Topic: Monetary Policy
Why Ron Paul Supports Dollar Competition Inflation is the unacknowledged enemy that is ravaging our people. It is a far greater threat than Al Qaedda, a far greater threat even than taxation. As Ron Paul says, it's the hidden tax, and it is helping to destroy America over time.by Walt Thiessen
(libertarian)
Monday, January 21, 2008
Yesterday, I called for the supporters of the Ron Paul Revolution to make Hard Money their number one issue to help lay the path for continued growth of the revolution after the Paul campaign and the 2008 elections conclude. Today, I want to expand on that call by showing why Ron Paul supports competitive Hard Money and to show how one private organization is already leading the fight to get Paul's Honest Money Act passed in Congress.
The bill is one of the shortest bills Congress has ever seen. It says:
A BILL
To repeal section 5103 of title 31, United States Code.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Honest Money Act'.
SEC. 2. REPEAL OF LEGAL TENDER LAWS.
(a) In General- Section 5103 of title 31, United States Code, (relating to legal tender) is hereby repealed.
(b) Clerical Amendment- The table of sections for subchapter I of chapter 51 of title 31, United States Code, is amended by striking the item relating to section 5103 and inserting the following new item:
`5103. [Repealed]'.
It's utter simplicity. You may be wondering what Section 5103 of title 31 of the Unites States Code actually says. It says:
"United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."
The only thing wrong with Dr. Paul's legislation is that it doesn't go far enough. Yes, the legal tender law has to be repealed, but so also must another part of U.S. code be repealed. That part is 18 U.S.C. § 486, which reads as follows:
"Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both"
This is an unspeakably bad law. In combination with the legal tender law, it makes it impossible for anyone in this country to escape the detrimental effects of the Federal Reserve System and its deliberate undermining of our money supply. It's a law that prevents good people like Bernard Nothaus of NORFED from creating gold based coins for currency circulation, coins which have gone up in value dramatically since his arrest by the FBI for violation of the above named act, during a time when the value of the dollar continues to plummet.
These two laws combine to make it impossible for Americans to conduct electronic monetary transactions in gold. This is the obvious retort to those critics who claim that gold based currencies are unwieldy and archaic because no one can carry enough gold around with them. It's too cumbersome, they say. It can't work in a global economy.
The critics could not be more wrong. There is already a market in electronic gold. Vendors such as e-gold.com have created this market, and it continues to exist to this day. But it can't grow when gold is not legally permitted to be a living, daily form of currency, of money. Instead, under law it must remain a minor market for the sole purpose of exchanging and keeping gold as an object, but not as a currency.
If 18 U.S.C. § 486 and 31 U.S.C. § 5103 were repealed, the Internet would quickly spawn a new, competition-driven form of gold-based buying and selling of goods and services that would provide the basis for allowing people to escape from the horrible effects of Federal Reserve inflation. It would allow people to save money that actually retained its value. Best of all, it would make such savings available to even the poorest among us.
Nor would the effects be limited to the Internet. NORFED competitors would spring up seemingly out of nowhere. Even the bankers themselves would get into the act, because who would want to miss out on the greatest, most stable new currency in living memory? Visa and MasterCard would issue gold cards that were really based in a gold currency. They'd be real gold cards.
The only thing that can stop this is the law and the Federal Reserve. That's why the law and the Federal Reserve must be stopped. Instead of arresting people like Bernard Nothaus for enriching the people, the president should be giving him the Presidential Medal of Freedom, the highest award that can be given to a civilian.
The current horrible legal situation guarantees that every time the Fed stimulates our economy by cutting the discount rate, there will be the instantaneous creation of more fiat money, and there is nothing that the average American can do to avoid its horrible effects. The word "fiat" sometimes confuses people, who think it's actually the name of a foreign car. It is, but in this case it means literally a decree, an arbitrary binding order. In other words, fiat money is money that is created because the bankers say it has been created under powers unconstitutionally granted to them in 1913, and by no other authority.
