History shows that, if individuals have the freedom to choose what to use
as money, they will likely opt for gold or silver.
Of course, modern politicians and their Keynesian enablers despise the gold
or silver standard. This is because linking a currency to a precious metal
limits the ability of central banks to finance the growth of the welfare-warfare
state via the inflation tax. This forces politicians to finance big government
much more with direct means of taxation.
Despite the hostility toward gold from modern politicians, gold played a role
in US monetary policy for sixty years after the creation of the Federal Reserve.
Then, in 1971, as concerns over the US government's increasing deficits led
many foreign governments to convert their holdings of US dollars to gold, President
Nixon closed the gold window, creating America's first purely fiat currency.
America's 46-year experiment in fiat currency has gone exactly as followers
of the Austrian school predicted: a continuing decline in the dollar's purchasing
power accompanied by a decline in the standard of living of middle- and working-class
Americans, a series of Federal Reserve-created booms followed by increasingly
severe busts, and an explosive growth in government spending. Federal Reserve
policies are also behind much of the increase in income inequality.
Since the 2008 Fed-created economic meltdown, more Americans have become aware
of the Federal Reserve's responsibility for America's economic problems. This
growing anti-Fed sentiment is one of the key factors behind the liberty movement's
growth and represents the most serious challenge to the Fed's legitimacy in
its history. This movement has made “Audit the Fed” into a major national issue
that is now closer than ever to being signed into law.
Audit the Fed is not the only focus of the growing anti-Fed movement. For
example, this Wednesday the Arizona Senate Finance and Rules Committees will
consider legislation (HB 2014) officially defining gold, silver, and other
precious metals as legal tender. The bill also exempts transactions in precious
metals from state capital gains taxes, thus ensuring that people are not punished
by the taxman for rejecting Federal Reserve notes in favor of gold or silver.
Since inflation increases the value of precious metals, these taxes give the
government one more way to profit from the Federal Reserve's currency debasement.
HB 2014 is a very important and timely piece of legislation. The Federal Reserve's
failure to reignite the economy with record-low interest rates since the last
crash is a sign that we may soon see the dollar's collapse. It is therefore
imperative that the law protect people's right to use alternatives to what
may soon be virtually worthless Federal Reserve notes.
Passage of HB 2014 would also send a message to Congress and the Trump administration
that the anti-Fed movement is growing in influence. Thus, passage of this bill
will not just strengthen movements in other states to pass similar legislation;
it will also help build support for the Audit the Fed bill and legislation
repealing federal legal tender laws.
This Wednesday I will be in Arizona to help rally support for HB 2014, speaking
on behalf of the bill before the Arizona Senate Finance Committee at 9:00 a.m.
I will also be speaking at a rally at noon at the Arizona state capitol. I
hope every supporter of sound money in the Phoenix area joins me to show their
support for ending the Fed's money monopoly.
