Competing Currencies?

[davagd0284]

I like this idea that Ron Paul has brought up. But exactly how would this process work? Would the Treasury Dept. issue gold and silver certificates as they did many years ago? Would the bank hold your gold and/or silver for a fee and issue it to you on demand? A detailed explanation would be helpful. Thanks!!

 

[JosephTheLibertarian]

I like this idea that Ron Paul has brought up. But exactly how would this process work? Would the Treasury Dept. issue gold and silver certificates as they did many years ago? Would the bank hold your gold and/or silver for a fee and issue it to you on demand? A detailed explanation would be helpful. Thanks!!

Actually, I am the first to bring it up. Prove me wrong. Competing currency would allow free market currency, it would also allow foreign currency to be used in the US. Very good imo. What you're describing is the gold/silver standard, that's not competing currencies. But I do recall one time RP bringing up competing currencies on tv. But that and the gold standard are two different topics.

 

[Dr.3D]

Statement Introducing the Free Competition in Currency Act

Here is the bill as introduced to Congress.

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.

It appears to be promoting competing currencies like the 'Liberty Dollar'.
http://www.libertydollar.org/

 

[Zippyjuan]

If people are allowed to make their own money then you would see a flood of currency into the market and spiraling inflation.

 

[DrCap]

If people are allowed to make their own money then you would see a flood of currency into the market and spiraling inflation.

no, because if you started printing your own money, no one else would want it unless you could convince others it has some value or will have some value. What would happen would probably be more like reputable institutions stating they are issuing a currency that is backed by something, a giving a guarantee about it's backing, then it would be worth something. More like gift certificates, where you know it has some value to someone somewhere. Now if you hate coffee a $25 best buy gift card might be worth more to you than a $25 starbucks card, but you probably know someone who would want the starbucks card, so a $25 best buy gift card is probably not worth more than a $100 starbucks card, cause you could 'trade' it to someone else. Interestingly the gift cards for sharper image recently lost a lot of value because they said they were not going to honor them (essentially defaulting), but then they changed their mind again. Suddenly those cards were worth a whole lot less.
With competing currencies you could have companies that specialize in this, or companies that do other things but give an explicit guarantee. Ultimately I think most competition would lead to asset backed/commodity backed currency. But i suppose McDonald's could issue their own Mcdollars, which people could use to buy other things, but would also be redeemable at McDonalds for 1 Big Mac or whatever. It would be very interesting - but likely you'd see a market for gold or PM backed currency probably push the other currencies out.

A bit of history: paper money really started when people deposited gold they didn't want to have to worry about protecting with jewelers who were really good at protecting it. The gold warehouse would then give a deposit reciept- ie you dropped off 2 ounces of gold with mcdonald's warehouse, here's your paper to prove it, whenever you want it back, come and get it, and we will charge you 1% a year to hold it. So people could take their deposit receipt, hold on to it, or use it to go buy something else. So then they give their deposit receipt to someone for a horse, that person buys something else, etc, and the receipt is passed around like money. (It was as good as gold). After years it would slowly loose value (due to storage costs), but people would be able to figure it's value easily. Some warehouses found they could 'make money' by printing more receipts than gold, but that risked their reputation and company outright because if people figured it out then their would be a run on the company's assets.

 

[Gideon]

The Liberty Dollar IS a competing currency.

 

[JosephTheLibertarian]

The Liberty Dollar IS a competing currency.

was lol..supposedly

 

[AceNZ]

I like this idea that Ron Paul has brought up. But exactly how would this process work? Would the Treasury Dept. issue gold and silver certificates as they did many years ago? Would the bank hold your gold and/or silver for a fee and issue it to you on demand? A detailed explanation would be helpful. Thanks!!

One way to think of competing currencies is to imagine that all existing foreign currencies were acceptable in trade in the US. A business could accept the Euro, the Swiss Franc, the Yen, the Peso, or whatever currency it wanted to. Or a private entity could introduce a currency of its own, perhaps backed by gold or silver, and then convince businesses and consumers to use it.

The idea is that the good currencies would drive out the bad ones. Who in their right mind would accept money from Zimbabwe, for example, with its gazillion percent inflation? And over the long term, who in their right mind would accept the ever-inflating dollar compared to gold or silver?

 

[Dr.3D]

was lol..supposedly

Is... they are still in business.

 

[Acala]

Brilliant

I think the idea of introducing competing currencies is brilliant from a political perspective because it is so simple and non-threatening. You let people use whatever money the want. They can keep using FRNs if they want. No need to force a gold standard.

But given a choice, who would use an inflationary currency when a non-inflationary currency was available? We ended up with a fiat currency through years of trickery, deceit and finally blatant force. The antidote is freedom and the honesty of the market.

I still think you would need to do something about fractional reserve banking and the Fed. And government employees would need to be able to choose the currency they are paid in, otherwise the government could force a bunch of FRNs into the market. The FRN would need to compete on a level playing field.

