Fables Of The Fourteenth Amendment

The more I peruse the current public discourse about the application of the Fourteenth Amendment to the present quandary of public debt that confronts this country, the more I am convinced of the wisdom of the observation of the ancients that “Against human stupidity even the immortal gods contend in vain!”

The gist of the argument in favor of the Fourteenth Amendment’s positive application rests on the first sentence of Section 4 of the Amendment: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Supposedly, this sentence grants a power to the President to borrow money in order to pay outstanding “public debt of the United States” as it comes due, even though Congress has not authorized such additional borrowing. Apparently the theory is that, if the President could not exercise this power, some of the debt would be unpaid at maturity, and therefore its “validity” would “be questioned”, in violation of the Amendment.

Now, the first suspicious peculiarity of this theory is its open-endedness. For public debt can be paid in ways other than by borrowing money (that is, Ponzi finance). It can also be paid through the collection and expenditure of taxes (real public finance). The Constitution delegates to Congress two relevant powers here: One is the power “[t]o borrow Money on the credit of the United States”. Article I, Section 8, Clause 2. Another is the power “[t]o 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”. Article I, Section 8, Clause 1. The Constitution delegates no power “[t]o borrow Money” or “[t]o lay and collect Taxes” to the President. So, if Section 4 of the Fourteenth Amendment implicitly empowers the President to borrow so that “[t]he validity of the public debt of the United States * * * shall not be questioned”, it also implicitly empowers him to tax for that purpose! And, with a greater degree of apparent constitutional approval, too—because, unlike the power “[t]o borrow”, which says nothing about the use of borrowed funds to pay public debts, the power “[t]o lay and collect taxes” is explicitly tied “to pay[ing] the Debts * * * of the United States”.

The Supreme Court has also invented a third power for Congress that can be used to pay public debts: the power to emit irredeemable, legal-tender paper currency (fiat currency). See Knox v. Lee, 79 U.S. (12 Wallace) 457 (1871), and Juilliard v. Greenman, 110 U.S. 421 (1884). Indeed, armed with this power, it is impossible for the United States ever to default on their debts, because every debt can be paid “dollar for dollar” with newly issued fiat currency at essentially no cost to the Treasury, and without the economic and political inconveniences associated with borrowing money or laying and collecting taxes. Yet (to my knowledge) no one up to now has ever claimed that this imaginary power can be exercised by the President on his own initiative. But if Section 4 of the Fourteenth Amendment empowers the President to pay public debts by borrowing money without the specific authorization of Congress—and, by logical extension, to tax in order “to pay the Debts * * * of the United States”—then why does it not also license him to emit whatever amount of fiat currency he deems necessary for that purpose? One could accompany Alice even farther into the depths of the Washington Wonderland and posit a license for the President to exercise the power of eminent domain, in conjunction with the power to emit fiat currency, for the purpose of paying pubic debts. Under this addendum to the basic theory, the President would simply seize valuable private property, turn it over to the holders of the public debt (say, the Red Chinese government) in payment thereof, and compensate the dispossessed former owners with rapidly depreciating fiat currency.

Those who pooh-pooh these possibilities should ponder on what reasoning Section 4 of the Fourteenth Amendment could be held to grant to the President the power “[t]o borrow Money” in order to pay public debts, without the prior authorization of Congress, but also held not to grant him whatever other powers might possibly be used to pay public debts, also without the prior authorization of Congress? Surely, if the sentence “[t]he validity of the public debt of the United States, authorized by law, * * * shall not be questioned” is a grant of power, on its face it is a grant without limitations, exceptions, or qualifications. Ergo, under this (mis)reading of the Fourteenth Amendment, the national motto should be amended to read: Hail, Caesar! We who are about to be fleeced salute you!

