By Jon Matonis
Forbes
Tuesday, August 7, 2012
It may not be as historically significant as President Nixon closing
the gold window in 1971, but Rep. Ron Paul laid out the framework for
the inevitable monetary confrontation of the future in his final U.S.
Domestic Monetary Policy Subcommittee hearing on “Sound Money: Parallel Currencies and the Roadmap to Monetary Freedom.”
The experts testifying included Robert Gray, Executive Director of the American Open Currency Standard, Forbes contributor Nathan Lewis, author of Gold: The Once and Future Money,
and Dr. Richard Ebeling, Northwood University economics professor. Rep.
Paul also included a prepared statement from constitutional lawyer and
monetary expert, Dr. Edwin Vieira, who was unable to attend.
Summarizing the August 2nd Congressional hearing, Alex Newman wrote for The New American:
“According
to Paul, the only way to stabilize the economy is by returning to
monetary freedom and legalizing constitutional money. And until the U.S.
government and the Fed get out of the way so the American people can
choose what money to use without government coercion, the economy will
never be truly stable and the supposed ‘recovery’ will be ‘illusory,’ he
added. Meanwhile, other nations are already catching on to the hoax
even as Americans lack the freedoms that citizens in some other parts of
the world have to invest and protect their wealth from inflation.”
Largely echoing the sentiments of the chairman,
the experts agreed that since the creation of the Federal Reserve in
1913 the dollar has lost 98% of its value and that central banking is a
form of central planning with no place in a free society.
Generally,
the repeal of legal tender laws will allow individuals to decide what
to use as the preferred medium of exchange and open the door to
alternative currencies without threat of prosecution.
Rob Gray has
been a tireless advocate for alternative open currency systems and he
is right to say “leave our money alone” but I fundamentally disagree
with his stance on legal tender laws.
He believes that the only effect of legal tender laws is that if a debt
is incurred without a specific agreement for a particular type of
payment, then that debt can be discharged with the declared legal
tender, or federal reserve notes. He even goes on say that, in addition
to not calling for repeal, he is in favor of existing legal tender laws
because they are so innocuous.
Although technically correct in
stating that legal tender laws do not result in “tax obligation,
exclusive requirement, and/or mandatory acceptance,” Gray misses a major
and symbolic effect that they do have and sometimes it’s a chilling effect.
The
legal tender laws have the effect of giving one form of money an
artificial preference over another by making that form of money
acceptable for the payment of taxes. Therefore, it indirectly puts forms
of money without legal tender status at a disadvantage because people
will perceive the ‘legally’ preferred monetary unit as having an
underlying value greater than zero. That is why I oppose legal tender
laws, Mr. Gray.
Then, a bit of bitcoin drama occurred when Rep.
David Schweikert (R-Arizona) initially referred to the cryptocurrency as
“um….what was one of them called?….something….coin” near the end
of the hearing. To my knowledge, that is only the second time that
bitcoin has been entered into the congressional record. The first being
when Prof. Larry White mentioned bitcoin in his prepared testimony for
the Free Competition in Currency Act of 2011.
Contrary to Nathan Lewis’ statement that “every currency has an issuer,” bitcoin does not require an issuer.
Proving
once again that events in the real world unfold faster than those in
power can comprehend, the participants probably did not know that
bitcoin is currently the largest distributed computing project in existence today, passing the Search for Extra-Terrestrial Intelligence (SETI) project some time ago.
They probably were also not aware that bitcoin is a three-year-old decentralized bootstrapped currency with a $100 million plus monetary base that is immune from government regulation and, more importantly, immune from the crippling effects of monetary policy.
