Virginia House Sets The Stage For Bipartisan Monetary Reform

The elevation of reform of the broken monetary system to a bi-partisan economic issue may be the biggest positive development over the next two years. Last week, two-thirds of the Delegates in the Virginia House voted to establish a subcommittee to study the feasibility of a metallic-based monetary unit.

Charles Kadlec
2/11/2013 @ 12:48PM
Forbes

The elevation of reform of our broken monetary system to a bi-partisan economic issue may be the biggest positive development of the next two years. Just last week, two-thirds of the Delegates in the Virginia House voted to “establish a joint subcommittee to study the feasibility of a metallic-based monetary unit.” That follows the lead of the Republican Platform’s call for a commission to consider the feasibility of a metallic basis for the U.S. currency, and last year’s decision by Utah to recognize gold and silver coins minted by the U.S. government as legal tender.

Importantly, there is nothing inherently partisan about favoring a metallic-based monetary unit. George Bernard Shaw, co-founder of the London School of Economics and ardent socialist, in his 1928 book, The Intelligent Women’s Guide to Socialism and Capitalism wrote this about the gold standard :

“You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And, with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold.”

The reasons for the Virginia study are aimed directly at the growing distrust of the “intelligent gentlemen” powering the Federal Reserve’s unprecedented manipulation of the U.S. monetary system and made clear in the justification and purpose of the study including:

WHEREAS, the purpose of money is to provide a reliable measure of value to facilitate the voluntary exchange of goods and services to the economic benefit of society; and…

WHEREAS, our nation’s most fundamental principles – equal rights, rule of law, private property rights, individual liberty – still require a dependable dollar to be meaningfully preserved; and

WHEREAS, unprecedented monetary policy actions recently taken by the Federal Reserve through activist intervention in banking and credit markets, including massive purchases of federal debt, have raised concern over the risk of dollar debasement and prompted inquiries into whether a metallic basis for United States currency might engender a more stable money unit consistent with limited government; and…

WHEREAS, the availability of a trustworthy money unit to facilitate productive economic and financial activity has historically been a major factor in restoring confidence and civil order under conditions of duress, and since the United States Constitution (Article I, Section 10) decrees that “no state shall make anything but gold and silver coin a tender in payment of debts”; now, therefore, be it

RESOLVED by the House of Delegates, the Senate concurring, That a joint subcommittee be established to study the feasibility of a metallic-based monetary unit…

In conducting its study, the joint subcommittee shall receive testimony from such witnesses and take such other evidence as it deems appropriate and shall consider recommendations for legislation, with respect to the need, means, and schedule for establishing a metallic-based monetary unit to serve as a contingency currency for the Commonwealth.

It is past time for the Federal Reserve and the advocates of the paper dollar to be held to account for the complete and utter failure of their grand experiment in monetary manipulation made possible by severing the final link between the dollar and gold by President Richard Nixon in 1971. The best and the brightest economists, politicians and central bankers promised such flexibility would give them the power they needed to increase the general prosperity by mitigating the business cycle, keeping unemployment low, and improving the trade balance.

Instead, when compared to the 20 years ending in 1967, the last year before the U.S. began to weasel out of its promise to maintain the value of the dollar in terms of gold, the paper dollar system they championed and still defend has led to:

· Slower growth: Real economic growth is more than a full percentage point lower, averaging only 2.8% per year versus 4.1%.

· Higher average inflation: Consumer prices have increased on average 4.4% a year, compared to 2%. As a consequence, a paper dollar today can buy less than two dimes could purchase in 1971.

· Higher Unemployment: Since abandoning a monetary standard, unemployment rates have averaged 6.6%, nearly two full percentage points higher than the 4.7% average for the 1948-67 period.

· Greater economic insecurity:

o Unemployment rates have exceeded 9% in four separate years since 1971 compared to their peak of 6.8% in the 1958 recession.

o Since abandoning gold for a paper dollar, the American people have suffered through a dozen financial crises, culminating in the financial crisis of 2008 and 2009, the housing collapse and now the European sovereign debt crisis. There were no comparable crises during the post World-War II gold standard era ending in 1967.

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