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Existential Economic Threats: How U.S. States Can Survive Without Federal Money

May 6, 2021 27 Comments

This article was written by Brandon Smith and originally published at Birch Gold Group

We all knew it was coming; the alternative economic media has been warning about it for years. Eventually, monetary intervention and bailout after bailout by central banks always leads to devaluation of the currency and inflation in prices. Helicopter money always ends in disaster and at no point in history has it ever produced positive long-term results for a society.

The federal reserve has generated trillions in fiat dollars over the course of a single year (on top of the tens of trillions created in the past decade), all in the name of offsetting deflation. This deflation was NOT caused by the pandemic, it was caused by the government response to the pandemic.  On top of that, the shutdowns of “non-essential businesses” and the lockdowns in general ended up being useless in slowing the spread of COVID-19.

All the information, all the facts and all the science supports the anti-lockdown crowd. Conservative run states that removed lockdowns and mandates months ago are seeing falling infection and death numbers and local businesses are on the mend. The problem is, government authorities don’t seem to care about this. It appears that their intention is to double down and continue demanding restrictions stay in place for the long haul.

In other words, they are going to FIND an excuse to keep the mandates going. If no reason exists, they will create a reason. Consider for a moment the fact that COVID-19 is mutating constantly, and like any other virus there are new strains that pop up every year. Just as we have a seasonal flu, we will probably now have seasonal COVID.

Since viruses also tend to evolve into less deadly forms of their original iteration it is unlikely that new COVID mutations will be any more dangerous than they were in the past. But each new strain creates a new rationale for the federal government to proclaim a national emergency and possibly enforce new lockdowns.

This puts a lot of state governments in a difficult position. If they ever shut down again simply because federal authorities demand it, they will be angering their citizens and harming their region’s cash flow and production. Small businesses will go bankrupt by the thousands and the public will be on the verge of rebellion.

On the other hand, if states defy the federal government (many are already passing laws blocking draconian vaccine passports), there is a good chance that the feds will respond by cutting off taxpayer funds and stimulus dollars to those states. With the combined threats of price inflation and federal financial retaliation, some states may cave and submit to more lockdowns or other mandates. And, by extension, their economies will begin to die once again.

It’s a Catch-22, but it doesn’t have to be this way. There are measures that states and communities can take to diminish inflation and reduce dependency on federal dollars at the same time.

Taking Back Resource Management

The most important action states and counties can pursue in my view is taking back control of resource management within their own borders. For decades the federal government through agencies like the EPA and the Bureau of Land Management have dictated how states can utilize natural resources. Entire industries have faded in the U.S. because of this, whether it be oil production, coal production, steel production, lumber production, etc.

If the federal government tries to punish states that refuse to comply with fiscally damaging pandemic restrictions by taking away stimulus payments and tax dollars, those states should reclaim control of their resources and ignore federal agencies. They should also take away federally controlled lands within their borders to make up for the loss of tax dollars. It’s only fair.

With resource production back in the hands of the states and their local businesses, these economies will have a chance to become more independent and the need for federal money will diminish.

Incentives For Local Manufacturing

Aggressive taxation along with overpowered labor unions have made manufacturing businesses difficult to maintain in the U.S., but states have the power to change this.

If we define price inflation as too many dollars chasing too few goods (I realize this is only one aspect of inflation, but it is important), then increased production of raw materials and manufactured goods should help to decrease inflation pressures. Why is production in the U.S. continuing to stagnate when it should be quickly expanding?

Many of the products Americans purchase are made overseas, and with continued dollar devaluation, this means that prices will keep rising. A weaker dollar translates to higher costs in exchange for foreign made goods. So, why not make those goods here?

Availability reduces price increases, localized manufacturing reduces dependency on foreign goods and increases employment. But how can states bring manufacturing back?  I suspect it is more simple than many economists realize: Just offer protection from federal taxation to any manufacturer that is willing to open up shop within your state. If the government is going to try to punish you anyway just for refusing to comply with pandemic rules, then you might as well take it to the next level and punish the government back.

This should create ample incentive for new businesses in particular to start production within certain states as profits would be MUCH higher. Their ability to compete with major corporations (which get unlimited special treatment from the federal government through stimulus measures) would also grow.

