Has anyone done a real life proof-of-concept of the Austrian ideal of a monetary system? I’ve seen a lot of talk about “abolishing the Fed” and “instituting sound money” but has anyone tried walking the walk?
In my mind, I imagine a group of like-minded people setting up a community bank that has 100% reserve demand deposits and 100% at risk time deposits (investments, if you will). Taken to the next level, all these deposits are in a sound money system, such as ounces of silver or gold. Checkbooks, debit cards, or privately minted silver/gold coins could be used for transactions.
I suppose you run into problems unless you get enough people on this “local precious metal standard” in actually being able to use it. And you still have to pay Federal taxes in Federal Reserve notes (and state taxes, unless you get a state that starts it’s own precious metal currency, like Idaho has talked about).
Sound money system is a system of private, competing currencies. Monopolized gold standard is not sound monetary system. Competition is the key. What you are describing is only one of many possible enterprises that could emerge on unhampered market. You will go to jail for trying to set up one of those though - tough times.
I don’t think you would go to jail for setting up an alternate currency system to the Federal Reserve Notes. Legal Tender laws just say that those notes have to be accepted for all debts (if offered), not ONLY those notes can be accepted for debts. There are many “barter networks” that have their own form of currency that exist. These currencies are denominated in dollars, though, for tax purposes as they still must be reported as income (curse you 16th amendment!).
From what I read, the only time you run afoul of legal tender laws is when you refuse Federal Reserve Notes (or their electronic/checkbook entry equivalent) that are offered to you as payment of a debt already incurred. Even if you have a contract to recieve payment in some other form, courts will rule in favor of the person offering Federal Reserve Notes. You can avoid that by requiring payment up front for any services/goods you wish to sell.
I believe a sound money system is any system that preserves the purchasing power of money. Competing money systems are just a free marketplace. In my illustration of a “proof-of-concept” the Federal Reserve system would exist in parallel to the local sound money bank, but that doesn’t make the inflatable Federal Reserve Notes sound money. Of course, it’s not a free market of money, as the Federal Reserve Note has a legal advantage.