Rothbard said that in a truly free market, fractional reserve banking will be limited because banks will cash in the notes of other banks as soon as they get them (because thieves always recognize other thieves instantly) and so keep the unbacked notes from getting out of hand. Also, bank failures will make consumers wary of fractional reserve banks.

But I think fractional reserve banking is an outright fraud and we should just prohibit. I don't have any problem with a limited government prohibiting the use of force or fraud among people. But then I am not quite the anarchist Rothbard was.

 

[JosephTheLibertarian]

Is... they are still in business.

Weren't they not shut down? And it's illegal to openly compete with the USD

 

[Flirple]

The Liberty Dollar IS a competing currency.

Well sort of, but not really because it wasn't operating in a free market because it wasn't allowed to be called "money", there is currently taxes on silver and gold, and legal tender laws severely restricted it's use.

Competing currencies simply means a free market in money. Which is to say the elimination of the federal monopoly of money.

This is why people have a hard time imagining getting rid of any federal program or department. They think it's too "drastic, disruptive and/or unrealistic." But with all these things the way you phase them out is stop giving them advantages over private rivals and then let them go out of business if and when the private sector out competes them. Thats exactly how you have can have a smooth transition out of the post office, public schools, public roads, etc.

Money is is no different. Money is a product just like anything else. If you are in the business of making and selling widgets then you are simply buying money with your widgets.

Eliminate legal tender laws completely and remove all taxes whatsoever on gold and silver and fiat money would be smoothly yet swiftly eliminated simply by default.

 

[Dr.3D]

Weren't they not shut down? And it's illegal to openly compete with the USD

They were not shut down, they just had everything they owned stolen from them by the government. They are open again and still doing business.

If you check in Austin Texas, you will find most of the businesses still accept Liberty Dollars.

 

[JosephTheLibertarian]

They were not shut down, they just had everything they owned stolen from them by the government. They are open again and still doing business.

If you check in Austin Texas, you will find most of the businesses still accept Liberty Dollars.

uh, right. So what happened to all of their property? I searched online to see if any business accepts the Liberty Dollar, I'm still yet to find any. Perhaps they don't advertise that? lol.

 

[davagd0284]

One way to think of competing currencies is to imagine that all existing foreign currencies were acceptable in trade in the US. A business could accept the Euro, the Swiss Franc, the Yen, the Peso, or whatever currency it wanted to. Or a private entity could introduce a currency of its own, perhaps backed by gold or silver, and then convince businesses and consumers to use it.

The idea is that the good currencies would drive out the bad ones. Who in their right mind would accept money from Zimbabwe, for example, with its gazillion percent inflation? And over the long term, who in their right mind would accept the ever-inflating dollar compared to gold or silver?

Thank you for that explanation. That was very helpful!

 

[Dr.3D]

uh, right. So what happened to all of their property? I searched online to see if any business accepts the Liberty Dollar, I'm still yet to find any. Perhaps they don't advertise that? lol.

The last I heard was the FBI was going to auction it off. And yes, you won't see much about businesses accepting the Liberty Dollar anymore. They have tended to go underground with their activities. Now the way it is done is to pass them off as gift certificates. These 'gift certificates' are redeemable at a number of businesses around the area.

Notice the date on this Liberty Dollar? 2007 was when the raid took place.

 

[davagd0284]

Competing Currencies

How would United States Notes fit into this category. These are debt free notes that used to be issued by the Treasury Dept. Although, they can be subject to inflation, they would seem to be a better option. Also, I read that JFK re-introduced silver certificates into the market in the 60's. He issued an executive order (Executive Order 11110) that supposedly was never repealed. Could this be an option as well (silver standard)?

 

[JosephTheLibertarian]

The last I heard was the FBI was going to auction it off. And yes, you won't see much about businesses accepting the Liberty Dollar anymore. They have tended to go underground with their activities. Now the way it is done is to pass them off as gift certificates. These 'gift certificates' are redeemable at a number of businesses around the area.

hmm. How can the FBI auction off someone's property? That just doesn't make any sense.

 

[JosephTheLibertarian]

How would United States Notes fit into this category. These are debt free notes that used to be issued by the Treasury Dept. Although, they can be subject to inflation, they would seem to be a better option. Also, I read that JFK re-introduced silver certificates into the market in the 60's. He issued an executive order (Executive Order 11110) that supposedly was never repealed. Could this be an option as well (silver standard)?

They "fit" because the people trust the USD. It is valuable in our minds, that's what makes the monopoly work. And uhh...asides from the fact that we are forced to use only the USD as far as money is concerned.

 

[Dr.3D]

hmm. How can the FBI auction off someone's property? That just doesn't make any sense.

Exactly... but that is what they are doing.
Nobody was arrested and there has been no court trial.