May 10, 2014

The Troubling Suppression of Competition from Alternative Monies

The Cases of the Liberty Dollar and E-Gold
  • Lawrence H. White

    Distinguished Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics
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An uncommon approach to US monetary reform, exemplified by F. A. Hayek’s 1976 monograph Choice in Currency, is to end legal barriers to alternative monies, whether as units of account or as media of exchange. Alternative monetary standards might then arise in the marketplace to operate in parallel with the fiat dollar, perhaps gradually to displace it. Here the author looks at two private alternative monetary systems that were available until disallowed by the federal government, the silver “Liberty Dollar” (a hand-to-hand currency) and e-gold (a system for online transfers among gold accounts). Their suppressions illustrate how legal restrictions are currently blocking monetary innovation. The same restrictions may be used against Bitcoin and other crypto-currencies.