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Ron Paul: Statement Introducing Free Competition In Currency Act

Statement Introducing the Free Competition in Currency Act
Ron Paul | December 9, 2009

Madame Speaker, I rise to introduce the Free Competition in Currency Act of 2009. Currency, or money, is what allows civilization to flourish. In the absence of money, barter is the name of the game; if the farmer needs shoes, he must trade his eggs and milk to the cobbler and hope that the cobbler needs eggs and milk. Money makes the transaction process far easier. Rather than having to search for someone with reciprocal wants, the farmer can exchange his milk and eggs for an agreed-upon medium of exchange with which he can then purchase shoes.

This medium of exchange should satisfy certain properties: it should be durable, that is to say, it does not wear out easily; it should be portable, that is, easily carried; it should be divisible into units usable for every-day transactions; it should be recognizable and uniform, so that one unit of money has the same properties as every other unit; it should be scarce, in the economic sense, so that the extant supply does not satisfy the wants of everyone demanding it; it should be stable, so that the value of its purchasing power does not fluctuate wildly; and it should be reproducible, so that enough units of money can be created to satisfy the needs of exchange.

Over millennia of human history, gold and silver have been the two metals that have most often satisfied these conditions, survived the market process, and gained the trust of billions of people. Gold and silver are difficult to counterfeit, a property which ensures they will always be accepted in commerce. It is precisely for this reason that gold and silver are anathema to governments. A supply of gold and silver that is limited in supply by nature cannot be inflated, and thus serves as a check on the growth of government. Without the ability to inflate the currency, governments find themselves constrained in their actions, unable to carry on wars of aggression or to appease their overtaxed citizens with bread and circuses.

At this country's founding, there was no government controlled national currency. While the Constitution established the Congressional power of minting coins, it was not until 1792 that the US Mint was formally established. In the meantime, Americans made do with foreign silver and gold coins. Even after the Mint's operations got underway, foreign coins continued to circulate within the United States, and did so for several decades.

On the desk in my office I have a sign that says: “Don't steal – the government hates competition.” Indeed, any power a government arrogates to itself, it is loathe to give back to the people. Just as we have gone from a constitutionally-instituted national defense consisting of a limited army and navy bolstered by militias and letters of marque and reprisal, we have moved from a system of competing currencies to a government-instituted banking cartel that monopolizes the issuance of currency. In order to reintroduce a system of competing currencies, there are three steps that must be taken to produce a legal climate favorable to competition.

The first step consists of eliminating legal tender laws. Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.

Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency. Gresham's Law describes this phenomenon, which can be summed up in one phrase: bad money drives out good money. An emperor, a king, or a dictator might mint coins with half an ounce of gold and force merchants, under pain of death, to accept them as though they contained one ounce of gold. Each ounce of the king's gold could now be minted into two coins instead of one, so the king now had twice as much “money” to spend on building castles and raising armies. As these legally overvalued coins circulated, the coins containing the full ounce of gold would be pulled out of circulation and hoarded. We saw this same phenomenon happen in the mid-1960s when the US government began to mint subsidiary coinage out of copper and nickel rather than silver. The copper and nickel coins were legally overvalued, the silver coins undervalued in relation, and silver coins vanished from circulation.

These actions also give rise to the most pernicious effects of inflation. Most of the merchants and peasants who received this devalued currency felt the full effects of inflation, the rise in prices and the lowered standard of living, before they received any of the new currency. By the time they received the new currency, prices had long since doubled, and the new currency they received would give them no benefit.

In the absence of legal tender laws, Gresham's Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society. Merchants would have been free to reject the king's coin and accept only coins containing full metal weight.

The second step to reestablishing competing currencies is to eliminate laws that prohibit the operation of private mints. One private enterprise which attempted to popularize the use of precious metal coins was Liberty Services, the creators of the Liberty Dollar. Evidently the government felt threatened, as Liberty Dollars had all their precious metal coins seized by the FBI and Secret Service in November of 2007. Of course, not all of these coins were owned by Liberty Services, as many were held in trust as backing for silver and gold certificates which Liberty Services issued. None of this matters, of course, to the government, which hates competition. The responsibility to protect contracts is of no interest to the government.

