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Taking the leash off our currency

Capitalism works when people making millions of transactions compare prices and choose the product that offers the best quality at the lowest price. Therefore, nothing is more fundamental to our economic system than the ability to compare prices, and purchase the best deal.

When our country was young, it wasn't clear that there would be one national currency. Some states claimed the right to issue their own currency, and even to tax the federal government's currency within their boundaries. Our Supreme Court wisely declared that there would be a single currency, and that it would be issued by the central government.

History is replete with schemes to obscure the price of goods, to give an economic advantage to transactions which might not be the best deal. In an early antitrust case, IBM was told that it could not "tie" the price of its computers to a promise to buy IBM-Brand data cards to feed into it, the 20th century equivalent of selling you a cheap HP printer that only works with overpriced HP ink.

Today's businesses can't offer their customers the option of using a Mastercard without also agreeing to price products the same for cash and credit customers, so that every cash transaction is "tied" to purchasing credit without regard to whether the transaction is a credit transaction or not. In America, the debit card is replacing the greenback as the most convenient medium of exchange, but the same companies that issue the credit cards force the merchant to charge every customer, whether cash or debit, a fee for this convenience. It's only two or three percent, but think about it. A few banks "tax" every commercial transaction as much as your local school district does, or the city that provides your roads, police and parks, or the state that provides whatever states provide these days. Unlike sales taxes, which often exempt items like food, the credit and debit card companies tax every consumer transaction the same. And a credit charge is included with every purchase.

Worse, if you want to buy a loaf of bread, the price is completely distorted by the fact that the price of an airplane trip for someone you don't know is built in to the price of the bread. The price you pay is more than the price someone else who carries a "Rewards" card pays. Do you realize that today in America, Mastercard and Visa make more than your neighbor who owns the gas station on each gallon of gas you buy with a debit card? How can that be legal? At best, our modern system is not fair, and at worst it undermines capitalism's ability to organize our economy efficiently.

My proposal is simple:

1. Only the Federal Reserve Bank will be allowed to issue debit cards, which can be used interchangeably with currency for any transaction, and the transactions will be processed by the federal government as a cost of providing the national currency. This will actually save our government money, because it costs less to process an electronic debit than it does to print and mint currency. If there is any additional cost to issue the debit cards, it will be more than covered by eliminating the banks' share of every purchase we make at the store.

2. Merchants will not be allowed to include the price of providing credit in the price of goods. Those who wish to purchase on credit will have to pay the price of the credit, which shall be prominently posted next to the cash price.

3. Private currency in the form of coupons, travel miles, club cards and any consideration other than money will be outlawed. Under my plan, when you buy a loaf of bread you won't have to pay for your neighbor's vacation or a bureacracy to support mail-in rebates.

It's high time we took back our currency.