The U.S. Monetary System and Descent into Fascism an Interview With Dr. Edwin Vieira

by David Galland
Casey Research

Recently by David Galland: Police State Amerika

Edwin Vieira, Jr., holds four degrees from Harvard: A.B. (Harvard College), A.M. and Ph.D. (Harvard Graduate School of Arts and Sciences), and J.D. (Harvard Law School).

For more than thirty years, he has practiced law, with emphasis on constitutional issues. In the Supreme Court of the United States, he successfully argued or briefed the cases leading to the landmark decisions Abood v. Detroit Board of Education, Chicago Teachers Union v. Hudson, and Communications Workers of America v. Beck, which established constitutional and statutory limitations on the uses to which labor unions, in both the private and the public sectors, may apply fees extracted from nonunion workers as a condition of their employment.

He has written numerous monographs and articles in scholarly journals, and lectured throughout the county. His most recent work on money and banking is the two-volume Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution (2002), the most comprehensive study in existence of American monetary law and history viewed from a constitutional perspective.

He is also the co-author (under a nom de plume) of the political novel CRA$HMAKER: A Federal Affaire (2000), a not-so-fictional story of an engineered crash of the Federal Reserve System, and the political upheaval it causes.

His latest book is: How to Dethrone the Imperial Judiciary... and Constitutional "Homeland Security," Volume One, The Nation in Arms.

We first met Dr. Vieira at our Casey Research Boca Raton Summit and were sufficiently impressed to want to hear more, and to share more, of his work with readers of The Casey Report.

DAVID: Before kicking things off, I’d refer readers to Dr. Vieira’s in-depth and excellent paper, "A Cross of Gold," as that provides a more detailed analysis on how the corrupt U.S. monetary system might transition into something more honest and effective.

Getting started, from a big-picture perspective, technically speaking, is the current U.S. monetary system actually constitutional?

EDWIN: Well, technically speaking, factually speaking, legally speaking, no. In a word, no.

DAVID: Why not?

EDWIN: There are two levels to consider. First, there's the straight currency level – what is supposed to be the official monetary unit. Then there is “other,” which I distinguish as different from the official monetary unit because the Constitution doesn’t prohibit private parties from creating media of exchange for their own uses, as long as those media of exchange are non-fraudulent and they’re operated in an otherwise honest commercial fashion.

But the official unit of currency is supposed to be the dollar, and I'll tell you exactly what a dollar is – it's 371.25 grains of silver in the form of a coin. That was determined as a historical fact in 1792. Actually the dollar was adopted before the Constitution was even written. It was adopted by the Continental Congress under the Articles of Confederation, the so-called Spanish milled dollar, which was the actual unit that was circulating then, because there had been essentially no coinage under the various colonial regimes in colonial America. So that's the dollar unit.

Well, do we have that now? The answer is, "Well, essentially, no." First, obviously they are not coining a true dollar, they coin a Liberty Silver Dollar, but that's 480 grains, not 371.25 grains. And you have various gold coinage with dollar denominations on it, but those dollar denominations have no real relationship in terms of market exchange ratio to a silver unit of 371.25 grains.

So the short answer is that within the coinage system we don’t have what we're supposed to have. We have silver coins, we have gold coins, but they’re not properly weighted or regulated. And then, of course, we have these base metallic coins, which have no constitutional status at all – at least with respect to being legal tender for their face values. So on the coinage side, we have a mélange and a mess. At least there is some silver and gold coinage, but it doesn’t meet the constitutional requirements.

On the other side, the so-called official paper money side, the Constitution does not provide for official paper money. What it does address are two provisions; the first, dealing with the states, specifically says, "No state shall emit bills of credit." As a word of explanation, bills of credit were the founding fathers' terminology for paper currency.

This is interesting because the paper currency they actually used and emitted were bills of credit that promised to pay something, typically gold and silver coins, specified on the face of the bill. So even those types of paper currency, fully redeemable paper currency, were outlawed for the states because the states had emitted them in vast excess. That was the historical basis for the outlawry.

Now, turning our attention to Congress, you need to recall that Congress only has the powers that are granted to it. You don’t look in the Constitution for prohibitions on Congress's authority and assume that it can do everything that isn't prohibited. You look for delegations of authority, and you assume that anything that hasn’t been delegated is prohibited.

If you look at the original draft of the Constitution in the Constitutional Convention, the Federal Convention of 1787, it said, "Congress shall have the power to borrow money and emit bills on the credit of the United States."