The sections of US Code which Liberty Services is accused of violating are erroneously considered to be anti-counterfeiting statutes, when in fact their purpose was to shut down private mints that had been operating in California. California was awash in gold in the aftermath of the 1849 gold rush, yet had no US Mint to mint coinage. There was not enough foreign coinage circulating in California either, so private mints stepped into the breech to provide their own coins. As was to become the case in other industries during the Progressive era, the private mints were eventually accused of circulating debased (substandard) coinage, and with the supposed aim of providing government-sanctioned regulation and a government guarantee of purity, the 1864 Coinage Act was passed, which banned private mints from producing their own coins for circulation as currency.

The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes. Short-term capital gains rates are at income tax levels, up to 35 percent, while long-term capital gains taxes are assessed at the collectibles rate of 28 percent. Furthermore, these taxes actually tax monetary debasement. As the dollar weakens, the nominal dollar value of gold increases. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases, the federal government considers this an increase in wealth, and taxes accordingly. Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals.

Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4% per year. Sales taxes in many states can take away 8% or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver.

In conclusion, Madame Speaker, allowing for competing currencies will allow market participants to choose a currency that suits their needs, rather than the needs of the government. The prospect of American citizens 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. I urge my colleagues to consider the redevelopment of a system of competing currencies and cosponsor the Free Competition in Currency Act.



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WHY isn't this on the FRONT PAGE?

This should be the FIRST THING that WE ALL SEE!

Most important bill of our time!!!

To think, we have these mugs in Congress not even reading the bills which are three hundred pages long. Some of which include more taxes and more laws to crush freedom.

And along comes Ron Paul with an ingeniously augmented, two page bill that is so simple ANY man on the street could follow it!!!

The "Freedom of Currency Act of 2009" should be the tip of everyone's tongue after the audit. Spread the word everywhere!!!!!

Introduce freedom of currency and FREE the market!!

At that point people can decide to Abolish the whole Fed......

You are right.

If it wasn't so cold I'd print up and wear a shirt with Freedom of Currency Act on it.

Vote in the poll - take 5 seconds

Vote in the Poll: "What People Think About The Free Competition in Currency Act of 2009" by going here:

http://www.washingtonwatch.com/bills/widget/200521993.html

and add the poll widget to your site.....I'm adding it to mine.

Get the word out about this if you want to show the Fed the door!

In 2007 there were ZERO co-sponsors Ron Paul's bill with the same name and it never came to vote:

http://www.washingtonwatch.com/bills/show/110_HR_4683.html

Yet in that poll, 69% of the people wanted it.

Now, after even more destruction of the U.S. Dollar, over 80% of the People want Free Competition in Currency.

Call your congressmen, especially the ones that voted for H.R. 1207 and get them behind this.

Here's what Edwin Vieira had to say about the first bill in 2007 (excerpt):

"This is the most prudent, if not the only realistic, route for reform, because no viable plan exists for a direct, “top-down” replacement of Federal Reserve Notes and base-metallic coinage with a currency of silver and gold (or any other currency, for that matter). The free market sets daily prices for various silver and gold coins in Federal Reserve Notes. But as soon as silver and gold coins became common media of exchange, in direct competition with Federal Reserve Notes for that purpose, their values will increase, and the values of Federal Reserve Notes will decrease, to some unpredictable degrees. The only way to determine how those relative values should change is to allow the free market to change them, on a day-to-day and even hour-to-hour basis, without political interference of any kind."

More here: http://www.newswithviews.com/Vieira/edwin73.htm

Peter Brimelow from Marketwatch had this to say about it today:

"Everyone has heard of Gresham's law, but practically no one understands it. Queen Elizabeth I's financial adviser was talking about a situation where two monies exchange at a rate fixed by law – for example, if both are legal tender and must be accepted in discharge of debt. Under these circumstances, people will try to pass on the "bad" money – the money whose value is suspect, either because of debasement or overissue – and hoard the money that's "good." But if the rate of exchange between the monies is free to fluctuate, it is the debauched currency that will depreciate and be driven out."

http://www.lewrockwell.com/orig/brimelow3.html

Audit the Fed
Allow Competing Currencies
End the Fed
Force Government to Live Within Its Means

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Just voted FOR it...

