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By: Keith Weiner | Thursday, January 10, 2013

This article originally appeared in The Gold Standard, the journal of Gold Standard Institute.


Many people are angry about the outcome of the election. While there is some soul searching, there is also a large and growing disgust, not just with President Obama but with the electoral process and the country itself. Out of anger and frustration, some people are calling for secession, though it's unclear how many.

It is easy to see the attraction. Let each "side" go its own way. Red states can be "conservative" and blue states can be "liberal" (those terms have different meanings in America than elsewhere). No more strife at the ballot box; let each side be governed as it chooses.

There are two problems. First, there is not much difference between the "liberal" and "conservative" positions. Both believe in paper money, public education, regulations and permits, transfer payments, progressive taxation, government-provided retirement and healthcare, massive taxes on inherited wealth, government-provided transportation, and many other statist ideas.

Second, these two groups are not neatly sorted out with one group on one side of a line and one group on the other side. Even in the "liberal" state of California, the "liberals" are in Los Angeles and San Francisco and the rest of the state is "conservative" for the most part.

The situation today is totally unlike the situation in 1860 (the only time secession was attempted), in which there were distinct ideological groups and they were geographically separated.

Today the majority is unhappy with the consequences of ideas they themselves believe in. We can see this with the "conservatives" saying that if they were elected, they would repeal Obama's version of socialized medicine and replace it with a "common sense program to provide universal health care access." As if their version would somehow incorporate "common sense". As if there could possibly be "common sense" in taking money from some people and using it to give free benefits to others.

Secession is no solution for the any of the problems that plague us today. Let's look at what it would mean in reality.

The original idea behind Southern secession was that states have a "right" to allow whites to impose slavery on blacks. Of course, states do not have "rights". Rights are by definition and by nature individual. But many today hold the idea that states should have a "right" to impose the laws that the local voters desire, such as imposing religion on the population, or group-based welfare. These ideas will fail at the local level for the same reason they fail at the national level.

Now think of what secession would mean, especially if it really picked up momentum. Ultimately, there would be 50 countries (or more--why can't Northern California secede from Southern California, if California can secede from the US?), each with its own diplomats and armies. There would be innumerable borders, across which the flow of people, goods, and money would be restricted and/or taxed.

What would happen if people in each region were forced by circumstance to eat only what could be produced locally? Once the flow of oil stopped, the people in arid western states like Arizona would perish, as there is little water without pumps powered by diesel or electricity. And how would oil pass through so many borders between mutually distrusting (if not hostile, envious, or trade-warring) countries?

What if other consumer goods had to be produced locally? There could be no such thing as a computer, as the chips in computers require a worldwide market. There could not be 50 local Intel corporations. Nor motor manufacturing, pharmaceuticals, pumps, power plants, lighting, etc. Even if there were no wars--started because one of these little countries thought to plunder another--there would be large-scale death and a huge decline in the quality of life.

Could law enforcement exist this way, and what of respect for law and order? It would be an environment of strained public budgets combined with mass anger. Those who feel entitled to be given free stuff could form gangs to take it from anyone they find.

And think of your money. You wake up one day, and the US dollars in your bank account are replaced with Texas "Stollars" or "MontanaBucks". North Dakota already has a state-run bank, and other states could follow suit. The only thing worse than the current system where money is borrowed into existence, is one in which the legislature can print it at will. Could "Dakotars" hold any value?

Breaking this once-great country into 50 remnants will guarantee that we collapse. And this is why I am writing about secession. The theme is the same as with the gold standard.

We must work to prevent collapse.

I don't know if some Romans in 465AD thought that collapse would help them restore a more honest form of government. We do know now that their civilization did not bounce back for over 1000 years after it collapsed.

The fight for the gold standard is the fight to preserve civilization and prevent collapse. Opposing secession is part of the same fight.


Author: Keith Weiner

Keith Weiner

Keith Weiner

Keith Weiner is CEO of Monetary Metals, a precious metals fund company in Scottsdale, Arizona. He is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. He is founder of DiamondWare, a software company sold to Nortel in 2008, and he currently serves as president of the Gold Standard Institute USA.

Weiner attended university at Rensselaer Polytechnic Institute, and earned his PhD at the New Austrian School of Economics. He blogs about gold and the dollar, and his articles appear on Zero Hedge, Kitco, and other leading sites. As a leading authority and advocate for rational monetary policy, he has appeared on financial television, The Peter Schiff Show and as a speaker at FreedomFest. He lives with his wife near Phoenix, Arizona.

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