Economic Secession by Jay Adams

This nation is dealing with issues that are quite remarkable. Our economy has been severely compromised by the policies of the past which have restrained the ability of American labor to compete in the global market place, created debt that simply cannot be repaid within the context of our existing economic capabilities, nurtured an entitlement class that resolves with violent intent to preserve its 'nouveau rights', a fourth estate that has largely abrogated its fundamental responsibility to act as a counter to political mischief and a religion that has targeted our nation as the 'evil' that must be cleansed from the earth.

This represents quite a daunting scenario, but the most insidious and perhaps greatest threat is the loss of control of the Federal Government by the people. Government is spending at a rate that is simply disastrous according to many credible economists, but there appears to be little that can be done in the context of the American political system as it functions today. I am contemplating an abstract method of regaining control. It involves a concept of 'economic secession', that is a departure from the economy that operates exclusively on the US dollar. There is evidence that this is already underway.

As this is written in the spring of 2011 I have observed that Utah has adopted a policy of allowing taxes to be paid in precious metals and North Carolina legislation has been introduced that would create an intrastate currency. This is an indication that some folks are concerned that the US dollar is in peril and rightly so. (This is confused by the fact that people like Robert Reich and Paul Krugman claim that the concern is misplaced and the National Commission on Fiscal Responsibility and Reform appointed by, and ignored by, 0bama; chaired by Erskine Bowles and Alan Simpson say we are in a crisis situation, and in spite of the overwhelming evidence there is still a debate).

In this confused environment it is a daunting thought for a state to set up a credible currency and maintain it in a manner that preserves its integrity. However, the Federal Reserve is in the process of ruining the credibility of the US dollar and against that backdrop, perhaps there is a way of creating an improved means of trade on a local level. First off, I don't see a single state pulling this off, but perhaps a state that is well resourced like Texas might. However, a coalition of states might form under a set of stated principals. This is where things get interesting…..

Our country is deeply divided between Blue States and Red States (Left and Right). There are a small group of 'purple' states like NC that tend to switch back and forth. This proposal would establish criteria for states that wish to participate in a 'Red State Currency', if you don't meet the criteria…you use the US dollar exclusively. The criteria would, in effect, establish a set of principals that are felt to be economically sound. Much like other governing documents this 'Declaration of Economic Principals' would be similarly modified by the participating states. Through this exercise the participants would blend recognized Constitutional governance with a set of Economic Principals that focus attention on the essential activities that create and sustain a sound state in the economic sense. In the context of the 'red state'-'blue state' dynamic, this would be a unilateral action.

Of course the Federal Government would react very vigorously to block such an idea. No doubt the Feds would use all manner of tactics such as withholding all manner of Federal funds. So this plan would have much to overcome and must be developed in such a fashion that the component states are, in effect, more powerful than the Federal Government! Is this possible? Well the 'economic state of the union' is composed of many states like California, Michigan, Illinois, New York and others that are effectively bankrupt. There are other states that are troubled simply by the Federal mandates they must fund. If the relatively healthy states, which tend to be 'red' states, ban together would this coalition not be more economically healthy than the 'whole'?

If states were to follow Utah's lead and recognize precious metals as currency and establish a method of preserving and regulating the use of same, how will the public react to this option? If the public should embrace this "new currency" how will the Federal government react? Since the Federal Reserve is a separate entity, how would it react? How would such a move be regarded in the global economy? I am not an economist but I would think that countries would see this as an attack on the US dollar, although an internal one. This could weaken the dollar in their eyes and might erode its desirability. But how would the global economy view the emerging currency? How would the speculators react? I wonder about these things… and I am seeking illumination… Help me!

This concept might accomplish another needed action. Our country is deeply divided philosophically with regard to the purpose of government. On the Left the Constitution is openly rejected as a governing document (except when it serves their purpose, for example, the ACLU, ACORN, etc.). They use the notion that the Constitution is over 200 years old and is no longer completely relevant to the operation of a contemporary government. It is fairly clear that the Left is moving toward a global government and there is certainly a growing effort to position the US for that merger. I won't enumerate the events that suggest this as fact, but at this juncture the evidence is abundantly clear. This concept is extremely divisive to those on the Right (that are paying attention) and as more evidence emerges it has the potential to polarize the nation in a way that is truly hard to imagine. It appears that the Left is fully aware of this and is attempting to create a circumstance that effectively "springs a trap" rather than allows a decision. This isn't going to work… there are many folks on the Right that see the "light" and are going to shine it everywhere. The Left is pretty clever but they are not nearly as smart as they think (They 'deem' themselves intelligent). The Right must patiently overcome the guile of the Left. This proposition may create a useful counter action to the efforts of the Left…

