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Competition in Currency

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Monopoly control of money is at the root of all kinds of evil.

As the Euro faces collapse, and the dollar’s value becomes increasingly unsteady, central bankers the world over worry about what to do next.

But it doesn’t have to be this way.

Last Thursday I mentioned monetary experimentation, including Ron Paul’s support for F.A. Hayek’s idea of competing currencies. In my Townhall column this weekend, I noted that Rep. Paul has done more than promote the idea “that government policy should allow all currencies to float, favoring none. . . . Last year he introduced the Free Competition in Currency Act, as Hayekian a piece of legislation as you could imagine.”Monopoly Money

Paul’s proposal is not merely a sign of the times, it is a sign of intellectual seriousness — in a politician, no less. In the early 1980s he had introduced a measure to return the United States to the gold standard. But now he is willing to let “the market decide” which monies should circulate.

We may know a lot more about money than we used to, but one of the things we’ve learned is that no one knows for sure how to manage an entire monetary system, the whole kit and kaboodle.

So, just as we don’t need a grocery czar or an “industrial policy” to micromanage either technological production or R&D, centrally managed money is just too hard for any one set of persons . . . to manage.

Competition in money and banking (sans today’s progressivist doctrine of “too big to fail”) would not only work, it would keep politicians from the extremity of irresponsibility.

For yes, today’s politicians rely upon the Federal Reserve. They need to keep the “printing presses” running to supply that special, hidden tax that funds their deficits: inflation.

This is Common Sense. I’m Paul Jacob.

3 replies on “Competition in Currency”

A free market in the means of exchange is, given today’s problems, inevitable. I hope it develops sooner than later as its being in place can act to lessen some of the issues we soon must start to face.
As for knowing more about the management of the monetary systems that ever before, I am not sure. In history no fiat currency has never lasted. Therefore Paul, what have we actually learned?

Jane Jacobs believed that stability in Europe was due largely to the fact that it was full of large countries with their own currencies, so that when one currency declined exports would go up, imports down, and the economy would quickly recover. She was right.

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