    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                           ROAD MAP TO SOUND MONEY: A
                        LEGISLATIVE HEARING ON H.R. 1098
                            AND RESTORING THE DOLLAR

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON

                            DOMESTIC MONETARY POLICY

                                 AND TECHNOLOGY

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 13, 2011

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 112-59

                                    _____

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                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                       SPENCER BACHUS, Alabama, Chairman

    JEB HENSARLING, Texas, Vice          BARNEY FRANK, Massachusetts,
        Chairman                             Ranking Member
    PETER T. KING, New York              MAXINE WATERS, California
    EDWARD R. ROYCE, California          CAROLYN B. MALONEY, New York
    FRANK D. LUCAS, Oklahoma             LUIS V. GUTIERREZ, Illinois
    RON PAUL, Texas                      NYDIA M. VELAZQUEZ, New York
    DONALD A. MANZULLO, Illinois         MELVIN L. WATT, North Carolina
    WALTER B. JONES, North Carolina      GARY L. ACKERMAN, New York
    JUDY BIGGERT, Illinois               BRAD SHERMAN, California
    GARY G. MILLER, California           GREGORY W. MEEKS, New York
    SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
    SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
    RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
    PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
    JOHN CAMPBELL, California            JOE BACA, California
    MICHELE BACHMANN, Minnesota          STEPHEN F. LYNCH, Massachusetts
    THADDEUS G. McCOTTER, Michigan       BRAD MILLER, North Carolina
    KEVIN McCARTHY, California           DAVID SCOTT, Georgia
    STEVAN PEARCE, New Mexico            AL GREEN, Texas
    BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri
    MICHAEL G. FITZPATRICK,              GWEN MOORE, Wisconsin
        Pennsylvania                     KEITH ELLISON, Minnesota
    LYNN A. WESTMORELAND, Georgia        ED PERLMUTTER, Colorado
    BLAINE LUETKEMEYER, Missouri         JOE DONNELLY, Indiana
    BILL HUIZENGA, Michigan              ANDRE CARSON, Indiana
    SEAN P. DUFFY, Wisconsin             JAMES A. HIMES, Connecticut
    NAN A. S. HAYWORTH, New York         GARY C. PETERS, Michigan
    JAMES B. RENACCI, Ohio               JOHN C. CARNEY, Jr., Delaware
    ROBERT HURT, Virginia
    ROBERT J. DOLD, Illinois
    DAVID SCHWEIKERT, Arizona
    MICHAEL G. GRIMM, New York
    FRANCISCO R. CANSECO, Texas
    STEVE STIVERS, Ohio
    STEPHEN LEE FINCHER, Tennessee

                       Larry C. Lavender, Chief of Staff
            Subcommittee on Domestic Monetary Policy and Technology

                           RON PAUL, Texas, Chairman

    WALTER B. JONES, North Carolina,     WM. LACY CLAY, Missouri, Ranking
        Vice Chairman                        Member
    FRANK D. LUCAS, Oklahoma             CAROLYN B. MALONEY, New York
    PATRICK T. McHENRY, North Carolina   GREGORY W. MEEKS, New York
    BLAINE LUETKEMEYER, Missouri         AL GREEN, Texas
    BILL HUIZENGA, Michigan              EMANUEL CLEAVER, Missouri
    NAN A. S. HAYWORTH, New York         GARY C. PETERS, Michigan
    DAVID SCHWEIKERT, Arizona

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        September 13, 2011...........................................     1
    Appendix:
        September 13, 2011...........................................    19

                                   WITNESSES
                          Tuesday, September 13, 2011

    Parks, Lawrence M., Ph.D., Executive Director, Foundation for the
      Advancement of Monetary Education..............................     3
    White, Lawrence H., Ph.D., Professor of Economics, Department of
      Economics, George Mason University.............................     6

                                    APPENDIX

    Prepared statements:
        Paul, Hon. Ron...............................................    20
        Parks, Lawrence M............................................    24
        White, Lawrence H............................................    87

                  Additional Material Submitted for the Record

    Paul, Hon. Ron:
        Written responses to questions submitted to Dr. Lawrence M.
          Parks......................................................    91
        Letter from then-Chairman Alan Greenspan of the Federal
          Reserve dated November 20, 2003............................   101

                           ROAD MAP TO SOUND MONEY: A
                        LEGISLATIVE HEARING ON H.R. 1098
                            AND RESTORING THE DOLLAR

