Fiat money isn't worth the paper it's printed o... Wait, WHAT!?

[richyoung]

Or the Swiss franc:




Guess what?  Currencies fluctuate against each other.  Using the fluctuations of the Euro as proof that the dollar is losing value is just plain stupid and betrays a gross ignorance of economics and currency exchange.

You do realize - your "Swiss Franc" graph shows the value of the dollar DROPPING, right?  A quarter bought a swiss franc in '71, now it takes 3 of them.  Or to put it charitably, if there was a major currency that the dollar has historically gone UP against over the last 30 years, you'ld have a point...but you don't.

[richyoung]

There is no requirement in the USC that legal tender be gold or silver.

Factually challenged today?  How about this:

U.S. Constitution - Article 1 Section 10   
Article 1 - The Legislative Branch
Section 10 - Powers Prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

[Matthew Carberry]

Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.

[The Rabbi]

Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.

Of course that what it means.  Sheesh.  Factually challenged, indeed.

[richyoung]

Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.

Here's some more for you:

U.S. Constitution - Article 1 Section 8   
Article 1 - The Legislative Branch
Section 8 - Powers of Congress

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

Get it?  "Coin" money.  Not "print" money.  Not to mention that if the STATES are restricted to gold and silver coin, then what kind of MONEY, pray tell, is COngress going to have to supply?

[richyoung]

Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.

Of course that what it means.  Sheesh.  Factually challenged, indeed.

...and if the STATES are restricted to "gold and silver coin", what type of money is the Congress going to have to supply for the system to function?

[The Rabbi]

Not to play devil's advocate or be contrary but that reads as if it only restricts the several states, not the federal government.

Of course that what it means.  Sheesh.  Factually challenged, indeed.

...and if the STATES are restricted to "gold and silver coin", what type of money is the Congress going to have to supply for the system to function?

Doesnt specify.  WHich is why the Federal Govt issues paper money.
But again, if you have issues with paper money, please send all of yours to me.

[richyoung]

...and if the STATES are restricted to "gold and silver coin", what type of money is the Congress going to have to supply for the system to function?

Doesnt specify.  WHich is why the Federal Govt issues paper money.
But again, if you have issues with paper money, please send all of yours to me.

IF:

1.  The states are prohibited from using anything other than silver and gold coins, and...
2.   The states are prohibited from coining their own money, and...
3.  Only COngress can coin money, then by simple deduction =

Congress has to coin gold and silver as money - otherwise, from where are the states to obtain the gold and silver coins whose use is mandated, and Congress is charged to supply?

[The Rabbi]

1+1=5.  No dice.  You'd have to provide something more substantive.  A Supreme Court opinion striking down the various currency acts would be a good start.

[richyoung]

1+1=5.  No dice.  You'd have to provide something more substantive.  A Supreme Court opinion striking down the various currency acts would be a good start.

Why would the Supremem pay any more attention to breaking this part of the Constitution than any other?  Treason on the part of 5 out of 9 judges does NOT change what the Constitution calls for.

In this case, 1+1 = 2, Rabbi.  Lets go over it again:

1. The states may only make gold and silver coin legal tender for debts.

U.S. Constitution - Article 1 Section 10   
Article 1 - The Legislative Branch
Section 10 - Powers Prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Agreed thats what it means?

2.  Only the United States Congress can "coin" money -

U.S. Constitution - Article 1 Section 8
....To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

Only Congress can make the money, and it has to be "coined" - gold and silver, because THATS what the States under the Constitution are rrequired to use - kapisch?


3. Now lets look at Section 10 again:

Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal;

coin money;

[/b]

The States CANNONT, MUST NOT coin money - only the Federal Congress can.

emit bills of credit;

[/b]

"bills of credit" are debt instruments - paper money bajced by a promise to pay.  Federal Reserve Notes are "bills of credit", so were the Continentals issued by the previous American government, as well as Lincoln's (illegal) Greenbacks.  This provision PROHIBITS the states from issuing paper money - the Federal Government is already prohibited from issuing paper money, because it has the SOLE authority to issue money to thte States, which MUST, by the COnstitution, use gold and silver coin.  There would be no point to issuing anything else, as no one in the States cpould use it - it could only be used in territories unincorprated into a state.

make anything but gold and silver coin a tender in payment of debts;

Game, set, and match.  The states MUST use gold and silver coin - only the Federal government can supply it - in fact the states are prohibited from using paper money, or even establishing the relative value of gold and silver, or foriegn coins - that is reserved to Congress in Section 8.

pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

[richyoung]

So answer me a question Rabbi - if Congress can make anyhting it wants "money", and the States CAN'T use anything other than gold and silver coin, and CAN'T coin their own money, and CONGRESS has to not only coin money, but also set the relative values of gold and silver and of foreign coins,...

