In 1994, the Republicans took control of Congress for the first time in about 40 years, based largely on “nationalizing” the election by having Republicans sign up en masse in support of Newt Gingrich’s “Contract with America.”

The contract itself was lame. The strategy was solid: present the American people with a clear statement of priorities.

Of course, the Republican follow through on the major points and proposed laws in the contract itself was pathetic; no second contract was ever proposed.

Now, as a libertarian, I understand my own views are far outside the mainstream of policy wonk fare. Nonetheless, I think it’s important to put forth a libertarian “Contract with America” that states just the most important changes that need to get done if we’re going to keep the economy (and the country) from spinning lugubriously down the toilet.

Is there any chance such a contract would actually be signed onto by current politicians? At best, maybe six or ten would do so–though even this would surprise me.

Nonetheless, being as always an optimist, here is my list of the most crucial changes that have to be enacted if we’re to avoid third-world economic status. In the interest of keeping things both simple and prioritized, I make the list only three items long. Enact these three changes, and the economy might have a chance to revive itself. Then, we can move on to the next three items.

1) ABOLISH THE FEDERAL RESERVE. It’s not surprising that the fifth of ten planks in the Communist Manifesto called for a central government bank with monopoly power. If I had to name one institution that absolutely has to go, it would be the Federal Reserve, because the Reserve’s ability to create money out of thin air (a power that can be safely entrusted to no one), is what makes all the other government abuses possible.

2) OUTLAW FRACTIONAL RESERVE BANKING (aka “counterfeiting”). Of course, the Federal Reserve endorses the piratical practice of fractional reserve banking. Under FRB, when you deposit a thousand bucks in the bank in a “demand deposit”, the bank can immediately lend that money out to another party. What if you come back the next day and want to take your money out? Well, then the bank takes money from its other accounts to pay you. What if more people want their money, than the bank has in deposits? In the old days, you would get a run on the bank. Nowadays, you get a “bank bailout.” Either way, the whole crooked system needs to be outlawed as inherently fraudulent.

3) ABOLISH ALL “LEGAL TENDER” LAWS. As it stands now, Federal Reserve funny money is “legal tender for all debts, public and private.” If you trade using other forms of money, you are likely breaking the law (though, as a practical matter, such trades are usually only prosecuted if they become common enough to be politically troubling). There should be no law against private minting of coins, so long as the minting is non-fraudulent (that is, you can’t mint a one ounce silver coin, but only put a half an ounce of silver in it). If people are allowed to trade using money that has actual value, Gresham’s law (“bad money drives out good”) works in reverse. That is, people will begin using money that is a lasting store of value (gold and silver coins), and will become more and more reluctant to use government-issued toilet paper money that loses five to ten percent of its purchasing power every year.

And that’s all there is! Are there hundreds of other things that need to be done to reach the goal of a free society? Of course. But a sound principle of business management is to prioritize, and not let yourself be distracted from priority number one until you have achieved it.


  1. I think you misunderstand the main argument here. We are merely arguing for a single currency backed by gold or silver. You know, the way it was when this country saw unprecedented prosperity, not unprecedented debt and poverty.

    And our “central banking system” is private and not under federal control or review. The federal government actually borrows money from the “central bank”, which is made up of private banks, many of them in Europe. You pay interest on each and every dollar you carry.

  2. at the time the federalists were trying to con Patrick Henry to join the cabal, there were over 1500 different banks pumping out 1500 different coins/bills.
    a libertarian (sic) from New York had a serious problem trying to buy goods from Virginia to sell in his store. The guy in Virginia couldn’t use the bank notes the guy from NY was trying to spend.
    you will also find in our history, bank after bank having a run on them, that ole free market at work, seeing without regulations they were still loaning out 20-1…save those deposits were not insured.
    this is one of the main reasons why there arose a need for a federal government in the first place. a central banking system, and a single monitary system. ahem, this came long before any “communist manifesto” lolol. tff.

  3. Well, I wrote a “Contract with America” consisting of only three points, figuring that–since they all had to do with economics–I would get only a few comments. I take a few days off to earn a living, and return to see 35 comments, including a few nasty spats between those who support hard money (the correct position), and those who don’t (the impractical position that has brought us to where we are today, and will eventually bring us to much more dire conditions).

    All of which confirms my view that economics is not, as the wags say, a dismal science that bores people to death.

    A point of clarification, that I thought was clear in the original blog post: Gresham’s law (“bad money drives out good”) only works in a system of fiat money in which the government mandates that real money (90% silver coins, in the American example) will be worth EXACTLY THE SAME as fraudulent fakes (the nickel-copper slugs minted after 1964). Of course, in such a system, people will behave logically and hoard the coins that have real, intrinsic value that will continually rise against the fake, fiat slugs that replace them.

    In a FREE SOCIETY, in which there are no “legal tender” laws, Gresham’s Law works in reverse. People will REFUSE TO ACCEPT government-issued nickel-copper fakes, and will insist on the real thing: 90% silver coins. Government issued fiat money rapidly becomes worthless, because people have no faith that government will show discipline and not inflate (that faith is thoroughly grounded in history).

    In a free society, merchants and consumers will vastly prefer gold and silver coins, because they know that such coins are almost impossible to inflate. They might accept worthless government paper money or nickel-copper slugs from a few desperate customers, at a tremendous mark-up. For example, your friendly neighborhood grocer might offer a pound of ground round for ten cents a pound in silver, or two dollars a pound in government funny money.

    In a free society, good money drives out bad. This works on the same principle as “good products drive out bad products.”

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