The idea of a gold standard is nothing new, of course. However, the ability of the marketplace to offer a private, hard money alternative to the dollar, the euro, the pound, the yuan, and the yen is hamstrung by federal law here in the U.S. and by similar laws in other countries.
Efforts by the 50 states to create their own currencies must inevitably fail because of the combination of Constitutional limits (Art 1 Sec 10) which restrict states to only using gold and silver coins as money, combined with federal law (Title 18 Sec 486 and Title 31 Sec 5103) which prohibits any entity from issuing gold or silver coins other than the federal government.
Even private efforts to issue gold and silver coins have led to convictions of "counterfeiting" charges. See, e.g., the case of Bernard von Nothaus.
Federal law does permit the existence of alternative fiat currencies, which is what enables currencies like the Ithaca Hours to exist unhampered.
Ultimately, the world desperately needs a currency that is level and steady, and of course neither central bankers nor the politicians nor the Keynesian or Friedmanite economists have any interest in providing such a currency. Fiat currencies, even privately issued ones, suffer from the same defect.
As we continue to head for the inevitable monetary system crash that must come at some point, the need for a level-stead money supply becomes even greater. It needs to be in place and functioning before the crash comes, not afterward. Since we have no way of knowing whether we have many years or decades or just a few months before the crash occurs, we must take action sooner rather than later ... as soon as possible, in fact.
The only alternative I can see is a gold-backed or silver-backed currency that doesn't actually issue coins. The most obvious objection to such a system, of course, is that there is no way to know for sure that an authority that issued such a currency wouldn't inflate it later on. The closest thing we have to any protection in this regard is that (1) there would be a method for redemption in the precious metal backing the currency, and (2) competing currencies will have more incentive not to inflate, or at least Austrian theory tells us this is so. I believe it is likely true, but we must recognize that it is not a certainty.
Having said that, I think we should give serious consideration to issuing a currency as a community that is backed by precious metals. Such a currency needs to have the following characteristics:
- The supply of the currency must be great enough to handle a global economy. While Austrian economics teaches us that the actual quantity of money doesn't really matter, the reality is that most people do care about there being "enough" currency. Therefore, I suggest that the pool of currency needs to number in the trillions of units.
- The only way I can see to offer currency in those kinds of numbers is to make something like 10,000 units of currency equal to an ounce of gold or perhaps an ounce of silver.
- Any for-profit issuing authority will always be suspected and doubted by the public. Therefore, such an organization needs to be not-for-profit. Of course, it won't be possible to get tax exempt status for such a venture, but it is certainly possible to register as a non-profit without gaining tax exempt status.
- Such currency cannot be a "privacy" vehicle. There are too many regulations in place to prevent such a thing from happening. All transactions using such a currency would have to be considered public transactions, in the sense that the Feds could at any time demand access to the records. Such a currency would undoubtedly also fall under SEC purview, meaning that privacy would be virtually non-existent. However, bitcoins provide an example of a currency where all transactions are recorded, so this is not necessarily insurmountable. "Privacy" currencies tend to attract the worst elements in society, in the form of organized crime, drug smugglers, money launderers, etc. Thus, all of the regulations related to such activities would also have to be honored as well.
- There must be a clearinghouse function, particularly for electronic money, which means that the non-profit issuer must also provide clearinghouse capabilities.
- Such a currency must be redeemable in some way for the precious metal(s) backing that currency.
- Such a currency must NOT be called a "dollar". This is a word that we can expect the U.S. government to defend to the death. I propose that we call this new currency the "paulie", in honor of Ron Paul.
The above list is by no means intended to be complete. It is merely a starting point for discussion.
The big advantage to establishing a non-profit currency-issuing organization is that it would be easier to get donations for such a venture rather than to try to raise capital for a for-profit venture.
The RP Revolution community has a long history of being able to organize itself and raise funding to support pro-liberty campaigns. I think that a pro-liberty campaign devoted to creating and supporting a hard-money-based currency on a non-profit basis could fit into this organizational model very well.
I'm posting this idea here in order to get reaction and further discussion, and to see if we can achieve some kind of consensus on moving forward with creating a non-profit organization for the purpose of issuing a hard currency.
Your comments would be appreciated.