Several readers, James Turk among them pointed out Kucinich's bill is unconstitutional because the proposal amounts to issuing "bills of credit", an act is forbidden by the constitution.
Really?
Where?
The States are prohibited from issuing Bills of Credit; Article 1 Section 10:
Section 10 - Powers prohibited of States
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.
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress.
No State shall, without the Consent of Congress, lay any duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.
STATES.
This, incidentally, is why States must have nominally-balanced budgets. They are prohibited from borrowing on their own credit. They can sell bonds predicated on some financing authority they claim to have, but they cannot issue instruments that are usable to pay taxes (e.g. which is a "legal tender") on their own credit.
A Bill of Credit is not necessarily "currency", although it encompasses currency.
No such infirmity exists for the Federal government. In fact, Article 1 Section 8 says:
Section 8 - Powers of Congress
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
To borrow money on the credit of the United States;
There it is - the power to issue a Bill of Credit - a credit instrument that has no defined value beyond the ability to lay and collect taxes on future production.
This is not my interpretation - it is original intent. Specifically, Nathaniel Gorham explained at the actual Constitutional Convention:
"The power (to emit promissory - that is, fiat paper), as far as it will be necessary or safe, is involved in that of borrowing."
There it is: original intent.
The Constitution, as a consequence of The Bill of Rights (and only as such a consequence) is a prescriptive document. That is, it outlines the powers that the Federal Government has, reserves all others to the states or the people, and in a few cases proscribes actions that States may not take.
The States, under the 10th Amendment, absent the explicit prohibition of Section 10, could indeed issue Bills of Credit and competing currencies predicated on anything they wanted. That's because Amendment 10 reserves all powers not explicitly declared to the Federal Government as held by The States or The People.
The States were prohibited these powers primarily to prevent them from falling into the debt of a foreign nation, as foreign matters of all sorts were explicitly delegated to the Federal Government. Without these proscriptions you could have literally had States that were effectively owned by a foreign entity.
Once you have the right to borrow on your credit (not your assets - your bare good name) then you have the right to issue things that can and will trade and circulate as "currency." Bearer bonds are currency instruments - they are negotiated and transferred simply by being passed from one person to another.
A "bearer bond" that has no future maturity, bears no interest and is backed only by "credit", not any specific asset encumbered as collateral is identical in form, fashion, function and legal effect as a fiat currency note when a government issues said bond, as both are backed by only one thing - the power of the government entity in question to lay and collect taxes and tariffs on the future production of the citizens.
In point of fact right up until TEFRA (Ronald Reagan's law) bearer bonds were rather common. They were currency - and were quite popular in this use, specifically with drug dealers and traffickers, since they were available in large denominations, where "Federal Reserve Notes" (just another bearer bond) were not.
Incidentally, if you wish to believe that The Constitutional Convention was not cognizant of the right of the Federal Government to issue fiat paper you should (as I've noted) read Anti-Federalist #44, and take note of the objections to The Constitution therein.
To receive credit for this assignment you must also note the other objections in Anti-Federalist #44 and that nearly all, but notably absent the particular Federal Constitutional ability to emit fiat currency, were addressed and the Federal Government was barred from those acts in what we now call "The Bill of Rights."
The Bill of Rights was the "grand bargain" that was struck with the Colonies over their objections to the original powers in The Constitution. There is also much history on whether The Federal Government should have been given and left with the power to borrow money on its own credit, as The Founders were quite-aware, having just come from The Revolution in which massive debt was in fact taken on, of exactly what sort of outcomes could result.
Kucinich's Bill is quite-clearly Constitutional under the original intent of the founders; in order to remove the Federal Government's ability to issue fiat paper you must bar The Federal Government from borrowing on its own credit. While Congress may choose to have hard currency, it is not compelled by The Constitution to do so.
Oh, and while I'm at it: Merry Christmas.