Create A Commodity-Backed Currency System

While labor and wages are a sensitive issue, the market, if left to flow naturally, will determine what fair wages and fair prices should be. That said, in the midst of a monetary crisis such as hyperinflation or stagflation, the most likely response by the federal government would be price controls as well as wage controls and rationing of goods. The last vestiges of the free market would be eradicated.

As long as states rely on the dollar, and the dollar’s value is determined by the whims of central bankers that do not actually answer to the public, there is no way to fight inflationary damage. However, if states were to offer an alternative currency or scrip that was NOT fiat, that was backed by a tangible resource or commodity that helps to limit money creation, then they could save themselves.

Such a move would have to be undertaken by a state-run bank, much like the bank that North Dakota utilizes to aid industry and agriculture. As long as issuance of the currency is backed by a commodity or precious metal like gold (or with inherent intrinsic value like the Morgan silver dollar). A backed currency’s value would be preserved even as the dollar sinks. Commodity-backed currencies would flourish as citizens and investors (even international investors) search for safe havens.

Essentially, states and communities would be decentralizing their economies so they are no longer slaves to the demands of people that answer to no one and do not have our best interests at heart.

There is, of course, the issue of aggression against states that take these measures, but we should remember that this is exactly what the Founding Fathers did in the years leading up to the American Revolution. They did not simply declare their independence, they made themselves independent through localized economic tactics.

Without economic independence, no other freedoms are possible. I believe it is time for Americans and free-minded states to once again focus on localization. The future of liberty in our nation depends on it.

 

 

After 10 long years of ultra-loose monetary policy from the Federal Reserve, it’s no secret that inflation is primed to soar. If your IRA or 401(k) is exposed to this threat, it’s critical to act now! That’s why thousands of Americans are moving their retirement into a Gold IRA. Learn how you can too with a free info kit on gold from Birch Gold Group. It reveals the little-known IRS Tax Law to move your IRA or 401(k) into gold. Click here to get your free Info Kit on Gold.

Brandon Smith

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27 Comments

  • Quatermain May 6, 2021 at 8:03 am

    “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 ” Article I Section 10 US Constitution.

    A contradiction of sorts, which does not prevent a private bank in a state from coining money from precious metals. It would seem that this provision would also prevent states from accepting federal fiat?

    • Brandon Smith May 6, 2021 at 8:36 am

      The political elites in Washington sold out the constitution a long time ago, but the covid mandates and hyperinflationary bailouts really drive home the reality that we are going to have to make our own rules. Constitutional restrictions on coining money no longer apply when the federal government is being controlled by people actively trying to destroy the dollar.

      • RAFO May 6, 2021 at 11:14 am

        Exactly! Here’s the problem… we try to play “by the rules”, i.e. the Constitution, and they (the enemy) doesn’t. They beat us every time because we’re playing a “gentleman’s” game and they’re cutting us to shreds. We’ve got to learn to be just as ruthless, shrewd and devious as they or we’ll never win!

      • Quatermain May 7, 2021 at 3:09 pm

        I hear you and agree, but if we are to trash the Constitution then we must go all the way and either secede or over throw the current regime. Rather use it as the means to refuse federal fiat at the state level ( as per article 1 Sec. 10)and establish currency from private banks as has been done before.

        • Brandon Smith May 7, 2021 at 5:29 pm

          You don’t necessarily need to throw the baby out with the bathwater. Establishing an alternative currency is necessary for survival, trashing the whole constitution is not. Maybe secession is necessary, maybe not. It may be better to force the enemy’s hand and make THEM separate from us instead. Many of the principles described in the constitution are essential to the success of a rebellion, and all we have to do is stick to most of them and this alone will be treated as “separation” as the establishment goes full totalitarian.

          • Quatermain May 8, 2021 at 6:45 am

            That could work.

    • Tim May 8, 2021 at 12:18 am

      It should be noted that we already have “Official US coinage in gold and silver” already minted. Several states already have reaffirmed gold and silver as “legal tender” in transactions & contracts. Banks could simply accumulate the coins and circulate that. Contracts & notes would benefit from the appreciation caused by Federal to inflation.