Thanks for the poll.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Bumpity, Bump, BUMP!

WOW!

THIS SHOULD BE THE STORY OF THE YEAR!!!

AN ABSOLUTELY INGENIOUS MOVE by Dr. Paul.

Let's see how far this bill gets.

It will scare the crap out of the Federal Reserve.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

I think the count for 2009 (111th Congress) ...

is now up to 57 HR Bills, including HR 4248, that are now currently sponsored by Dr. Ron Paul. The list can be found here :

http://www.govtrack.us/congress/billsearch.xpd?sponsor=400311

(HR 4248 is not yet on the list)

I think it would be interesting to have a vote on our TOP TEN .... and then go viral with those!

My Rep from Pa has a whopping 5 Bills for 2009 - all involve more government intervention in our lives and more taxes ... check out your own Rep, and compare with Dr. Paul. He is my President!

Please take the time to watch and pass on: http://www.youtube.com/watch?v=BXf8aXdZdTM

Please enjoy, "RON PAUL And All That Jazz"
http://www.dailypaul.com/176606/ron-paul-and-all-that-jazz
Central Pa, Lycoming County, Williamsport

bump

bump

bump the competing currency act of Ron Paul.

Keeping this up.

bump the competing currency idea of Ron Paul.

Important to control the growth of government.
More important than HR 1207.
Most important to free us from slavery.
grant

I am going to call and ask my congressman.

Has anyone started a list of Congressmen that support this idea. Perhaps it could be done in the same way as was done to get HR 1207 the attention that it needed.
grant

An extremely important

An extremely important bill.
This would be a gigantic step towards liberty.

I believe it is even more

I believe it is even more important than HR 1207. If competing currencies were allowed there would be not need to audit the Fed, since it would be obsolete.
grant

yes

indeed.

Competing currencies.

Ron Paul is taking the lead on this next issue. It is as important if not more important than Audit the Fed. What can I do to help.
grant

Competing currencies.

Ron Paul is taking the lead on this next issue. It is as important if not more important than Audit the Fed. What can I do to help.
grant

Comprehensive Financial Reform Bill

Does anyone know if Ron Paul added this to the Comprehensive Financial Reform Bill? There is such a huge power grab in there; I thought we could get in a few things that might actually help.

Competing Currencies - Underground Markets

Once again, Ron Paul speaks the truth and tells it like it is! Excellent article. Unfortunately I think talking about this to the government is like talking to a brick wall.
Personally I think it is going to have to come down to us, We The People. We need to create a system of competing currencies on our own. There are already a number of Local Currencies in motion in various parts of the country, and although they are pegged to the federal reserve note and are not perfect in themselves, they do promote a sense of localism and support local economies as opposed to a federal based national economy.
Then there are also plenty of silver and gold bullion coins out there that people can use as bartering coins. And if the government has a problem with this, like it did with the liberty dollars, well there are always US issues 90% silver junk coins that we can use to trade with based on their silver content as opposed to their face values.
So I see this economy being something that again has to grow from the grass roots level up, an underground or ground floor level of Patriotic Americans denouncing the "federal" reserve note standard and start trading in local currencies or silver based coins.
Thanks for the beautiful words Dr. Paul.
http://enemyartistkristofer.blogspot.com

bump

good posts deserve bumps.
___________________
Restore Liberty - Oath Keeper Money Bomb Dec 4th
http://www.dailypaul.com/node/117790
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sometimes LL can suck & sometimes LL rocks!
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Love won! Deliverance from Tyranny is on the way! Col. 2:13-15

Bill Number for Competition in Currency

The bill is HR 4683 for those who wish to start contacting their own representatives, asking them to cosponsor Dr. Paul's bill.

Go Team!