                                  ----------

                          Tuesday, September 13, 2011

                 U.S. House of Representatives,
                      Subcommittee on Domestic Monetary
                                 Policy and Technology,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The subcommittee met, pursuant to notice, at 2:35 p.m., in
    room 2128, Rayburn House Office Building, Hon. Ron Paul
    [chairman of the subcommittee] presiding.
        Members present: Representatives Paul, Jones, Luetkemeyer,
    and Huizenga.
        Chairman Paul. This hearing will come to order. Without
    objection, all members' opening statements will be made a part
    of the record.
        Are there any other opening statements? Okay. I will make a
    brief opening statement and then we will go to our witnesses.
        The monetary issue has been an issue that I have been
    fascinated with and interested in for a long time. I became
    much more aware of the significance of this issue back in
    August of 1971, with the breakdown of the Bretton Woods
    agreement. At that time, I was quite convinced and remain
    convinced that we have ushered in a special age that probably
    did not exist in the same fashion ever before. And we now have
    been living for 4 decades with a total fiat world currency, and
    it has created a lot of problems for us.
        I am convinced also that we are on the verge of a change
    from the current status. Just as significant as it was in 1971,
    something had to give, and there was a change. And I think this
    is what the conflict in the markets and the chaos in the
    markets is telling us.
        But too often, the people in the Congress are looking
    elsewhere to solve the problems. We, as a Congress, have lived
    way beyond our means because the people in this country wanted
    us to live beyond our means, and the monetary issue of course
    is very significant because it actually facilitates the
    spending.
        So without the type of system of money that we have today,
    there would have been a limitation on the massive expansion of
    the size of government, spending, taxes, debt, and the crisis
    that we are facing right now. But very few are even thinking
    about monetary policy as a significant contributor to the
    economic problems we have today. More attention has been given
    to the Federal Reserve in recent years than it has in the past
    but we have a long way to go. But there are more and more
    people on both sides of this issue who are recognizing that
    monetary reform eventually will come. The big question is, is
    will they try to patch this up or transfer this into another
    system that is not much better than the one we have?
        In many ways, that is what we did in 1971. We had a dollar
    reserve gold standard that broke down, and then we ushered in
    something actually worse and it probably lasted a lot longer
    than a lot of people expected. But today, because of the
    crisis, I think many are just wondering what is going to
    happen.
        I have had a position for a long time about what I think we
    should do with the Federal Reserve; I don't believe it
    contributes all that much. But I have also taken the position
    that if I had the authority to do it, I probably wouldn't take
    the key, lock the door, and just allow the system to work its
    way out. I think that would be very chaotic, and that is not my
    position. So as early on as the Gold Commission in the early
    1980s, even up until now, I still believe that the best way to
    go from one system to another is to try to allow the market to
    help us.
        The British made a serious mistake when they tried to go
    back on the gold standard in the 1920s at an old ratio of the
    dollar to the pound and it obviously failed. Of course, it was
    blamed on the gold, not on the policy of transition.
        So the market has to help us on this, the market has to
    help us if we ever want to relate our currency to gold again. I
    have been fascinated with some of the work of Hayek and others
    that talks about allowing currencies to compete with one
    another, let the markets sort it out. And it is a lot less
    threatening. Other countries are talking about that. The
    Mexican Government has talked about it. The Swiss Government
    has talked about just allowing other currencies to circulate
    within their own country. And when you think about it, that is
    what happens internationally all the time. Currencies fluctuate
    all the time, and that is one of the ways that they were able
    to keep the system together, is allow the competing currencies
    to fluctuate on a minute-to-minute basis.
        So there is no reason in the world that we couldn't adapt
    to allowing competing currency within our own country. And then
    if people just love Federal Reserve Notes and want to spend
    Federal Reserve Notes and save in Federal Reserve Notes, let
    them do it. But others who might think that another system is
    better, I think we ought to talk about legalizing it.
        To me, I would like to summarize and say, why don't we
    legalize the Constitution? The Constitution has been rather
    clear. It might not have given us the perfect monetary system
    and we didn't follow it very well. But at least it did indicate
    that the Founders didn't like paper money. They did not like
    emitting bills with credit. They did not like fiat money. And
    if we were to look just to the Constitution, it would mean that
    we should reconsider commodity money, something that
    governments can't control, can't monopolize, and let the market
    work.
        So, those are basically my thoughts on this issue. I am
    anxious to hear the remarks from Dr. Parks and Dr. White on
    these issues, because I have studied this for many, many years
    and there are still a lot of questions to answer.
        We do have a bill, H.R. 1098, which is far from a perfect
    bill. But it is a place to get started in talking about what we
    might do and how we can do it because things could change
    rapidly. Although many of us have been thinking about this for
    many, many years, things could move rapidly. Currency
    destructions, the end of currencies sometimes move much quicker
    than anybody dreams that it could. So a major crisis could
    come. It could come next month or next year or in a few years.
    But to me, there is no guarantee that we have 5 or 10 years to
    keep studying this. I think that we need to get people engaged
    in this and talking about it and understanding the monetary
    issue.
        So I am very grateful to our two guests for coming today
    and for being willing to submit their remarks and answer some
    questions for us.
        I will now go to our first witness. Dr. Lawrence Parks is
    the executive director and founder of the Foundation for the
    Advancement of Monetary Education. Dr. Parks has studied money
    for 30 years and was a student of the free market economist
    Murray Rothbard. His writings have appeared in The Economist,
    Pensions and Investment, and The Washington Times, among
    others. He has authored and produced over 200 educational
    videos on the U.S. monetary system. Dr. Parks is a member of
    the United Association of Labor Education and UAW 1981, AFL-
    CIO. He received his Ph.D. in operations research from the
    Polytechnic Institute of New York University.
        Dr. Parks, please go ahead and give your summary and then
    we will go to our next witness.

      STATEMENT OF LAWRENCE M. PARKS, PH.D., EXECUTIVE DIRECTOR,
          FOUNDATION FOR THE ADVANCEMENT OF MONETARY EDUCATION