That language was taken from the Articles of Confederation. The Congress operating under those articles had the power to borrow money and emit bills – emit paper currency – and they did it. They emitted the so-called continental currency from which came the phrase "not worth a continental" because they emitted so much of it that it depreciated very close to worthlessness.

At the Constitutional Convention, you had people in attendance who had been members of the Continental Congress. They had been members of various state legislatures. These were the leading political figures in the country. They had to a large extent been the ones who had emitted continental currency or had emitted various state bills of credit. So this was a question that wasn't in some way alien to them as they had been involved in it only a few years earlier.

So the first draft of the Constitution was put forward with the same power that the Continental Congress had, and there was a debate. You look at Madison's notes, and it was a rather vociferous debate, and they threw out the words "emit bills," so that now that provision of the Constitution says, "Congress shall have the power to borrow money on the credit of the United States." It says nothing about emitting bills.

Well, by hypothesis, if the power is proposed and then stricken from the final version, it doesn’t exist, right? You don’t need to be a Harvard law school graduate to understand that.

So we look at those two provisions of the Constitution: One explicitly prohibiting the states from emitting bills of credit, because otherwise the states would retain that power. And the other with respect to Congress, where they didn’t grant the power, even though the power was proposed to be granted and that proposal was overruled, and so it wasn't granted. Based on that it is clear, I would say, that there is no power in Congress or in the states to issue bills of credit.

What we have now is something I think goes almost beyond the bill of credit, though it’s not really fiat currency because the Federal Reserve note, according to the statute, is supposed to be redeemed in "lawful money." So in principle one could go back to the Federal Reserve Bank or one could take it to the Treasury – both have the obligation of redemption – and you could exchange a Federal Reserve note for one of these base metallic coins now in circulation. So, I guess it still could be called a bill of credit in the sense that you can actually receive some coinage, but what is the coinage that you receive?

Interestingly, we had an example of this type of problem in the period around the Civil War. During the Civil War and just after, the Union Government issued “greenbacks” – legal tender U.S. Treasury notes – and that was the first time that the government had purported to issue any kind of paper currency under the Constitution.

They did it once again under a wartime emergency – and for a short time, those things were not redeemed because the government was not paying out gold except as interest on bonds. They had to suspend specie payments during the war, but the Supreme Court upheld the constitutionality of that issuance of those greenbacks, I think erroneously, but they upheld it specifically on the basis that the greenbacks were to be redeemed in the constitutional currency of gold and silver.

All right, so even the furthest extent of error that has been made by the judicial system, with respect to paper currency, was premised on that paper currency being a true bill of credit in that it would be redeemed in the constitutional coinage of the country.

Well, if you look at the Federal Reserve note, you have a number of problems with it: Number one, it's not issued by the Treasury. It's issued by this banking cartel. No Federal Reserve note can come into existence unless one of the 12 regional banks, each of which is a private corporation, goes to the Board of Governors with certain assets defined in the statute and asks the Board of Governors to generate Federal Reserve notes.

The Board of Governors can't generate Federal Reserve notes on its own, neither can the Treasury. So these things are being generated by a private corporation, and they’re not redeemable as a matter of law in the official constitutional silver or gold currency of the country. So they probably have four or five constitutional strikes against them. Especially if you look at the difference between U.S. Treasury notes and Federal Reserve notes. Treasury notes were always the product of some specific statute enacted by Congress, where Congress would say that so many millions of dollars' worth of these notes are to be emitted.

DAVID: Right, and emitting those notes obviously falls within their right to borrow money.

EDWIN: Well, assuming that that's what they’re doing – and that was the Supreme Court's decision in the legal tender cases after the Civil War – they said, well, that’s a form of borrowing money. It really isn't because it's a form of generating money. You don’t borrow money when you generate money – the concept is nonsense – but even assuming that that's the case, Congress has the power to borrow money and they specify a certain amount of money.

Well, they haven’t specified a certain amount of money to come out of the Federal Reserve system ever. There's absolutely no specification – that's all left to the whim of the Federal Reserve banks. So assuming that Congress had the power to generate Treasury notes, they would do it in a controlled fashion by telling us exactly how much is supposed to come out with each emission. Here they have purported to delegate this power to a consortium of private bankers, so this is like six or seven strikes. This is worse than baseball.

DAVID: And at this point, you really cannot redeem your Federal Reserve notes for anything anywhere. I mean, you can trade them with other people for other goods, and then you can take them to the bank and redeem them in base metal coins worth a fraction of their face value.

EDWIN: Well, initially Federal Reserve notes were required to be redeemed in gold, and then that was removed in '33 and '34 with the gold seizure. So now we have notes that, as John Exter used to say, are an IOU-Nothing Currency – because with respect to the banks and with respect to the Treasury, they owe you nothing, and if you go into the marketplace, you may be able to get whatever someone will give you for them, but you have no legal right to demand any particular amount of anything.

