Laws associated with issuing U.S. dollars cause dire poverty and destroy the environment. American law has codified the dollar as sufficient for satisfying debts even over a creditor’s objection (legal tender) and as the only form of payment that typically meets federal tax obligations (functional currency). The Supreme Court has upheld government bans on private possession of, or contractual repayment in, monetary alternatives to the dollar like gold or silver. Furthermore, since 1857 when the United States Congress began abandoning the silver standard in practice, the dollar has gradually been trending ever greater as a “fiat money”—a debt instrument issued at the pleasure of the sovereign—and, indeed, has been a 100% debt instrument since 1971 when the United States finally, formally, and completely abandoned gold and silver standards. States and municipalities also support these four legal aspects of the dollar despite a potentially contrary constitutional mandate.
This Article examines implications of these four legally entrenched aspects of the modern dollar—fiat money, legal tender, functional currency, and non-fiat money bans. As the first analysis in the academic legal literature to do so, this Article demonstrates that the combination of these four legal attributes leads to severe environmental damage and catastrophic impoverishment of a portion of the global population (in particular, those who are already abjectly poor). The Article shows that calls for digital currencies based on international fiat monetary alternatives to the dollar, such as Special Drawing Rights (SDRs), will not improve the environment and global economy and indeed may worsen them. The Article concludes by laying out possibilities for reform of laws supporting the dollar in its present form that would diminish both poverty and environmental destruction.
II. A Relevant History of the Dollar’s Laws ... A. Fiat Money ... B. Legal Tender ... C. Gold and Silver Bans ... D. Functional Currency ... E. States and Municipalities
III. Economic Insights into the Dollar’s Legal Attributes ... A. The Fiat Money Thought Experiment, Part 1: From Raw Silver to Fiat Silver ... B. The Fiat Money Thought Experiment, Part 2: From Fiat Silver to Fiat Notes ... C. The Fiat Money Thought Experiment, Part 3: From Fiat Paper Notes to Fiat Electricity (Digital Currency) ... D. The Globalization of Fiat: Special Drawing Rights (SDRs)
IV. Conclusion: Solutions for Reform
Christopher P. Guzelian,
The Dollar’s Deadly Laws That Cause Poverty and Destroy the Environment,
98 Neb. L. Rev. 56
Available at: https://digitalcommons.unl.edu/nlr/vol98/iss1/3