    • Scott Jeffery Walton May 10, 2021 at 2:07 am

      Money from Federal Government???? Thats Our Money… they took by means of fraud and theft under force of men with guns and threats of being thrown in a cage .. money not earned by them .. for oursake-they know what’s best for us..they’re the government & they’re here to help…lol.
      Social Security is the government taking Your Money and holding it until you retire cuz they truly believe that you can’t handle your own finances to invest ,save,and plan.. they think we’re stupid cuz they dumb down America with lame education and Fluoride in the water..its poison. Fluoride is poison.

  • Mr.BA May 6, 2021 at 8:53 am

    Brilliant Brandon. You are a chess master!

  • Going Dark Soon May 6, 2021 at 8:59 am

    “””Just as we have a seasonal flu, we will probably now have seasonal COVID.”””

    Now it’s all called PIC (pneumonia, influenze, covid) because COVID is not a disease but a psychological operation targeting the people of the world to make the willing to harm themselves by participating in a giant gene therapy experiment in genocide.

    The lies will never stop unless people turn off the TV and quit listening.

    • Chevrus May 7, 2021 at 9:02 am

      Based on what I have been reading (multiple sources and perspectives) the “gain of function” aspects of the (non)vaccine could be quite deadly.

  • Gauntlet33 May 6, 2021 at 2:42 pm

    “Many of the products Americans purchase are made overseas, and with continued dollar devaluation, this means that prices will keep rising. A weaker dollar translates to higher costs in exchange for foreign made goods. So, why not make those goods here?”
    ..
    I like this idea. If anyone out there has any ideas of what can be produced locally, I would be interested in becoming a partner / shareholder in that type of venture. Americans’ social and political freedoms are directly linked to our economic freedom, so we have to be taking active steps to maintain our economic sovereignty right now.

    “Without economic independence, no other freedoms are possible.”
    ..
    You read my mind! 🙂

    • FreedomIsNotFree May 11, 2021 at 9:39 am

      Gauntlett33,

      As Bill Gates is busy becoming a land baron and buying up an incredible amount of farm land that he will control and most likely benefit the Chinese; I suggest we start becoming self sufficient through local hobby farm/homestead operations that can benefit the local market. With the Wildly fluctuating seasonal temperatures, geo-thermal greenhouse, vertical farming will be necessary to continue to provide produce year round. Shrimp and fish farms, Poultry and livestock all done at the local level to challenge all of the logistical supply chain fiascos we are all experiencing right now. I would love to get involved in something like this as well.

    • Brandon Smith May 7, 2021 at 12:11 am

      Montana is quickly becoming the tip of the spear in this fight. I’m proud to live here.

      • Hugo May 8, 2021 at 9:30 am

        Gianforte has been a rockstar along with the state legislator. Glad you’re fake moderate Steve Bullocks wasn’t elected.

  • selena May 6, 2021 at 11:00 pm

    if THEY can simply print their paper money,bonds whatever,
    why the hell are we paying taxes ?
    think about it.

    • Black Cat May 7, 2021 at 6:40 am

      A valid point to ponder. One may also question why any hardworking, honest Americans are still participating in anything that is of this usurious fraud. I know I ask myself that ever day and the answer is increasingly NO; it isn’t worth my time or energy to support it. What do you guys think?

  • spud May 7, 2021 at 1:08 pm

    The Federal Reserve is a private bank with loyalty to it’s nation because it is owned by globalists that don’t believe in borders, just an open society for them to play nations against one another. It’s more important to take action before SHTF cause you’ll know which segments of the government will have an alliance too. Great piece again Brandon.

  • Henry Ford May 7, 2021 at 3:47 pm

    You nailed it. For far too long, the Feds have treated states like children: “we will withhold your allowance if you don’t behave and follow our rules”. Guess what, we the people are not children, and it’s time the states do exactly what this author has recommended, tell the Feds to stick their funny money where the sun don’t shine. And oh by the way, we will not be making any more tax payments to DC, we will be drilling on any “federal” lands in our state that we decide, and gold and silver will be used as our money. We will still be part of the union, but we will not be pushed around by little tyrants in DC any longer. Great article.