When your bankers can invent money, effectively "print" money out of thin air, their action increases the supply of money, and all the existing money is therefore worth less. As supply increases, individual value decreases. That's the law of supply and demand.
The only two things that can block this kind of flagrant, deliberate debasement of currency are (1) law and (2) competition. When the law sides with the devaluers and competition is outlawed, debasement becomes the law of the land. The inevitable result is increasing poverty and economic decay, which describes very well what we've been experiencing in this country for decades, especially the past 10 years.
After the late Harry Browne concluded his two attempts at the presidency in 1996 and 2000, he helped to found an organization called Downsize DC, which continues to do his good work to this day. Downsize DC is a supporter of Ron Paul's legislation, and today they actively asked their tens of thousands of Downsize DC activists to contact their Congresspeople and Senators in support of Dr. Paul's bill. They've been pushing the bill since early December when it was introduced. I urge all readers of this article to join Downsize DC's effort by using their online system to send an email to your Congressional representative and your U.S. Senators from your state asking for their support of Paul's bill.
In the letter they sent out to supporters today, Downsize DC included a rather interesting quote. It reads:
"Mr. Speaker, today the Chief Executive sent to this House of Representatives a . . . bill for immediate enactment. The author of this bill seems to be unknown. No one has told us who drafted the bill. There appears to be a printed copy at the speakers desk, but no printed copies are available for the House Members. The bill has been driven through the House with cyclonic speed after 40 minutes debate, 20 minutes for the minority and 20 minutes for the majority. I have demanded a roll call, but have been unable to get the attention of the Chair. Others have done the same . . .
"I want to put myself on record against procedure of this kind and against the use of such methods in passing legislation affecting millions of lives and billions of dollars. It is safe to say that in normal times. after careful study of a printed copy and after careful debate and consideration, this bill would never have passed this House or any other House. Its passage could be accomplished only by rapid procedure, hurried and hectic debate, and a general rush for voting without roll call.
"I am suspicious of this railroading of bills through our House of Representatives, and I refuse to vote for a measure unseen and unknown. ... I want the RECORD to show that I was, and am, against this bill and this method of procedure; and I believe no good will come out of it for America. We must not abdicate our power to exercise judgment. We must not allow ourselves to be swept off our feet by hysteria, and we must not let the power of the Executive paralyze our legislative action. If we do, it would be better for us to resign and go home-and save the people the salary they are paying us.
"I look forward to that day when we shall read the bill we are considering, and see the author of the bill stand before the House and explain it, and then, after calm deliberation and sober judgment- after full and free debate-I hope to see sane and sensible legislation passed which will lift America out of this panic and disaster into which we were plunged."
It sounds like something Ron Paul would have said, doesn't it? And yet, those words were actually uttered 75 years ago in 1933 by Minnesota Congressman Ernest Lundeen upon passage of the Emergency Banking Relief Act. This was the act which, among other things, authorized the Secretary of the Treasury to steal gold from the American people. The people received the "equivalent" of their gold in paper money, which was later devalued. 75 years later, America is still drowning in inflation, and it's getting worse.
As for Dr. Paul, he himself spoke on this very same issue today in an email he sent to supporters. He wrote:
The Fed has again taken our country into a terrible crisis. Who else is talking about honest money that cannot be printed up at will by DC bureaucrats? My opponents in both parties are all some variety of print-and-spend Keynesians. Only we are telling the truth, about who is to blame for this recession, and how we can build real prosperity with sound money, no IRS, no deficit, and strict obedience to the Constitution. And, of course, no hyper-expensive, hyper-dangerous empire all around the globe.
This was the centerpiece of his message regarding his second place finish in Nevada just two days ago. If Dr. Paul thinks the message is this important, so important that it dwarfs every other message of importance following his greatest victory yet in the 2008 primary season, then I can only reiterate that this should be the #1 message of the Revolution as it continues to do his work in the months and years to come.
