Paul Makes Case for Parallel Currency in the U.S.
Texas lawmaker says transparency of central bank is insufficient and Congress should get a "backbone." But Fed chairman counters that required audit could subject decisions to political influence.
Ultimately he would like to end the Fed, but the Texas Republican is making an impact within the GOP on the more short-term goals of curbing inflation and increasing transparency at the central bank.
WASHINGTON — Leaving no coin, metal, or commodity unturned, retiring Rep. Ron Paul made a final push on one of his signature issues on Thursday, seeking stronger ground for the U.S. to implement a parallel currency in lieu of the U.S. dollar.
"There is no reason why Americans should not be able to transact, save, and invest in the currency of their choosing," said Paul. "Unfortunately, decades of government restrictions and regulations have hampered and prevented the circulation of parallel currencies and destroyed the familiarity of American with any sort of money aside from the Federal Reserve notes or bank deposits denominated in U.S. dollars."
During a hearing of his monetary policy subcommittee, Paul said the solution was to "legalize monetary freedom and allow the circulation of parallel and competing currencies."
Paul didn't cite new digital currencies like Bitcoin, but instead pointed to Mexican workers who are allowed to set up accounts denominated in ounces of silver and Asian countries like Singapore where individuals can set up bank accounts denominated in gold and silver.
The Texas Republican has pressed Federal Reserve Chairman Ben Bernanke on the issue, arguing repeatedly that the U.S. should be able to return to the gold standard.
"It is horribly unjust to force the American people to do business with a dollar that is continuously debased by the Federal Reserve," said Paul, at the hearing.
The U.S. abandoned its commitment to the gold standard in 1971, breaking away from the Bretton Woods system, allowing for the dollar to become a fiat currency.
"The American people should be free to use the currency of their choice, whether gold, silver, or other currencies, with no legal restrictions or punitive taxation standing in the way," said Paul. "Restoring the monetary system envisioned by the Constitution is the only way to ensure the economic security of the American people."
Paul was supported by panelists appearing at the hearing.
"Some people today, including myself, think that the United States should return to the monetary principles of the country's first 182 years — in other words, a gold standard system," said Nathan Lewis, author of Gold: the Once and Future Money, adding that the idea remains "contentious," especially among those who believe that "a currency should be used as a tool for economic manipulation."
Others made the case why paper money, or fiat, monies are "unsound" money.
"The importance of a monetary system based on gold, therefore, is that it limits the range of discretion open to governments to manipulate the quantity and value of money," said Richard Ebeling, professor of economics at Northwood University. "The fundamental rule that the supply of money in the economy is anchored to the profitability of gold production as determined by market forces depoliticizes the monetary policy system to a significant degree."