Thursday, April 19, 2012

6 Steps States Can Take to Protect Themselves From Financial Collapse

Dees Illustration
Brandon Smith, Contributor
Activist Post

The states of America are, truly, children of the Constitution. The legal framework that is the foundation of state sovereignty and internal administration is unique for perhaps any country in history up to the moment the U.S. won its independence. States were designed to decentralize and keep in check the power of a subservient Federal Government. They were meant to be the guardians at the gate, the barrier to the formation of oligarchy or outright dictatorship. This, of course, has changed drastically.

The battle over centralized verses decentralized authority and economy has been going on for quite some time, and is undeniably critical in our climate of crisis now, under a government which is bankrupt in every sense and a currency which is on the verge of calamity.

A vast shift in state independence was definitely caused by the reformations of the Civil War, but the progressive erasure of financial sovereignty in the states was really placed on the fast track after the Federal Reserve Act of 1913, when the enforcement of new taxes fueled the establishment machine, including social security (which the government constantly steals from) and the income tax (which does not pay for any state infrastructure), came to life. Now, the Federal Government could borrow fiat money created at will by the private central bank from thin air, and, it could tax the populace to feed the Federal Reserve in a cannibalistic circle of doom. This dynamic has grown our government to a size so massive that it is now forced to monetize its own debt just to survive.

Setting aside the inevitable collapse of the dollar and our economic system as we know it, a considerable goal has been achieved by centralists; with so much free money at the disposal of the Feds, they could wipe away the last vestiges of state sovereignty by simply BUYING state compliance. Through agencies like the EPA, FDA, ATF, etc, 10th Amendment checks and balances are trampled constantly without any regard for local laws or the will of the people, but really, state governments and citizens would be in a far better position to deny such agency intrusions if they didn’t gobble every dollar that D.C. waves in their faces like doggie treats. In our era of tenuous fiscal sop-gaps and imploding economies, the need for Americans, and especially states, to decouple from the Federal Government and the mainstream system is more important than ever.

The following is a step by step method that states could use to accomplish the task of insulation from financial crisis and federal control. Much of it hinges on a willingness by state governments to actually pursue independence, which might seem like a naïve dream to most of us. But, in the wake of a major breakdown, and the fall of the greenback, I believe many states will be seeking a way to weather the storm, if only out of a desire to survive, and this includes walking away from their ties to Washington:

Step 1: Stop Accepting Federal Funding

For states already drowning in debt, this is probably an incomprehensible idea (there is no financial escape for California or Illinois that I can see), but for those states which have some responsibility, and lower debt levels, federal funding is not necessary. Much of the money that the Federal Government collects comes through state cooperation. This money is then handed back to the states through various avenues with strings attached. The rest of the capital D.C. pumps into states is attained through printing; which carries the high price of dollar devaluation and the hidden tax of inflation. The fact is, states are not required by law (yet) to accept federal funds. As long as states do so anyway, they expose themselves to federal influence. As the dollar goes, so shall all those tied to it. States should take a lesson from the Asian bloc nations like China or Japan and begin distancing themselves as far away from U.S. currency and debt as possible. In the long term, those that do will endure. Those that don’t will be drug under the water along with the sinking ship.

Step 2: Enforce 10th Amendment Nullification

Once states are no longer beholden to federal monies, they have more leeway to obstruct intrusions by alphabet agencies and to deny dangerous legislative programs (like Obamacare) which put them at financial risk. Nullification takes many forms, and numerous issues have the potential to become vehicles for the assertion of 10th Amendment rights. One very fascinating political method was devised by representative Phil Hart of Idaho, who used the power to declare emergencies by states themselves to devise a piece of legislation which would allow Idaho to trump Federal and EPA restriction of the local wolf problem. As the bill flew through the legislature, interestingly, Congress delisted the wolf as an endangered species. Obviously, the Federal Government did not want the issue to become a success for 10th Amendment rights, and so defused the situation pulling the EPA back. Essentially, the Federal Government blinked.

