Legal Tender Act passed
Frank Galikanokus
Feb 25, 1862:
Legal Tender Act passed
The U.S. Congress passes the Legal Tender Act, authorizing the use of
paper notes to pay the government's bills.
http://www.history.com/this-day-in-history/legal-tender-act-passed
JAM
Bremick
"Frank Galikanokus" <"Frank Galikanokus"@nospam.net> wrote in message
news:4D67E878...@nospam.net...
Almost 150 years now and we're still waiting for that certain economic doom
that the bankers and financial experts predicted. I know. I know. It's
coming. Just listen to the experts.
Frank Galikanokus
We've had some economic disasters since then 1907, 1929, 2008 but these
were not caused by paper currency.
JAM
mazorj
"Bremick" <rem...@cox.net> wrote in message
news:ik8qgn$clo$1...@news.eternal-september.org...
This is a bit tangential to the subject, but one thing that the critics of
paper money never seem to address is this: If they could entirely eliminate
FRB notes and other forms of "funny money" and go back to using only
gold/silver coins and notes backed by PMs in Ft. Knox, how would that affect
trade and the economy? Specifically, that would put a cap on the nation's
circulating money supply. Would there be enough "real" money available to
meet our present or future needs? (Side note: Further aggravating the
money shortage, what would become of all those dollars held as currency by
foreign sellers and investors? Would we replace all the Benjamins out there
with the new PM-backed notes, too? One up side might be to screw the drug
dealers and money launderers who couldn't figure out a way to recoup their
losses, but that's just a temporary, one-shot benefit.)
I haven't analyzed the numbers, but there might not be enough "new money" to
meet needs, especially if the practice of easing banking requirements to
create more (M2?) money is eliminated - which would be a logical and
arguably necessary part of going back to using only money holding intrinsic
value. You can argue that such a change would have a deflationary effect,
thus reducing the amount of circulating money needed to keep the wheels of
commerce turning. But I doubt that deflation itself would close the gap,
and besides, deflation on that scale would be just as harmful as large-scale
inflation.
Cranking up the production of M1 and M2 money is risky and worrisome; but
all I'm saying is that proposals to turn the monetary clock back 150 years
may be a waste of time because the Earth has gone around the sun too many
times for the monetary flat-earthers' proposals to be a realistic solution.
oly
>
> - Show quoted text -
Dr. Gideon Gono, meet Mr. J.F. Mazor.
J.F. Mazor, meet Dr. Gono.
I think you two will make great great buddies.
You both have the curiously parochial, yet cocksure, mindsets that are
found only in national capitols.
oly
oly
> "Frank Galikanokus" <"Frank Galikanokus"@nospam.net> wrote in messagenews:4D67E878...@nospam.net...
>
>
>
> > Feb 25, 1862:
> > Legal Tender Act passed
>
> > The U.S. Congress passes the Legal Tender Act, authorizing the use of
> > paper notes to pay the government's bills.
>
> >http://www.history.com/this-day-in-history/legal-tender-act-passed
>
> > JAM
>
> Almost 150 years now and we're still waiting for that certain economic doom
> that the bankers and financial experts predicted. I know. I know. It's
> coming. Just listen to the experts.
Yes, there are only three or four national fiat currencies which can
trace their existence to the period prior to World War I.
Each of these trades at 1/20th or less of their 1913 purchasing power
values.
Meanwhile, there are 100+ currency casulties in the 19th and 20th and
21st centuries.
May you live in interesting times.
oly
oly
>
>
>
> > Feb 25, 1862:
> > Legal Tender Act passed
>
> > The U.S. Congress passes the Legal Tender Act, authorizing the use of
> > paper notes to pay the government's bills.
>
> >http://www.history.com/this-day-in-history/legal-tender-act-passed
>
> > JAM
>
> Almost 150 years now and we're still waiting for that certain economic doom
> that the bankers and financial experts predicted. I know. I know. It's
> coming. Just listen to the experts.
