Bradley Jansen (editor)

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Bradley Jansen is the director of the Center for Financial Privacy and Human Rights, part of the Liberty and Privacy Network, a Washington DC-based non-profit founded in 2005 to defend privacy, civil liberties and market economics. He is an adjunct scholar at the Competitive Enterprise Institute. Previously at the Free Congress Foundation, Jansen safeguarded privacy and other Constitutional liberties including testifying before Congress on the USA PATRIOT Act proposal, National ID, and other issues. While working for U.S. Rep. Ron Paul, he initiated and lead opposition to the "Know Your Customer" proposal. Jansen holds a B.A. in International Studies from Miami University (Ohio), learned Spanish at the Pontificia Universidad Javeriana (Colombia), and with advanced studies in economic history at Universidad Católica de Valparaíso (Chile) and law and economics at George Mason University School of Law.

He is a columnist with The Daily Caller, The Huffington Post and Nolan Chart.

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Thanksgiving: a celebration American currency competition

by Bradley Jansen November 27th, 2014 8:14 am

Happy Thanksgiving to all of my fellow free bankers out there!

Today is our biggest secular national holiday.  Not everyone celebrates Christmas or Easter much less other national holidays like Memorial Day or Labor Day, but I don't know anyone who doesn't like Thanksgiving.  So, as we sit around eating turkey or some other dinner of thanks, remember also that we acknowledge the beginning of native currency competition in America.  While there was always competing use of different national currencies (basically different denominations and weights of gold and silver) in what would become the American colonies, and in that sense America was founding on free banking principles, Thanksgiving gives us a time to remember the birth of a truly American free banking experience.

Wampum!

Yes, wampum was, arguably, the first native American free banking episode.  Here is the description of the birth of the first native American currency, wampum, from the 1883 Ancient Landmarks of Plymouth by William T. Davis, the former president of the Pilgrim Society (pp. 57-9):

No legal-tender scheme, in these later days, has been bolder in its conception, or more successful in its career than that of the Pilgrim Fathers, which, with the shells of the shore, relieved their community from debt, and established on a permanent basis the wealth and prosperity of New England.  Many of the Indian tribes not acquainted with the use of wampum, were instructed in its use and before the enterprise could be successfully carried out, and adopted it greedily when when it was fully understood.  This currency of the early days was made from purple and white parts of the quad-haug shell, round, about a sixteenth of an inch in thickness, and a quarter of an inch in diameter, with a hole in the middle for stringing on strings of bark or hemp, the purple and white alternating on the string, the purple of double the value of the white, and the while value at five shillings per fathom.

 

Wampum string

[Quahog and whelk wampum made by Elizabeth James Perry (Aquinnah Wampanoag/Eastern Band Cherokee), c. 2009; image courtesy of Wikipedia]

Unfortunately, the success was relatively short-lived.  Here is a follow up to that development in the Rhode Island colony by Oliver Payson Fuller, The Hisory of Warwick Rhode Island: Settlement in 1642 to the Present Time published in 1875 (pp. 59 and 70) explaining,

The currency of the colony, wampum page, which had been in use from the earlier settlement, had fallen so low in value that was declared to be no longer legal tender.  The other colonies had abandoned it some time previously.  Massachusetts had commenced the coining of silver ten years before...

As there was no restriction in relation to the manufacture of peace, a large amount came early into circulation, and as early as 1649, a law was passed lowering the standard of black page one third, and four instead of three per penny was the legal rate.

There were even differences between new Coke currency and classic English currency even of the same name, explains Fuller, p. 70, "Forty shillings of the New England currency was equivalent to thirty shillings of English currency."

I guess this shows that inflation is as American as apple pie--though some things are definitely sweeter than inflation.

 


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Phil Crane and Gold

by Bradley Jansen November 11th, 2014 1:18 pm

Former US Representative Phil Crane passed away this weekend.  Readers of this blog should remember him as the author of the legislation to re-legalize monetary gold ownership in 1974.

Richard Viguerie's Conservative HQ writes:

In the 1960s and 70s Phil Crane, along with Bob Dornan, Dr. Ron Paul, John Ashbrook, senators Jesse Helms and Strom Thurmond were among the leaders of the conservative movement who challenged not only the Democrats, but the Republican establishment as well. . .

