[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





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