The deficiency from which the proponents of the foregoing theory of Section 4 of the Fourteenth Amendment suffer is that they cannot read. Section 4 does not grant anyone a power. It imposes what lawyers call a disability, an absence of power. The sentence “[t]he validity of the public debt * * * shall not be questioned” strips the United States and the States (and every official thereof) of any right, privilege, or power to “question[ ]” any portion of “the public debt” through the exercise of any power that otherwise could “[in]valid[ate]” that portion—that is, that would legally nullify it. Section 4 says nothing at all, however, about what could or should be done, by whom, and under what circumstances in the event that some public official actually attempted to “question[ ]” “[t]he validity of the public debt”.

A power to deal with a violation of Section 4 does exist. But it appears in Section 5 of the Fourteenth Amendment: “The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.” Observe: The Fourteenth Amendment, which so many deep thinkers among the legal intelligentsiia assert implicitly empowers the President to enforce Section 4, explicitly empowers Congress, and only Congress, to do so! Congress. C-O-N-G-R-E-S-S. Congress. See Dick! See Jane! See Section 5! See whom it empowers! See Congress! Not the President!

To be sure, under the aegis of Section 5 Congress could enact “appropriate legislation” that directed and authorized the President to take certain strictly executive actions to secure “[t]he validity of the public debt”. It could authorize the Treasury, under the supervision of the President, “[t]o borrow Money”, “[t]o lay and collect Taxes”, even to emit fiat currency in particular amounts. It has done all of these things in the past (the last of them, of course, without constitutional authorization). And under the injunction in Article I, Section 9, Clause 7 that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law”, Congress could even decree that the particular moneys borrowed, collected in taxes, or emitted as fiat currency should be “drawn from the Treasury” exclusively for the purpose of paying specific public debts. But, absent such legislation, the President or any of his minions in the Administration is powerless to engage in any of those activities on his own. Inasmuch as Article II, Section 3 the Constitution commands the President to “take Care that the Laws be faithfully executed”—and inasmuch as one of those “Laws” is the Constitution itself—and inasmuch as Section 5 of the Fourteenth Amendment explicitly empowers Congress alone “to enforce” Section 4—it follows that any attempt by the President to usurp any or all of the powers “[t]o borrow Money”, “[t]o lay and collect Taxes”, or to emit fiat currency in order purportedly to enforce Section 4 would constitute a “high Crime[ ] and Misdemeanor[ ]” for which “Impeachment” and “Conviction” would be appropriate, followed by criminal prosecution of both himself and his accomplices. Compare U.S. Const. Article II, Section 4 with Article I, Section 3, Clause 7 and with 18 U.S.C. §§ 241 and 242.

One other point should be clarified, too. “The validity of the public debt of the United States” is not “questioned” simply because that debt is not paid on time (or perhaps is never actually paid at all). “The validity” of a debt is a matter of its legality. Payment is a matter of actual compliance with the obligation’s contractual provisions. A debt may not be paid on time, without anyone’s questioning its validity. The debtor may agree that he owes the money as a matter of law, but may deny that he is able to pay as a matter of fact. In that event, he may be sued for damages, or he may seek the protection of a bankruptcy court—but the validity of the debt is never at issue. The peculiar problem for holders of public debt is whether they have a satisfactory remedy if the Treasury takes the position that it simply cannot pay some debt the validity of which it does not question.

In Perry v. United States, 294 U.S. 330 (1935), which applied Section 4 of the Fourteenth Amendment to invalidate in part the infamous House Joint Resolution No. 192 of 1933, the Court adverted to this problem as follows:

[T]he right to make binding obligations is a competence attaching to sovereignty. * * * The Constitution gives to the Congress the power to borrow money on the credit of the United States. * * * The binding quality of the promise of the United States is of the essence of the credit which is so pledged. Having this power to authorize the issue of definite obligations for the payment of money borrowed, the Congress has not been vested with the authority to alter or destroy those obligations. The fact that the United States may not be sued without its consent is a matter of procedure which does not affect the legal and binding character of its contracts. While the Congress is under no duty to provide remedies through the courts, the contractual obligation still exists and, despite infirmities of procedure, remains binding upon the conscience of the sovereign.