        Mr. Parks. Thank you very much, Dr. Paul. It is a great
    honor to be here, and I appreciate the opportunity to testify
    in support of H.R. 1098, the Free Competition in Currency Act
    of 2011. I am honored to have been invited.
        I know it must sound like hyperbole, but I believe that
    H.R. 1098 is perhaps the most important piece of legislation
    ever to come before the Congress, because H.R. 1098 is
    necessary to make a transition from a certain catastrophic
    collapse of our unauthorized by the Constitution, dishonest,
    and unstable legal tender, irredeemable paper-ticket-electronic
    monetary system.
        While I suspect that this committee will be most interested
    in how this bill will affect jobs, debt, economic growth in
    capital markets, pensions, and a host of other important and
    timely topics, I am going to focus my opening statement with an
    example of the dishonesty, which is the Achilles' heel of the
    present system, by highlighting one of the many
    misrepresentations about our money.
        There are three take-away points from my testimony. The
    first is that the system is not in conformity with the
    Constitution. The second, and very importantly, it is
    dishonest. And third, it is unstable and in the process of
    blowing up perhaps while I am testifying here today.
        One can be certain of a complete collapse of this monetary
    system because there is no longer any market-based self-
    correcting mechanism for increasing debt, increasing the money
    supply, and increasing leverage. And any system, any physical
    system, any social system, any system without a self-correcting
    mechanism blows up. With no exceptions, the history of legal
    tender irredeemable paper-ticket money is that its purchasing
    power always approaches its cost of production, which is zero.
        I want to explain why the system is dishonest. There are a
    myriad of misrepresentations and nondisclosure of material
    information about what we call a dollar. No amount of
    regulation or oversight committees will cure dishonesty. The
    only remedy is honesty.
        To illustrate what in my view is the most egregious example
    of this dishonesty, I give an example of silver, although the
    same principle applies with gold. Now it was and remains
    inconvenient for people to carry around silver dollars because
    they are heavy and bulky. So what people did--let's have the
    first exhibit up there--is that they deposited their silver
    dollars typically in a bank and received in exchange a
    promissory note, a.k.a. a banknote or a note that bore the
    inscription that so many dollars had been deposited and the
    note was payable to the bearer on demand.
        Here is an example of a United States note. And notice that
    this is not a dollar. At the top of the bill are the words,
    ``United States Note.'' I don't know if you can see it from
    where you are sitting but under the image it says, ``will pay
    to the bearer on demand one dollar.'' Well, what is a dollar?
        Next slide [image of a silver dollar]. That is a dollar, as
    put into law by Alexander Hamilton in the Coinage Act of 1792.
    But then the promise to pay a dollar--let's have the next
    slide--was defaulted. Here is the punchline. The broken
    promissory note, the dishonored promissory note is now
    represented as being a dollar. This is a gross
    misrepresentation and is dishonest. This piece of paper is not
    even a valid note. The signatures of the Treasurer of the
    United States and the Secretary of the Treasury are gratuitous
    and deceptive.
        In other words, what we use for money are just dishonered
    promissory notes that are misrepresented to be dollars. It
    means that all of the securities in our capital markets at home
    and abroad are denominated in dishonored promissory notes. This
    has immense implications for trade, jobs, pensions, military
    preparedness, and almost everything else that is important.
        People have the notion that the Congress can make the
    dollar anything the Congress wants it to be and back it with
    specie or not or whatever. This is demonstrably false. The
    highest law in our country is the Constitution and all of our
    laws have to be in conformity with it. The word ``dollar'' is
    mentioned twice in the Constitution but it is not defined in
    the Constitution. It is mentioned in connection with the Slave
    Tax, which is no more, but it is also mentioned very
    importantly in the Seventh Amendment, which guarantees everyone
    a right to a trial by jury for any dispute $20 or more.
        If it were true that the Congress could redefine the
    dollar, that would mean that the Congress could redefine the
    Seventh Amendment, which is ridiculous. And so the question
    comes up, what is the objective meaning of the dollar? And in
    fact, for the Seventh Amendment to have objective meaning, the
    dollar has to have an objective meaning. And what they are
    talking about in the Constitution itself--next slide--is the
    Spanish Milled Dollar, sometimes called the piece of eight. The
    Spaniards had built mints all over the colonies and the Spanish
    Milled Dollar was ubiquitous. When independence was declared,
    the colonies adopted the Articles of Confederation, which gave
    the Congress the power to issue money called ``continentals.''
    Here is an example of a continental $30 bill.
        Next slide. I don't know if you can read it from where you
    are sitting, but notice it ``entitles the bearer to receive 30
    Spanish Milled Dollars, or the Value thereof in Gold or
    Silver.'' The value of a coin is its specie content.
        After independence was achieved and the Constitution was
    adopted, the United States did not want to rely on Spanish
    mints for its coins. The United States wanted its own mints to
    mint its own coins, including dollars. To that end, Alexander
    Hamilton, then Secretary of the Treasury, wrote the Coinage Act
    of 1792, wherein he tells us exactly what a dollar is. And what
    a dollar is, is 371.25 grains of silver. Where did Hamilton get
    that crazy number? That was the silver content of the Spanish
    Milled Dollar. They couldn't just introduce some arbitrary coin
    because everybody had contracts in terms of dollars. So the
    Constitution requires that the dollar be a weight of silver.
    Now some might claim that if Hamilton defined the dollar this
    way, perhaps it can be defined another way. And that is not
    true either. Hamilton's definition of a dollar was not
    arbitrary. All he did was write into law what was already a
    fact.
        Here is another way of looking at this issue. Go to the
    next slide, please. Suppose we have a sign that says ``cat''
    and we hang it on a dog. Does the dog become a cat? And suppose
    the Congress passes a law that says all the dogs with cat signs
    are now cats--go to the next slide--now are all of these dogs
    cats? And the answer is no. Conceptually, this is no different
    than taking a piece of paper, printing the word ``dollar'' on
    it, adding seals and signatures, and calling it a dollar. And
    this is precisely what has happened to our money.
        Clearly, there is no easy remedy. How could such an immense
    fraud be perpetrated? There are several reasons but one of the
    most important ones, which H.R. 1098 will go a long way to
    correcting, is that we are coerced into using fraudulent money
    by the legal tender statutes. By getting rid of legal tender,
    H.R. 1098 is necessary and may be sufficient to help pave the
    way to an honest monetary system.
        I am going to stop now and give you a chance to address any
    questions or issues that may come to mind. Thank you so much.
        [The prepared statement of Dr. Parks can be found on page
    24 of the appendix.]
        Chairman Paul. I thank you. I would like to go next to Dr.
    White.
        Dr. Lawrence White is professor of economics at George
    Mason University, where he specializes in the theory and
    history of banking and money. Dr. White has written extensively
    on monetary systems with over 40 articles published in academic
    journals, including the American Economic Review and the
    Journal of Monetary Economics. He has also authored three books
    on monetary matters, including ``Competition and Currency:
    Essays on Free Banking and Money.'' He received his Ph.D. in
    economics from UCLA and his undergraduate degree in economics
    from Harvard.
        Dr. White, you may proceed.

    STATEMENT OF LAWRENCE H. WHITE, PH.D., PROFESSOR OF ECONOMICS,
            DEPARTMENT OF ECONOMICS, GEORGE MASON UNIVERSITY