You know, U.S. 90% silver coins, dimes, quarters and halves, the ones
you were spending in daily commerce back in 1960, are now trading for
greenies at TWENTY-FOUR times (or more) original face value.
How do you come up with "same-o, same-o"???
Do you have a "debt-wish"???
oly
Bremick
I'm hearing you. I'm still talking "doom" like those financial experts
prophesized because of that new paper currency. Maybe their interpretation
of "doom" is different from mine.
Bremick
"oly" <oly...@aol.com> wrote in message
news:9b931fb8-a9c7-420d...@f36g2000pri.googlegroups.com...
------------------
So, yes, we're one of the three or four whose "fiat" currency hasn't
collapsed. That's my point. It involves those ca1862 "financial expert"
doomsayers who predicted the collapse of everything we hold dear because of
this new paper currency. 150 years and still waiting. I suspect those
"experts" and their heirs still managed to prosper throughout the years
following their statements.
Bremick
-----------------
Do you call that economic Doom? Has our currency collapsed? Is your 2001
salary the same as it was, or would have been, in 1964?
oly
> "oly" <oly2...@aol.com> wrote in message
>
> - Show quoted text -
My salary isn't 24 times what a bank examiner (with some seniority)
got back in 1964. It's probably closer to ten times.
I'm figuring week in and week out, the seasoned examiners got paid
$175 per week (and some of the juniors as low as $100 per week), but
that might be a little on the high side.
One of my fellow examiners who was in the Army in 1971-73 looked up
his old payscale and it was $161 mos to start and $363 mos at the
end. He lived and ate on the base, not yet married. He started out
very very low in rank.
And it is a form of economic doom; for the four currencies which have
survived since pre-1913, it's simply the death of ten-thousand cuts as
opposed to a guillotine.
oly
Beanie
> So, yes, we're one of the three or four whose "fiat" currency hasn't
> collapsed. That's my point. It involves those ca1862 "financial expert"
> doomsayers who predicted the collapse of everything we hold dear because of
> this new paper currency. 150 years and still waiting. I suspect those
> "experts" and their heirs still managed to prosper throughout the years
> following their statements.
If one's definition of money includes that it be a store of value, then FRNs
certainly are not doing the job.
They are currently worth about 5% of their value when FDR took us off the gold
standard in 1933.
If there is historical precendent for a stable fiat currency, I never saw it.
Peter
> If there is historical precendent for a stable fiat currency, I never saw it.
Actually, there is. There may be others and the applicability of the
example I know is somewhat limited. The most famous example (that I
know) is this one:
http://en.wikipedia.org/wiki/Iraqi_Swiss_dinar
Unfortunately Wikipedia does not capture the whole picture of how
remarkable the case was, but you get a lot of the idea from the link.
Beanie
"Peter" <w2...@hotmail.com> wrote in message
news:2eedba94-6f86-45bf...@o21g2000prn.googlegroups.com...
http://en.wikipedia.org/wiki/Iraqi_Swiss_dinar
------------------------------------------------------------------------
bad, if not disingenuous example.
mazorj
oly
============================
How about a substantive reply to my hypothesis instead of banal stereotyping
and a thinly disguised racial ad hominem?
If we went overnight to solely using money that held inherent PM content
(gold/silver coinage) or notes fully backed by Ft. Knox holdings, would
there be a sufficient money supply so that there would be no negative effect
on commerce?
It's a simple question. Get your head out of wherever it's gotten stuck and
answer it.
I don't do spelling flames but I'll make an exception because of your ad
hominems. "Capitols" are just buildings. It's "capitals," which are the
actual seats of government power. Furthermore, how do you get "cocksure"
out of my post? It was framed as a tentative personal hypothesis - as
opposed to your cocksure pronouncements in the past that "a massive meltdown
is inevitable".