This strategy could be used for multiple state conflicts with the Federal Government to effectively nullify their ability to lord over and interfere with specific needs of the people of a particular region. The future economic prosperity of the various states will depend greatly on their ability to take decisive fiscal action without constantly having to ask permission from the feds.

Step 3: Set Up A State Bank

There is certainly some controversy over the idea of a state bank. In the end, any institution can be twisted for devious ends, and a state bank is no different. However, this system has worked well in North Dakota, where a state bank has been in operation for over 90 years. Some from the “left” (whatever that means anymore) often attempt to use the institution as an example of “socialist banking”, which is not exactly accurate, and gives the strategy a bad name. Yes, the bank is state owned, but its purpose is to invest in and encourage free market enterprise within the state, not create a state owned and operated economy.

A state bank would be especially effective in resource rich areas, where a state government can invest in local projects run by local companies which employ local people. This is the opposite of what we see so often today, where international corporate entities are given monopoly over resource development within a state. They siphon away most of the profits and jobs from the region, while the Federal Government thwarts the growth of competing small businesses through concerted taxation and regulation. This goes on because states often do not feel they have the funding capability to encourage local business efforts. The problem diminishes drastically with a state bank, if done correctly, honestly, and with oversight from the citizenry.

Step 4: Resource Development

As mentioned above, resource rich states will have a noticeable advantage in the event of a primary system collapse. As the dollar continues to tumble and inflation rises, trade methods will eventually revert to raw goods and materials. This has taken place in nearly every recorded modern economic crisis, and was especially prevalent during Weimar Germany, when debtor nations began refusing the hyperinflated Mark as payment, and demanded natural resources from the Germans instead. States with heavy resources will be in a perfect position to decouple from the failing establishment and build their own systems (which is probably a main motivation behind Obama’s latest “National Defense Resources Preparedness Executive Order…).

Step 5: Adopt Alternative Currencies

There is a lot of debate over the “legality” of a state coining its own money, so, I recommend cutting out the debate entirely and merely adopting certain metals, like silver, gold and copper, as recognized methods of payment within the state. Many state governments are considering measures for alternative currencies, and some, like Utah, have passed bills on precious metals. The problem is that most of these bills do not go far enough. At bottom, states are going to have to complete the economic chain by paying OUT precious metals into the system and encouraging businesses to do likewise. It’s not enough for residents to be allowed to pay IN.

States that rely on the dollar as their only trade mechanism will fail. States that decentralize currencies by adding other options into the mix will survive. It’s really that simple.

Step 6: Encourage Localized Markets

States will only be as healthy economically as their individual communities allow. Small communities can become independent trade networks on their own, but the right state help and encouragement would make the process move along much faster. The more self reliant each town and county becomes, the more insulated they become from wide spectrum disaster. During any national breakdown, redundancy is the key. It will mean the difference between a total nightmare scenario and large scale tragedy, or a minimal system shock followed by rapid rebuilding. Barter must be reintroduced to the American lifestyle, and states have the ability to help nurture network growth. Trade skills and micro-industries can easily be promoted through state programs.

This is the kind of constructive government involvement that is needed; it seeks to open doors and then gets out of the way, rather than closing doors, and grasping for more control. Unfortunately, policies like this are not possible under the current Federal construct, but they still could be possible within the states.

I would like to point out that in the event that your state government is not receptive to the idea of independent economy, all is not lost. Each one of the steps above can be accomplished in reverse at the neighborhood, town, and county level. Over a period of time, and with relentless drive, solid alternative networks will spread, link, and take over a state regardless of what the local government approves of. The secret is this;

Provide for yourself and others what the mainstream system will not, and eventually, they will either have to conform to your logic, because it works, or, they will have to try and stop you with violence and expose their inherent tyranny, building greater resistance. In either case, you win.

Brandon Smith is the founder of Alt-Market is an organization designed to help you find like-minded activists and preppers in your local area so that you can network and construct communities for mutual aid and defense. Join today and learn what it means to step away from the system and build something better or contribute to their Safe Haven Project. You can contact Brandon Smith at:


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Anonymous said...

