The Birth of a National Fraud

The Federal Reserve (FED) allows our national government and twelve private banks to steal the value of our currency straight out of the wallets and bank accounts of Americans

The Birth of a National Fraud

Dr. Dawinder S. Sidhu, professor of constitutional law and national security at the New Mexico School of Law, wrote an article[1] in which he presented the historical actions of Eldridge Gerry Spaulding, chairman of the House Ways and Means Subcommittee on Banking and Currency, to create the fiat currency known as the greenback.



The advent of the greenback, green paper currency not backed by anything of intrinsic value, like gold or silver, created as a war measure in 1862, was a lawless act because it violated restrictions in the Constitution prohibiting such measures.

Spaulding illogically argued the Constitution “empowered Congress to “raise and support armies” and “provide and maintain a navy,” and that Congress retained the “discretion” to determine how to fund the army and navy, including through the issuance of paper notes. This authority, supplemented by the enumerated power to make laws “necessary and proper” to execute its other express powers, could afford a sufficient constitutional foundation for the act.”

To those somewhat familiar with the Constitution, this may sound reasonable, because Congress is empowered to “raise and support armies” and “provide and maintain a navy,” but Congress has not been delegated the authority to determine how to fund the army and navy if the funding method falls outside that which is specified in the Constitution.

According to the Tenth Amendment, Congress only possesses powers expressly written in the Constitution, such that if a power is not written, then Congress, the President, and the Judiciary do not have that power.



Article I, Section 8, delegates the power “To coin Money,” and “regulate the Value thereof,” not “print” money and regulate the value thereof. If words have meaning, which they do, then this is a very important distinction, because in this clause Congress has not been granted the authority to print money. What this clause states is that, unless the authority to print money has been specified somewhere else in the Constitution, Congress is not authorized to do it.

Evidence of a national prohibition against any level of government in the United States from either making or accepting paper money as legal tender for debts is in Article I, Section 10 where it restricts States from emitting “Bills of Credit.” “Bills of Credit” is a term by which the authors of the Constitution meant un-backed paper money. According to the Tenth Amendment, if the States were not restricted from emitting paper money, then they would have the power to do it, but the authors of the Constitution made sure this paper money loophole was closed.

Further evidence of this is also found in Article I, Section 10 where the States are restricted from making “any Thing but gold and silver Coin a Tender in Payment of Debts.” It stands to reason that if the national government can only coin money and States cannot accept anything but gold and silver coin as legal tender in payment of debts, then Congress cannot print money and require the States to accept it as legal tender for their debts.

The Legal Tender Act of February 25, 1862, required the States to do what the Constitution prohibited them from doing; i.e., accepting anything but gold and silver coin as legal tender in payment of debts. By definition, passing a law that violates something in the Constitution makes that law unconstitutional and such was the 1862 Legal Tender Act.

Given the above evidence, even the most obtuse among us should be able to discern that while Congress does have the power to “make all Laws which shall be necessary and proper”[2] this power is limited to within the boundaries set by the Constitution. In other words, the term “all” is only in reference to the powers delegated in the Constitution, not every power anyone can dream up.

If this meant any possible law and every possible method, then the meaning of the Tenth Amendment would be null and void making the Constitution a schizophrenic document, which it is not.[3] The Tenth Amendment, ratified on December 15, 1791, during Washington’s second year in office, was originally demanded by the States as a prerequisite to ratifying the Constitution. The States’ demand for this amendment make it the Rosetta Stone by which the Constitution must legally be interpreted.

Another argument Spaulding used to support the greenback was “that, in times of emergency, Congress can activate a law of necessity to preserve the nation.”

From an academic standpoint, if the nation had actually been attacked and as a result in peril of extinction, this argument would have merit, but is it applicable when this is not the case and the emergency is of the government’s own creation? Should our national government be allowed to create a crisis by violating the Constitution and then justify further breeches in order to “fix” the problem it created? Will violations of the Constitution lead to a restoration of the Constitution or just more abuses of it?

If history is any guide, the government should not be allowed to manufacture its own crisis so it can arbitrarily violate our supreme Law, and any violation of our supreme Law only leads to further similar violations of it.

As a result of President Lincoln unconstitutionally calling up troops to suppress the South, Representative Spaulding devising a scheme to fund the war Lincoln created, and the Supreme Court upholding the greenbacks as legal tender, Americans are now strapped with an unconstitutional system of currency, based on the Federal Reserve.

The Federal Reserve (FED) allows our national government and twelve private banks to steal the value of our currency straight out of the wallets and bank accounts of Americans.[4] The FED was granted authority via the 1913 Federal Reserve Act to buy US Treasury bonds, which are national government debt, and use the debt as a reserve to make loans to member banks approximately nine times greater than the debt it holds. The member banks, in turn make loans, based on the fictitious credit given to them by the FED, to commercial and private consumers at the same fractional reserve ratio, thereby further expanding fake credit like a giant hot air balloon.

This is analogous to a local government borrowing money from a penniless homeless person in which the only thing the homeless person provides is an agreement the government can borrow against the government’s future “principle” payment plus interest. In other words, the homeless person provides nothing except fictitious credit, but is paid principle plus interest on the fake credit and has the right to make loans on the government IOUs in excess of the amount the government promised to pay. The only difference is that if a homeless person or anyone else actually did this, they would rightfully be thrown in prison for fraud.

The fraud known as the FED, although not the only fraud foisted on America by its elected and appointed officials, is one of the most widespread frauds of them all, because every American of every age, gender, skin color and ethnic orientation is adversely affected by it.

This fraud, and all the others, can be resolved by “We the People of the United States” upholding the original intent of our Constitution. The Constitution was ratified with the idea that it provided adequate safeguards against potential central government abuses, which it can, but only if people are willing to hold their elected and appointed officials accountable for any breeches of the Constitution instead of rationalizing perceived benefits from them. The Constitution will only function properly and be a blessing to all Americans if citizens of every generation know, understand and hold everyone, including themselves, accountable to its original intent.

[1] The Birth of the Greenback, New York Times, December 31, 2013.
[2] American Founding Principles, Are all Laws Necessary?, January 14, 2013.
[3] The Constitution referenced here refers to only the seven articles and the first ten amendments.
[4] American Founding Principles, America’s Cyprus, April 2, 2013.