Free Competition in Currency

The national unemployment rate is hovering at ten percent. The national debt is swelling to over thirteen trillion dollars. The United States Dollar has never been worth less. The central government of the United States has never been bigger. In this time of economic and political uncertainty, it is vital for the populace to examine how and why the United States arrived at the position it now finds itself in. It is important that the citizenry ask these vital questions. What causes inflation? Where did the debt come from? What has been allowing the government to grow at such unprecedented levels? The root of all these problems is inflationist monetary policy.

Since 1913, the Federal Reserve is the only institution allowed to create currency. Although the Federal Reserve is technically privately owned, it is supposedly run by a government appointed board, currently chaired by Ben Bernanke. However, the government and the banking institutions who hold shares in the Federal Reserve System work hand in hand to expand the size of government.

This is what happens: Most of the money spent by the federal government is borrowed money. The Federal Reserve buys treasury notes in exchange for US Dollars. The US Dollars it adds to the government's ledger do not exist before the Treasury Notes are sold. The taxes which Americans pay barely covers the annual interest on the debt. What this means is that the government continues to borrow more each year, because the interest on the debt continues to get larger, diminishing the government's real revenue, which forces the government to borrow more than it did previously if the money is to be spent. The result of this is that there are constantly more dollars in circulation in a given year than there were the previous year. What this means is that, unless the Gross National Production increases at a steady rate each year, the dollar will constantly lose value. And it has! Since the Federal Reserve Act, the US Dollar has lost ninety six percent of its value. This means that one dollar's worth of commodities in 1913 is equal to twenty four dollar's worth of commodities today. Because of these inflationist policies, people are spending more every year to buy the same goods. In other words, the government is stealing money from the people. Just because you retain the same amount of dollars in your wallet, does not mean that it is worth the same amount year to year. If one were to invest his US Dollars in a stable commodity such as gold, he would seem to gain money every year. In reality, however, he would simply be retaining the savings value in his money; the value which the government had been siphening from the savings of his neighbors.

The most efficant solution to these problems is to legalize competition in currency. Currency competition is a monetary system in which private entities print currency. This currency is to be backed up by some commodity or another. This monetary system serves all of the purposes of currency. Competition in currency provides a stable representation of value with which individuals could protect their savings. It also provides a fair and balanced means of exchange between individuals. In addition to this, competing currency would avoid the notion of a currency crisis. If people lose faith in the Dollar, and begin to dump their investments in dollars and treasuries, the dollar will lose all of its perceived value, and everyone holding dollars would lose. Competing currencies, however, will hedge their values against eachother. If people lose trust in a particular currency backed by gold, then the lost value will be picked up by another commodity currency, such as silver, platinum, or palladium. Currency crises and even market crashes, would essentially become obsolete.

Another concept that would become obsolete is the exponential growth of the federal government. The current monetary system allows the government to grow at such a fast pace. This is because, the government, through the Federal Reserve, can simply increase the currency supply at will. Because of the Federal Reserve Act, the American people are forced to make economic exchanges using Federal Reserve Notes. It is because of the fact that Americans cannot opt out of the official currency that the government can continue to expand without losing actual legitimacy. If you stop the Federal Reserve from devaluing our savings by printing such large quantities of money, you stop the federal government from usurping unconstitutional power.

Congressman Ron Paul of Texas has long held firm distain for the inflationist policies and unconstitutionality of the Federal Reserve. It is because of this that Paul introduces bills every year which would abolish, audit, or severely restrict the pervue of the Federal Reserve. In 2009, however, he introduced another bill: the Free Competition in Currency Act. This Act would eliminate sections 486 and 489 of title 18, United States Code,which effectively restrict private minting. This bill would allow people to opt out of the US Dollar as a means of exchange and investment. This would allow a smooth transition to free, commodity-backed currency, which would eliminate the boom-bust business cycle as well as halt the unacceptable rate of government growth. As result of this Act, people would have honest and stable means of investment. People would be able to more efficiently plan for their own economic futures. In addition to this, trust in the economy would be increase exponentially, as the government would no longer have the means it needs to tamper with the value of currency. This transition would help transform the United States to once again become the most industrious and productive nation in history. Please support the Free Competition in Currency Act. If we do not end the current monetary system in favor of a transition to a stable one, the market will end the monetary system for us; and then, there will be no last vestige of economic recovery.