Upside down and backwards. Art. I,Sec. 10 purpose was to prevent the Congress from making a paper currency a legal tender. It might be helpful to read more of Madison's Notes on the subject:
There were many friends of Paper Money on August 16, 1787 when the discussion arose on Art. I, Sec. 8. The proposed wording was:
"The Legislature of the United States shall have the power to... coin money...and emit bills on the credit of the United States." And then came the arguments:
"Mr. G. Morris moved to strike out "and emit bills of credit." If the United States had credit, such bills would be unnecessary; if they had not, unjust and useless.
Madison: Would it not be sufficient to prohibit the making them a tender? This will remove the temptation to emit them with unjust views. And promissory notes in that shape may in some emergencies be best.
Mr. Wilson: It would have a most salutary influence on the credit of the United States to remove the possibility of paper money.
"The motion for striking out carried.
Here is Madison's account on Art. I, Sec. 10:
Mr. Wilson and Mr. Sherman moved to insert after the words "coin money" the words "nor emit bills of credit, nor make any thing but gold and silver coin a tender in payment of debts" making these prohibitions absolute, instead of making the measures allowable with the consent of the Legislature of the U.S.
Mr. Sherman thought this a favourable crisis for crushing paper money. If the consent of the Legislature could authorize emissions of it, the friends of paper money would make every exertion to get into the Legislature in order to license it.
Is there something about the words "crushing paper money" that is ambiguous or unclear?
What part of the TWO WORDS, "NO STATE" is ambiguous or unclear?
ETA: By your thinking, the federal government cannot enter into treaties with other countries. If that clause applies to the federal government, then what is the purpose of Article 1, Section 9, Clause 3? That clause forbids the federal government from passing a bill of attainder or ex-post facto law which are also mentioned in Section 10 Clause 1. So why would it be in there twice? Because, it is obvious that Section 9 prohibits the federal government from doing certain things and Section 10 prohibits the STATES from doing certain things.
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