Although his legislative record was one of principled conservatism – over his long career, he got a 99 percent rating from the American Conservative Union – and he authored the 1974 legislation permitting the private ownership of gold, these things are again, somewhat forgotten, but the Republican Study Committee he founded lives on to affect legislation and what happens on Capitol Hill every day.

David L. Ganz in his book "The Essential Guide to Investing in Precious Metals: How to begin, build and maintain a properly diversified portfolio" related the short history of how Rep. Crane was able to reverse the ban on gold and move us towards monetary freedom (p. 65):

Starting in the early 1970s, a group of "gold bugs" began to advocate private gold ownership rights and eventually, they found the ear of some congressmen and senators who bought into their fairness theory and the claimed illegality of the gold seizures and recalls of the 1930s.

In a truly bizarre episode, they tacked a resolution allowing for private gold ownership onto the foreign aid package that the Nixon Administration wanted.  Presidential vetoes were threatened and an alarmist attitude prevailed at the Main Treasury building.

The foreign aid bill with its non-germane gold ownership clause finally made it to a vote in which conservative members such as Rep. Phil Crane, R-Ill., and others voted with liberal Democrats.  Crane said to me later it was the only foreign aid bill that he voted for in his 35-year congressional career.

His rationale: it was more important to get private gold ownership than argue the vagaries of a single year's foreign aid package.

Congressman Ron Paul's Freedom Under Siege similarly credits Congressman Phil Crane and explains a bit more about the general context with Howard Segermark and Sen. Jesse Helms re-legalizing gold clause contracts.

Bruce Bartlett, like me a former staffer for Rep. Ron Paul, shares the story that Congressman Phil Crane shared with him about his visit to Ft. Knox and inspection of the gold there on his blog here.

Although not yet old enough to vote, I supported Congressman Crane in his 1980 presidential run (losing, of course, to Ronald Reagan) and was a big fan of his.  Soon after I started working as the monetary policy staffer of Congressman Paul in 1997, I met the chief of staff, I think it was, for Congressman Crane.  I told him I was a big fan and brought up the gold issue with him.  He told me that he and his boss still favored a return to a gold standard and lamented that so few were interested in these issues anymore.

I'm glad Phil Crane lived long enough to see a rebirth in interest in gold and monetary alternatives and a growing skepticism towards the Federal Reserve.


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House Passes Audit the Fed Bill

by Bradley Jansen September 17th, 2014 2:49 pm

Today the US House of Representatives passed HR 24, the Audit the Fed bill by a vote of 333-24 under the suspension calendar (requiring a ⅔ majority to pass).

House of the Clerk floor summary here:

1:12:15 P.M. H.R. 24 Considered as unfinished business. H.R. 24 — "To require a full audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks by the Comptroller General of the United States, and for other purposes."
1:44:04 P.M. H.R. 24 On motion to suspend the rules and pass the bill, as amended Agreed to by the Yeas and Nays: (2/3 required): 333 - 92 (Roll no. 504).
1:44:04 P.M. H.R. 24 Motion to reconsider laid on the table Agreed to without objection.

The roll call is here to see how your Representative voted:

http://clerk.house.gov/evs/2014/roll504.xml

All Republicans voted "Aye" except for Rep. Campbell (and four not voting) along with a majority of the Democrats (but well less than ⅔ of their number) with 106 in favor 91 opposed and two not voting.

It would be highly unlikely for the Senate to take up the bill this late in the calendar.

 


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Free Banking and Economic Growth in Lower Canada, 1817-1851

by Bradley Jansen August 19th, 2014 3:20 pm

Mathieu Bédard and Vincent Geloso have a paper out on SSRN here, "Free Banking and Economic Growth in Lower Canada, 1817-1851":

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2482313#.U_HwDx1w4a0.facebook

Says the abstract:

Generally, the historical literature presents the period from 1817 to 1851 in Lower Canada (modern day Québec) as one of negative economic growth. This period also coincides with the rise of free banking in the colony. In this paper we propose to study the effects of free banking on economic growth using theoretical and empirical validations to study the issue of whether or not economic growth was negative. First of all, using monetary identities, we propose that given the increase in the stock of money and the reduction in the general price level, there must have been a positive rate of economic growth during the period. We also provide complementary evidence drawn from wages that living standards were increasing. It was hence impossible for growth to have been negative. Secondly, we propose that the rise of privately issued paper money under free banking in the colony had the effect of mitigating the problem of the abundance of poor quality coins in circulation which resulted from legal tender legislation. It also had the effect of facilitating credit networks and exchange. We link this conclusion to the emergence of free banking which must have been an important contributing factor. Although we cannot perfectly quantity the effect of free banking on economic growth in Lower Canada, we can be certain that its effect on growth was clearly positive.