In my opinion, it is a very bad policy to have a Governor chosen on the basis of their knowledge of Economics and how to accept Finance, and it could be likened to choosing the Expert Doctor Joseph Mengele to treat a minor wound, rather than just leaving it to a paramedic.

They say that if you ask 2 Experts on Economics, then you will get 4 Opinions, and if the Governor can say that I am an Expert on Economics and it must be done my way, then he will become a Dictator, and a State will lose what little Democracy it once had.

This is because any debate or even descent will not be tolerated, because who are you to dispute with what an Expert says.

A Governor should be a good Judge of Character, with the ability to choose a Team of Experts on Economics who do not have any Vested Interests and who cannot be Corrupted or Bribed, and this applies to other Areas of Government.

In my opinion, with Economics, it is better to just assign a Team of Incorruptible Experts to formulate a plan, and give them sufficient time to do that; because, there are no two Expert Economists who agree with each other on all things, and it is better if they debate it among themselves with majority voting on contentious matters.

There can be hundreds of applicants for Team Members of Expert Economists, but only the best 30 should be chosen with three of the best Schools of Economics equally represented with 10 Candidates each.

There should three of the most recognized Schools of Economic by the Government, and they should have 10 Members from each group in the initial 30 Experts.

The Team should be chosen from 30 Incorruptible Economic Experts, and a Team of 11 should be chosen by Incorruptible Public Lottery to formulate Economic policies for 2 years, and then they are replaced by another 11 Economic Experts using the same application process and Incorruptible Selection Process.

What this means is that every 2 years a new combination of Experts with randomly selected numbers of different Schools of Economics that can give different Policy Formulating Advice could readjust the Economic Advice Compass, and they should have a Public Website that only they use to inform both the Government and the Public.

These Experts should also design a Tax System, and provide their Opinions on Government Spending, but the Government has to take responsibility for Taxation, Government Spending, and the Economy.

The Government will face the Electors on their handling of the Economy, but the Electors will know that the Government had the best Independent Advice by those who will never take Bribes to gluttonously enrich themselves at the expense of their Country.

There will be those who will insist that only an Economic Expert should be Governor, and they could be right, but I offer my opinion, and it could be correct.

The Deputy Prime Minister and Finance Minister Boris Fyodorov, a Russian Doctor of Economics, and the Businessman and Russian Deputy Prime Minister and Privatization Minister Anatoly Chubais on Russia’s privatization program in the Boris Yeltsin Administration, the acting Prime Minister Yegor Gaidar on Macroeconomics, were all Experts.

We saw the disaster that these Experts caused to the Russian Economy, and the living standards of ordinary Russians.

We can see how useless some Experts can be, and that is not to say that there are not some Honest Experts, and that is my opinion for formulating a good Economic Plan for a State or Country.

Anonymous said...

I realized that I wanted to add another point in my other comment, and it is the following sentence.

I think that a Governor should know as much about Economics, as the Secretary of Transport knows about how the Electronics in a Computer of an electronic fuel injection car works, and to be an Expert Mechanic who is able to repair every make and model of cars that use a Country’s roads.

The reason is the same where a Person may not listen to better advice, if it should occasionally appear, because he is an Expert, and if he is seen to consult with others or take advice occasionally from other experts, then People will say that he is not competent to do his job.

Brandon Smith said...

There are "experts" on economics, and then there are EXPERTS on economics. That is to say, just because a politician or even an adviser has a few fancy degrees and a cushy job in his field, it doesn't make him an expert at all. Most establishment trained economists are a joke. Many of them do have the same exact economic view, because they were all trained in establishment universities, and, many of them sit on political teams.

A guy like Ron Paul, on the other hand, warned about the collapse of the housing bubble over a decade in advance, and without needing a team to tell him what to say. If D.C. had been filled with statesmen like Paul, with REAL economic knowledge, we would not be in the trouble we are in today.

Anonymous said...

I should have mentioned that with a job like Secretary of State, or Minister for Foreign Affairs as it is also known, then knowledge and training and experience would be necessary for jobs such as that.