Phil. 4:13

my congressman's assistant said 4248

anyone got a link?

A Reply on Mildot & The Debate on Money

As with most arguments that tilt to the side of a verbal fight, I think we might be having a problem of people talking over each other. This is because we mean different things and/or we think people mean things other then what they are actually trying to say.

Now I believe that Mildot's conclusion is correct. That there never should be a national standard of what money should be, even if it is gold and or silver. However, I think the points which Mildot has used to defend himself aren't corrent, which I think caused the debate. Now some of the points he makes are confusing because I am not sure if he is talking about gold/silver as government fiat or just gold/silver as "natural money". Mankind has chosen gold and silver over time to be the most reliable because of the properties that they have, as Dr. Paul has stated clearly.

Mildot has a problem with this for a few reasons:

"It wiped societies out. Use some common sense man, or start reading some real history. Throughout history, gold and silver has been a scam of the bankers or money brokers."

"Explain to me how it would work. Explain to me where and which societies prospered with gold and silver money? Explain to me where all these precious metals would come from?"

How people using gold/silver as money would "wipe them out" I am not sure of, he may be talking about them as fiat. Countries have been "wiped out" because they have debased their gold standard or whatever standard. This is not inherent in gold/silver. THIS IS INHERENT IN GOVERNMENT. I believe that Mildot would agree with the later, but the former he seems to have a problem with:

"Explain to me where and which societies prospered with gold and silver money? . . . Explain to me where all these precious metals would come from?"
Basically all nations who have used gold/silver as money . . America. Mining.

Now Mildot brings up some sound points about the violence and war behind commodities. But he is missing the point. It is never the commodities themselves that cause the violence, obviously, it is the ones who use coercion to obtain it. The fact that nations have been at war with each other because of gold, oil, or whatever doesn't mean that these commodities shouldn't be used as money.

"If money is backed by gold, the quest to mine more will never end and mankind will SUFFER. "
I don't understand this. How about if money was gold, like physical gold. How would we suffer? If money was backed by gold, in the case of the paper bill or receipt, then it should be the same.

"Natural resource backed moneys are not the answer. It wont work any longer, UNLESS you want to start some population reduction"
Every physical item in the world is a natural resource. Anything that has been, is, or will be used as money . . . is a natural resource. They are of course, scarce, and can run out (This of course man not apply to everything in the universe if biological systems can be kept steady).
I have not idea what causality with natural resources as money will result in population reduction.

We should prefer gold backed money via fiat over nothing backed money via fiat. And we should prefer free choice in money over anything backed money via fiat. This is where there seems to be confusion on this thread and with Ron Paul in general. He has at times pushed for the gold standard because it is better for the economy than what we have now. He also has pointed out the negative effects of the gold standard. He is using Friedrich von Hayek's plan to allow for competing currencies. (specie anarchism, or just the way things are when government leaves it alone).
This bill is not for backing the dollar with gold silver, which Mildot seems to be obsessively attacking in his posts. This bill IS for free competition of specie in the marketplace. THIS IS EXACTLY WHAT YOU WANT MILDOT!! And I believe that it never was confusing in the first place: Free Competition In Currency Act.

Good Post !

I don't know if you're talking directly to mildot, or everyone reading, but I will give my opinion on this question you wrote:

{snip} ; "Explain to me where and which societies prospered with gold and silver money? . . . Explain to me where all these precious metals would come from?"

The early USA prospered using Gold and Silver money.

Here is a condensed statement written by Pat Buchanon. {Former Presidential hopeful ???}

{ quote } From 1865 to 1913 U.S. growth averaged 4% per year. The U.S. began the era producing 1/2 of what the British Empire produced, but ended the era producing twice as much as the British.
With no income tax and using Gold and Silver as money.
Tariffs produced 50-90% of federal revenue.{end quote }

{ next on precious metals } The earth is still producing about 2,400 metric tonnes of Gold per year.
There are many Gold claims throughout the world that contain Gold, however the cost of mining at previous prices and tonnes of regulations make these claims currently un-productive.

