Nature and Origin of Money, Coining of Money & Currency

Discussion in 'Economics & Trade' started by Shiva_TD, Jul 24, 2011.

  1. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    This is true and it has absolutely nothing to do with Federal Reserve notes or lawful money in the United States. It related to tax laws and not to legal tender laws.
     
  2. dujac

    dujac Well-Known Member

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    notice how it wan't me that brought it up


    money is legal tender - source link
     
  3. Inphormer

    Inphormer Banned

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    Your argument makes no sense because you totally ignore wage inflation in your calculations. The fact of the matter is consumers have way more federal reserve notes in their possession now than they did then. Common sense and the obesity epidemic tell you that we have plenty of money to buy food these days.

    I wouldn't want to trade places with this lady.

    [​IMG]
     
  4. dujac

    dujac Well-Known Member

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    nor would i want to deal with a volatile boom/bust cycle, every few years

    [​IMG]
     
  5. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Sometimes I have to wonder if people actually read the links that they post. The link relates to the definition of legal tender and not money.

    http://debt-and-credit.e-articles.info/title/What-is-Legal-Tender/

    Many forms of money are not legal tender and individuals are not obligated to accept them under the law in payment of debts. For example, Canadian Gold Maple Leafs are unquestionably money but they are not legal tender in the United States. A person is not obligated to accept them under the law in payment of a debt but they can accept them if they choose to do so. American Eagle Gold, Silver, and Platinum Eagles are money that is legal tender in the United States.

    A person and/or the US government is obligated to accept a $50 American Gold Eagle coin in payment of a $50 debt because the law states its legal tender whereas anyone can refuse to accept a Canadian Gold Maple leaf for payment on any debt of any amount in the United States. No one argues this point. That is the difference between legal tender money and money that is not legal tender.

    As was also noted since 1977 a contract can contain a gold clause were only gold can be used to fulfill a debt obligation so even the statement that a person is obligated to accept "legal tender for all debts public or private" is false as the conditions of a contract that establish the debt can require payment in gold as opposed to legal tender currency. The gold clause can specify a weight in gold, which is not legal tender, or it may specify payment in US Minted gold coins, which are legal tender, but exclude payment in Federal Reserve notes which are also legal tender.
     
  6. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    This chart, or a similar one, has been presented before and the changes in the US economy the inflation cycles are primarily related to an influx of currency and then recovery from those influxes of currency is reflected by deflation as the economy adjusts.

    We've also shown the related chart where the purchasing value of Federal Reserve notes has constantly eroded to the point that it's worth less than 3% of its original value.

    [​IMG]

    There isn't a boom or bust cycle related to Federal Reserve notes... there's just a bust cycle. They started out with value and have lost all but a very small percentage of that value. Over time they will eventually lose all values just like all fiat currencies in history.
     
  7. dujac

    dujac Well-Known Member

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    what a joke, the vast majority of businesses don't accept them

    that really is immaterial to the fact that wages and standards of living have risen tremendously over the past century

    that doesn't happen without an effective financial system
     
  8. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    So the argument is that the vast majority of businesses will not comply with the US legal tender laws?

    http://openjurist.org/title-31/us-code/section-5103/legal-tender

    There is a mandatory legal obligation to accept US minted coins such as American Gold Eagles for all debts public and private under US law as these coins are legal tender. As noted Canadian Gold Maple Leafs, while being money, are not legal tender and there is no obligations for the government or private enterprise to accept them for any debts. They might choose to but there is no legal obligation that they must.


    What we're actually seeing based upon the use of fiat Federal Reserve notes and Keynesian economic interventionism is the tranfer of the wealth of America to the wealthy from the middle class. While only addressing about the last 50 years the attached graph shows this movement of wealth from middle and low income workers to wealthy income individuals. This is a direct result of inflating the money supply which adversely effects those who general store their wealth in dollars (i.e. the poor and middle class).

    While unquestionably our lifestyles have improved with the poor in America living a lifestyle very similar to the middle class in other countries the fact is that fiat currency and inflation are literally robbing them of a much more as their wealth is being syphoned off to the wealthy.

    Just see the attached chart which reflects this transfer of America's wealth from the poor and middle class to the wealthy which is a direct result of inflationary monetary policies made possible by legal tender currency.
     