I once again call for Hard Money to become the rally cry of the revolution.
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If Ron Paul actually talked about this he would lose a lot of voters who would thimk that he was a kook.
I still want people to explain to me how the richest nation in the world needs the worlds most valuable currency.
Are we really being hurt. Are we better off today then we were in 1950? I say yes, yes, and hell yes. Back in 1950 we had less money in our pockets. Today technology is cheaper and most items cost less of a percentage of our paycheck then they used to.
Does a stronger currency change prices? If not, then why worry about it when we have kept inflation low? We are not like Zimbabwe, nor will we ever be.
Posted By: Walt Thiessen
Date: 2008-01-21 16:58:57
The Statist asks, "I still want people to explain to me how the richest nation in the world needs the worlds most valuable currency."
The answer to your question is very simple. When the richest nation in the world undermines its own currency, only the richest people of the richest nation benefit, while everyone else in that nation loses.
What's the point of being the richest nation in the world if those riches are primarily aimed at enriching the top 1%?
So tell me why people of Great Brittan on average have less materials, smaller cars, and smaller homes in thier home country and can afford more in the United States. Thier currency is worth twice as much as ours, almost always has been. Do we really need this strong of a currency?
Posted By: Richard Wicks
Date: 2008-01-21 17:44:49
"I still want people to explain to me how the richest nation in the world needs the worlds most valuable currency." The US isn't the world's richest nation. It's easy to seem rich when you have an unlimited ability to go into debt. That's coming to an end, very soon. Already our creditors are starting to cherry pick our companies.
You do realize that government spending has nothing to do with the private economy right?
And Foriegn Countries buying our corporations is nothing new, it just makes investors rich.
You people seriously make me wonder where you have taken your classes in economics. Conspiracy Theory University.
The US is not going bankrupt, but it could be giving its people more economic freedom by ending socialism. And how the hell is another nation going to get its money from us? By turning off our water and electricity? The US owes taxpayers money, not other nations.
So what is the richest nation in the world if it is not us?
Do the math. Example: one British pound in 1971 is worth 9.77 pounds in 2008. The British pound is in big trouble. The only reason the pound is worth more than the dollar is that the two currencies are denominated differently.
If Britain wants to debase its pound, that's their problem.
At this time, the USA's problem is even more serious than Britain's because we are the world's greatest debtor nation even as we debase our currency. We borrow trillions from countries like China and Saudi Arabia -- countries that could stop lending us money at any time.
the statist said, "their currency is worth twice as much as ours, almost always has been. Do we really need this strong of a currency?"
I don't know much about currency, but I think the reason they have less materials, or smaller cars or any of that is because they are not taught to buy "stuff." They might be taught to buy things in necessity. I'll tell you right now if I didn't have a dad who was a stickler on saving money and not buying "things" I would be like a lot of Americans who are now in financial trouble, both with credit cards and defaulting on mortgage loans. I think smaller cars have nothing to do with their currency either, I think it has to do with the fact that there is little space all over Europe and it's more economic and better on the environment to rive smaller cars. The US is leading in the big car industry.
I think we do need a stronger currency. Again, I know little of currency or economics, but I do know I don't like going overseas to visit bringing my hard-earned $500, and have it exchanged into half the amount, unless I go south. America's currency is turning to England what Mexico's currency is to us. I don't think that sounds good, does it?
the statist said, "their currency is worth twice as much as ours, almost always has been. Do we really need this strong of a currency?"
I don't know much about currency, but I think the reason they have less materials, or smaller cars or any of that is because they are not taught to buy "stuff." They might be taught to buy things in necessity. I'll tell you right now if I didn't have a dad who was a stickler on saving money and not buying "things" I would be like a lot of Americans who are now in financial trouble, both with credit cards and defaulting on mortgage loans. I think smaller cars have nothing to do with their currency either, I think it has to do with the fact that there is little space all over Europe and it's more economic and better on the environment to rive smaller cars. The US is leading in the big car industry.
