Privatize the Monetary System

     Power gravitates to whoever has the power to create money. The federal government and its sidekick, the Federal Reserve Bank, hold a monopoly over the dollar and have accumulated too much power. To move some of the power back to the people, let’s get rid of the Federal Reserve and allow private parties, in competition with one another, to create money.  

Anything could serve as currency, be it CitiDollars, BancAmericaDollars, euros, gold, or anything else. All currencies would be convertible into every other, enabling people to select those that are most convenient and which best hold their values. Dealing with more than one currency would be bothersome, but the Europeans lived with this for years.  

Competition provides a natural barrier against a currency’s overproduction. If a producer maximizes short-term profits by creating an excess of money, prices in that currency would rise. People would stop using it, and the producer’s profits would come to a halt. Currency producers would have to balance short-term against long-term goals, making the system self-regulating.  

Having no competition, government is not self-regulating, which is why the dollar’s buying power has deteriorated so.

Most long-term lenders would require that the repayment of loans be made in a currency that’s valued in gold. Gold backing would bring long-term price stability and a strong economy. All this, plus a weaker federal government, would narrow the gap between rich and poor.

Let’s cut back government by allowing private parties, competing with one another, to create money.