Fiat Money and the Coinage Clause

[A18]

Article I, Section 8, Clause 5
The Congress shall have Power ... To coin Money, regulate the Value thereof, and of foreign Coin...

[A18]

No. The clause authorizes the coining of money from precious metals, such as gold and silver.  The founding generation distinguished between the power to "coin" specie money and the issuance of "bills of credit." The value of coined money was "inherent" in the metal from which the coin was made. The value of a bill of credit was based entirely on the good name of the United States.

At the Constitutional Convention, a proposal to give Congress the power to "emit bills on the credit of the United States" was defeated as too prone to abuse. It seems to have been understood by both supporters and opponents of the proposal that, absent the specific grant, paper money would be unconstitutional.

This sheds some light on the original understanding of the words "to coin money." And the framers were, after all, generally hostile to paper money.

[A18]

The Congress also rejected a proposal that would have allowed Congress to establish a national bank.

Interstate commerce is the exchange of merchandise across state lines. In other words, it is trade and navigation--it is shipping.

[A18]

The answer is that it can not. Congress has power to regulate the shipping of merchandise across state lines for sale, not money. Furthermore, it can not declare bills of credit issued by private corporations to be legal tender.

All that's relevant here is the original understanding; not what that was based upon. In any event, money does get its value from the rarity of the commodity, and paper money is still backed only by the good name of the issuer. No one would accept a form of money if they thought a corporation was going to inflate it away.

[A18]

No, it just means I can separate my personal views from the Constitution's.

[A18]

He didn't say government-issued fiat money; just currency.