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House Committee Passes Audit the Fed Bill

by Bradley Jansen July 24th, 2014 5:34 pm

The House of Representatives Committee on Oversight & Government Reform today passed by voice vote HR 24, the "Federal Reserve Transparence Act of 2014".  More background and video of the hearing available here.

 

Text as passed here:

H.R.-24-Issa-ANS

 

Federal Reserve Transparence Act original text

 

 

EDIT:  The text of the substitute bill considered and passed includes some formatting and technical changes as well as some substantive ones:

 

H.R.-24-Fed.-Reserve-Transparency-Act-original-text

 

 

The substitute passed includes some substantive changes.

In the original text, Section 2 (b) (c) is changed from

"REPEAL OF CERTAIN LIMITATIONS.—Subsection 20  (b) of section 714 of title 31, United States Code, is 21  amended by striking the second sentence.

To this:

(c) REPEAL OF CERTAIN LIMITATIONS.—Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after ‘‘in writing.’’.

I don't know offhand the significance of this change.  Also from this:

(d) TECHNICAL AND CONFORMING AMENDMENT.— Section 714 of title 31, United States Code, is amended by striking subsection (f).

to this:

1. (d) TECHNICAL AND CONFORMING AMENDMENTS.—
2. 23  Section 714 of title 31, United States Code, is amended— (1) in subsection (d)(3)—
(A) in subparagraph (A)—

(i) by striking ‘‘or (f)’’;

(ii) in clause (i), by striking ‘‘or (f)’’; and

(iii) in clause (ii), by striking ‘‘or (f)’’; and

(B) in subparagraph (C), by striking ‘‘or (f)’’; and

(2) by striking subsection (f)

Also, the  "SEC. 3. AUDIT OF LOAN FILE REVIEWS REQUIRED BY ENFORCEMENT ACTIONS" has been struck from the original text:

SEC. 3. AUDIT OF LOAN FILE REVIEWS REQUIRED BY EN- FORCEMENT ACTIONS. (a) IN GENERAL.—The Comptroller General of the United States shall conduct an audit of the review of loan files of homeowners in foreclosure in 2009 or 2010, re- quired as part of the enforcement actions taken by the Board of Governors of the Federal Reserve System against supervised financial institutions. (b) CONTENT OF AUDIT.—The audit carried out pur- suant to subsection (a) shall consider, at a minimum— (1) the guidance given by the Board of Gov- ernors of the Federal Reserve System to inde- pendent consultants retained by the supervised fi- nancial institutions regarding the procedures to be followed in conducting the file reviews;

(2) the factors considered by independent con- 2 sultants when evaluating loan files; 3 (3) the results obtained by the independent con- 4 sultants pursuant to those reviews; 5 (4) the determinations made by the independent 6 consultants regarding the nature and extent of fi- 7 nancial injury sustained by each homeowner as well 8 as the level and type of remediation offered to each 9 homeowner; and 10 (5) the specific measures taken by the inde- 11 pendent consultants to verify, confirm, or rebut the 12 assertions and representations made by supervised 13 financial institutions regarding the contents of loan 14 files and the extent of financial injury to home- 15 owners. 16 (c) REPORT.—Not later than the end of the 6-month 17 period beginning on the date of the enactment of this Act, 18 the Comptroller General shall issue a report to the Con- 19 gress containing all findings and determinations made in 20 carrying out the audit required under subsection (a).

 

 Again, I'm not sure offhand what, if any, are the significance of these changes, but I do know the devil is in the details! 

Audit the Fed bill

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NY Regs Threaten Bitcoin and Digital Currencies

by Bradley Jansen July 23rd, 2014 12:15 pm

The New York Department of Financial Services (NYDFS) has issued new proposed proposed BitLicense rules and regulations that would curtail not encourage digital currencies like Bitcoin.

Many years ago when I first started in Rep. Ron Paul's office, I initiated and led a fight against a similar anti-money laundering proposal called "Know Your Customer" which would have increased regulations, violated financial privacy and threatened currency competition. Lots of background on that fight here.

