Comment And Critique Of Congressman Ron Paul's Statement On
Competing Currencies
By Thomas H. Greco, Jr. (February
18, 2008)
My recent
message, which included the text of Congressman Ron Paul�s Statement
on Competing Currencies, drew a flurry of responses, some positive
and some negative. That�s fine because now I know I�ve got people�s
attention. Now I would like to explain why I think his message is so
important and why I decided to circulate it.
I intended from
the start to write a detailed critique of Congressman Paul�s
monetary agenda. I�ll include at least a portion of that critique
toward the end of this message. I will outline what I agree with and
what I disagree with, adding some points about implementation
strategies that I think have better chances of success than the
political approach which Congressman Paul and other monetary
reformers find it difficult to see beyond.
The truth of
Lord Acton�s warning that �power corrupts� becomes more evident
every day, so anything that enables the ever-increasing
concentration of power must be exposed and disabled. Although it is
not widely recognized, the monopolistic control of the money system
is primary among these.
So my reasons
are these:
1)
Ron Paul's message has made the money issue, for the first time in
decades, part of the mainstream
political dialog. His candidacy for the
office of president, and his
demonstrated ability to raise significant
amounts of money from a grassroots
constituency have attracted some
mainstream media attention, enabling
his statements on money to get some major exposure.
2)
Congressman Paul�s statement explicitly exposes the fact that we
have �a government-instituted banking cartel that monopolizes the
issuance of currency,� and makes the case that competition in
currencies is necessary to restoring democracy in America.
3)
His statement calls for �eliminating legal tender laws.� People need
to understand that legal tender laws play an essential role in
empowering and enriching central governments and banking elites at
the expense of the people and democratic governance. Legal tender
laws amount to, quite simply, a license to steal. They enable the
federal government to spend virtually any amount of money for wars
and favors to crony corporations without regard to its limited tax
revenues.
Chronic
deficit-spending creates debt that will never be repaid. It takes
value out of the economy by diluting the money supply with legalized
counterfeit. Eliminating legal tender is the single most important
step in reining in abusive central government and restoring the
balance of power.
Do I believe
that repeal of legal tender is a likely prospect? Under the present
circumstances I put the probability at nil, as I do the chances of
getting any kind of political solution to the money problem. But we
must look ahead to a time when it will be possible to establish
truly democratic government in which people hold power at the local
level and the upward assignment of responsibilities is only
provisional and temporary.
Just as the
separation of church and state was a huge step forward, which was
enshrined in the United States Constitution, and is generally
accepted as a fundamental tenet of democracy, so too the separation
of money and state will need to be explicitly enshrined in a new or
amended constitution.
4)
He correctly states that, �In the absence of legal tender laws,
Gresham's Law no longer holds.� Under legal tender laws, which force
acceptance of �bad money,� �bad money� drives �good money� out of
circulation. In the absence of legal tender laws, the bad money will
be rejected or discounted in the marketplace leaving in circulation
only �good money,� money that people trust.
5)
The Paul message includes some current and historical anecdotes that
provide additional insights into the dimensions of the money
problem. Specifically, he refers to various government actions that
were designed to eliminate free exchange by shutting down competing
exchange media.
Anyone who
seeks to establish community currencies or other alternative
exchange processes, needs to be cognizant of these potential
hazards.
Now, for my
critique:
Anyone who has
been following my work knows that I have repeatedly made clear my
opposition to using gold as money. While gold (or silver) might
serve as an objective measure of value, there is no need to revert
to gold as a payment medium. But even in the role of value measure,
gold has serious shortcomings, not the least of which is the fact
that the market for gold is manipulated by the large holders of
gold. I made these points in my 2007 Malaysia presentation
http://video.google.com/googleplayer.swf?docId=1399011433067824706&hl=en.
The traditional
functions which money is supposed to serve must be segregated. For
my brief recent statement on this see,
http://beyondmoney.wordpress.com/new-chapters/fundamentals-of-alternative-currencies-and-value-measurement/.
The exchange of
real value, which money is supposed to facilitate, has evolved
beyond money. This is the fact that the �gold bugs,� and almost
everyone else, fail to recognize. As I�ve described in my
presentation on
The Evolution
and Transformation of Money (http://www.reinventingmoney.com/slides.html),
the highest stage of evolution in the exchange process is direct
credit clearing. This is a process by which accounts payable
(resulting from purchases) are offset by accounts receivable
(resulting from sales) within a circle of associated buyers and
sellers.
This approach
has the added advantages of bypassing all the sales tax issues
associated with using commodities, including gold, as exchange
media.
So, in brief,
all kinds of �money� are obsolete. All that is required now is a
system that provides for the democratic allocation and management of
credit. If we insist on using the term money, we must say that money
is nothing more than credit.
The local,
democratic management of credit and the establishment of networks
that connect those local credit clearing entities into regional and
global trading unions provides the means for establishing true
economic and political democracy and a dignified life for all.