    Attached Files:

  9. dujac

    dujac Well-Known Member

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    reality shows that slow steady growth works much better than the boom/busts of the past
     
  10. BleedingHeadKen

    BleedingHeadKen Well-Known Member Past Donor

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    Incorrect. In markets of the last 20 or 30 centuries, gold and silver emerged as the best forms of money, as they easily satisfy all criteria money: store of value, unit of account, and medium of exchange, but are also portable, identifiable, nearly impossible to counterfeit, etc. People used them because they naturally serve the function of money better than anything else. Fiat by despots wasn't needed, and besides, no government has jurisdiction over the world that they could have the power to declare gold/silver valuable by fiat. Even the US is having trouble maintaining dollar hegemony.

    You might as well argue that bananas aren't nutritious until government declares them to be so.
     
  11. dujac

    dujac Well-Known Member

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    no, gold is a volatile commodity, it brings volatility due to it inelasticity

    gold and silver backed money was abandoned for good reason, it didn't work
     
  12. BleedingHeadKen

    BleedingHeadKen Well-Known Member Past Donor

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    Well, here's a test:

    Take a gold coin. Any type will do. Age makes no difference. Get a hammer. Smash it flat, and then roll it all up in a clump. Urinate on it. Clean it off and take it to a gold buyer. Other than collector value, if it had any, what value has it lost?

    Now, take a federal reserve note out of your pocket. Any denomination will do. Tear it up. Roll it in a ball. Urinate on it. Now, try to buy something with it. What value does it have?

    Or, another comparison. This is a US Continental $60 note:
    http://cgi.ebay.com/Sept-26-1778-60...=150613684946&ps=63&clkid=1602958143179772003

    At the time it was issued, it was supposed to be redeemable for 60 Spanish Milled dollars, or 60 ounces of silver. Today the note is listed for $169. Uncirculated and in mint condition, the seller might get as much as $800. If you had redeemed it for silver, on the other hand, the price today for that silver would be $2400.
     
  13. BleedingHeadKen

    BleedingHeadKen Well-Known Member Past Donor

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    First, I was rebutting your argument that gold/silver are fiat money. Your reply to my rebuttal is a red herring.

    Paper money is a way for government to eliminate the problem of scarcity. It can either print in limitless amounts (as the USG did in the late 18th century) it can create limitless debt as it does today.

    So yes, gold and silver didn't work. It didn't work government and bankers who wanted to become richer. It also doesn't work for lifelong welfare recipients and warmongers who need that endless debt to keep the cash coming from the producers. For the rest of us, it works just fine.
     
  14. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    On a very interesting side note related to gold and silver being a common commodity used in the barter system to facilitate transactions, which is what money really is, I've found out something new to me.

    The barter system is apparently making a serious comeback because of the internet. It allows multiple transactions so that those wishing to trade commodities for other commodities can do so without the use of a common commodity being involved in the transaction. No money of any kind is used and no one "profits" as it is a straight exchange of goods. Apparently about $8 billion worth of goods are being traded in this manner today and while this is in its infancy it is expanding. They do use "barter tokens" but not money of any kind and I can see the barter tokens eventually going away as more commodities are traded. When gold and silver enter these barter exchanges there would no longer be a reason for barter tokens as gold and silver are commodities that can be exchanged for virtually anything.

    The implications are huge if one thinks about it. It could literally render legal tender obsolete as well as income taxes and many other forms of taxation. The funding of governments would have to depend upon revenues in commodities and the only way I know of doing that is if a small "tax" is imposed on each transaction in the system. Basically a transaction tax, similar to a sales tax or consumption tax, could be imposed but since no legal tender is used legal tender becomes completely obsolete in the long run.

    Techonlogy is actually taking us to the point eventually where the tools of government to steal from the people or intervene in the transactions of enterprise will no longer work. The economy will revert to the People and the corruption of government interventionism will collapse.

    I may not live to see this happen but logically it's going to happen because the technology allows it. Perhaps it will be the ultimate collapse of the dollar that brings it about but will happen nonetheless because progress is inevitable. We will revert back to gold, silver, and other commodities that hold their value over time and legal tender is ultimately doomed.
     
  15. BleedingHeadKen

    BleedingHeadKen Well-Known Member Past Donor

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    Bartering is fantastic, however the government is onto it and requires that barter be reported as income. It doesn't have the resources (yet) to prosecute those who barter at a local level, but the internet sites that track and monitor barter (trading chits for time/services so one does not have to directly barter with others) are required to report to the IRS.
     
  16. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    Gold and silver are not volatile, fiat currency is volatile and worse still even with its volatility it continues a downward spiral to worthlessness.