And BTW, since you are fond of assigning guilt by association with the act
of living and working near seats of power, let the record show that your
'hood is the capital of a state government as well as your county seat. So
based on your logic, living in the capital of said state, and furthermore,
being an active employee of said state government with a vested interest in
said capital's powers and views, you are much more likely to harbor
parochial views. (A fact that you are well aware of, hence your use of the
limiting descriptor "national" in your slur. Nice try, but it's still pot,
kettle.)
Frank Galikanokus
>
> "Frank Galikanokus" <"Frank Galikanokus"@nospam.net> wrote in message
> news:4D67FAD0...@nospam.net...
> > Bremick wrote:
> >>
> >> "Frank Galikanokus" <"Frank Galikanokus"@nospam.net> wrote in message
> >> news:4D67E878...@nospam.net...
> >> >
> >> > Feb 25, 1862:
> >> > Legal Tender Act passed
> >> >
> >> > The U.S. Congress passes the Legal Tender Act, authorizing the use of
> >> > paper notes to pay the government's bills.
> >> >
> >> > http://www.history.com/this-day-in-history/legal-tender-act-passed
> >> >
> >> > JAM
> >>
> >> Almost 150 years now and we're still waiting for that certain economic
> >> doom
> >> that the bankers and financial experts predicted. I know. I know. It's
> >> coming. Just listen to the experts.
> >
> > We've had some economic disasters since then 1907, 1929, 2008 but these
> > were not caused by paper currency.
> >
> > JAM
>
> I'm hearing you. I'm still talking "doom" like those financial experts
> prophesized because of that new paper currency. Maybe their interpretation
> of "doom" is different from mine.
O
JAM
Bremick
"Beanie" <b...@ea.ne> wrote in message news:ik9687$ndr$1...@speranza.aioe.org...
The hour's wage worth of today's FRN's still buys about the same as the
hour's wage in FDR's time. If a stable currency is so important, why then
do all countries choose fiat currencies?
Peter
> "Beanie" <b...@ea.ne> wrote in messagenews:ik9687$ndr$1...@speranza.aioe.org...
>
> - Show quoted text -
Note that those who are retired and depend on a fixed income (annuity,
or conventional pension) might be less pleased than the workers. Also
any progressive tax regime that seeks to "soak the rich" has a
convenient way to adjust the fraction of the GDP it captures.
Peter
> bad, if not disingenuous example.
You doubted the existence of an historical precedent. It is only
recent history, but unless you doubt Wikipedia, it seems to be
historical, even so. Admittedly, the measurement period was modest
and the Swiss Dinars did better than just hold their value (they
actually did better than the US dollar). How does that make it bad?
Disingenuous would seem to indicate that you not only doubt the
example, but also doubt my motive. I don't understand how that came
to be.
Bremick
------------------
If you were being paid today in 1964 silver half dollars at face value, then
your comparison might be more relevant. Silver is erratic, doubling in
value over the past year primarily due to world events and investor emotion.
A few years ago it dropped in value. A little over two years back you were
probably making a similar salary while silver was trading at only TEN times
face. The average annual increase in the price of silver since 1964 has
been less than a dollar a year, hardly competitive to compounded bank
interest over that same period.
I started out in the Army under the same circumstances in 1962 at $78 a
month (before taxes and "unit fund contributions"). Today it would be $1467
or about twenty times greater. To show how military pay has been adjusted,
my starting fed salary was $5,500. Today it would be $27,430, only about
ten times greater. And feds don't get free meals, quarters, and medical,
and they can't retire at age 40. Not intending to disparage today's
military, but they aren't the only "feds" who are asked put their life on
the line.
I guess I'll take those thousand cuts. They're hardly noticeable.
Bremick
--------------------
I'm missing your point. I'm retired and am usually more pleased than I was
when I had to go to work every day. Plus, I don't have to worry about job
security. I welcomey the challenge of living within the limits of my
pension. I was never anywhere close to being rich, but I still believe
that those who BECOME rich shouldn't be taxed at a higher percentage than
the rest of us-- as long as they actually DO pay that percentage of their
income. Financial success shouldn't be "soaked".
