Legalize Competing Currencies (Ron Paul)

Much has been made recently about the supposed economic recovery. A few blips in a few statistics and many believe our troubles are all over. Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street. But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendae.

They have even set up a commission to investigate the crisis as if it were all in the past.

The truth is that Americans are still losing jobs, the Fed is still inflating, and more regulations are in the works that will prevent jobs and productivity from coming back. We are on this trajectory for the long haul. The claim has been made many times that this administration has only had a year to clean up the mess of the last administration. I wish they would at least get started! Instead of reversing course, they are maintaining Bush’s policies full speed ahead. They are even keeping the Bush-appointee in charge of the Federal Reserve! They are not even making token efforts at change in economic policy. And for all the talk of transparency, we hear that some powerful senators will do all they can to block a simple audit of the powerful and secretive Federal Reserve.

We have been on a disastrous course for a long time. The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington. When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos. That is, unless we take some major steps now to allow for a peaceful transition in the future. These steps are laid out in my legislation to legalize competing currencies.

First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative. We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money. Only gold and silver can constitutionally be legal tender, not paper money. Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes. Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office. Consequently, private mints should be allowed to mint gold and silver coins. They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit. Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money.

The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it. The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power.

Three reasons why this bill should be passed:

1. Because, given the disastrous job the Fed has done, the government should stop protecting the Fed’s money monopoly. The Federal Reserve Note has lost 98% of it’s value versus gold. The FRN is a horrible store of value and the Fed’s practice of over expanding the money supply fuels the bubbles which cause the busts.

2. Because, if in order to pay for the increasingly massive debt the FRN is debased too far too fast resulting in hyperinflation, if money competitors already exist we might avoid the solution that will be proposed by the government and central bankers - a worldwide currency.

3. Because free people should be free to choose their own money.

Grandfather bought 2 blocks of Manhattan for bag of wampum, 3 hawk feathers and a hammer.

Methinks money supply must simply be relatively adequate (optimal) to facilitate volume and velocity of all transactions and store of value for all entities, with larger or smaller than optimal money supply creating pressure for decreasing or increasing it’s value.

Only mistake gov’t or central bank can make is having way too much or way too little causing inflation (too much money chasing goods and services) or high interest rates (too little liquidity to lending will demand higher rates).

Other than that, if I run my little business and inflation and interest rates are reasonable, I can conduct my transactions and i’m happy.

Currency is a quite small percentage of the total money supply, so printing twice as much as usual is not nearly as bad as these bailouts, where ma gov’t is putting money in somebody’s account and issuing Treasury debt to back it up, i.e., borrowing the money. Most dollars I earn and spend I never actually hold any currency, they could be units, or whatever. The only pain would be if they lose value very fast (high inflation) so that dollars I earned were worth less when I spent them a month later and my raises don’t come through as fast as price increases - ouch !

But from a national perspective, we should strive to keep the nations currency from losing it’s value, and the key driver in that is our national efficiency, how much output we get from our inputs. That will determine the work we need to do and the work other nations need to do to produce goods and services when we trade. If we can work 1 hour days, and another country as to work 14 hour days, and we live in nice houses and they live in huts, it is our national efficiency that is making the difference.

Every internal tax burden we place on ourselves, meaning every time the gov’t spends money, adds to our cost of living, without giving us a new toy or a nice meal (hey, I didn’t order Tax!). That all adds to what our citizens need to earn in order to get by. Thus, it may increase the amount of work they need to do to create the products and services they create, i.e., if you need to take a part-time job to supplement, or it may force them to cut their spending to afford rent. In either case, you wind up with less for how many hours you work.

In a wealthy country, citizens can easily make enough to live very comfortable lives; the country has a very efficient system of converting inputs to outputs (goods and services). A great example of burden on our comfortable citizens is environmental regulation: it is an extra burden that costs time and material to overcome. But, of course, in the long run, we can’t pollute ourselves into oblivion, or who would want to live here ? So we have to balance between needing some government and keeping as much of what we earn as possible.

Harping on currency is kind of a side show. Money supply must be adequate, but efficiency is where the whole game is won or lost.

In one Freeper’s opinion...

Harping on currency is kind of a side show.

Despite a flawed currency, productivity and generally free markets have led to a high standard of living in the US.

It does not follow from that fact though, that we should therefore necessarily continue to maintain the flawed currency and the unnecessary centrally controlled, monopolistic monetary system.

The Fed money czars believe that they possess knowledge enough to improve upon the local decisions made by millions of people interacting in the market and therefore should maintain the authority to manipulate money supply and interest rates so as to improve the efficiency of the economy. They are wrong.

Spending intellectual energy pointing out the lunacy of this sort of thinking, as pervasive and entrenched and unquestioned as it is, is worthwhile. An increase in productivity from an economy NOT hampered by a flawed monetary system, and WITHOUT all of the dislocations produced by wild business cycle swings, could be the result!

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