“In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System … the State’s governmental finances and private economy will be thrown into chaos,” stated North Carolina Representative Glen Bradley in a bill he drafted in 2011. Get my next ALERT 100% FREE
Sensing that the Europe’s crisis has bought the Fed and U.S. Treasury some time, for now, State legislators have already begun to prepare for the eventual rejection of the U.S. dollar as a viable means for exchanging goods and services. [Related: PowerShares DB U.S. Dollar Index Bearish Fund (NYSEArca:UDN), PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca:UUP)]
According to the U.S. Constitution, Article 10, Clause 1 (Contract Clause), States can issue their own money as long as they are in the form of gold and silver coins.
Article 10, Clause 1 (Contract Clause)
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
How much time the U.S. dollar has left as a trusted currency is unknown, but the countdown has begun.
Like the sudden collapse of sub-prime mortgage market—which spread throughout all mortgages—and Greek sovereign debt in 2010—which spread to the rest of Europe—one day Americans will wake up to a crisis in the dollar.
The man who warned of a credit bubble in the U.S. mortgage market in 2006, Doug Nolan of Prudent Bear, told Financial Sense Newshour he likens Greece to the sub-prime mortgage market and the currency dominoes the besieged nation will eventually topple across the globe.
“I refer to this [U.S. Treasuries] as the global government finance bubble and I draw parallels between Greece and sub-prime U.S. mortgage back in the Spring of 2007,” said Nolan. “In the Spring of 2007, confidence started to falter for sub-prime. The risk is part of mortgage debt and of course you had the aggressive policy response. You actually had a very speculative market and you didn’t have a serious crisis until sometime later in 2008. Now we see Europe; they had the initial Greek crisis; they responded aggressively with the bailout. That bought them some time, but then things started to spiral out of control last year.”
Though U.S. Representative Ron Paul, TX has sponsored the “Free Competition Currency Act” in the U.S. House of Representatives, State legislators are waiting for Washington. They have proposed varying methods of introducing gold and silver as a go-to currency in their States so that their citizens can continue to buy groceries, services and durable goods, such as cars and major appliances after the fall of the dollar. [Related: iShares Gold Trust (NYSEArca:IAU), ETFSPhysical Swiss Gold Shares (NYSEArca:SGOL)]