Archive for the ‘Federal Reserve’ Category

Legal pseudoscience: Sovereign Citizens and the 1933 Banking Act

January 6, 2013

Every field has its pseudoscience, and the law is no exception. On the innocent end of the spectrum are the simple errors: “a cop has to tell you he’s a cop,” your “one phone call,” all the rest. But on the other end you have income tax deniers, sheriffs-onlyers, “natural citizens” agitators, all the general melange of legal bizarrity that altogether make up the loose far-right loony-bin colloquially described as the ‘Sovereign Citizens movement.’ There’s a good piece up on the Daily Beats about them from last week, which focuses on one of the core legal pseudosciences of the Sovereign Citizens movement: the 1933 Banking Act.

Before getting into the details, it is important to understand that while it may be an interesting academic exercise merely to dissect the gross errors of fact and law asserted with great random in Sovereign Citizens circles, it should be appreciated that, in no uncertain terms, the Sovereign Citizens movement is dangerous. Participants in that ideology are closely affiliated with the militia movement, and they have committed crimes up to and including murder operating under the express claims of that movement. The movement is hopelessly bound up in a long tradition of anti-Semitism, racism, anti-government terrorism, and the same kind of profound delusional paranoia one might expect to see in an insular doomsday cult. In a nutshell, Sovereign Citizens believe that the United States government is illegitimate, that most or all of its laws are illegitimate, and on a good day the furthest authority they will concede to anyone but Jesus and their guns is that states have the right to empower sheriffs to carry out the law. Anyone else they see as an agent of the United Nations, of international (Jewish) banking interests, or of Israel.

The Sovereign Citizens movement is the Tea Party with its hair let down. There’s a reason that its ideology is preserved more or less intact in the corpus of Ron Paul’s dwindling supply of acolytes: it is libertarianism run amok.

A big chunk of their rhetoric comes from their broad misreading of the 1933 Banking Act and the transition from fiat gold currency to simple fiat currency. I say “fiat gold currency” because a common, nonsensical trope of both the Sovereign Citizens movement and advocates of a return to the gold standard at-large is that the value of gold, or silver, or some other shiny metal in finite supply culled from the Earth’s crust, is somehow more “real” than currency valued at an exchange rate on a finite supply as determined by the Federal Reserve instead of geology. But that’s too broad a topic to explore much more closely here.

If you have the stomach for it, there’s an hours-long interview series between what so far as I can tell is several insane asylum inmates discussing how the Banking Act of 1933 is nothing more than a complete forfeiture of the United States government to shadow-governments that go by such subtle noms-de-plume as “the Jews.” The speakers in those interviews seamlessly and easily confuse the ’33 Act with the end of the gold standard, which is far from their most grotesque distortion of a perfectly sensible banking insurance program.

Because that’s what the 1933 Banking Act is: insurance. It established the FDIC, and required banks to pare their speculative investments from their traditional banking operations – and this latter function was significantly de-stressed in subsequent amendments to the Act. The legislation more germane to their semi-literate dogma is the Emergency Banking Act (an understandable confusion for people of this level of seriousness, since it’s from the same year and has the word “Bank” in it somewhere), which was little more than a recapitulation of the authority of the federal government, as established in the Constitution, to borrow on American credit, to create uniform bankruptcy codes, and to create currency. States are expressly forbidden from creating their own currencies, and the Constitution grants broad powers to the government to decide what ‘currency’ actually is.

The Emergency Banking Act does what virtually all Congressional legislation does: it delegates Congress’s powers to somebody else. The EBA in particular delegates Congress’s power to mint and control currency to the Treasury Department, and unites banks that are potential bailees for government-backed securities under the auspices of the Federal Reserve. The ’33 Act is basically a long-term version of the short-term guarantees of bank solvency promised by the EBA, all of which are, in my view, mere recapitulations of the positive duty placed on the government by the 14th Amendment to respect the rights of creditors of the US government.