  • Paul Clark Lewis May 8, 2021 at 3:24 am

    I read this article originally on Zero Hedge and wrote this comment there. I am posting it here in hopes that your readers find value in my opinion.
    Ref: https://www.zerohedge.com/personal-finance/existential-economic-threats-how-us-states-can-survive-without-federal-money

    This topic has been on my mind for some time.

    I will venture to say that I believe that most states will form their own “State Bank”(s), funded in gold and silver, within the next year. I say this because I think that the devaluation of the dollar will force them to act to protect their economies from said devaluation.

    Many states have already enacted laws that treat precious metals, (PMs), favorably, either by allowing them to be used as legal tender or simply ceasing the taxation of them when traded for dollars.

    Having control over its own state funds, monetized in PMs, will allow states to ignore the nonsense the federal government and the federal reserve banking cartel has in mind without violating the US Constitution’s regulations found in Article I, Section 8, Clause 5. It is the feds who are not following the Consitution, not the states, especially if the states transition their economies to ones backed by PMs.

    The only way to ensure that they keep the fed’s paws off their state’s money is to set up their own state bullion depository, guarded by their own state police, which I would have right next to the main stockade of their national guard armory.

    Although states are prohibited from minting their own coin, they can readily use any bullion already in circulation, whether it is junk silver, silver and gold eagles, private mint bullion rounds and bars, and good delivery bars. Libertads, Loonies, Philharmonics, in gold, silver, platinum or palladium would all be welcomed. Heck, pennies from 1982 or older would be recognized.

    The trick in all of this is how to get the stae’s economy switched over to using PMs as currency completely, if not initially, ultimately. The implications of doing so would mean that the state bank would become the primary bank within it’s jurisdiction. This would work if a couple of things happened.

    The first would require that the state would have to incentivize its citizens who own PMs to deposit them with the state bullion bank, for which the state would pay the depositors interest in like kind metal. These types of time deposits in PM already exist. Having a state do it would require not much more than the state owning a share of a PM mining producer(s) who would pay the state dividends in PMs, (even if the mining did not occur within the state itself).

    Secondly the bank would then have local county and city economies within the state begin to use PMs as currency, with a fixed rate of prices for items produced and consumed within the state. This would be to discourage PMs from leaving the state. Other states with similar PM-based state economies could become confederated with each other, as long as they had a relatively close balance of trade.

    All of this would work greatly to diminish the power of the federal government over the affairs of individual states. It might even force the federal government to live up to the Constitution and get out of the paper “funny money business”, (but don’t hold your breath).

    I believe that state credit unions would play a big role in the transition away from the power of the US dollar and its proponents. Also viable partners would be private regional banks, which would be beneficial to trans-states’ balance of trade, if they were found in states that were confederated.

    The upshot of all this would also be that it would force states who are fiscally irresponsible to either clean up their spendthrift ways or lose a lot of either real money (PMs), or business with states who have gone to using real money for their economy. It would also cause an exodus of companies from states with poor fiscal management to states who have gone on their own gold standard, (though I suspect that those il-managed states would not take the leaving of their businesses kindly). This exodus is already underway driven by state taxation rates. Fiscally-sound states would only cause this trend to accelerate.

    I do not see how rational, sensible, fiscally-responsible states can avoid going to policies that protect their citizens from the insanity that has taken over the Federal government. Not acting is not a choice. Not acting is as much a dereliction of duty as what the Feds are up to, and two wrongs will never make a right. If you want this for your state, the only way to make it happen is if you write to your state representatives and let them know that this matters. Tell them that the most vile of monsters is at our door, and its name is Hyperinflation. Then ask them if your state has a “rainy day fund”, (it does). Then ask them, “Denominated in what?” and watch the blood drain from their faces.

    Hurry every chance.

  • Daniel Cotter May 8, 2021 at 3:32 am

    There are now a few states issuing “goldbacks”, which contain gold. Suggestions are that many, if not all others are soon to follow.

  • Gotheart May 8, 2021 at 10:02 am

    Daniel can you verify this for me? Where did you learn of this? Thanks. 👍

  • Dennis May 11, 2021 at 12:39 pm

    Brandon, thnx 4 this great article.

    “Know thy self, know thy enemy. A thousand battles, a thousand victories.” -Sun Tzu-

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