        Mr. White. Thank you, Mr. Chairman. Thanks for the
    opportunity to discuss my views on H.R. 1098, the Free
    Competition and Currency Act of 2011. I am going to have to be
    very sweeping given the limited time, but I will be happy to
    answer any questions you might have about historical or other
    details.
        The idea of competition in currency, or you might call it
    competition among currencies, is fairly straightforward. We
    know as a rule that open competition gives us better products,
    higher quality at lower cost. For example, we have faster and
    more reliable package delivery thanks to the competition of
    FedEx and United Parcel Service with the U.S. Postal Service.
    The main point I want to emphasize today is that competition in
    currency isn't any exception to this general rule. More
    competition promotes better currency.
        Let me give you some examples. Throughout history, currency
    has been better provided by freely competing private
    enterprises than by government monopoly or by legally protected
    private monopoly. The United States had competing gold and
    silver mints at one time during our gold and silver rushes and
    they produced very trustworthy coins. These private mints ended
    only when they were suppressed by Civil War legislation, part
    of which H.R. 1098 aims to repeal. Redeemable private tokens
    and redeemable bank-issued paper currency notes have also been
    popular forms of money in the 60-plus parts of the world where
    they have been allowed.
        H.R. 1098 would lift legal barriers to currency
    competition. It wouldn't immediately remove the U.S. Treasury
    or the Federal Reserve System from issuing currency. But--and
    then this is the second point I want to emphasize--competition
    would give the Fed better incentives to provide the kind of
    money that people want. Sound money, stable, valued money,
    trustworthy money. It would give the Fed better incentives to
    avoid creating inflation, in other words, because its customers
    could begin to go elsewhere. The U.S. dollar already faces
    competition, and I would say useful competition, in the
    international arena. People have a choice in international
    trade. Between the dollar and the euro, the Swiss franc and
    they can invest in gold and silver. So there are many monetary
    standards in the world.
        H.R. 1098 would open a door to similar kinds of competition
    within the domestic arena between Federal Reserve Notes and
    other currencies. It won't make the Federal Reserve Note go
    away, as Dr. Paul said, if people want to use Federal Reserve
    Notes. New forms of currency won't gain a foothold in the
    market any faster than the public has reason to prefer them to
    Federal Reserve Notes. So the Fed can retain its business as
    long as it provides a high-quality product. But if the Fed
    slips up in quality control, meaning if double digit inflation
    should unfortunately return to the United States, then the
    American public would find it very useful to have trustworthy
    alternatives to Federal Reserve Notes that are depreciating in
    their pockets.
        So this Act offers three concrete reforms. And let me talk
    about them briefly. Section 2 of the Act removes legal tender
    status from Treasury coins and Federal Reserve Notes. Legal
    tender has a more narrow scope than is often realized. It
    relates to the discharge of debts. So the phrase on Federal
    Reserve Notes, ``legal tender for all debts'' means that under
    current law a creditor is barred from refusing payment in
    Federal Reserve Notes. But it is perfectly feasible to have
    debt contracts without legal tender, and, in fact, there is
    already an important class of contracts that are today exempt
    from legal tender provisions.
        Under Title 31, Section 5118(d)(2), the obligations created
    by gold clause bonds are not discharged by delivery of legal
    tender today. That section says that the bond issuer has a
    contractual obligation to pay in gold. That is what the
    contract says, and that will be enforced. So removing legal
    tender status from U.S. Treasury coins and Federal Reserve
    Notes more generally would simply broaden the freedom to
    denominate debt contracts in whatever people want, not just
    dollars, not just gold. But they might want silver. They might
    want to say the debt is only discharged by checks or wire
    transfers of dollars, or it could be silver coins or it could
    be units of foreign currency, claims denominated in consumer
    index bundles or wholesale commodity bundles or it could be
    Bitcoins.
        Section 3 of the Act rules out Federal or State taxes on
    precious metal coins, whether minted by a foreign government or
    by a private firm. That would allow a more level playing field
    for competition of private coins with the U.S. Treasury coins
    without the special tax disadvantages which now handicap
    private coins. Sales taxes on acquisition, capital gains taxes
    on holding them, right. Federal Reserve Notes are not subject
    to those taxes.
        Section 4 of the Act repeals Title 18, Section 486. That
    section bans privately produced coins of gold, silver or other
    metals and it repeals Section 489 which bans disks that are
    merely similar to official coins. Section 486 is the relic of
    the Civil War that I mentioned. It was part of an effort to
    boost the acceptance of the wartime paper greenbacks by banning
    competition from the private gold coins that were being
    produced. Repealing that would again allow producers to make
    and consumers the option to use privately minted silver and
    gold coins if they like.
        I think the question we should ask, in the words of Seth
    Lipsky in a recent Wall Street Journal article, is whether it
    makes any sense to ``suppress private money that is sound in
    order to protect government-issued money that is unsound.''
        I have mentioned that Section 489 would also be repealed.
    That I think is a section that is redundant at best and far too
    sweeping at worst. It outlaws making or possessing ``any token,
    disk or device in the likeness or similitude as to design,
    color, or the inscription thereon of any of the coins of the
    United States.'' It is redundant at best because there is
    already another section that outlaws counterfeiting and we are
    not talking about repealing the laws against counterfeiting.
    But this section is simply about similitude. And if you took it
    literally, it would outlaw all silver medallions because after
    all they are the same color as silver dollars and quarters and
    dimes. So it is too sweeping because it can be used to suppress
    private coinage, what we might say victimless private coinage
    that doesn't involve counterfeiting and doesn't involve any
    other fraudulent intent.
        So to conclude, competition in currency is a very practical
    idea. It is an idea that offers sizable benefits to the public
    when the quality of the dominant currency becomes doubtful. Now
    we all hope that Federal Reserve Notes retain their value. But
    for those who are skeptical, they should have another
    alternative. U.S. citizens would benefit from H.R. 1098's
    removal of current legal restrictions and obstacles against
    currencies that could provide useful competition with Federal
    Reserve Notes and Treasury coins.
        Thank you.
        [The prepared statement of Dr. White can be found on page
    87 of the appendix.]
        Chairman Paul. Thank you. I will start off with the
    questions. The first question will be for both of you.
        What do you think the arguments will be by the
    establishment? How will they come back and describe what we are
    trying to do? And why is it--I think it is well known that
    governments have always wanted to cling to a monopoly power
    over the currency, and it must be related to that. But could
    you give me an idea of what you think they will be saying or
    trying to describe what is going to happen? And if they claim
    that this would be terribly chaotic, what are some of the
    answers that we might give to those questions that they raise?
        Mr. White. I suspect that the argument might be made that