    We also repeatedly hear that the US has abandoned the gold standard but no one has ever been able to provide a link to an actual document that does this. The laws on the books, which have been cited repeatedly, still state that Federal Reserve notes are redeemable in lawful money and the only lawful money that exists in the United States are coins being minted under the Gold Bullion Coin Act of 1985 where it states:

    Now if anyone questions the stupidity of the US Congress one need only read this law. While it does establish the current gold coinage of the United States, which is legal tender, if we read it closely then a $50 gold coin contains one ounce of pure gold while a $10 gold coin contains 1/4th ounce of pure gold. Five $10 gold coins contains 1.25 oz of pure gold but only equals $50 in denomination value. A $50 gold coin and five $10 gold coins are not equal as five $10 gold coins have more gold content than one $50 gold coin.

    Apparently Congress took math in public schools because they surely can't add. And people believe these idiots know how to run the US economy? We'd be better off with a good grade school student that can add running the economy.

    PS BTW Nixon did not remove the US from the gold standard. Nixon withdrew the United States from the Bretton Woods agreement and that is all. The United States has no obligation to redeem foreign debt in gold and that is what his executive order was about. The United States does have an obligation to redeem it's domestic debt, as represented by Federal Reserve notes and other Treasury notes, in lawful gold and silver money. Executive orders cannot violate US law.
     
  17. loosecannon

    loosecannon New Member

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    You should be careful what you wish for. A 100% gold or silver backed currency has massive hazards in an economy as tightly strung to the margins as ours.

    Only an asset backed fractional reserve currency provides the flexibility we need to adjust the money supply along with the durability to provide long term stable econ growth.
     
  18. Shiva_TD

    Shiva_TD Progressive Libertarian Past Donor

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    When will people learn that there is no connection between economic growth and the money supply. This is pure propaganda from the bankers that profit from the expansion of the money supply which devalues expended labor which is stored in currency.

    All wealth originates from that which is either grown or mined. From those raw materials commodities are created and that is wealth. All service industries are parasitic entities that have a symbiotic relationship to commodities. Banking is a service industry as it produces nothing and the Federal Reserve, which promotes the propaganda that expansion of the money as being necessary for economic growth, is exclusively interested in the promotion of the banking service industry.

    In 2007-2008 when the banks were failing what did the Fed demand? Government (People) bailouts of the banks. The banks were "saved" by throwing the American people under the bus. When the banks were failing during the Great Depression what did the Fed demand? A freezing of the People's assets held by the banks where trillions of dollars were lost by depositors under FDR. They borrowed the lawful money of the People by confiscating the gold coins and have never paid it back.

    The expansion of the money supply (unbacked fiat currency) is exclusively about increasing the wealth of the wealthy which is why the percentage of wealth from the GDP has consistantly increased for the wealthy while it decreases for middle and low income Americans. The wealthy are not becoming more wealthy because they're CEO's making million dollar paychecks but instead because their wealth is in assets and not dollars. As Federal Reserve notes, which American workers are paid in, lose value through expansion of the money supply the wealthy are unaffected as their wealth is in assets, not dollars. The assets are worth more relative to dollars so they gain in wealth at the expense of the middle and low income workers that have their labor and wealth stored fiat currency.

    Thsoe that believe that expanding a fiat money supply is necessary for the expansion of the economy have simply drank too much of the bankers Koolaide. The expansion of the economy is exclusively linked to the conversion of that which is grown or mined into commodities. Increasing the money supply does nothing as far as making this happen.
     
  19. Joe Six-pack

    Joe Six-pack Banned

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    Yep. That must by why Federal reserve notes can fail as a currency, but gold never will.

    In an end-of-the-country scenario, gold would still be traded while Federal notes would be toilet paper.
     
  20. BleedingHeadKen

    BleedingHeadKen Well-Known Member Past Donor

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    Service to those who produce wealth, or to those who provide services, aids in productivity, which enhances wealth and increases the standard of living. Government is parasitic, service is not unless it is providing service to government.
     
  21. macaroniman

    macaroniman New Member

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    as the govt intentionally devalues our money and robs from us the value of our wages and investments I remember ancient Rome when they continued to devalue the gold content of their coinage to the extent that their troops nor even the govt would accept the coinage as payment for taxes or military service.
    watch the behavior of our elected to the "money people" as they do this behavior with impunity and ruin us all.http://www.rollingstone.com/politic...wall-street-crimes-20110817?link=mostpopular3
     

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