294 U.S. at 353-354 (emphasis supplied). So there one has it, directly from the horse’s mouth. Without a remedy—which “matter of procedure * * * Congress is under no duty to provide”—the debt cannot be collected; nonetheless, “the contractual obligation still exists and * * * remains binding upon the conscience of the sovereign”, so that its “validity” has not “been questioned”.

Now, I am the first to condemn the decision in Perry v. United States (indeed, the decisions in all of the so-called Gold Clause Cases), And I have done so in excruciating detail in print, on pages 1127-1240 of Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution (Chicago, Illinois: R R Donnelley & Sons, Inc., 2011 GoldMoney Foundation Special Edition of the 2002 Second Revised Edition)—which I commend to those who have advanced, or want to advance, beyond the “Dick and Jane” level of constitutional law and political economics. The point is, however, that this matter of Section 4 of the Fourteenth Amendment has been settled, not only by Section 4 and especially Section 5 themselves at a matter of self-evident legal principle, but also by Perry as a matter of convoluted legal practice (for those who accept decisions of the Supreme Court as somehow the last word on the meaning of the Constitution).

One need not be an electrical engineer, therefore, to realize that the legal “bright bulbs” in the White House are running at far below their self-rated wattage.

vieiraDr. Edwin Vieira  is IAI’s Distinguished Senior Fellow in Jurisprudence and Constitutional and Monetary Law.

This article was originally published originally published on April 9, 2012, on NewsWithViews.

The opinions published here are those of the writer and are not necessarily endorsed by the Institute.


Shutting Off The Gas

The way political commentary in Brazil delights in trivia, leaving aside the essentials, obliges anyone who understands the gravity of the phenomenon to alert the public that what is being sold today as journalism is in fact a new and different product, with the opposite finality of what was being consumed a generation ago under that name.

The Portuguese word for news, “noticia,” comes from the word “notar,” which means to grasp, apprehend or perceive. When the news you receive from various channels arrives with a uniform content and in an absolutely identical tone, it is clear that it is not expressing human perception, which is varied and individualized by nature and devoid of engineering work, i.e., a template pre-set on the facts, not to reflect them but to substitute them.

The case of the Oslo terror attacks is a prime example from this standpoint. Flagrantly erroneous information was disseminated throughout the world in a matter of minutes, in a tone suggesting universally recognized certainties, at a rate such that its contradictions became apparent only to a few, one here, another there, without the force required to reject the homogeneous mass of falsehoods which, like the lethal bubble in the famous movie, had already engulfed whole multitudes.

As I have said before, terrorist attacks are never an end in themselves. They are always inserted in some general strategy which, by bloodless political or propaganda means, prepare for the attacks and reap (or produce) their results. The physical destruction must be preceded and followed by moral demolition efforts or political blackmail which transform the mere carnage into a specific political advantage. To give but 2 classic examples, September 11 was based on a whole decade of growing anti-American propaganda and immediately managed to invert the initial impression of horror at the terrorism, transforming it into a global wave of hate against the US (see: http://www.olavodecarvalho.org/traducoes/terrorism2.htm); in Spain, less than 24 hours after the 2004 attack, a huge popular protest was already in the streets, not against the terrorists but against … the conservative government of Prime Minister Aznar (Portuguese-language site: http://www.olavodecarvalho.org/semana/040325jt.htm). But we needn’t go that far from home. In Brazil, between 1964 and 1988, every bomb, every arms robbery and every kidnapping was followed by intense propaganda based on the slogan that the blame for these crimes lay not with their perpetrators but with the government that fought them. The legend of “young idealists in the struggle against tyranny” bore its fruit with the massive comeback of the communists to the country and their unstoppable rise to power (Portuguese language site: http://www.olavodecarvalho.org/semana/110428dc.html). I cite my previous articles to emphasize the continuity of the analyses I have been making, chapters added to many years of study on the phenomenon of the revolutionary mentality.