    you are encouraging people to abandon the U.S. dollar and,
    thereby, you are undermining the U.S. economy. Right? But the
    answer is that the fate of the dollar or the purchasing power
    of the dollar is in the Federal Reserve's hands. And all we are
    doing is giving people the option to make the transition to a
    more stable system if the Federal Reserve Note should begin to
    deteriorate in value, in reliability.
        If we look at the experience around the world with paper
    money, we know that high inflation is not impossible, and we
    have had double digit inflation in the United States. And where
    people are free, they start--in a country with very high
    inflation--in Latin America we see this many times--they prefer
    to start moving their savings into a more stable currency. And
    then they start posting prices in the more stable currency so
    that they don't have to repost them every day. And then they
    start accepting payment in the more stable currency. Having
    that freedom makes the public a lot better off. So giving
    people an additional option doesn't undermine the stability of
    the current monetary system. That is under the control of the
    people who issue the current money.
        Chairman Paul. Dr. Parks?
        Mr. Parks. What I suspect they are going to do is to ignore
    this altogether, not raise any objections at all, just leave it
    alone. However, should any objections come forth, I think the
    best response is that the irredeemable paper-ticket money is
    going away, and, in fact, the history of the world is that
    these paper moneys always go away. Why should this one be any
    different?
        Second, the irredeemable paper-ticket dollar has lost
    something like 98 percent of its purchasing power since the
    Federal Reserve was formed. Why does anybody think that the
    last 2 percent is sacrosanct?
        Third, there is a whole bunch of--how shall I say--trial
    balloons being put forth by the media talking about currency
    depreciation and why it is acceptable. So there was a time
    roughly about a year ago when Jeffrey Garten--Jeffrey Garten
    had a minor role in the Nixon Administration, was an Under
    Secretary of, I think Commerce, in the Clinton Administration,
    went on to be Dean of the Management School at Yale University,
    wrote five books, sometimes a publisher of articles in Business
    Week, member of the Council on Foreign Relations--published an
    article in the Financial Times, something to the effect of, we
    have to get ready for a weaker dollar. And he says in the
    Financial Times, the United States is going to have to
    camouflage a slow motion default. ``Camouflage.'' In other
    words, not really explain to the people what they are doing.
    But there is no question at all that the obligations of this
    government, of all the local and State governments and all the
    other debts, these obligations are not going to be met.
    People's pensions are going to be lost.
        Then this was followed up just recently by a professor from
    Harvard, Professor Rogoff, who published a piece saying that
    once every 75 years or so we have to have extra inflation,
    maybe 6, 7 percent, in order to get rid of this debt. And this
    was legitimatized further by Floyd Norris, senior writer from
    The New York Times, a very senior guy. He wrote an article,
    ``Sometimes inflation is not evil.''
        So what they are really doing is setting us up for the
    depreciation of the dollar. And we know from history that once
    this gets started, once this gets out of the can, there is no
    way to put it back in the can.
        Other things about this competition and money. It is true
    that you can make contracts in gold. However, in regular life,
    if you should have a contractual dispute with somebody and it
    gets settled in the courts, that judgment is going to come down
    in the irredeemable paper-ticket money. And it is also
    noteworthy that the people in the financial sector have gotten
    the International Monetary Fund--in 1978--to add a provision to
    the IMF Articles of Agreement--it is like their bylaws--to
    prohibit member countries from linking currencies to gold and
    only to gold. These folks have really knocked themselves out to
    get gold out of the monetary structure and I think part of the
    response should be that the reason they did that is so that
    they could garner unearned profits.
        I have good evidence to show that. I think I am past my
    time. I don't know if you want to see some of that evidence.
        I am asking you a question. Should I put it up?
        Chairman Paul. Yes.
        Mr. Parks. Thank you. Put up slide number 67, please. I am
    sorry, 56. Do you have that? 63. It is important. So if you go
    back to 1980, the money supply in this country, defined by the
    Federal Reserve at that time, was M3, was something on the
    order of $2 trillion. And the market capitalization of the
    stock market was roughly $1 trillion. The financial sector
    portion of that was roughly 5 percent, roughly $50 billion. You
    shift ahead to 2007. Now all created flat out of nothing, with
    no work, now the money supply is something on the order of $13
    trillion. The stock market capitalization is approaching $20
    trillion and now the value of the financial sector firms is
    something like $4 trillion. It went from $50 billion to $4
    trillion. Forget about the bonuses. Think stock options. These
    folks have garnered just an incredible amount of money. They
    don't even know what to do with it. That would not have been
    possible if we had an honest monetary structure. And the way
    they got away from an honest monetary structure is they got
    gold out of the system. And the legal tender laws helped do
    that. So really you have to get rid of legal tender.
        Chairman Paul. Thank you. I want to move on. I want to
    yield time to the vice chairman of the committee, the gentleman
    from North Carolina, Walter Jones.
        Mr. Jones. Mr. Chairman, thank you very much. Dr. Parks and
    Dr. White, thank you very much for your testimony today. I am
    going to take a little different approach. I am not an expert
    in financial matters of this magnitude, but I have learned a
    lot from my good friend Ron Paul, and being part of the Liberty
    Caucus has at least exposed me to some individuals like
    yourself who could help me become more interested in the issue
    of monetary policy.
        I am one who is very much concerned, as most Americans are,
    that we are headed down the road of no return. And when I
    listened to both of your testimonies--and I listened very
    carefully--it brings me to a question that the average working
    American, which I am a part of that group, by the way, when do
    we know that we get to a monetary point of no return? When that
    collapse comes, is that something in your opinion that you see
    happening sooner rather than later? And what should the average
    person--what will make the average person realize that we are
    in a collapse as it relates to strength of the dollar?
        Mr. White. I think we are getting mixed messages right now.
    If we look at the exchange value of the U.S. dollar, it has
    declined precipitously the last couple of years. If we look at
    the price of gold, of course, that is shooting through the
    roof. And those are telling us that people don't want to hold
    their wealth in dollars. They want to move it into something
    they think is safer. On the other hand, if you look at the
    inflation indexed bonds or if you look at long-term bonds,
    those are not signaling the expectation of high inflation. But
    I am not sure how much we can trust those signals anymore
    because the Federal Reserve now has a policy of buying 30-year
    bonds to drive their prices up and drive their yields down. So
    that signal may be jammed a little bit.
        But when we see all those signals indicating that high
    inflation is coming, then we know we have a big problem on our
    hands. And of course we don't just have a monetary problem. We
    also have a fiscal problem. We have a problem of an
    unsustainable debt going forward. And the two issues are of
