Congress Eyes Rules for the Fed - New York Sun

The New York Sun runs this article which has some interesting ideas regarding the US FED. The article notes that none of these bills are likely to pass, but they have been introduced in Congress. We'll review a couple of items in the list that would impact the monetary system if implemented.

-Free Competition in Currency Act, H.R. 77, which was introduced by a Republican of Georgia, Paul Broun, and would codify Nobel laureate Friedrich Hayek’s idea of the deantionalization of money by ending legal tender status of United States fiat scrip and open the system to privately-issued competing currencies, and end any tax arising from the spending of gold or silver;

Sound Money Promotion Act, S. 768, offered by Senator Mike Lee of Utah, would exempt from taxation any gold and silver coins declared to be legal tender by either the federal government or any state government, extending nationally the most radical monetary measure to be enacted anywhere in recent years, the Utah Sound Money Act, which makes gold and silver coins legal tender in the Beehive State and removes state taxes arising from spending them.

Sound Dollar Act, or H.R. 1174, another Brady project, which would, among other things, including on the Open Market Committee more presidents of the regional Federal Reserve Banks, get tougher with the International Monetary Fund, and focus monetary policy on price stability;

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my comments: Obviously if the US Congress passed legislation that opened up

competing currencies to the US dollar as legal tender, that would have a huge

impact on the monetary system. It should be noted that these first two bills have

very little chance of being passed and signed into law.

The last one is interesting because of this statement:

"get tougher with the International Monetary Fund"

A story we have covered all year on this blog is the failure of the IMF to get the US Congress to pass IMF reforms that would change the quota system and allocate more influence to the BRIC nations. Of course this has led to the BRIC's seemingly going their own way as we have also noted. Next week the BRIC summit will take place and a lot of eyes will be watching that.

But the point to make here is to notice that the current US Congress is just not friendly towards the IMF (note the phrase "get tougher with the IMF"). Right now polling suggests the US Congress will remain in Republican control and, if anything, is likely to be even less inclined to be supportive of the IMF. This bill likely will not pass in Congress, but it does reflect how the Republican majority probably feels about the IMF. The BRIC nations will probably keep moving away as a result since they see little hope for change anytime soon.

What we don't know is if the BRIC nations are really going to split and form their own competing system or not. Whether they are serious about replacing the US dollar based system. Right now Russia is clearly leading that charge. 

What remains to be seen is if the split is real or if the BRIC's just want to pressure the US Congress to go along with the IMF reforms. Time will probably tell.