A redeemable currency, by law, is a currency that has a requirement that the issuer redeem it in something that is specified, a certain weight of gold, a certain weight of silver, whatever. So at one time, Federal Reserve notes were redeemable currency.

Now, I suppose, as I said, they’re not a fiat currency because you can get this base metallic stuff for them, but the constitutional requirement, assuming that you could have a bill of credit at all, would be that it had to be paid in the constitutional coinage unit. So this is the problem. Constitutionally, the thing is a first-class mess.

DAVID: So you’ve got eight strikes or so against this currency, constitutionally speaking, and yet the situation persists. Why hasn’t there been a successful challenge to the system in the courts?

EDWIN: Looking at challenges that have come up over the years, I would start by looking back to the '30s, because in the '30s you had two events. The first was a gold seizure followed by the second, the prohibition of gold clauses in contracts.

You had one set of cases that came up to the Supreme Court dealing with the prohibition of gold clause contracts, and one can only look at those and shake one’s head and say, "Well, this is just, you know, fraud, complete double talk, nonsense." And interestingly enough, they never took on the gold seizure. They never decided a case on the gold seizure, even though cases were brought to them. They refused to hear them, and I think the reason was even they knew they couldn't figure out how to justify that one, how to rationalize that.

Subsequently, you’ve had attempts by people to challenge the Federal Open Market Committee in particular, because the Federal Open Market Committee of course is composed not only of the members of the Board of Governors of the Federal Reserve System.

Now, arguably, because they’re appointed by the president and confirmed by the Senate, you could say they’re officials of the government, although that's an open question that's never really been decided. But the other members of that committee are representatives of the private Federal Reserve regional banks, about which there have been a number of challenges brought on the ground that you can't allow private parties to participate in that kind of a committee – a committee that is essentially making governmental monetary policy.

Every one of those challenges has been thrown out without reaching the merits. They’ve been thrown out on some kind of standing ground – either the courts have refused to hear them at all, or they’ve thrown them out on what I would call tangential grounds, really not getting to the merits. I think the ultimate reason for that is probably out of fear or prudence, depending on how you want to characterize it.

I mean, if I'm a judge and somebody comes to me with one of these cases and says, "I want you to overturn this entire monetary structure by knocking out this important provision or that important provision," I say to myself, "Well, yes, I guess I could do that, legally speaking. I can write an opinion saying that this provision of the law is unconstitutional and it's no longer effective."

But then what happens?

I can't write, in my opinion, an order to Congress to pass a particular statute to correct that situation, so although I can throw a judicial monkey wrench into the gears, I can't do anything to prevent the disaster that will then occur as a result of blowing up that mechanism. Ergo, wearing the hat of a judge, I'm going to stand back and not get involved but rather leave it to Congress to solve, if possible.

DAVID: But once you start down that path where you have, let's say, a certain amount of elasticity on when you follow the Constitution and when you just look the other way, doesn’t that set the stage for all sorts of gyrations and further miscarriages of justice and even fraud? As Doug Casey has commented on numerous occasions, at this point the country is being operated on a very corrupt basis.

EDWIN: Well, I agree with him 100%. After the Civil War, in the Knox v. Lee legal tender case, the Supreme Court could have said, "Yes, we understand this was done during the Civil War, but it’s unconstitutional, and you can't continue with this. And so any contracts that were made in this illegal money will be revalued in constitutional money." If they had taken that position back then, they could have worked it all out because they did just that for the confederate states.

The confederate states were considered to be an illegal operation entirely, a criminal rebellion. The confederate states generated a huge amount of paper currency, and a number of cases came to the Supreme Court after the Civil War dealing with the enforcement of contracts in the confederate states that had been made implicitly or explicitly in confederate money. What were we going to do with these contracts?

And the Supreme Court said, "Well, to the extent the contracts were for an illegal purpose, such as supplying arms to the Confederate Army, then they were void, but if it was a contract to buy wood or something from a farmer or whatever, these people were forced into using that currency because that's where they were, they had no choice, and we will simply revalue those contracts and enforce them for their fair worth, that's just simple equity."

They could have done the exact same thing with respect to the greenbacks of the Civil War – saying that the greenbacks were unconstitutional and let's never do this again. But they didn’t, and as a result set a precedent, and one precedent leads to another, and that's precisely why we're here.

The same thing during the 1930s with the gold clause cases: They could have declared that statute unconstitutional right then and there because nothing had yet happened, but they played this game in the Supreme Court.