    course related. As Dr. Parks mentioned, there has been talk
    about how we need inflation in order to relieve our national
    debt in real terms. But that is nothing more than a default,
    sort of behind a very thin veil in the form of the value of the
    dollars being paid back is reduced by half instead of the debt
    is explicitly cut in half. But it is the same thing. So when
    that becomes sort of respectable talk, then we have to be very
    worried.
        I am not sure if I can identify exactly a tipping point.
    But when we see inflation get into double digits, then we will
    know we are in big trouble.
        Mr. Parks. I would say that collapse can come at any
    moment. And the amount of leverage in the system is beyond
    belief. Put up slide number 71, please. This is a slide showing
    the amount of derivative bets the banks have made all over the
    planet. It is something north of $600 trillion. This data comes
    from the Bank for International Settlements, which is sort of
    like an umbrella organization for all the central banks--it has
    sovereignty by the way. But one of the things it does, they
    calculate all these derivative bets.
        Slide 71. There you go.
        So after the last tie to gold was broken, which was in
    1971, as you can see from this chart, basically the only
    derivative bets you had were things like commodities, corn,
    soybeans or whatever. But after the last tie to gold was broken
    you start to have volatility in interest rates, big volatility,
    and big volatility in foreign exchange rates, and people who
    are in business and people who trade between countries need to
    hedge that. Banks have made an incredible number of bets on
    this. According to the Bank for International Settlements, the
    amount at risk that can be lost is something like $30 to $40
    trillion and this is worldwide. In this country, according to
    the Office of the Comptroller of the Currency, the amount of
    derivative bets is something on the order of $200 trillion, and
    of that, one bank, JPMorgan Chase has something like $80
    trillion worth of derivative bets.
        These bets, by the way, you have counterparty risk and that
    is what happened with AIG. That is why they really had to bail
    out AIG. AIG owed money to a bunch of banks. If you let AIG go
    down, then those banks' balance sheets become impaired.
        But also on this business of inflation, they have changed
    the methodology of how they compute the CPI multiple times
    since the Clinton years.
        Put up slide 27, please. There is a guy who is a scholar
    for us. His name is John Williams. He is in retirement now. He
    used to be an establishment economist with clients like Boeing
    and IBM. And what he does is he calculates the CPI using the
    consistent methodology from the 1980s--that is that top blue
    line--versus what the Bureau of Labor Statistics tells us
    today. And as you can see, on a consistent methodology basis,
    inflation is already and has been running 10, 11 percent for
    like 25 years. The understatement of the CPI, there are
    innovations such as the hedonic pricing, geometric weighting,
    substitution. Who knows what these people are talking about?
    They really lull people into thinking it is not as bad as it
    is.
        I have prepared an analysis. Go to chart number 29, please.
    These are my health care premiums for Oxford while I had
    Oxford, and I compare the year-on-year increases with the
    medical component of the CPI. Next slide, please. With the
    medical component of the CPI and my insurance premiums--this is
    everybody in the whole country--they are going up 15 percent a
    year. But the medical component of the CPI is going up 4
    percent a year. So they mislead people on that. And of course
    people who are seniors, who get Social Security and those
    benefits are keyed to the CPI. Disabled veterans, people who
    have cost-of-living escalations and union contracts and of
    course holders of Treasury inflation protection bonds, these
    people are all being cheated. But the tipping point comes, you
    don't know how it is because of the leverage. It is the
    leverage that always brings you down. And the leverage is
    beyond belief. As I said, it could happen while I am talking.
    You don't know when it is going to be.
        Mr. Jones. Thank you, Mr. Chairman.
        Chairman Paul. I have a couple of follow-up questions that
    I would like to ask. I will start with Dr. White.
        We have had this system of money since 1971 where there is
    no connection to gold and the dollar has been used as a reserve
    currency, to a slightly less degree than it was even a year
    ago, but it is still the major reserve currency and most of the
    countries hold dollars. And they pyramid down and inflate their
    own currencies from this. Have there been many times in history
    that it has been this significant, this big, this worldwide
    with the fiat currencies? I know we have had fiat currencies
    for as long as we can date. People have debased their currency
    in different manners. But has it ever been this big? Is this a
    special phenomenon? Or is this something that you can go back
    in history and say, it was sort of like this 200 years ago or
    300 years ago and we worked our way out of it? How do you put
    this in perspective in history?
        Mr. White. As far as the international monetary system
    goes, the international monetary system was never a fiat
    system. It was the international silver standard and the
    international gold standard. And of course there is no
    potential for runaway inflation when you have a metallic
    currency. It is only mined to--1, 2 percent of the stock is
    produced each year. The stock of gold just doesn't grow that
    fast. And in fact, that makes it possible to have an
    international monetary system. It is not controlled by any one
    country. And so countries can join, knowing that it is safe
    from political devaluation from the interest of any one country
    undermining the system.
        Countries that have adopted the dollar or who fix their own
    exchange rate to the dollar do so when they think the dollar is
    the most popular currency in world markets. But as you have
    mentioned, as the dollar becomes a little shakier, they start
    to shy away. China, most importantly, has moved from basing
    their currency entirely on the dollar to now a basket of
    currencies. So we are starting to see other countries starting
    to back away from the dollar.
        In that sense, I think the move to create the European
    monetary system provides some real competition to the dollar as
    an international reserve currency. And we can only hope that
    that will give the Fed a signal that there is somebody they
    don't want to inflate faster than. Of course, it seems to be a
    race to the bottom right now.
        Chairman Paul. If we were successful and had something like
    we are proposing and we had a competing currency, what would
    happen with the concept of fractional-reserve banking? Would
    more laws have to be written? Or would they follow the same
    pattern that we have today? How do you think that would work?
        Mr. White. That is a very good question. If private gold
    and silver coins begin to be popular, people are going to want
    to have bank services denominated in gold units or silver
    units, whatever it is that they find attractive. I am not sure
    we really have a sort of legal barrier against the Fed
    controlling that parallel banking system the way they control
    the current banking system. So it might be necessary to
    construct some barriers and say, here are the rules for this
    parallel banking system. It doesn't have deposit insurance. It
    doesn't have control by the Federal Reserve System as to
    reserve ratios or investment portfolios. So we would need to
    think about that if we got to the point where there was a big
    demand for those services.
        Chairman Paul. I will follow up on that and ask both of you
    what your opinion is. Of fractional-reserve banking, you know
    in free market circles, there is a disagreement to a large
