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.”
NO STATE 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.)