If the price of Gold goes way,way, up and mining restrictions are lifted, we may see much more annual production worldwide.

One more thing. Gold/Silver did not cause any wars. Warmongers that gain political power, and enough money to arm a military force cause wars.

The Vietnam war ended only when Congress voted to stop spending { fiat dollars } to support the war.

beesting

Ron Paul...

2012!!!!!!!!

"There are only two ways to conquer and enslave a nation. One is by sword, the other is by debt." - John Adams

Ron Paul's Monetary Message Is Consistent

From his 1985 paper given at the Ludwig von Mises Institute conference, later turned into the book; "The Gold Standard."

"Most people understand very little about economics or monetary theory. When they see supposed experts in disagreement, the status quo wins by default, because nobody with the power to change it has the courage of conviction. The majority of votes see the debate among experts and hesitate to support any leaders with comprehensive reform schemes. This is why all efforts to rebuild a gold monetary system have met with frustration and stalemate in the past.

The demonstrated popularity in the United States of Krugerrand coins, and all the imitators of the Krugerrand (Maple Leaf, Panda, Onza, and the U.S. Gold medallions) have shown us that it is possible to adopt another tactic, that of getting gold coins into circulation prior to setting a new par value for the dollar. Indeed, the only affirmative recommendation of the Gold Commission was to create a new U.S. gold coinage in units of weight."

As you know, Ron Paul was instrumental via the Gold Commission in getting the American Gold Eagles into circulation in 1986. And as you also know, our government stamped a $50 price on it which is not "coinage in units of weight" although there is a weight listed on the coins.

Ron Paul goes on to say...

"I would love to see a purely private, free market monetary system with any honest manufacturer able to produce coins, as Americans saw in California from 1849 to 1864. There must certainly be no restrictions on the private production of coins, but I believe that getting the U.S. Mint further into the act, producing a gold coinage with some of the mystique of the government, will be useful in further political stages of monetary reform."

So Ron got his gold coins and now is the time for "competing currencies" as Mises wanted so long ago.

Paul concludes;

Honest money, after all, is a political objective; it is fitting that people should demand honest money from their government, as wll as an economic policy that permits individuals to compete honestly. An official coinage that reflects honest bullion weights is a powerful symbol of the gold standard we support."

So one thing that needs to be added to the bill is the removal of any "price" set forth by the government.

I still would like to see someone take out of the country 200 $50 gold coins valued at $10,000 with a street value of $222,400. And in case you're wondering if it would work, I wrote to U.S. Customs in the past and they said they would value them at the higher value. But to buck the system, maybe on my next trip out of the country I'll take 11 coins with me just to mess with them. I'd even declare the value at $50 each on the customs form just so they know I wasn't trying to hide anything.

The most they could confiscate is part of one coin, lol. Would make for a great law suit nonetheless. Then the government might be forced to stop this fixed price nonsense and just go by "honest bullion weights" as Ron Paul espouses.

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!

Thanks for your post.

I noticed Ron Paul mentioned the "Liberty Dollar" company.
Here is their latest up-date:

http://www.libertydollar.org/ld/pr_nl/11_16_2009.htm

Ron Paul's proposal, if passed or co-sponsored by enough Congress people, would give the Liberty Dollar company some strong footing when their case comes up for trial.

Ron Paul Is My President !

beesting

beesting,

the liberty dollar folks had it wrong from the beginning by putting a face amount on the coins. They charge a premium over spot but this dollar amount is irrelevant just like the dollar amounts printed on American Eagle's.

I've criticized them from the beginning for this. Whether or not what they do is legal or illegal is a different conversation.

I do like the guy in Nevada who paid his employees in old silver coins and won the case against the IRS though! He paid them in the face amount of the coins, so got away with paying less taxes. Brilliant! Every employer should pay their employees in $50 gold pieces!

Blog: http://fedupbook.com/blog

Free White Paper:How Gold Investments Can Secure Your Retirement Years - download at http://fedupbook.com/whitepaper

Author of Buy Gold and Silver Safely
Next book: Illusions of Wealth - due out soon
Also writing book We the Serfs!