By actually promoting a form of "economic secession," through the adoption of state by state economic principals, the states that adopt the fundamentals of conservative fiscal policies would strip away many of the entitlement programs required by the Federal Government. By weaning themselves from, or minimizing the use of, the US dollar the states could establish programs that use the "state currency" and theoretically disenfranchise themselves from the US dollar. This is a reversal of the mechanism I observed when my alma mater, The Citadel, was required to accept women because the school had accepted Federal funds. In my proposal, if The Citadel were to (in some form or fashion) operate without US dollars it would regain its autonomy as would all other entities that are under the gun of the Federal government through the poisonous use of its money. Of course this would be a compelling reason to use the "state currency".

Using the premise that this would segregate fiscally conservative states from the more liberal states, over time this would tend to 'move' the more liberally minded folks to the blue states and the more conservatively minded folks to the red states. As this occurs the red states would develop a "cultural fabric" that would be quite different from the blue states. Perhaps this might result in highly developed arts and culture in the blue states and more business development and wealth accumulation in the red states (which would no doubt, lead to more artistic endeavors and cultural development). In my opinion this would "segregate" the states along economic ideology. Segregation is ordinarily considered a bad thing, but in effect this would allow a form of "free market" for each philosophy.

What we have today is a Federal Government that has abrogated its responsibility to maintain a credible currency. There are a variety of arguments with regard to the Federal Reserve's actions and policies. Because of the uncertainty that has resulted in the circumstances of the past decade there have been calls for auditing the Fed or outright elimination of the Fed. Many believe that the US dollar on a trajectory toward collapse in the global marketplace. My proposal offers an alternative method of trade that would originate within the various states but may be extended by reciprocity or other agreement to allow some interstate use of an alternative currency.

This concept would, over time, create a competitive environment where the policies that govern the use of the US dollar would have to compete with the policies of the "state dollars". If the blue states have entitlement programs that require relatively severe redistributive tax and fee structures, the businesses and residents of those states may find a more favorable environment in a 'Red State'. If a person or business sees value in the entitlement programs of a blue state rather than the more Spartan programs of a 'red state,' they would go to the more favorable environment. As you can see this would uncouple the existing mechanisms within the Federal Government that transfer wealth from 'red states' to 'blue states' and, moreover, consolidate the citizens that embrace entitlement policies from folks that rely on and embrace free market policies.

This proposal may appear fanciful, but it is certainly less radical than the outright secession that some contemplate. The Federal Government is out of our control and it seems that our political system is incapable of coping with the economic reality we seem destine to realize. What I have proposed here is not a 'sweeping plan' to restructure the present economic system, it is intended to be an incremental 'movement' that will create economic pressures to clarify policies that are sustainable, and illuminate policies that are not, to identify economic realities with regard to health care, defense, unemployment insurance, minimum wage, building codes, workman's compensation, highway construction and all of the myriad of activities that state and local governments fund with the Federal government as the "rich uncle" that picks up the slack. Rather than continuing the academic debate this proposal creates an environment where these practices can be tested in the real world at the individual state level.

A state may elect to adopt a completely "lean and mean" profile of nearly pure capitalism, while another chooses a package of governmental amenities that provide various levels of support and services, while another may choose a higher level of services. If the state can provide its "package" at a level of efficiency that keeps costs at an appropriate level, that state will enjoy economic success. If a state cannot operate as efficiently it will have to change its practices or reduce its services. Over time the state will achieve "equilibrium" that matches its natural features (coastline, weather, natural resources, available infrastructure, cultural amenities, etc) with the underlying "cost of operation". In effect this would "re-boot" the economy/culture, which is better than outright "destruction & creation".

Of course there would be monumental 'push-back' to such moves and I am surprised that the Feds haven't taken exception to Utah's legislation regarding the use of precious metals. Recently a gentleman in NC was found guilty of (I'm not sure of the charge) manufacturing coins made of gold and silver. The judge even remarked that he was a 'terrorist' for producing these coins. Apparently the fellow gave notice to all of the agencies he could identify that he intended to do this without objection. He then produced something like $7.5 M of these coins and folks began buying them and using them for barter. The Feds have now found him guilty of something and now they want to confiscate the coins!

So, the Federal Reserve is printing money that has no intrinsic value and we use that money for exchanging value. The Feds are reducing the value of those dollars every day they print more of them. A person creates coins that are made of 99.9% pure gold and silver to be used as barter and he is a terrorist….. what is wrong with this picture?

This is intended to pique your imagination…. Whatdayathink?