    degree on--I know Rothbard was very adamant, his position of no
    fractional-reserve banking. What is your opinion about what
    would be proper? And Larry, you can answer as well, as to
    whether we should have rules on what the banks declare.
        Mr. White. I think the basic should be freedom of contract.
    And as long as people make informed fractional-reserve
    contracts with a banker, I have no problem with that.
    Historically, that seems to have been what was more popular. If
    you have a fractional reserve then you don't need to pay
    storage fees to the vault keeper who is keeping your gold and
    you may even get interest on your account balance. So it is an
    attractive deal. It doesn't have to be based on hoodwinking the
    customers. Customers brought their money to fractional-reserve
    banks because they got a better deal.
        The other thing worth noting is that you can't really have
    circulating paper currency, which is more convenient than
    carrying around coins for many purposes, unless you have
    fractional reserve banking. Because if it is a warehouse
    receipt, the warehouse needs to know who to charge the storage
    fees to. But if it is an anonymous circulating note, like we
    are accustomed to, how do they know who to charge the storage
    fees to? So I don't know of any historical examples of
    circulating warehouse receipts. But there are plenty of
    examples of pay to the bearer on demand in gold or silver
    circulating banknotes.
        Chairman Paul. Do you have an opinion on fractional-reserve
    banking?
        Mr. Parks. First question, put up slide number 73. This has
    to do with the size, the amount of fiat money out there. This
    is an analysis that is put together by McKinsey Global. And in
    1980, the amount of financial securities was roughly--I don't
    know, it looks around $18 trillion. By the end of 2009, it was
    close to $200 trillion. Last year, it hit something like $212
    trillion. I don't know if you can see on that chart, but at the
    very top it is in red, and that is gold. So all the rest is--it
    is irredeemable paper-ticket money, U.S. and foreign money, or
    securities denominated in irredeemable paper-ticket money.
        The nice thing about this bill is that it leaves everything
    in place. It leaves the dollar in place, leaves the Federal
    Reserve in place, and it really facilitates a transition. And
    for everyday purposes, it really doesn't make any difference to
    people whether we use an irredeemable paper-ticket, token, or
    whatever. They go to work, they get paid, they buy stuff, who
    cares? Where it becomes important is for future payment for
    people's pensions, for people's annuities, for people's
    savings. There they want to know in the future that they are
    going to have what they have. So in that way, this bill is very
    important.
        For future transactions, people will want gold and we have
    precedent in this country where this kind of thing was
    instituted. And that was after the Civil War. You recall the
    Civil War was financed with greenbacks at one point. The
    greenbacks were discounted roughly 50 percent against gold. And
    the way people looked to protect themselves afterwards is they
    put a gold clause in their contracts. And when they got paid
    later on they got the same amount of gold they were expecting.
    When the United States issued Liberty Bonds during the first
    World War, they had a gold clause in the bonds.
        As for fractional-reserve lending, I agree with Dr. White.
    But I want to add something to that. And that is, it is
    fractional-reserve lending that got us into trouble from the
    get-go. And the reason is, the banks have engaged in fraud in
    their basic banking relationships right from the beginning. And
    so, for example, banks told people that they were depositors.
    They are not depositors. They are unsecured creditors. And
    second, banks told people they could get their money back on
    demand. In fact and in law, when these people put money into a
    bank it is not their money anymore. It is the bank's money to
    do with as the bank wishes. If banks want to do fractional-
    reserve lending, they need to do what I call full disclosure.
    They have to tell people right out, we are going to lend this
    money to somebody else or whatever, that you may not be able to
    get it back. Some people may want to take that gamble. But my
    guess is they won't. Ordinary people put money in the bank for
    security, for safety. They don't want to have it in the
    mattress. It might be stolen or lost or whatever. They are not
    interested in making interest on their savings. They just want
    it to be safe. Those people are not going to be involved in
    fractional-reserve lending.
        As to Murray Rothbard's point of view, Murray was talking
    always about a gold backed dollar. That is a mistake. Again,
    you have to go back to what a dollar is. A dollar is the weight
    of silver. There is no such thing as a gold-backed piece of
    silver. The trouble with what Murray did is, he didn't go back
    further than the Coinage Act of 1792 where Hamilton defined the
    dollar as 371.25 grains of silver. The notion was that if
    Hamilton could define the dollar one way, we could define it
    another way. That is not true.
        But again, the beauty of this H.R. 1098 bill is that we
    don't really have to address those issues. I think what will
    happen is that for long-term transactions, people will start
    using the gold clause. And over time, there will be a
    transition. During that period, all the irredeemable paper-
    ticket money will go away. The Federal Reserve will go away.
    Again, there is no possibility, in my view, as a practical
    matter, of having some kind of discontinuity in our monetary
    system, getting rid of the Fed. But this in fact is really
    important and we need to bring people up to curve as to why it
    is.
        Chairman Paul. Congressman Jones?
        Mr. Jones. Mr. Chairman, thank you. I want to go a little
    bit off of your expertise, but I think you will have some very
    helpful comments. I have said two of the worst votes I ever
    made since I have been in Congress were the vote to go into
    Iraq and the repeal of Glass-Steagall. I realize this doesn't
    deal exactly with monetary issues, but we do have banks. You
    have made reference to banks many times in your comments about
    monetary policy.
        Do you feel that when Glass-Steagall was repealed by the
    Congress, it helped the banking world or it created
    opportunities for greed and for mistakes?
        Mr. Parks. Greed is part of the human condition. Glass-
    Steagall did not do anything to change that. There is a fellow,
    his last name was Warburg, he was the son of Paul Warburg, what
    was his name? One of Franklin Roosevelt's advisors. He wrote a
    book in the 1930s called, ``The Money Muddle,'' which really
    led to this business with Glass-Steagall, and what they were
    complaining about in those days was using bank money to
    speculate in the securities market. Bank money, it was
    understood, was money that the bank created out of nothing as
    opposed to regular money, gold and silver, and so the purpose
    of Glass-Steagall was really to keep the banks from
    overleveraging, and when Glass-Steagall was passed, now the
    banks could overleverage in a big way.
        I have charts that I can put up for you that show what
    happens to the banks. Let me just get those out. Start with
    chart number 67, please. We will go right through them.
        If you go before the last tie to gold was broken, and look
    at bank revenues, they are tiny. What are banks doing? They are
    processing payments, they are handling the check clearing
    system. But after the last tie to gold was broken, look what
    happened to bank revenues, it went up to something like $800
    plus billion. This is just for passing paper around.
        Go to the next slide. Look at bank net income after the
    last tie to gold was broken. It went up to something like, I
    don't know, $130 billion at its peak. This is after paying
    compensation to employees.
        Go to slide 70, please. Look what happened to bank employee
