Experts advocate competition for money

Rep. Ron Paul's proposal has its day on Capitol Hill
Published : 09/21/11
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Two expert witnesses testified Sept. 13 during a U.S. House hearing on the Free Competition in Currency Act of 2011.

H.R. 1098 was introduced by Rep. Ron Paul, R-Texas, on June 1. Paul chairs the House Committee on Financial Services’ Subcommittee on Domestic Monetary Policy and Technology, which conducted the hearing.

The bill seeks to repeal legal tender laws, prohibit taxation on certain coins and bullion, and repeal certain anti-counterfeiting statutes. When introducing the bill, Rep. Paul stated, “Historically legal tender laws have been used by governments to force their citizens to accept debased and devalued currency.” Paul has also cited the case of Bernard von NotHaus, who was convicted of counterfeiting and fraud on March 18 in a federal counterfeiting trial. Federal prosecutors successfully presented the case that von NotHaus was trying to pass his Liberty Dollars as U.S. currency.

In his opening statement, Paul — a Republican candidate for president — stated that current U.S. monetary policy is directly related to the current tumultuous economic climate, warning that “monetary reform eventually will come.”

Dr. Lawrence Parks, executive director of the Foundation for the Advancement of Monetary Education, submitted 64 pages of testimony. Parks called Paul’s bill “perhaps the most important piece of legislation to ever come before the Congress,” before adding that its passage “is necessary to make a transition from the certain catastrophic collapse of our unauthorized (by the Constitution), dishonest and unstable legal tender irredeemable paper-ticket electronic monetary system.”

His written testimony included pictorial evidence of 20th century currency collapses, such as workers in Hungary after World War II sweeping devalued money into sewers.

Dr. Lawrence H. White, a professor of economics at George Mason University, submitted four pages of testimony in which he discussed the benefits of currency competition, stating that the bill “would not remove the Federal Reserve from the currency market, but it would give the Fed a stronger incentive to deliver the kind of trustworthy money that consumers want.” He cited von NotHaus’ private silver-based currency, suggesting that it could provide a useful alternative in a high-inflation environment.

Rep. Paul’s bill has been referred to the House Subcommittee on Crime, Terrorism and Homeland Security where it sits with no co-sponsors. ■

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