Tuesday, August 7, 2012
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.