DAVID: So, the Supreme Court ducked crucial issues and allowed precedents to be set for the creation of a monetary system that is clearly unconstitutional and, importantly, unsound. So here we are today, with everything totally screwed up. Do you think the monetary system now operating in the U.S. – and around the world, for that matter – can survive as is? Or is it going to have to change, and relatively soon?

EDWIN: Well, it’s going to have to change, raising the questions, “In what direction and under whose control?” Historically, the United States has seen each one of these faulty systems go into self-destruction mode, followed by the government ratcheting things up to the next-higher level.

Thus the First Bank of the United States was followed by the Second Bank of the United States, neither of which was really a central bank. They were just private banks that operated as fiscal agents for the government. And there were a lot of state banks, and these all went into some kind of failure mode.

Along comes the Civil War, and they come up with the National Banking System, which was a cartelization of banks tied into the U.S. Treasury, so they moved it from the level of individual banks – that might have been state chartered or chartered by Congress but were nevertheless essentially separate private entities – into a cartel structure that had a direct connection to the Treasury.

Now that direct connection to the Treasury was that those banks had to buy U.S. Treasury bonds, and then they would deposit those with the Treasury, and they'd get 90% of the value of the bonds back in currency, which they could then use for their own private purposes. That system didn’t work because at that point in time, people were not interested in amassing ever greater federal debt, and the expansion of that banking system depended upon amassing ever greater amounts of federal debt.

Well, that system goes into crisis and what do they do? Do they correct it? No, they go to the next level and give us the national lender of last resort, the Federal Reserve System. Essentially improving the cartel structure. That thing lasts only from 1914 to 1932, about 20 years, before it collapses. Does Roosevelt solve this problem by dealing strictly with fractional reserve? No, he raises it to another level by expanding the powers of the Federal Reserve System and taking gold away from the American people.

That lasts until after World War II, at Bretton Woods, when the United States Federal Reserve System and the Federal Reserve note become the World Central Bank and the World Central Reserve Currency, as a matter of fact, and how long does that last? Until 1971, right? By then, so much gold has left the country because of the profligate policies of Congress, especially the war in Vietnam and Johnson's War on Poverty, that Nixon finally has to stop gold redemption in 1971.

Which brings us to the present, and we are again back in crisis mode, and what are they telling us? "Oh, we've got to go to the next level. We've got to create a New World Central Bank." Maybe this will be the IMF or whatever, but we are going to expand the thing to the next level until we have the final blowout. Because this is what they’ve always done.

DAVID: It seems to me that once the U.S. government starts talking about a global currency that Americans will finally say, "No, enough, we're just not going there.” For a lot of reasons, nationalism and because of the negative examples being provided by the failing experiment with the euro?

While I have long been shocked at the depth of the apathy of the American people, I have a hard time believing they would turn our currency over to the IMF or any international body. If you agree, doesn’t that mean that we could be at the point now – in this crisis – where it's not going to go any further? That the madness stops here?

EDWIN: Yes, I was not saying that their plan will work, rather I was just restating what their plan is. I don’t think it's going to be successful. The euro gives us a good example of why it's not going to be successful. Also, they have another difficulty; to set up a system of this kind, they’re going to have to pass some serious legislation to tie us into some kind of world currency system.

DAVID: Which will never happen.

EDWIN: That's right. Can you imagine what the deadlock would be in Congress over that? So actually we have an opportunity here. The door has finally opened for some serious monetary reform because the other side has come essentially to a dead end.

DAVID: Because they can't keep amassing ever-increasing amounts of national debt. We're reaching the limit on that.

EDWIN: That's right. So here we are, and now the question really comes back to whether there are enough people in America who understand this and are willing to take the appropriate steps to start putting in some alternative?

I don’t think this can be done from the top down. I don’t think Congress is going to solve this problem, and certainly the bankers are not going to give them the right legislation to solve this problem. It has to be solved from the bottom up.

DAVID: Bottom up?

EDWIN: The beauty of the constitutional system is, we have these intermediate political bodies called the state governments that have certain reserved constitutional authority. They haven’t been exercising it for a long time, but it's there, and part of that is monetary, and interestingly enough this has already been decided by the Supreme Court. It's not as if I'm inventing this idea.

After the Civil War, we had a similar situation. Before they went back to gold redemption, you had depreciating legal tender Treasury notes circulating, and there was gold and silver circulating as well. That had not been withdrawn from circulation, so in the first case of this kind, the State of Oregon had a law that required that its taxes be paid in gold and silver coin and someone tried to pay in legal-tender Treasury notes on the theory that Congress has made these legal tender for all debts and therefore that overrides the laws of the State of Oregon requiring payment of taxes in gold and silver.

