, to gold magnate J.P. Morgan (father of the company which is now JPMorganChase) in order to meet its obligations. After the Revolutionary War, few states coined their own money those that did found their currency to be essentially worthless. In the 1970s, President Nixon’s decision to take the nation off the gold standard was blamed as of the reasons for a recession with gripped the nation for years.
Should the federal government manage to avoid sequestration (the technical term for the combination of tax increases and spending cuts associated with the “fiscal cliff”), while still making serious progress towards reigning in the federal budget, these latest calls for payment in hard cash instead of paper currency will likely die down.
UPDATE: Politico.com reported Thursday that an attorney for the State of Montana disagrees with Representative O’Neil’s interpretation of the portion of the constitution being used to justify the salary payment in precious metal. Jaret Coles, the legislative staff attorney for Montana’s goverment, said he could find nothing in the U.S. Constitution stipulating a requirement for such a sort of payment, nor is there “specific authority in the Montana Code Annotated for an agency to pay debts using gold or silver for services.” Coles did, however, suggested that if O’Neil wishes to be compensated that way, he could introduce legislation allowing for it.
O’Neil’s response included referring to Coles as a “judge” instead of an attorney, an then saying instead of trying to get a law passed about it, he would simply have his salary direct deposited to a coin dealer who would pay him in gold.