I and other bloggers here have written a lot on how the anti-money laundering regulations do more to inhibit currency competition now than legal tender laws do. Lots of background here. Check out Larry White's talk about these issues at Cato too:

The Chamber of Digital Commerce is calling on the Bitcoin community to submit comments to the NYDFS. Instructions on how to submit comments can be found on the NYDFS website at http://www.dos.ny.gov/info/register.htm.  More on the new Chamber of Digital Commerce here.

A new digital currency trade association is fighting the regulations. Their press release can be read here:

“One egregious aspect is that the NYDFS is only giving 45 days to comment, which is severely inadequate to proposed regulations of this scope” said Perianne Boring, President of the Digital Chamber. “We are requesting that the NYDFS extend the comment period through the end of 2014, to allow the industry adequate time to properly review and respond.”

When fighting the KYC proposal, I generated 300,000 comments against the proposal (with only 105 in favor). Let's organize those groups and experts interested in these issues to figure out how to fix this proposal now: contact me at bjansen @ financialprivacy.org and stay tuned here if interested in joining this fight!

Kudos for the NYDFS for being pro-active to secure a legal path to digital currency use, but the proposal as written would do much more harm than good. Let's hope they are open to making sure they get this right and don't end up shifting digital currencies and other financial innovations away from New York. Even more thanks go out to Perianne Boring for her efforts!

Now is the time to stand up and make the world (well, at least New York) safe for digital currencies and alternatives to the Fed!

 

EDIT: the new proposed rules are now online here (scroll to page 14):

 

The National Law Review has a post here.


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Blame the Fed for Reagan's Spending

by Bradley Jansen April 24th, 2014 5:11 pm

A nice debate has started brewing about the records of Presidents Jimmy Carter versus Ronald Reagan on spending--thanks to US Sen. Rand Paul who again seems to be setting the terms of the debate.

Mother Jones has published a video of Rand taking issue of spending rising faster under Reagan that it did under Carter.

MSNBC has publicized the video through an interesting story here saying, in part:

It’s worth emphasizing, in case details like these make a difference, that Paul’s criticism of Reagan’s fiscal record happened to be accurate. The budget deficits were smaller under Carter than Reagan. Federal spending grew slower under Carter than Reagan, too.
But to put it mildly, Republicans don’t want to hear any of this, and they tend to be thoroughly unhappy when anyone compares Reagan unfavorably to Carter, even when the analysis is true.
before adding:
After Corn’s piece ran, Paul’s office issued a statement to Mother Jones, noting, “I have always been and continue to be a great supporter of Ronald Reagan’s tax cuts and the millions of jobs they created.”
Reason has now got into the act with a story here.  They basically confirm that Rand's facts are right before concluding, "The short version: Reagan spent like a drunken sailor and skipped out on the bill."
They even include a handy chart from Veronique de Rugy at Mercatus from here report here
Reason sums up Veronique de Rugy's (in full disclosure, she is part of the Board of the think tank that runs this blog) numbers:
As de Rugy does the math, Carter increased real spending 17 percent over the last budget of his predecessor, Gerald Ford. Over two terms, Reagan increased spending by 22 percent over Carter's final budget. On an annualized basis, then, Carter grew spending by 4.25 precent a year, while Reagan grew it by 2.75 percent. However, when expressed as a percentage of GDP, spending under Carter averaged 20.6 percent per year while Reagan averaged 21.6 percent. Spending typically really gears up in a second-term president's final years, so it's plausible to theorize that had Carter managed to stick around for eight years, he might have equaled or surpassed what the real-world Reagan managed.

For those still reading along, thanks, and you might be asking, what if anything does this have to do with free banking?  Well, I would like to posit that it is at least tangentially related in that from what I remember from the early days of the Reagan Administration, he cut a deal with Congress  on spending that would have had nominal growth but real cuts based on then projected inflation.  The blame then goes to Federal Reserve Chairman Volcker for slaying the inflation dragon much faster than anticipated so that the projected real spending cuts became real spending increases.

The St. Louis Fed published a paper by Keith W. Carlson in January/February 1989 entitled "Federal Budget Trends and the 1981 Reagan Economic Plan" (pdf) explaining that "prices were generally increasing at double digit rates."  The paper goes on to illuminate my point:

The 1981 administration forecast for inflation for the 1980—86 period was a 7.1 per-cent annual rate; the actual inflation rate during this period was 5.1 percent.