Well, the case gets all the way to the Supreme Court and the Supreme Court says "No, wrong. The states have residual sovereignty.” They are sovereign governments, except to the extent that they’ve surrendered certain powers to the national government, and one of the powers they have not surrendered is the power of taxation – one of the basic governmental powers. I guess you could include borrowing and spending, so forth and so on, but they have the right to perform basic governmental functions, taxation being one of them.

If a state determines for its own purposes it needs to tax in gold coin and silver coin or bullion, then the state can do it and Congress has nothing to say about it. From which it would follow that step number one would be for a state to start saying, "We’re going to tax or spend or borrow," or whatever, in gold coin, silver coin, gold bullion, silver bullion.

DAVID: Recently there was legislation in Utah defining gold as being legal for settling debts and so forth. Correct?

EDWIN: Well, there's a statute that just came out in Utah, which I would call more of a “making a statement” statute than a substantive statute, because they recognize the United States gold and silver coin as legal tender. Well, they have no choice – it is, that's constitutional. The statute merely recognizes that people can make contracts, enforceable contracts using gold and silver coin, and that's also their right. But it's the first time that a state has actually stood up and said something about monetary policy. Even so, a journey of a thousand leagues begins with a single step, right?

DAVID: Looking at the descent of the dollar and its steep downtrend since 2002 – against other currencies and, of course, gold – one can’t but wonder, how much further can it fall before you get a real crisis? One that the government won’t be able to deal with?

Based on the historical precedent you mentioned, it just continues to go down until it reaches the point they have to come up with something else. Given the strong probability that, in time, the Fed is going to have to step back in with another round of quantitative easing, do you think that could be the trigger for the bottom falling out from under the dollar?

EDWIN: I think so, because of the large percentage of debt required to finance the government at this point – I think it is now running around 46%. Victor Sperandeo has done some work on hyperinflations and found that apparently once that number gets over around 40-41%, that's the end.

According to his work, in every big example of hyperinflation since the French Revolution, that number is apparently the tipping point on the rollercoaster. You’ve gone over the top, and now gravity takes over and down you go to the bottom. They can't stop the thing. So we're now at 46%, at least it was on the 12th of May, 46%, and it doesn’t seem to me there's any will or intelligence in Congress to correct this, and it's not going to be the Federal Reserve that corrects this, it's going to have to be done legislatively.

Of course, the government could do something radical to correct the situation – there is always the “if-then” type analysis, but assuming that they don’t take radical steps to correct it, which seems a safe assumption, that’s the direction we’re heading in.

DAVID: So we could already be over the top on this, as far as this is concerned.

EDWIN: Yes, that’s the fear – and once we're over the top, that's the end of the game. The rollercoaster goes to the bottom. There's no stopping it.

DAVID: Interesting in this whole discussion is that the U.S. has been the driver in the global adoption of the monetary system we now have, starting with Bretton Woods and then when Nixon stopped gold redeemability. At that point, everybody just sort of went along, continuing to use the U.S. dollar as a de facto reserve currency. But all of a sudden, today, you look around and can’t help realizing the problem is global in scale, leaving none of the paper currencies as a viable alternative. Are there any conceivable solutions to a crisis of this scale?

EDWIN: If you want to go back to a sound currency system and a sound political system – and by sound political system, I mean one in which the political powers can't manipulate money – then it has to be tied to some free-market commodity, right? Historically the two that have worked have been gold and silver, and that actually is the constitutional standard, so unless we want to change the Constitution, we have to work with that.

Fortunately it will work, so we can do that. The mechanism for doing it is the question, and as I say, it's got to come through the states. Looking at this from the investor's point of view, I don’t know if there are good investments in the collapse of Western civilization. Which is what we're facing.

DAVID: A lot of people think that if you own gold, enough gold, that you'll come out of this okay. What is your general view on that?

EDWIN: In the hyperinflationary event, if you held something like 15% or 20% of your total portfolio in gold and the rest of it goes to zero, you won't gain anything but you will not lose anything. That said, my interest has never really been in this from an investment point of view, except investment in a political sense.

Looking down the road in an attempt to see what this country will look like if we go through a hyperinflationary event – and if out of that doesn’t come a sound currency and restrictions on the government's power to manipulate money and credit – it appears to me that what could emerge is a first-class fascist police state.

