Americans Should Be Free to Choose Their Currencies

An economist named James Galbraith was just on Bloomberg television telling viewers that a raise in interest rates would be catastrophic because US borrowers would have to pay higher interest rates to foreign lenders were interest rates to be raised. This is half true. The half that Professor Galbraith omits is that this policy causes resources to be redistributed from the American people and foreign lenders to borrowers, namely Wall Street and big business. In his view, if commercial banks and Wall Street do not get to cheat foreign lenders and the American people (through inflation) then the situation is catastrophic. The only acceptable situation in Professor Galbraith's view is where Wall Street and big business steal from the poor and where borrowers cheat lenders.

Professor Galbraith's short term thinking is precisely why the American people are becoming poorer. If you cheat your lenders then they will not lend to you. If you subsidize borrowers at the expense of productive workers (through inflation) then productive work will disappear. There is nothing catastrophic about asking that dollars that have been borrowed be repaid in dollars that are still worth the same amount. James Galbraith finds this concept to be catastrophic.

The dialogue about the dollar is steeped in deception of the kind that Professor Galbraith offers. But until the twentieth century, Americans did not have to use the increasingly worthless greenbacks (they are not dollars) that the Federal Reserve Bank prints. We did not have to try to grasp the arguments of academic con men, Wall Street cheaters and perpetrators of banking fraud.

It is time to establish a competitive monetary system. Americans should be free to reject the greenback and to establish a true dollar based on criteria established through private contract. Competition with respect to money would reflect democracy and market freedom. Why not have free choice with respect to the money we need to accept? What virtue is there in being forced to accept mismanaged greenbacks? Why can't the states, private banks or private firms issue their own money? Why can't borrowers insist on being paid back in gold as some did in the nineteenth century?