Wednesday, September 14, 2011

Ron Paul's Statement at Hearing on "Free Competition in Currencies Act" (HR 1098)

John Maynard Keynes once stated that “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Such a situation is exactly what faces this country today, as the Federal Reserve seems hell-bent on destroying what little purchasing power remains of the U.S. Dollar...

... Economics teaches that monopolies produce fewer goods and sell them at a greater price than in a competitive market. This leads to inefficiency, deadweight losses, and over time complacency on the part of the monopolist. Most mainstream economists fail to extend the theory of monopoly to the market for money. Government monopolization of the issuance of money fails to produce the sound money the market demands. The poor-quality money that is issued continues to lose its value, and the American people must work longer and harder for money that continues to decline in purchasing power. Meanwhile, government agencies and the banking system benefit from the first use of that money, being able to spend it and lend it before it circulates through the rest of the economy and before prices increase in reaction to this inflation.

The only way to counteract this problem is to break the government monopoly on the issuance of money. The Constitution does not grant the federal government this monopoly, a fact which was not in dispute for nearly a century after this country's founding. The federal government has become complacent, forgetting the need for sound money, and the only way to break this complacency is to break the monopoly. HR 1098, the Free Competition in Currency Act, intends to do just that...

...I hope that this hearing will start a vigorous discussion of currency competition, sound money, and how to return to a sound dollar. HR 1098 is certainly not a panacea, as there remain significant structural problems in our banking and monetary system that still need to be addressed. But allowing for competing currencies will enable Americans to choose a currency that suits their needs, rather than the needs of the government. The prospect of Americans turning away from the dollar towards alternate currencies will provide the necessary impetus to the US government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system.

READ THE FULL ARTICLE HERE...

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