DAVID: Because restricting the government’s ability to manipulate the money also restricts their ability to do everything that they are currently? Putting in those restrictions would then limit them from being involved in so many parts of the economy, as they now are. Obviously, in a monetary system built around sound money, they couldn’t keep spending money at this level.

EDWIN: That's right. If you have a system based on real money, we would not have this elephantiasis of government. So that was the great failure of the Supreme Court not asking, "Wait a minute, if we let them have this, where will that lead?" They didn’t look down the road. Maybe they did. Maybe that's what they wanted. Maybe they were extreme nationalists of the Hamiltonian view of "The more power the better," but an intelligent person will look and say, "Wait a minute, we can't put these powers into the hands of mere politicians."

DAVID: So do you really think a collapse of the Western civilization is avoidable at this point?

EDWIN: No. That's what I'm worried about.

DAVID: It seems avoidable if the politicians acknowledged the reality of the situation and dealt with it accordingly, but do you see any hope that it's politically likely?

EDWIN: Well, I'm going to give it a year or two to see what the states start doing here. We're seeing more and more resistance, at least verbally, coming out of state legislatures and even out of some state governors to various encroachments by the people in Washington. We’ve seen some push-back in the healthcare area, TSA, and then there's this business with illegal immigration, and now some states are beginning to talk about monetary reform.

There's not too much the states can do about TSA. There's probably not too much they can do about healthcare, because that would have to be decided in the courts, and god knows that's a wasteland. Immigration is kind of back and forth/up and down, but on monetary reform, if a state passed the right statute, they could potentially bring that about within 30, 60, or 90 days. Especially if they put in one of these electronic gold/electronic silver type systems, which is off-the-shelf technology.

DAVID: How could it work?

EDWIN: Within 90 days of the passage of the statute, you could have everybody in that state with electronic gold debit cards dialed into the price structure in all of the supermarkets and so forth. People could essentially opt out of the Federal Reserve System if they wanted to.

DAVID: So watching the states for a hopeful plan is something we can do.

EDWIN: That's right, and if they don’t do it within the next year or 18 months, then I would begin to become very pessimistic.

DAVID: Since we’re talking about being pessimistic, let’s talk a bit about the real dark side of all of this – namely that it appears to many that the U.S. is in the early stages of becoming a police state. Supporting that view, there are things I thought I’d never see in my lifetime, institutionally sanctioned renditions and torture, Guantanamo, the recent Supreme Court ruling that police can kick down your door based upon hearing what they consider to be a suspicious noise – the list of things the government is doing these days goes on and on, including the current blatant attempt to assassinate Gaddafi. So where do you think we are on the scale from 1-10, 1 being perfect liberty and 10 being full-on police state?

EDWIN: About 6-1/2 to 7, because they’ve set up the principles for it. You don’t have to have the police breaking in every day to have a police state, you simply have to have the judiciary saying, "If they break in, we'll let them do it." It's the principle of the thing. The NKVD didn’t arrest everybody in Stalin's Russia, but the principle was in place so they could arrest anybody, and that's the problem.

If you type “police brutality” into Google or some other search engine, how many YouTube hits do you think you'll get? Huge number, right? And they become more grotesque every day. If I were a Supreme Court justice, I might look at this and say, "This is the real problem in the country," but of course those people live in an ivory tower, so they don’t know or perhaps care about reality. If they did, they would know enough to know this is becoming a real problem.

So, as a Supreme Court justice, would I want to give them a principle that allows the police to solidify and expand that kind of oppressive behavior? And the answer would have to be, "No, I don’t." The Constitution could never have foreseen this or allowed for this, right?

DAVID: Right.

EDWIN: And yet they allow for it. Now, either this is the biggest bunch of idiots that has ever been assembled in judicial robes in the history of humanity, or there's some other agenda going on here.

DAVID: Assuming that they are not complete idiots, what could that other agenda be?

EDWIN: In my view, and I've written about this for years, the people at the top levels of government understand that their monetary system is inherently flawed. That we're on the Titanic, in a sense, and they know that this ship is going to sink. They don’t know when, but they know when it sinks, they’re going to have a huge amount of economic dislocation, social crisis and civil unrest to the level of revolt.

So they started developing this police state mechanism in the hopes of keeping the lid on the garbage can when the monetary system breaks down. The upper echelons of the judiciary have been going right along with this because they know what the program is. This is obvious. No one in his right mind would stand by and allow the sort of excesses we’ve seen.

Just the other day, the Indiana Supreme Court ruled that the Fourth Amendment doesn’t apply at all because you can sue the police after they’ve mistakenly broken into your home. But when they break into your home and they kill you, then what?

DAVID: Not a lot of recourse then.

