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“Monetary Sovereignty”: Code Words for “Domestic Keynesianism”

Written by Gary North on June 25, 2014

One of the most perverse phrases that we hear today in conservative, free market circles is this one: “monetary sovereignty.” Whenever you read or hear the words “monetary sovereignty,” think “Federal Reserve System.”

Every defense of monetary sovereignty today is a defense of either the Federal Reserve System or else a pure fiat money system run by the federal government: greenbacks. It’s either Janet Yellen or Ellen Brown. Either way, it’s Keynesianism.

I see no reason for ever proclaiming your commitment to monetary sovereignty, unless you are very specific in stating that monetary sovereignty means exclusive free market sovereignty, meaning no state licensing of banks — local, state, national, or international. This is not what most people mean by monetary sovereignty, nor is it what most people hear when they hear the words “monetary sovereignty.”


There was a time in the history of this nation when there was no monetary sovereignty. This was prior to the American Revolution. Under the monopoly of the Bank of England, the colonial governments were not allowed to issue their own fiat currencies. Benjamin Franklin was a big promoter of fiat money, but he was never able to get his plan adopted, because in terms of the British Empire, this sovereignty was not transferred to colonial governments. This was a tremendous benefit for people living under British rule in North America. No state government could shove paper money down their throats. There was no legal tender at all in the British colonies.

The monetary system was completely in the hands of tiny local banks and the government of Spain. The primary currency in North America was the Spanish silver dollar. The article in Wikipedia is very good, and I recommend it. We have forgotten what monetary freedom was.

(For the rest of my article, click the link.)

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6 thoughts on ““Monetary Sovereignty”: Code Words for “Domestic Keynesianism”

  1. Gresham's Law states that "bad money drives out good". It does that because people will spend the bad and retain the good. Monetary Sovereignty is just another federal ploy to control the public and to make them feel good about their constantly devalued dollars. I one has gold in one pocket and dollars in another, when making a purchase it is always the dollars that will be spent. Mr. Gresham is right once again. See my blog at http://cranky-conservative.blogspot.com

  2. ken1lutheran says:

    My reaction at first reading the phrase was that it would mean something like Britain maintaining the pound sterling rather than go in with other European countries on the Euro. If all it means is asserting the right to finagle the currency to be worth whatever you want it to be worth (trying to stop inflation? value it up–trying to improve your balance of trade? value it down, then it's just what the article says it is, a defense of monetary manipulation by a government.

  3. It is a law that has been forgotten by most. This is why the only correct money is free market money.

  4. It's my understanding that Benjamin Franklin, when visiting the English Parliament, was asked why there was so much prosperity in the colonies. He explained that the colonies issued their own interest-free script. At that time, in circulation there was an average of $50 per person. Franklin explained the system. A couple of months or so later the Parliament prohibited the colonies from issuing their own money. To get money they had to borrow with interest. Within a very few years the local money supply dwindled to about $15/person. The commerce was no longer as effective, job opportunities diminished, and crime increased.

  5. The Currency Act as Bill noted above, not the Boston Tea Party or the Stamp Act, is what really triggered the American Revolution. We wanted to be free of the private central bank that had impoverished the colonies then, and impoverishes America today.

    Shame it took less than 200 years to get us back in the slavery of a private central bank (aka Federal Reserve System), not more "Federal" than Federal Express, with no "Reserve" of any kind, just a printing press and lots of ink! End the Fed Now!

  6. There's a poster at the Daily Bell who constantly harps on "Monetary Sovereignty". The DB readership, to a man/woman, realizes he's probably Paul Krugman using a pen name.