Now in the Norwegian case, the only propaganda campaign observed was aimed against the terrorist himself, but associated with the obvious scapegoats, Zionists and conservative Christians. The golden rule in the analysis of terrorist attacks is: Find out whom the campaign being observed is targeting and you will see that the responsibility for the crime lies in the opposite direction.

Anders Behring Breivik himself gave us a valuable clue when he said in his “Manifesto” that he was not a Christian but just a Darwinist convinced that Western Christian civilization is more highly evolved than others. This not only refuted the official version of the “mainstream media” but unequivocally aligned Breivik with the ideological pattern of the materialist, evolutionist French Nouvelle Droite (New Right) headed by Alain Benoist. This is another thing that the enlightened political commentators aren’t aware of, or for that matter, that the Nouvelle Droite is a staunch ally… of “Project Eurasia,” brainchild of Alexander Dugin and Vladimir Putin!

Based on this information, I announced on my program True Outspeak of July 27, 2011, that we would soon see, behind all these perverse attempts to smear Zionists and Christians, the truth bearing a label with three letters: K, G and B, or in their new version, modified for the nth time, F, S and B[1].

No more than 48 hours later, on Friday July 29, I received from my Romanian friend Anca Cernea this news report from the Russian agency RiaNovosti: Breivik had been in Belarus several times, receiving terrorist training from the local section of the FSB (http://en.rian.ru/world/20110728/165436665.html). Actually, while there, he also had contact with a “rightwing extremist,” Viacheslav Datsik, but Datsik, jailed in Norway for arms smuggling, has just confessed to working for the FSB.

To clarify still more, Breivik states in the “Manifesto” (http://www.asianews.it/news-en/Russia-as-the-mass-murderer%E2%80%99s-political-model-22193.html) that the ideal target for his struggle would be to substitute the European political structure, which he calls “dysfunctional,” with a model of authoritarian democracy “similar to that of Russia” (sic). And, on top of that, he praises Vladimir Putin to high heaven.

To round out the picture, Russian interest in destabilizing the Norwegian government is as plain as the nose on your face: Norway is Russia’s only competitor in the supply of natural gas to the European continent – that is, the only obstacle standing in the way of Vladimir Putin’s dream of one day bringing Europe to its knees simply by threatening to shut off the gas.

[1] Russian Federal Security Service, replacement of the KGB

Olavo de Carvalho is the President of The Inter-American Institute and Distinguished Senior Fellow in Philosophy, Political Science, and the Humanities.

The opinions published here are those of the writer and are not necessarily endorsed by the Institute. This article was originally published in the newspaper Jornal do Brasil on August 26, 2011, and translated from the Portuguese by Donald Hank.

The Root of the Matter

Are we headed for hyperinflation? Consider the Web site of the National Inflation Association (NIA), www.inflation.us  – with the subtitle Preparing Americans for Hyperinflation. According to the NIA, “The United States now has over $76 trillion in total debt obligations. Our budget deficit in February of 2011 alone was a record $225.5 billion, more than the entire year of 2007.” The NIA believes that the U.S. federal government will not be able to balance its budget, let alone pay off its existing national debt. Inflation is therefore inevitable as the government will have no alternative. Not everyone agrees with this assessment, however. Looking at the situation very differently, Wall Street Journal Economic Editor David Wessel concluded that an “immediate outbreak of inflation is improbable.” The economy, after all, is stagnant. How could there be inflation? Of course there are special circumstances that could arise, Wessel admits. But these are nonetheless unlikely.

How are we to evaluate the inflation question? Is there more sense in the “big picture” analysis of the NIA? Or is there more sense in the detailed analysis of David Wessel? The NIA takes the long view while David Wessel is trying to see what may be lurking around the next corner. What we find in the NIA and WSJ is two approaches to the same question. In the game of prediction, “big picture” analysis usually won’t tell you want is going to happen in the short run; and most details of the moment are mere trivia when it comes to the long run.

