You may have heard about the nullification crisis involving South Carolina back in the days of Andrew Jackson, but you probably haven’t heard that nullification was used in many other cases throughout the early years of our republic. Some New England states nullified Jefferson’s trade embargo, others used it to fight the constitutionally dubious aspects of the Fugitive Slave Law of 1850 that allowed Federal marshals to drag average people out of bed in the middle of the night and force them to become slave catchers in their jammies, and these are just some examples.

The basic concept of nullification is that if the Federal government passes a law that is unconstitutional, Supreme Court decisions notwithstanding, it does not have the force of law, respecting it is entirely voluntary, and enforcing it is optional. Additionally, states had become incensed with Federal dalliance outside the bounds of its authority that some actively prevented enforcement by Federal agents by detaining them. The majority of this activity occurred early in our history, either by members of the founding generation or the next, people who understood the original intent of the federal system.

I don’t intend to litigate the SC crisis here, but I will say that SC was in the wrong because the Federal government did have the power to impose a tariff granted to it in the constitution. In other cases, however, like the Fugitive Slave Law of 1850 that violated the 4th and 5th amendments, it is a state’s duty to protect its citizens from being violated when the Federal government violates its own basic law, the constitution.

States have, over the decades since the Civil War, forgotten their power. It might be that they are addicted to the Federal handouts and are afraid to exert their power, but it has never been taken away. What makes this pertinent to the current situation is that congress has abused its power to coin money indirectly by allowing the Fed to abuse its power and if we were to interpret the constitution without any gray areas, as it didn’t have any, states would be within their right to remedy the situation. Not by trying to nullify the Fed, as some have suggested. That would be too difficult, and we wouldn’t have any money then because the states can’t print their own.

What the states could do, however, is diminish the Fed by nullifying other powers it has, in addition to market regulatory powers that have been vested in other departments, like the SEC and the FDIC because these also violate the 4th and 5th amendments on a regular basis. I am not saying that they should fight with these institutions, but just declare them unconstitutional and set up their own stuff where people who don’t want to be harassed by the Federal bureaucrats can go. The precedence for it is what Pennsylvania did with the Second Bank of the United States after its Federal Charter expired in 1836. It extended that bank a state charter which allowed it to continue operating.

Additionally, the states could apply for a constitutional convention to deal with two specific topics: commerce clause clarification and coinage, to remove market and banking regulatory power from the Federal government and allow states to emit bills of credit (paper money). If they could manage some basic agreement on these topics, they can ratify any amendments from that convention and they would become part of the constitution without them having the blessing of congress or the president. For the Federal government, it would be, “too bad, so sad, Sammy”

I am not saying that these conditions, having all 50 states running their own markets and printing their own money would be ideal. In fact I was happy with the way things were. The strategy is, though, to make such a big stink, pretty much an outright financial rebellion, out of what is happening with the management of the markets and the currency that congress will have to do something about it in order to keep the control it has. Just pounding on the politicians to do the right thing isn’t going to work, and We the People deserve better than the crap sandwich of austerity we’re having forced down our throats and having the Fed make the choices about the kinds of public policies we get to have instead of doing it through the democratic process with the Fed respecting it.

So many people think Romney and Republicans having control of the government is going to fix this miserable state of affairs, and I just don’t agree. I have heard nothing about fixing what is really broken, and the things I have heard coming from that side of isle won’t fix it. There is almost nothing that can be done that will fix it when monetary policy is too tight, barring squishing Bernanke like a bug. He deserves squishing because he is trying the Biddle approach to politics, which is a huge ethical no-no. Not to mention his hawk talk is sapping markets, which is devastating to a market economy. We can’t have stable markets and thus a stable economy by destroying security.

These things may seem like drastic measures, and they are, but something has to start happening somewhere, and the sooner people and the state governments themselves realize we don’t have to put up with this the better off we’ll be. If they don’t, we’re just going to sit here like we are currently for a decade or more as we keep electing different politicians who claim they have the solution only to have them fail time and time again. I simply do not have time for that, and we certainly can’t afford all of the lost productivity with the huge debts we have.

PS: Austerity, in the literal sense, doesn’t bother me so much, its where the forcing comes from that bothers me. Government by monetary authorities is not government by the people. It is undemocratic, oligarchy, and unconstitutional.

 

Update:

I just wanted to update this idea with another thought I had come to mind after writing my entry about the Civil War, and the points I made about how the Whigs got around the monetary policy implemented by the Democrats who controlled the Federal government.

Whigs were far more successful at dominating state governments than they ever were at the Federal level. What they did to get around hard money policies that Democrats who controlled monetary policy at the Federal level had implemented was to make changes to state banking charter rules so that banks could issue bank notes, championing free banking at the state level.

Federal law prohibits this today, so there is no expedient way to use this strategy again. But if states used the convention route, they could override it. They wouldn’t have to repeal the prohibition on states emitting bills of credit, which would not be that great of an idea anyway. They could simply provide for state charters of banking that includes bank notes, while excluding it from the commerce clause. That would diminish the importance of the Fed almost immediately, but if it decided to become competitive for a change and actually manage its monetary policy in a way that is practical, people could be persuaded back to using dollars and state charters would be diminished, but it would still be in the constitution should we ever need it again.

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