I think we do need a stronger currency. Again, I know little of currency or economics, but I do know I don't like going overseas to visit bringing my hard-earned $500, and have it exchanged into half the amount, unless I go south. America's currency is turning to England what Mexico's currency is to us. I don't think that sounds good, does it?
~"I still want people to explain to me how the richest nation in the world needs the worlds most valuable currency."~ The Statist
First of all, it's not 'the most valuable currency', it's just that it would have genuine worth. Hard money forces the gov't to be honest. It constrains the growth of gov't, and retains its' value over time (that way the value of your savings won't decrease each time the FED drops intrest rates). If fiscal integrity is not something you want in your gov't, make that your platform and then run for office, see how far you get (w/o bribes or corp sponsors). It's cynical views such as yours, Statist, that would ensure the poverty of our future generations. Do you want the dollars you leave to your children to actually have any kind of purchasing power? Or do you have so many, that it's irrelevant to you?
Our dollar is now only worth .04 cents of the dollar in 1913 when the FED was created. When it gets down to .01, the paper itself is, literally, worth more than the note. What happens then, oh wise Statist? How are you going to buy your Cheerios?
Ah, the statist, at the shrine of government again.
If only you could see where your arguments would lead.
The complexity of this issue seems to be beyond your grasp.
Would you sell your children's houses to lavishly furnish your own? Take all the credit you can, things will be good in your life. Your children will inherit your debt.
Ron Paul is the only candidate that makes any sense on the topic of monetary policy.
If we were in Zimbabwe, this conversation might make sence. I am just pointing out that the average voter is dumber than I am. If Ron Paul talks about this, then he will dull the audience to sleep.
This whole "How are you going to buy your cherios" argument is silly. This issue has been irrealavent for a long long time, since the day the US decided not to back the dollar with anything.
The penny is actually worth more than it's face value, while the other coins are worth less. Does this mean that I should start a penny collection?
In the future, cash will still be used. Prices will be different as always. The United States will not experiance Hyperinflation.
Most voters want to hear about issues that actually effect thier lives, not this boredom.
Your arguments are like zits. They're nasty but still fun to pop. I've asked this before ... do you really believe the things you write?
You are correct when you say "life is not that bad". And that's the point of many people's concerns ... we want to keep it that way. We have not forgotten the lessons of history -- the boon of the 1920's and the Great Depression of the 1930's; and cases of hyperinflation in Germany (1923), Greece (1941-1944), Hungary, Yugoslavia, Mexico, Boliva, Argentina, Venezuela, Peru, Brazil, etc.
You say technology is cheaper. So what? The gas for my vehicle has doubled in 2 years; the price of milk has doubled in 2 years; and housing prices have risen (I'm guessing) 35% in the last 4 years. How can one save money when it loses value so quickly?
You also comment that government spending does not affect the private economy??? Hmmm ... Who has to pay taxes for the government to spend? From what countries is our government borrowing money? In what countries does our government spend money, or give it away? And who is responsible for repaying the borrowed money?
No, I'm not an economist. But I don't have to be to understand that if I don't pay my bills, I lose what I'm supposed to be paying for. There is a wise saying: The debtor is servant to the lender. And as long as the lender controls the value of the currency being used, the debtor will always be enslaved.
The nice thing is that the more RP supporters get behind issues like this, specifically, the greater political chance they have to succeed.
To anyone out there wanting an explanation for gold:
First of all, as the repeal of this law would suggest, it's not just the repeal of gold, it's the /freedom/ to use whatever currency we choose.
And I really don't understand how FIAT currency could last after such a repeal. Here I could have a currency that is automatically adjusted with the market to 0% inflation, that supports free market banking, a currency that is out of the utilitarianistic hands of the FED. And a currency that imposes strict oversight and budgetary balance and thus encourages a limited government.