I guess it is probably true that the different Schools of Economics are controlled by the Elites, and that misinformation is being taught to students, without them being aware of it.

They do this with the lie of evolution, and it is possible that they teach Economists lies to benefit the Elites.

We have the London School of Economics, the Austrian School of Economics, etc, and perhaps Ron Paul should start an Austin Scholl of Economics, and Austin is the Capital City of Texas, and Ron Paul is a Texan Congressman.

If Ron Paul has this special knowledge on Economics, I do not think that should hoard it to himself, but he should share that knowledge, because he is a Paid Public Servant.

I do not think that all of what they teach on Economics, Banking, and Finance are wrong, and Ron Paul could just mention those areas that need updating, and he could have an online College where People receive their Degrees or Diplomas.

Graduate Economists of the Current Schools, would only have to do a one year Course to graduate, but the course would be for three or four years for other People, and the Public would have to contribute for the Establishment of such an online University or College.

Anonymous said...

you people write too much, Jesus spare me, Who woudn't want the states to go bsnkrupt? they are more obnoxoious & in our busniess than the fedswith their property taxes, car taxes, gas taxes, building permits, licenses, I mean please spare me, I dont want any stinking state bank either!! That's a terrible idea, instead of having 1 federal reserve then we would have 50!! oh yeah big improvment genius!

David Burton said...

The last post had it right, let them all go bankrupt, let us have justice (even if that be vigilante justice which turns out to be “the absolute law” when faith in all other “law” fails. Barter? That's what we do anyway, except we use money to split our barter with each other. The problems with that money are not what most people think. It matters who gets to create money and sorry NO government or corporation deserves that right, period! You imagine precious metals will save the day? They are controlled by the elites. The only basis for having anything to do with precious metals is as a means to shield a new monetary system from the old collapsing one as advocated by me on the E. C. Riegel blog. Economists were the invention of the people who are the enemies of the rest of the human race; it is knowing things “their” way, not ours. The only “economist” who is different and has the answers to our problems never went to any of their schools. (By the way, once this whole business is over, we will have to take a good hard look at dismantling some of their schools). State banks are a stop gap that will not only fail, but distort the natural economy because THE STATES DO NOT DESERVE THE RIGHT TO CREATE MONEY BECAUSE THEY HAVE NOTHING TO SELL THAT WE WANT.

October said...

I can barely read ur article, the mobile version on iPhone makes it impossible to scroll without accidentally navigating to the previous or next post unless I am

Judy Thompson said...

Although it's wonderful to see that people of all sorts are truly awakening from our few centuries of slumber, We are still in the current game with the Elites. We all know who they are, how corrupt they have come, and that their sole intentions are playing out daily like music to their ears. we, the ones waking up, can't and never will come to a unified agreement about what to do about the entire economic and governmental collapse. The Elites have counted on their elusive and devious acts to leave us indecisive as to whom to really trust. So we argue several strategic points continuously going nowhere while their ultimate fate for us continues to unfold without question. Should we start at the roots of the problem and kill the weed before it blooms any further. After all, ANYONE who has threatened to expose them has been silenced quickly by death with a fall guy.(Assassinated, murdered, disappeared indefinitely) Scare tactics that seem to keep them safe, interbreeding pigs at the top of the food chain. There's 530+ people in our government, most all corrupt above the law bigots who are making decisions for 335,000,000 Americans. Is it that hard to figure out what we need to do? Were our founding fathers Yale or Princeton graduates? NO! Think about it. Simplicity to help educate compliant drones our society has become. Government made thing complicated and pass laws behind our backs piggybacked with laws they know we want passed and diminish our freedom and rights more each passing day. Thanks to shrewd lobbyists and greedy elected officials who want that last big buck in their pocket. Not realizing they are screwing themselves and Americans in the process. They are just as corrupt as the Elite. What's next on the agenda guys, we can't seem to get passed our differences on this subject to find a solution...Oh my, more issues about the same thing just worded differently. Great lets see if we can come to a plan of action this time!?!? vicious circle we're in here

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