u/Heng-Li

Other "free market" schools of economics like neo-classical and monetarist (Chicago) do not support monetary freedom. They both support central banking and the statist regulation of money.

Other schools of economics believe money is not a market produced good and a creation of the state. Therefore they would say monetary freedom does not make sense, since there is no such thing as money without the state. Austrians, since its founder Carl Menger, have rejected the state origin of money (see the sidebar for Carl Mengers work on the origin of money). Money, like language and law, is a spontaneous order and did not originate from the state.

What is monetary freedom? There are two main laws preventing monetary freedom: taxes (VAT tax and capital gains tax) and legal tender law. Taxes prevent everyday transactions of anything other than paper currency (eg USD). In the US to barter in anything other than USD, you need to fill out a 1099-B and pay tax. Legal tender law prevents transactions involving debt outside of USD. For example you cannot create a mortgage or credit card to be paid in gold ounces since a creditor must accept payment for debt in USD. Greshams law dictates no one would ever have the incentive to pay their debt in anything other than USD.

In the USA, Ron Paul's Free Competition in Currency Act (2011) is the only legislation proposed to expand monetary freedom. This gives legal tender status and removes taxes for precious metals like gold and silver (and e-currencies like Bitcoin). Why should we give status to these commodities and not others? Because historically the market gravitated towards these metals use as money due to their physical properties. Their fungibility is recognized by law. When redeeming your stored gold in a bank, the bank is not legally required to give back the exact same physical piece of gold you deposited. They are required to produce the equivalent ounces of the gold because all gold and silver are completely fungible with each other. Their value is also completely proportional to its weight unlike other commodities like diamonds. A 10 oz diamond is not worth 10 1 oz diamonds. However a 10 oz piece of gold is completely equal to 10 1 oz pieces of gold. Because of these physical properties of precious metals the market naturally gravitated towards their use as money. It would be better to completely abolish legal tender law and capital gains taxes. However it's easier to give legal tender status and remove taxes on these specific commodities.