    compensation. So the whole notion of all this business of
    allowing the banks to leverage up, this was enormously
    beneficial to employees, to the banks themselves. Over the
    period after the last tie to gold was broken, banks paid out
    over a trillion dollars in dividends, a trillion dollars in
    dividends, and just a couple of years ago, it turns out that
    while bank balance sheets said they had to get, I don't know,
    $2 trillion from the Federal Reserve, all this money that they
    paid out in bonuses and what-not, it was not real profits, and
    the only reason they were able to do that is because they were
    able to leverage up, and the only reason they were able to
    leverage up is because we have irredeemable paper ticket
    electronic money as legal tender. If you had gold and silver
    money, you would be back on that curve before the last tie to
    gold was broken, and it is the banks that really have corrupted
    the system, but again it is probably counterproductive to point
    fingers. Really what we want to do is have a transition, and
    again the whole system is going to collapse no matter what. It
    is urgent that we pass this bill in order to facilitate a
    transition to an honest monetary structure.
        Mr. Jones. I understand. Dr. White, could you comment on
    Glass-Steagall as well?
        Mr. White. I would say the repeal of Glass-Steagall had
    very little to do with the financial crisis. There would be
    absolutely no objection to repealing Glass-Steagall; that is,
    letting commercial banks align or merge with investment banks
    and insurance companies, if it weren't for deposit insurance
    and if it weren't for the too-big-to-fail doctrine.
        If those had not been in place, then if somebody wants to
    form a financial supermarket, okay, we will see if that will
    fly. It is no skin off our nose. But when we begin to guarantee
    the liabilities of investment banks which are highly leveraged,
    which are not like commercial banks, which are not even part of
    the payment system, that is really an invitation to trouble,
    and when the Federal Reserve Bank of New York intervened in the
    Bear Stearns failure and took up the bad assets so that
    JPMorgan Chase would buy the rest, it is not the first sort of
    too-big-to-fail action, but it is the one that sort of sticks
    in my craw. That was really bad policy.
        Mr. Jones. Right.
        Mr. White. And I don't think it had that much to do with
    the repeal of Glass-Steagall. But if we treat investment banks
    like they are entitled to too-big-to-fail protection, then we
    are really asking for trouble, and that is really what needs to
    be undone.
        Mr. Jones. Thank you, sir.
        Mr. Parks. Can I add to that, please? If you have gold and
    silver as money, gold as money, this too-big-to-fail stuff
    doesn't even come up. The only reason you have this is because
    of the irredeemable paper ticket money. You could never have
    this kind of leverage with gold, and in fact the money-center
    banks, they have leveraged their balance sheets something like
    30 to 1, impossible if you had an honest monetary system. So
    really one feeds into the other, and this whole business with
    too-big-to-fail, the lender of last resort, Federal Deposit
    Insurance--Federal Deposit Insurance is not insurance; it is
    just a subsidy to the banks, and the reason it came about is
    that after the banks failed in 1933--they were failing before
    1933--people were not putting their money back into the banks,
    and so they passed that legislation to induce people to put
    their money back into the banks.
        As far as the lender of last resort comes about, again,
    that is the result of bank leverage, and the only reason you
    have so much leverage with the banks is because they
    misrepresented depositors. So if I were to borrow money from
    you, say I want you to lend me $10,000, what is the first thing
    that goes through your mind? I would think, what is the
    collateral? How am I going to get the money back? What are you
    going to do with the money? But if you loaned it to a bank and
    they say, well, this is a deposit, now you don't do the
    counterparty surveillance, so it is really a function of what
    constitutes the money, and I think you have to go back and
    realize that what we call our money today, our dollar, this is
    just a dishonered promissory note. And in fact one of the
    quotes I have for you, and I will stop right here, is after
    Franklin Roosevelt closed the banks on March 5th, 1933, a lot
    of people were caught short, and there was a question of
    whether they should print script, and here is a quote from
    William Woodin, Roosevelt's Secretary of the Treasury, he says
    the Federal Reserve Act lets us print all we need, and it won't
    frighten the people. Get this line now. It will look like--it
    won't look like stage money, it will be money that looks like
    real money. This is the Secretary of the Treasury telling you
    that this stuff is really, in effect, stage money, but it looks
    like real money. This is not real money that we have, folks.
    This is just a piece of paper gussied up with seals and what-
    not. It is dishonest, and we need to fix the dishonesty.
        Mr. Jones. Thank you, sir.
        Chairman Paul. Thank you. I have one more question for Dr.
    White. If we moved in to a period of time where we had
    competing currency, we have one group of people thinking a
    dollar equals a Federal Reserve note and let's say we or
    somebody decides that a dollar equals 371 grains of silver, and
    we use an old silver dollar, that could be competing, but the
    definitions are obviously completely different. How do you
    think it would be resolved when it comes to paying your taxes?
    Because they won't allow--I think this is part of the reason
    that we allowed the resistance because some people have tried
    this, paying salaries with old silver dollars, and, oh, that is
    a dollar, I don't have to pay any taxes on this. But it is a
    real problem because if they think that anybody--we want to get
    rid of some of the inhibitions to a competing currency, but if
    the people who use silver dollars had no taxes to pay, it would
    be a tremendous advantage. I think we could win that argument.
    But what do you think the IRS and the tax people are going to
    say about this? And do you have an idea how that could be
    resolved?
        Mr. White. I am sure the IRS would like the taxes to be
    paid in the equivalent of what they would be if all the
    transactions had been done in Federal Reserve notes. It would
    be an interesting exercise to look at around the world and see
    if there are other countries that have faced this problem of
    having taxes denominated in multiple currencies. I really don't
    know that much about it myself, but it seems like not a very
    important problem. On tax day, you need to have some exchange
    rate between the different currencies people might be allowed
    to pay in or you would require them to convert their own books
    into whatever the official currency for tax purposes is, but
    364 days of the year that shouldn't bother them. It is pretty
    easy with software these days to convert one column of figures
    into another column of figures.
        Chairman Paul. It seems like in the computer age we could
    probably work that out rather well. If I made one dollar of
    profit and silver was $40, maybe it could be worked out, but of
    course the more ideal thing would be not to have the income
    tax, and we wouldn't have to worry about problems like that.
        Okay, Walter is gone.
        I think that we will conclude. The Chair notes that some
    members may have additional questions for this panel that they
    may wish to submit in writing. Without objection, the hearing
    record will remain open for 30 days for members to submit
    written questions to these witnesses and to place their
    responses in the record.
        This hearing is now adjourned.
        [Whereupon, at 3:35 p.m., the hearing was adjourned.]

                                A P P E N D I X

                               September 13, 2011