But in the eyes of the Sovereign Citizens, the EBA and the ’33 Act together constitute a complete secession of American sovereignty to international banking interests (this is an innovative synonym for “the Jews” in Sovereign Citizen literature). By delegating Congress’s power to the Federal Reserve to control currency levels, rather than the varying amounts of gold in the Earth’s crust, the government apparently turned citizens themselves into currency, and the rails are so far behind already that it’s hard to remember where we started. With the grace and aplomb of a Tim LaHaye novel, Sovereign Citizens interpret a (quite successful) federal insurance program designed to save a banking industry on the brink of collapse from its own excesses into a global human trafficking scam in which Social Security numbers are the new physical anchor for American currency and apparently Jews or the United Nations or somebody scary owns all your money. And since the government has capitulated to the “international bankers,” there really isn’t a government anymore – and so no valid lawmakers in the federal government, and so no more federal law, and certainly no valid income taxes.

If you want me to connect the dots, I can’t, because there are no dots to connect. The Sovereign Citizens movement is such a menagerie of frankly archaic xenophobia that it’s less of a coherent game of ideology and more like a game of word-associations played by militiamen and bored Ron Paul fans to pass the time between target practice and tax-evasion seminars until Jesus comes back and re-issues golden Treasury certificates to all the good Christians and roasts the rest of us on a pyre of unbacked fiat currency. There is little actual argumentation to rebut in Sovereign Citizens literature because its core doctrines are simply bare erroneous statements about laws that anybody can read.

Perhaps there is no better representative of the jurisprudential miscarriage than James Traficant. A celebrity in Sovereign circles, Traficant made a name for himself championing the rather creative hypothesis that the Emergency Banking Act formally dissolved the federal government in 1933 by declaring the federal government to be bankrupt. In a 1993 Congressional floor speech, he offered the chronological noodle-scratcher that the federal government actually became a proprietary of the United Nations in 1933 – 14 years before the United Nations existed – and, between that and being bankrupt, ceased to exist. Never mind that the United States government hasn’t been bankrupt since the days of the Articles of Confederation. Never mind that neither the EBA nor the ’33 Act say anything about the insolvency of the government (rather, they are peripheral guarantees of its solvency). What’s important is that a lot of scary-sounding things (United Nations, “international bankers,” World Trade Organization) are involved, and that somehow going bankrupt simultaneously makes an entity 1) stop existing, 2) the property of the United Nations (before the UN existed; perhaps it was merely insolvent?), and 3) exist “in name only,” as opposed to all of the other governments that are actual flesh-and-blood golems.

Mr. Traficant finished out his career defending a war criminal, going to jail with a rap sheet that could be a Sovereign Citizens laundry list (tax evasion, corruption, and slavery), and counting on the support of such Sovereign Citizens luminaries as David Duke.

It is difficult to rebut what is so grievously misstated in the first place. Where its rhetoric about the solvency, or the existence, of the federal government is concerned, the Sovereign Citizens movement is simply wrong. Pseudoscience exists in every field, from biology to philosophy, from astronomy to physics, but it exists in the law, too, and it is those who deliberately twist and undermine the rules that separate societies from mafias that do us all the greatest disservice. And the Sovereign Citizens movement is a disservice, make no mistake. I like American history. I like reading about the Constitution and the Founding Fathers. I think that the relationship between the branches and between the federal and state governments is fascinating. I think that people should read the law more, that people should be more confident in representing themselves and getting their days in court, and I think that we should be vigilant against abuses of the Constitutional system. And so do Sovereign Citizens. The difference is that the Sovereign Citizens movement does all of those things with such cavalier disregard for reality, with deliberately crass loathing for all outsiders, with such seething anger against phantom enemies, that they spoil it for the rest of us. I can’t read about the gold standard without running into their nonsense. I can’t look into the fascinating story of the Federal Reserve without encountering them (which is a shame, because the Fed is as interesting from an agency perspective as it is good for the economy). They’ve ruined sincere amateur legal discourse for the rest of us, and that may be what I despise about them the most.