Peter
>
> - Show quoted text -
I was trying to avoid discussing your specific case, actually. A
retired federal employee (as I suspect you might be) has, under CSRS,
a pension that is indexed to a cost of living index. It is a feature
that is not typical of an annuity or a conventional pension. I am in
the same situation that I guess you are in and have a somewhat similar
view of that situation.
You were discussion the plight of the currently employed. Your remark
seems accurate as far as it went. If someone is currently employed in
the US, in the past wages have done a reasonable job of following the
cost of living. The case you omitted was those that stepped out of
the system. I mentioned one example of someone who steps out by
retiring on an annuity or conventional pension.
Retiring on an annuity or a conventional pension means, for most, that
inflation will take its toll.
The other case you didn't treat was the benefiit of using a fiat
currency except to wonder why they seem prevalent. They are prevalent
for many reasons; I mentioned one:
It is easy under a progressive tax system for governments to adjust
the revenue they receive. In inflation, the government's revenue
increases faster than inflation so long as it does not lower taxes
(more people meet the minimum income and more reach the highest tax
bracket).
Please note that I am not necessarily disagreeing with your initial
post; I am merely noting some of the aspects you omitted.
Beanie
On Feb 25, 4:51 pm, "Beanie" <b...@ea.ne> wrote:
> bad, if not disingenuous example.
You doubted the existence of an historical precedent. It is only
recent history, but unless you doubt Wikipedia, it seems to be
historical, even so. Admittedly, the measurement period was modest
and the Swiss Dinars did better than just hold their value (they
actually did better than the US dollar). How does that make it bad?
-----------------------------------------------------------------------
Because the time frame they were in use is too short and most fiat currencies
work in the short term - until the politicians' urge to print more currency
becomes too much to resist.
Beanie
> The hour's wage worth of today's FRN's still buys about the same as the hour's
> wage in FDR's time. If a stable currency is so important, why then do all
> countries choose fiat currencies?
Becuase it is politically expedient to do so.
Beanie
> I guess I'll take those thousand cuts. They're hardly noticeable.
Either you are the stupidest man that ever lived or...
No, you are the stupidest man that ever lived.
Bremick
-----------------
Yes, I am a retired federal employee under CSRS. Before my annuity was
frozen, I did enjoy a one or two percent COLA each year, similar to what
most government employees and Social Security recipients receive. It
usually didn't quite compensate for my insurance premium increase. When I
originally signed on, I considered this to be attractive retirement "perk"
that could offset the lower pay and benefits during my career as compared to
my public sector counterparts, most of who were getting a "free ride" during
their employment, with fully paid health insurance and no pension
contribution.
------------------
You were discussion the plight of the currently employed. Your remark
seems accurate as far as it went. If someone is currently employed in
the US, in the past wages have done a reasonable job of following the
cost of living. The case you omitted was those that stepped out of
the system. I mentioned one example of someone who steps out by
retiring on an annuity or conventional pension.
Retiring on an annuity or a conventional pension means, for most, that
inflation will take its toll.
--------------------
I agree there. But most non-govt types with a conventional pension or
annuity will also be elligible for Social Security as well, along with the
annual COLAs which hopefully will return one day. Also, many of today's
retirees will be able to add the fruits of their 401k-type investments to
their income-- something that wasn't as widely available a generation or two
ago.
------------------------
The other case you didn't treat was the benefiit of using a fiat
currency except to wonder why they seem prevalent. They are prevalent
for many reasons; I mentioned one:
It is easy under a progressive tax system for governments to adjust
the revenue they receive. In inflation, the government's revenue
increases faster than inflation so long as it does not lower taxes
(more people meet the minimum income and more reach the highest tax
bracket).
---------------------
My repeated confusion over this "fiat currency" thing is that I can't
see any other practical option in today's global commercial environment.
The genie is out of the bottle. You can't put toothpaste back in the tube
(without damaging the tube). Blah. Blah. I'm not educated enough to argue
or even discuss the topic beyond what I've mentioned already. I think I do
understand your tax explanation.