1.  Where do the States get the gold and sivler coin they have to use?

2.  Where is this "other" money going to be used, since it can;t be used in the States?

[The Rabbi]

So answer me a question Rabbi - if Congress can make anyhting it wants "money", and the States CAN'T use anything other than gold and silver coin, and CAN'T coin their own money, and CONGRESS has to not only coin money, but also set the relative values of gold and silver and of foreign coins,...

1.  Where do the States get the gold and sivler coin they have to use?

2.  Where is this "other" money going to be used, since it can;t be used in the States?

1) Same place they get it from now.
2) What "other money" are you talking about?  There is no other money.

And as a reminder, the opinion of the USSC on what the Constitution means is binding and definitive.  Much more so than some guy on a chatboard.

[richyoung]

So answer me a question Rabbi - if Congress can make anyhting it wants "money", and the States CAN'T use anything other than gold and silver coin, and CAN'T coin their own money, and CONGRESS has to not only coin money, but also set the relative values of gold and silver and of foreign coins,...

1.  Where do the States get the gold and sivler coin they have to use?

2.  Where is this "other" money going to be used, since it can;t be used in the States?

1) Same place they get it from now.

They AREN'T getting it now - that's rather the point.  They are SUPPOSED to get it from the same place they were gettting it after the Coinage act of 1792.  Might ought to peruse that pupy, and seehow many times the words "gold and silver coin" are used....

2) What "other money" are you talking about?  There is no other money.

The "other money would be the NON-gold and NON0-silver money you insist the government had the right to create.  Where is it to be used, sinc ehte states can't?

And as a reminder, the opinion of the USSC on what the Constitution means is binding and definitive.

Why?  Because the Constitution SAYS SO?  If THEY don't follow it, they have lost the moral imperative to compel ME to follow it - they have broken the compact.

 

Much more so than some guy on a chatboard.

None are so blind as those who refuse to see.... or to put it another way, how legal are all those "gun control" laws, in the light of the 2nd Ammendmant?  Freedom isn't always lost at one fell swoop, with conquering armies marching through rubbled streets.   Sometimes its lost one thin sliver of a slice at a time, gradually, slowly....

[Matthew Carberry]

rich,

Maybe I'm missing something.

I'll grant as written the .gov should be only making gold and silver coins, and Congress can set their value.  That doesn't solve the problem of "fiat money". 

If I understand correctly, there isn't enough gold or silver in existence for the actual amount of wealth around on a ounce-dollar basis to make a dollar coin worth "a dollar", not with a coin at an ounce and an ounce at $600 for gold and even at whatever silver's trading at.  You'd have to have some kind of debased alloy to get usably sized coins out of  (small enough denominations to make change and to be rational to carry around as cash on hand).  A debased coin is hardly better than paper.

Even if there were enough metal around for everyone's use, if we have a new innovation in science and all of a sudden our productivity triples or something, there won't necessarily be enough specie found to match the demand.  So you'll have a "dollar" coin that suddenly has a set value in no relation to anything resembling it's scarcity as Congress will set it's value to the abstract "wealth" amount.

Whether it's made out of paper or gold, if its value is just assigned to match economic reality, what does it matter?

[Perd Hapley]

carebear, perhaps he has discovered the philosopher's stone.   

[richyoung]

rich,

Maybe I'm missing something.

I'll grant as written the .gov should be only making gold and silver coins, and Congress can set their value.  That doesn't solve the problem of "fiat money". 

If I understand correctly, there isn't enough gold or silver in existence for the actual amount of wealth around on a ounce-dollar basis to make a dollar coin worth "a dollar", not with a coin at an ounce and an ounce at $600 for gold and even at whatever silver's trading at.  You'd have to have some kind of debased alloy to get usably sized coins out of  (small enough denominations to make change and to be rational to carry around as cash on hand).  A debased coin is hardly better than paper.

Even under the old system, coins of copper, brass, and nickle were used for smaller denominations.  Also, remember, the par value is usually maintained such that the metal in the coin is worth SLIGHTLY less than the face value, to avoid coinage from being scrapped for its material content.  Add in the fact that so much of our wealth exists in the form of digitally kept records, and you will rapidly see that it isn't necessary for every single dollar to be instantly redeemable in precious metal.  No less than Alan Greenspan himself had repeatedly called for a return to the discipline ncumbant upon a gold-backed currency.  FYi, over 80% of the gold is currently used for jewelry and decoration.  If you add in platinum, copper, etc....

