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The Fourth Amendment, Civil Forfeiture, & Digital Currency

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrant shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” That is Article IV of The Bill of Rights, also known as the Fourth Amendment. The Bill of Rights was ratified in 1791, — two years after the Constitutional Convention ending in 1789. Their creation did not come without controversy and fierce debate.

Patrick Henry was one of the most outspoken of the Anti-Federalists and opposed the idea of a convention and the need for a stronger central government. He was so opposed to the Constitutional Convention (1787 — 1789), that he refused to attend. “When the new Constitution was sent to Virginia for ratification in 1788, Henry was one of its most outspoken critics. Henry wondered aloud why the Constitution did not include a bill of rights. Henry believed that the absence of a bill of rights was part of the attempt by the few to amass power.” James Madison, one of the writers of the Federalist Papers and a fellow Virginian, promised the addition of a bill of rights to the Constitution once it was approved. “In 1789, the first Congress of the United States sent a list of 12 amendments to the states. Henry believed that these amendments did not adequately safeguard the rights of the people and the states. He therefore did not support them, instead calling for a new convention to revise the Constitution.” Ten of the amendments were eventually ratified and added to the Constitution. The original 10 amendments became known as The Bill of Rights.

Patrick Henry had previously worked on the Virginia Bill of Rights and Constitution. There were sixteen articles enumerated in Virginia’s Bill of Rights, and “as a compact, immense and powerful statement of rights, the Virginia bill is without rival, — eventually influencing the federal Constitution and its Bill of Rights.” The last two articles of the Virginia Bill of Rights were of particular interest to Henry, and were drafted by his own pen. We will only cite the fifteenth amendment here, as it pertains to the subject at hand. The fifteenth article reads: “That no free government, or the blessings of liberty, can be preserved to any people but by a firm adherence to justice, moderation, temperance, frugality, and virtue. Without individual self-governance, there can be no political freedom, for in the absence of moral restraint, anarchy will call forth tyranny to maintain order.” (For quotes reference: “Give Me Liberty” / David J. Vaughn / copyright 1997 / Pages 102 & 103)

As you can see, Henry’s fifteenth amendment was clear in laying out the conditions for civil order in a free society. Certain conditions would have to be met, and he felt that the federal Bill of Rights, — as presented, — was incomplete. How would descriptions like “adherence to justice, moderation, temperance, frugality, and virtue” apply to present day America? Henry was more complete in his writing, because he feared the nature of men to justify the acquisition of power, and to maintain it by any means possible, including corruption of the culture. In light of recent abuses of civil forfeiture laws, his concerns were correct.

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When buying items from private parties, many times they ask to be paid in cash. This is understandable, as people are not familiar with a stranger’s character. Titles, bills-of-sale, or other receipts are exchanged for cash, and such is commerce. But, what if you are stopped on the way to your purchase for going 37 mph in a 35 mph zone and it is discovered you have cash, — you are hauled off to jail, and — threatened with money laundering unless you turn over the money? No probable cause, supported by Oath or accusation, no warrant, — and only the “threat” of a charge. What would you do? In 2014, Roderick Daniels was frightened, so he gave it to them. Officials eventually returned the property after considerable media attention and legal pressure. Or, — what if you run a grocery store and your insurance limits state you can only have a certain amount of cash on hand at any given time? So, — you comply by running a deposit to the bank (across the street) daily. The IRS seizes your account, as they suspect you of, once again, money laundering. No charges are ever filed, — no probable cause (other than cash deposits), supported by Oath or affirmation, and no warrant. To top it off, you have to go to court to prove your innocence in order to retrieve your property. That is the story of Terry Dehko. To add insult to injury, you discover that the federal government promoted such behavior through what it calls “equitable-sharing.” Frederic Bastiat had name for this, — he called it “legal plunder.”

We recently have heard calls for the elimination of cash by the likes of Larry Summers and Ken Rogoff, — or at least the $100 bill. It may shock some that the $100 bill comprises 78% of all paper currency in circulation. This action would virtually wipe out paper currency. In a similar action, the European Central Bank will no longer be issuing any 500 euro notes. I playfully asked in a previous essay, “What will be the next thing we declare war on, — CASH?” What is the reasoning for this action? Supposedly, it is to stop criminal activity. Slowly, the use of cash is being shunned and criminalized.

The push into digital currency has been going on for some time. From electronic banking, credit/debit cards, Apple Pay, PayPal, to mobile phones, — people have become more and more comfortable about carrying little to no cash. But, are you safe in your “persons, houses, papers, and effects” under this new paradigm? Without even addressing privacy issues, could your assets be seized at the push of a button? Could the money supply be increased by an electronic entry (already happening), rendering your deposits less valuable? Could your assets be hacked into and stolen? What about the solvency of the banking institution where your “digits” are stored? Since you are an unsecured creditor to your bank, could some of your assets be forfeit in a financial reset? In a future banking crisis, could you withdraw “digits” for items you need? How about a power grid failure where you are unable to do any electronic transfers? Could you be locked into negative interest rates on savings and demand deposits should they happen? The point is, we are losing sight of what money is and the purpose it serves. Eliminating physical currency does not come without risk. The concept of being safe and secure in our “persons, houses, papers, and effects” is being lost. Americans are being lulled to sleep. The paper currency we have now is severely flawed, but cannot imagine the abuses that could occur in a totally digital regime.

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