If the US Constitutions forbids anything but gold/silver for payment, why do we have paper money?

Question

I imagine it is because the money is issued by the federal government. In my mind, each state is still making it legal tender for debts when they require state taxes, traffic fines, fees, etc to be paid in federal reserve notes. Is there a court case that discusses this?

Answer 1

I think it forbids the individual states from printing money or creating tender. Congress still has the right to coin money . Actually read through it more there is a clause that rescends that.

In Perry v. United States (1935), the Court invalidated a law seeking to rescind a clause whereby creditors could demand payment in gold coin.

You are right about the Gold Reserve at Fort Knox, it no longer applies, that amount at Fort Knox is incredibly small compared to the amount of money in circulation. The Government still honors Gold and Silver it but no longer applies.

Answer 2

not an expert on this in anyway.. but I think the money we have in circulation isnt to exceed the money equal to the gold in federal reserves (like fort knox) As for using paper money, the dollar bill (I believe) is considered more of a voucher equal to a certain share of that reserve.

but im pulling on memories from way back on this so it could be wrong heh

Answer 3

Our entire system is based on debt and not any gold standard. The link below will explain the modern monetary policy of the US. It is a poor policy. The film take a few minutes to start but worth watching.

http://video.google.com/videoplay?docid=...

Answer 4

The non-Federal Federal Reserve was set up instead, and now the Central Banking System has the entire country by the...