Posted By: Walt Thiessen
Date: 2008-01-21 20:18:05
The truly instructive point is to realize that since The Statist thinks we live in relative prosperity, it's incredible to imagine just how grim his idea of genuine decline is. Anything that isn't 100% absolute and complete economic collapse is, in his mind, prosperity. How depraved.
Walt, do you even invest in actual stocks, or do you buy gold?
Gas prices, milk, and food have gone up because of government interference in the economy by green activists.
This has a lot less to do with the currency and more to do with actions such as corn and soy being diverted from the market for Biofuel, Gas not being drilled for in ANWAR, Gasoline refineries not being built in the US, Nuclear Power being shunned by Al Gore type freaks, and Environmental initiatives.
If you hate the price of gas in the US move to Venezuala where it is still less than a dollar a gallon. Or move to Europe where you might pay $6-10 a gallon.
THE UNITED STATES GETS BROKEN INTO BECAUSE POVERTY IN THE United States IS UPPER MIDDLE CLASS ARROUND THE REST OF THE WORLD. NO MATTER WHAT WE DO, MEXICANS AND OTHER NATIONALITES WILL SHOW UP TO DO OUR SMALL JOBS BECAUSE WE ARE A WEALTHY NATION.
Get rid of environmentalism and socialism, and we will improve greatly.
While the Hard Money Act may not go far enough, Ron Paul has introduced legislation that does.
http://www.house.gov/paul/congrec/congrec2007/cr121307h.htm
Statement Introducing the Free Competition in Currency Act
13 December 2007
Rep. Ron Paul, M.D.
Madame Speaker, I rise to introduce the Free Competition in Currency Act. This act would eliminate two sections of US Code that, although ostensibly intended to punish counterfeiters, have instead been used by the government to shut down private mints. As anti-counterfeiting measures, these sections are superfluous, as 18 USC 485, 490, and 491 already grant sufficient authority to punish counterfeiters.
The two sections this bill repeals, 18 USC 486 and 489, are so broadly written as to effectively restrict any form of private coinage from competing with the products of the United States Mint. Allowing such statutes to remain in force as a catch-all provision merely encourages prosecutorial abuse. One particular egregious recent example is that of the Liberty Dollar, in which federal agents seized millions of dollars worth of private currency held by a private mint on behalf of thousands of people across the country.
Due to nearly a century of inflationary monetary policy on the part of the Federal Reserve, the US dollar stands at historically low levels. Investors around the world are shunning the dollar, and millions of Americans see their salaries, savings accounts, and pensions eroded away by rising inflation. We stand on the precipice of an unprecedented monetary collapse, and as a result many people have begun to look for alternatives to the dollar.
As a proponent of competition in currencies, I believe that the American people should be free to choose the type of currency they prefer to use. The ability of consumers to adopt alternative currencies can help to keep the government and the Federal Reserve honest, as the threat that further inflation will cause more and more people to opt out of using the dollar may restrain the government from debasing the currency. As monopolists, however, the Federal Reserve and the Mint fear competition, and would rather force competitors out using the federal court system and the threat of asset forfeiture than compete in the market.
A free society should shun this type of strong-arm action, and the Free Competition in Currency Act would take the necessary first steps to freeing the market for competing currencies. I urge my colleagues to support this bill.
statist, The thing that you don't seem to realize is that the inflation, which is caused by the fed printing more money eats up most of the investment potential and thus the potential for economic growth. People are still able to save and invest some money but if we had no debasing of the dollar our economy would most likely grow by 5 to 10 percent per year on top of the current growth.
Prices for technology would be dropping much faster if we did have hard money and thngs like milk and housing would actually get cheaper, too.
You are perfectly right when you say that legal regulation of economic matters causes a lot of problems and contributes to the cost of the things we buy. However the fed is probably the single largest source of destruction of wealth in this country even before the IRS.
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