What does lawful money mean?

Lawful money refers to currency that holds intrinsic or constitutionally recognized value under the original financial system of the United States. Historically, this included:

• Gold and silver coins – as mandated in Article I, Section 10 of the U.S. Constitution

• United States Notes – paper currency issued directly by the U.S. Treasury, which were at one point redeemable for gold or silver

Lawful money stands in contrast to Federal Reserve Notes, which are issued by the Federal Reserve (a private central bank) and are not backed by physical assets like gold or silver. Federal Reserve Notes are considered legal tender, but not lawful money.

Under Title 12 U.S.C. 411, every American still has the right to demand that Federal Reserve Notes be redeemed in lawful money. This process reclassifies the currency from taxable debt instruments (Federal Reserve Notes) to non-taxable lawful money, aligning with the original monetary standard.

So in summary:

• Lawful money = gold, silver, or U.S. Notes backed by them

• It carries no tax liability when properly redeemed under federal law

• It is the financial foundation of the 12-411 tax exemption process