I recently held a hearing in
my congressional subcommittee on the subject of competing currencies. This is
an issue of enormous importance, but unfortunately few Americans understand
how the Federal Reserve and Treasury Department impose a strict monopoly on
money in America.
This monopoly is maintained
using federal counterfeiting laws, which is a bit of a stretch. If any
organization is guilty of counterfeiting dollars, it is the Federal Reserve.
But those who dare to challenge federal legal tender
laws by circulating competing currencies-- at least physical currencies--
risk
going to prison.
Like all government created
monopolies, the federal monopoly on money results in substandard product in
the form of our ever-depreciating dollars.
Yet governments have always
sought to monopolize the issuance of money, either directly or through the
creation of central banks. The expanding role of the Federal Reserve in the
20th century enabled our federal government to grow wildly larger than would
have been possible otherwise. Our Fed, like all central banks, encourages
deficits by effectively monetizing Treasury debt. But the price we pay is the
terrible and ongoing debasement of our money. Allowing individuals and
business to use alternate currencies, especially currencies backed by gold
and silver, would expose the whole rotten system because the marketplace
would prefer such alternate currencies unless and until the Fed suddenly
imposed radical discipline on its dollar inflation.
Sadly, Americans are far less
free than many others around the world when it comes to protecting themselves
against the rapidly depreciating US dollar. Mexican workers can set up
accounts denominated in ounces of silver and take tax-free delivery of that
silver whenever they want. In Singapore and other Asian countries,
individuals can set up bank accounts denominated in gold and silver. Debit
cards can be linked to gold and silver accounts so that customers can use
gold and silver to make point of sale transactions, a service which is only
available to non-Americans.
The obvious solution is to
legalize monetary freedom and allow the circulation of parallel and competing
currencies. There is no reason why Americans should not be able to transact,
save, and invest using the currency of their choosing. They should be free to
use gold, silver, or other currencies with no legal restrictions or punitive
taxation standing in the way. Restoring the monetary system envisioned by the
Constitution is the only way to ensure the economic security of the American
people.
After all, if our monetary
system is fundamentally sound-- and the Federal Reserve indeed stabilizes the
dollar as its apologists claim--then why fear competition? Why do we accept
that centralized, monopoly control over our money is compatible with a
supposedly free-market economy? In a free market, the government's fiat
dollar should compete with alternate currencies for the benefit of American
consumers, savers, and investors.
As Austrian economist Ludwig von Mises
explained, sound money is an instrument that protects our civil liberties
against despotic government. Our current monetary system is indeed despotic,
and the surest way to correct things simply is to legalize competing
currencies.