Even if there were enough metal around for everyone's use, if we have a new innovation in science and all of a sudden our productivity triples or something, there won't necessarily be enough specie found to match the demand.  So you'll have a "dollar" coin that suddenly has a set value in no relation to anything resembling it's scarcity as Congress will set it's value to the abstract "wealth" amount.

Whether it's made out of paper or gold, if its value is just assigned to match economic reality, what does it matter?

Its when its value is inchained to any reality that problems creep in.

[CAnnoneer]

I think the simple middle ground among all these arguments boils down to money supply control by the gov in a manner that neither strangles the economy nor does it produce hyperinflation. Rich argues that a way to curb abuse and mismanagement by the gov is to be on a metal standard, but that is impractical. So, the real issue is to try to control spending by gov, because excessive deficits seem to be the chief devaluer of our currency.

So, the issue is not metal or paper, but to what extent the gov can be stopped from bankrupting itself. To me, that is much more scary than how the euro does. Moreover, the strength of the gov is the only guarantee of the currency, and that is why making America look impotent on the international scene is so damaging to the dollar as well. As an aside, is it really a coincidence that the Dems fighting to lose the Iraq war are financed by people (Soros, anyone?) that bet against the dollar?

Finally, we do not want the dollar to be too expensive either, because then foreigners will be less likely to invest in the US. Observe that South Korea car manufacturers are hurt by the strengthening of the won, because the cost of their own money decreases their effective profit from exports.

[Waitone]

http://www.amazon.com/coming-battle-complete-history-national/dp/0965636909

The Coming Battle was written in 1899 and details the history of banking in the US.  A fascinating book because
a.  the US has always been in a fight over control of the currency
b.  argumentation in this thread can be found in the book

Google hard and you'll find a freebee pdf file somewhere.

[Art Eatman]

"So, the issue is not metal or paper, but to what extent the gov can be stopped from bankrupting itself."

Yup.  Perzackly.  Even when gold and silver were used in coins, government debased currency.  That goes back to Roman times.  They minted coins with ever decreasing amounts of intrinsic value, although the face value remained the same.  Prices of commodities rose.

In more modern times, we were able to make the Louisiana Purchase because France had gone to fiat currency and had debased it to the point of bankruptcy.

Basically, the history of fiat currencies is one of degradation of buying power over time.  As long as wages keep up with this inflation, it doesn't really matter for purchases of domestic goods and services.  A problem for the U.S. is that wages haven't kept up since the early 1970s, for the middle economic class, the majority of our population.  And, we're importing more and more from outside the country, with other countries' currencies gaining in strength against the dollar:  A double-hickey.

Rome didn't crater in any short time; I doubt the U.S. will, either.  Great empires of whatever sort don't.  I note, however, that the rate of decline has accelerated.  Consder the comparative lengths of time for the decay of Rome, Great Britain and the USSR...

Art

[Guest]

"So, the issue is not metal or paper, but to what extent the gov can be stopped from bankrupting itself."

Yup.  Perzackly. 

 So, in essence, the issue is the "gov" and its perverse incentives.

 Private gold/silver coin manufacturers would have an incentive to make their coins honest, unlike the state. If found to be light, sales would decrease.

 BTW, why is the forum software repeating phrases in everyone's posts?

[Eleven Mike]

BTW, why is the forum software repeating phrases in everyone's posts?

What do you mean? 

[Guest]

BTW, why is the forum software repeating phrases in everyone's posts?

What do you mean? 

 Hmmmm, must have been my cloudy, intermittent satellite connection. 

 Never mind. 

[Matthew Carberry]

It was Echelon, a glitch in the system.  The Fed Reserve is on to us.

I'd recommend donning your tinfoil, I know I am. 

[richyoung]

Gold leaf works better than so-called "tin" foil, which is actually commmon aluminum.  Plus you can melt it down into bullion when done....


 

[Matthew Carberry]

Here's a question from a guy who doesn't own a scale.

Your average "challenge coin" sized coin, made of 99.9% silver.  What kind of weight are we talking per? 

I made up a bunch when I thought I had the resources to do a new one each year and sell them to support my non-profit.  I must have 70 or 80 still floating around.  They cost me about $10 each to have made in '01 and '02.