EDWIN: Right, like that poor ex-marine that was shot 60 times in Arizona, and he's dead – now what, can he bring a lawsuit? Have we lost our minds? I mean, you don’t have to be a Harvard-educated lawyer to know that this is insanity. This does not rise to the level of just mere error. No one in his right mind can write these kinds of opinions, which means that either they’re insane, which I don’t believe, or they have another agenda, and the judicial opinions are simply camouflage – they’re propaganda to convince us that "Oh well, this is all right" because Judge Flapdoddle told us that it's all right.

DAVID: Likewise, when you look at what's been going on with the government’s spending, which is clearly insane, I mean, who would have thought they could even conceive of running a $1.5 trillion annual deficit?

EDWIN: And going up.

DAVID: And going up, and planning on this continuing well into the future. In your paper "A Cross of Gold," you mentioned that all told, the U.S. government’s total outstanding obligations at this point add up to something like 200 trillion dollars?

EDWIN: Yes, that's Professor Kotlikoff's, at Boston University, figure, not mine.

DAVID: So it’s hard to draw any other conclusion than that the government is operating in a complete fantasy. That everything is completely off the rails. Then you look at the judiciary and some of the things they have approved and looked the other way on, and it sure begins to look like fascism to me.

You and I see it, a lot of our readers look at it, but most people are so passive about it. Everybody is so quiet, and there is nobody making any waves – is that because it's too late? Before you answer, I'll give you just a quick anecdote that I think makes the point.

I was at a party not too long ago with a bunch of young people, and we were talking about some topic that was mildly controversial, and one of them said, "I’d love to look up more about that online, but I don’t want it to be part of my permanent search record.” So, the youth of America already have it in their heads that anything they do online is being monitored and will be in their search records forever and accessible to the government.

Back to my question, have we reached that stage where people are quietly huddling behind the doors of their houses, trying to keep a low profile so the government will leave them alone?

EDWIN: Given the current state of things, I'm sure there are a lot of people deliberately deciding to adopt a low profile, politically or socially. A lot of this has to do not so much with politics but what your neighbors or your coworkers will say about you, right? If you tell them something that is actually happening in the world, you will be labeled a conspiracy theorist; they’ll look at you as if you're crazy.

But what about the activists? At a certain stage, the great mass of people will look around for leadership figures. When the economic crisis comes, they’re going to want someone to tell them how to get out of it. They’re not going to know the answers themselves. The question is, will there be activists, leadership figures, proposing the right solutions – and how soon will they come along?

That's why I look at this Tea Party Movement, using that in a generic sense, an indication of the ground swell of discontent that's out there. There's a huge amount of that, but at this point it's not particularly directed. Of course the establishment is trying to co-opt it, with Gingrich and others trying to claim that they’re leadership figures in this movement, and that deflects it from the direction in which it ought to go.

By contrast, you do have the Ron Paul-type movement. I mean, look at Ron Paul as an example. This is not a charismatic figure. He's a very diffident individual, a very shy individual, not someone that you could possibly imagine as a man on a white horse in a political sense. He certainly has had very little real effect in Congress. He's been the gadfly, he's been the critic, but he hasn’t put in any legislation of consequence that has been passed. He's made a lot of noise about the Federal Reserve, but he's constantly being blocked by the real power structure in Congress in terms of getting anything done there. Yet nevertheless a whole political movement has essentially crystallized around him.

I look at him as the surfer on the wave. The surfer is not the important thing, the wave is the important thing. The surfer would be nowhere without the wave. That wave is out there, and it's just waiting for the right surfer. He's the first one that's come along, but there will be others, perhaps some state governor who is actually competent, and he looks at this monetary system and he says, "To hell with this. Here's what we have to do," and they put in that alternative currency statute, the proper one, not the kind of statement that was made in Utah, but a proper functioning one. In which case he will become the next president of the United States, and then we will see what will happen.

DAVID: Any time the states try to go their own way on issues that the federal government doesn’t like, the federal government starts to threaten them with losing their highway funds or education funds, or whatever. Isn't that part of the problem?

EDWIN: Well, it certainly is part of the problem, and that's why you're going to have to have some real leader in the state who is going to say, "We have priorities, and our first priority is correcting the monetary problem, the currency problem, and we'll worry about those federal education funds later. In fact, what we may do is stop paying some money to the federal government."

Unfortunately, once you allow the federal government to have the kind of influence they now have over the states, the states have essentially rolled over. So, at some stage, they have to say no.