So, in conclusion, yes, Rand Paul is right to raise spending as an important economic issue and take sacred cows out for fair examination--but let's not forget that the Federal Reserve deserves its share of blame both for confusing economic planners as well as monetizing budget deficits.


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White and Selgin at Heritage on the Fed tomorrow

by Bradley Jansen March 18th, 2014 2:36 pm

Larry White and George Selgin and Jerry Dwyer will be speaking at the Heritage Foundation tomorrow.

The Federal Reserve at 100: How Well Has It Done?

Has the Federal Reserve functioned as it was intended? How well has the Fed managed the economy and calmed business cycles? Do its successes outnumber and outweigh its failures? Join us as leading experts address these and other important questions.

RSVP to attend in person or just watch online.

http://www.heritage.org/events/2014/03/federal-reserve-at-100


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Cayman Financial Review: Repeal the AMLs

by Bradley Jansen February 24th, 2014 3:23 pm

My call to repeal the anti-money laundering laws got published in the current issue of the Cayman Financial Review.  In "Repeal the anti-money laundering laws" I explain how the AMLs stifle currency competition.  I concluded:

There are political costs to consider. The increased scrutiny of politically exposed persons and sanctions greatly complicate AML compliance, increase costs and can cause unintended political by-products. In addition, to the extent the AML programs are successful, they can divert funds away from monitored channels to places with no financial intelligence. Iran trades with gold marginally reducing demand for the U.S. dollar in international trade. Individual Iranians use bitcoins as an alternative to their currency instead of the U.S. dollar. Just recently, the Cuban interest section in Washington, D.C. is closing for lack of legitimate banking options because of AML and FATCA compliance concerns.

Even when the authorities shut down the Liberty Reserve operation (an alternative electronic currency operation allegedly set up for money laundering), they admitted that most people using the site were there for the low 1 percent transaction fees for remittances or get around forex restrictions. The plight of the KenyanGuatemalan and Somali people and others around the world who depend on low-cost money transfers to survive or rise out of poverty or recover quickly from disasters should not be ignored.

AMLs stifle needed new payment systems such as bitcoin. Less regulated industries such as technology are adapting much faster than the financial system. Actors in the financial industry are often late adopters to quickly changing technologies. On the other hand, new electronic monies have been less regulated (though this is changing).

It is bitcoin, Liberty Reserve and others that are allowing faster and cheaper mobile payments to more of the world’s population, including the unbanked, than has ever been possible. These changes mean more money is reaching the people who need it most ─ and faster including situations when lives depend on it. Grafting a failed AML approach from the polyester-wearing disco music era onto the fast changing 21st Century technologies can’t end well.

In conclusion, as I cited in my 2001 Congressional testimony on what became the USA PATRIOT Act, money launderers do not have a statistically significant chance of being caught so the deterrent effect of our AML approach is negligible. Only a minuscule fraction one percent of CTRs and SARs result in criminal convictions. I know of no examples where AML reports prevented any terrorist events.

Our AMLs are a failure: the drug trade continues unabated, financial fraud is more prevalent now than ever, and terrorist groups continue to finance their operations. The greatest tragedy is what everyone knows and policymakers don’t seem to care: it is the unbanked, the poor, and the racially and ethnic minorities in rich countries (and the populations of poorer countries) that suffer these costs for such elusive benefits.

Time to reboot our AML policies to aid law enforcement, encourage innovation, cut costs and protect privacy and other human rights.

On a humorous personal note, the original story ran with a bio that added a "g" to the end of my dot org email address before I got it corrected.

Relatedly, Larry White made many of the same points in his talk at the Cato Monetary Conference last year.  Video here.

Edit: The American Banker has a white paper out calling for reform of the AMLs making similar arguments to mine.  They want to "modernize" them "using predictive analytics to pinpoint suspicious activity."


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Selgin on RT

by Bradley Jansen February 23rd, 2014 8:17 pm

Since George is going to be modest, I'll take the liberty of pointing out that George Selgin was interviewed on RT television's "Boom and Bust" show.

The link is here:

http://rt.com/shows/boom-bust/economy-deflation-olympics-nbc-497/

The segment with George comes on about halfway through.  As the show describes it, "monetary and banking economist George Selgin discusses price and debt deflation."


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