Those who specialize in long run thinking are sometimes called “philosophers,” or lovers of wisdom. One of the more relevant philosophers of the last century was Jose Ortega y Gasset, who wrote a remarkable little book published in 1930 under the title The Revolt of the Masses. One of the core themes of the book is that, “for good or ill,” the masses have ascended to “complete social power.” Ortega called this situation “the greatest crisis that can afflict peoples, nations, and civilization.” He noted that mass man is only concerned with his own well-being while remaining ignorant of the principles that make civilized existence possible. “They do not see behind the benefits of civilization,” he wrote. “The mass man has a radical ingratitude towards all that has made possible the ease of his existence.” This might include the principles of economics, thrift and industry. The mass man is focused on the immediate future, and immediate gratification. He does not look to the long run. “The long run is a misleading guide to current affairs,” wrote John Maynard Keynes. “In the long run we’re all dead.” (Spoken with due sensitivity to the spirit of the age.)

Something is definitely lost when we adopt a negative attitude toward the long run. In a chapter titled “Primitivism and History,” Ortega argued that “Nature is always with us.” Civilization, however, is not Nature and is not always with us. Civilization is artificial and fragile. “If you want to make use of the advantages of civilization,” he warned, “but are not prepared to concern yourself with the upholding of civilization – you are done.” Civilization exists because of long run thinking. It is maintained by long run thinking. Therefore, civilization is imperiled at a time when nearly everyone is focused on the short run. A key symptom is found in a general want of historical knowledge. “The most ‘cultured’ people today are suffering from incredible ignorance of history,” wrote Ortega. “I maintain that at the present day, European leaders know much less history than their fellows of the nineteenth, even of the seventeenth century.”

A similar statement could be made with regard to economic knowledge. Just as we have been losing our sense of history, we have been losing that sense which says “a penny saved is a penny earned.” If the mass man is merely concerned with his immediate gratification, and if he has no regard for the economic long-run, is not indebtedness his destiny? And once he finds himself ruined by short-sightedness, what desperate measure will he next employ?  Retrogression is likely, Ortega predicted. By this he meant “typical movements of mass men, directed, as all such are, by men who are mediocrities, improvised, devoid of long memory and a ‘historic conscience,’ they behave from the start as if they already belonged to the past….”

If we look back at history, we see that inflation and economic stagnation can exist together. We also see that inflation is the natural course of government when leaders prove themselves ignorant. And why should leaders be any more enlightened than the so-called “experts” and professors who advise them today? What was taken as common sense for centuries is now considered out-of-date. The same John Maynard Keynes quoted above also said, “In truth, the gold standard is already a barbarous relic.” Indeed! The Roman Emperor Caracalla debased the silver denarius from 95 percent silver to 50 percent and then 0.5 percent. Barbarian mercenaries in service to the emperor would not accept payment in Roman coins, but insisted on payment in gold.

History suggests that all fiat currencies are headed for worthlessness. We do not know, of course, how long it will take in any given case. The National Inflation Association has a number of intriguing charts, which readers may wish to evaluate for themselves (see http://inflation.us/charts.html [4]). The one that caught my attention is titled “Fed & Treasury Total Money (FTTM).” According to this chart the Fed & Treasury total money supply began to skyrocket after the 2008 economic meltdown. The NIA set down the following note below the chart, “The DOW Jones has rallied 97 percent from its low in March of 2009. However, adjusted for real inflation, the Dow Jones is about equal to where it was in 1963.”

Inflation is already here, and worse is coming.

Jeffrey Nyquist is the President of the Strategic Crisis Center and Distinguished Senior Fellow in Political Science at the Inter-American Institute for Philosophy, Government, and Social Thought.

The opinions published here are those of the writer and are not necessarily endorsed by the Institute.