That's why I say that at some point down the line, if we see nothing happening on the state level – if we see these bills being put in and being constantly defeated, and no one comes forward to take leadership on these issues – well, I'll throw up my hands and say, "We just don’t have the leadership group, we don’t have the Patrick Henrys, we don’t have the Thomas Jeffersons, we don’t have the Sam Adams, we just don’t have those people anymore, and that's the end.”

But I don’t believe it will come to that. We have over 300 million people in this country, we can't find a few hundred?

DAVID: Well, we will certainly keep an eye on the states for somebody to show up one of these days. Governor Christie in New Jersey seems like a pretty sound guy.

EDWIN: I want to see just two things, because there are two things of real consequence right now in terms of the major powers of government historically and in terms of political philosophy. Those two things are the power of the purse and the power of the sword. In order to continue spending at the levels it now is, the government has to maintain control over the monetary system, and it has to have some kind of control over military and police force.

Under our Constitution, those two powers are supposed to be ultimately in the hands of the people. We're supposed to have a free-market-oriented and -controlled monetary system based on gold and silver, so the politicians really do not have control over the purse. They have to come to us and ask for taxes. They can't manipulate the money and use inflation as a hidden tax. We've lost that. We failed to assert it – let's put it that way.

On the other side, we see this police state developing, with a centralized Department of Homeland Security in Washington that has tentacles reaching down into every local and state police force. This is completely contrary to the Constitution because the Constitution tells us that the thing that's necessary for the security of a free state is what? A well-regulated militia. And what is a well-regulated militia? It's composed, as the Virginia Declaration of Rights in 1776 said even before the U.S. Constitution, of the body of the people – the people organized in a certain way. Think of Switzerland.

Well, we've lost control over those two key elements, and until we get them back, we can only continue down this road to the full-blown police state. So in sizing up any politician, I'd start by asking them these two things: “What are you going to do in the state to return us to a system of constitutional currency with an alternative system in this state because we can't do it in Congress?” And, number two, “What are you going to do to revitalize some kind of state militia structure, perhaps using Switzerland as the model because they’ve been very successful over the years, so that we are no longer under the control or answerable to Janet Napolitano?”

If the states can’t regain control over those two things, the rest of it is a waste of time. If you don’t have control over the high ground, as the military people would say, then you’ve lost the battle. Education funds, transportation funds, all the rest of this stuff is not even icing on the cake if you let the federal government continue to have those two powers.

They took power over the money a long time ago, and they have been systemically organizing this police state since well before 9/11; in fact, the plans for the Patriot Act were drawn up before 9/11. They understand where the high ground is, and that's why if you are a state politician and you can't answer those two questions – if you don’t tell me that those are your number one and number two priorities – forget it, we'll look to somebody else for leadership.

DAVID: It seems to me that unless and until there is some sort of a push-back on the state level, the situation is going to grow increasingly dangerous, looking for a trigger, so to speak. Much in the way the Arab Spring blew up almost overnight. People looked at that and said, how did that ever happen? These are some of the most oppressed people in the world, ignorant and backwards and everything else, and all of a sudden they are in the streets, risking their lives for more freedom. So, it would seem that it's just a matter of time before we see something akin to an American Spring here.

EDWIN: Oh, I think so, yes. It's just terrible to think that we have to take second seat to the Egyptians in the promotion of liberty. Not to criticize the Egyptians, but Egypt has never been considered to be a country that philosophically was in the forefront of that area.

DAVID: Speaking of Egypt, I think the jury is still out on whether the military will allow the freedom movement there to take power. The Saudis are falling all over themselves to give the Egyptian military money, as is the U.S. government, so it would appear that we're now trying to solidify their power.

EDWIN: Please don’t say “we” when referring to the people in Washington. Don’t include me in that list.

DAVID: (laughs) Doug Casey often says the same thing. And on that note, I’ll sign off by thanking you very much for your time. Let’s do it again some time.

For those of you who wish to hear more from Dr. Vieira, James Turk of the GoldMoney Foundation recently posted a video interview that you may find of interest. Here's the link.

Quoting James Turk on the video, “This video could be described as a teaching guide to sound money at the state level. I think this video can be helpful in getting out an important message about sound money at the state level to bring about meaningful change. All it requires is state legislators spending 40 minutes to become educated on this matter. If they do that, I don't see how any of them could reasonably deny the power of Edwin's logic and discussion of the law.”

If you are interested in reading more fascinating interviews, controversial articles, and mind-boggling analysis of the economic “state of the union,” as well as the best ways to crisis-invest like the pros, try The Casey Report risk-free – with 3-month money-back guarantee.

June 24, 2011

David Galland is the managing editor of Casey Research.

Copyright © 2011 Casey Research