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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.
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