________________
Please note that I am not necessarily disagreeing with your initial
post; I am merely noting some of the aspects you omitted.
-----------------------------
I have no problem whenever someone disputes or disagrees with anything I
write. In the end I often end up learning something, broadening my
appreciation of others' views, or sometimes find I've ventured into a
subject that's over my head.. Maybe that's the case this time.
Bremick
"Beanie" <b...@ea.ne> wrote in message news:ik9o7j$tu4$1...@speranza.aioe.org...
It would seem it's more likely fiscally expedient, unless maybe you're a Yap
Island resident.
Bremick
"Beanie" <b...@ea.ne> wrote in message news:ik9oc9$u90$1...@speranza.aioe.org...
It's obvious you don't understand. Or you haven't had much experience in
adulthood yet.
Beanie
I shouldn't say you are a stupid man.
But you do, like most of us, make stupid statements.
You were touting a flat tax plan - a plan that is more onerous on low income
people than the very rich - the same very rich who control 85-90% of the wealth
in the USA.
A graduated tax is fairer by any standard of decency.
Let's say the flat tax is 10% to keep thing easy.
Joe Lunchbox drawing down a cool $40000/yr and would pay $4000 - leaved him with
a kool $36K
Big Shot gets paid $10,000,000.00/yr - pays $1,000,000 - leaves him with $9mil
And that seems equitable to you, right?
Well I posit that it's grossly unfair.
My tax plan would not even start taxing people until they earned more than
$25,000.
Middle class taxpayers from $25001 to $50000 pay 5%
$50000-100000 pay 10%
$100001-250000 pay 12%
$250001 -500,000 pay 15%
$500,001 - 1,000,000 pay20%
$1,000,001 - $10,000,000 25%
$10,000,000 - $50,000,000 30%
All monies earned over $50,000,000 pays 50%
No tax write offs for anything, no taz shelters, no shady lawyers accountants
and conivers
Bremick
"Beanie" <b...@ea.ne> wrote in message news:ika4va$o06$1...@speranza.aioe.org...
You're certainly welcome to your opinion. I don't consider your proposal
"stupid"; I just don't agree with it. In my own opinion, each wage earner
should pay the same percentage of his or her total annual take. I don't
mean to be crass, but that would indeed affect a large percent of lower
income families who now end up paying no tax at all, but who use the same
services that the rest of us pay taxes to keep going. If you were able to
use your education and ingenuity to make yourself wealthy, you shouldn't
have to bear an excess burden of supporting those who didn't. With my view,
I would have to agree about no tax writeoffs or shelters, etc. We each
share the load and pay that same percentage period. You may not agree, but
it's not stupid.
Peter
> Because the time frame they were in use is too short and most fiat currencies
> work in the short term - until the politicians' urge to print more currency
> becomes too much to resist.
"too short"
That may be, but you have what may be a classic case that seems to
support the idea that the inherent weakness of a fiat currency is the
temptation to print more of it.
Side by side there were two currencies that differed, initially, only
in appearance. One continued being printed and lost most of its
value. The other could not be printed and the users had reason to
believe that it would remain so for the foreseeable future. That
currency actually increased in value.
If the period is "too short", what would have changed the outcome if
the period had been longer?
Beanie
>If the period is "too short", what would have changed the outcome if the period
>had been longer?
The politicians' desire to placate the people (and/or enrich themselves) by big
gubmint spending.
Once they are unfettered by a solid backing for the currency, the temptation to
keep the printing presses running full tilt is irresistible.
The loss of purchasing power of fiat currencies over the long term is well
documented and I suggest you do a bit of research for complete details.
mazorj
"Beanie" <b...@ea.ne> wrote in message news:ikb8qk$hm0$1...@speranza.aioe.org...
True, but do note that not all of that is attributable to putting the
printing presses on steroids.
Even under conservative fiscal policies and practices, a certain amount of
"background" inflation is inevitable due to supply/demand pressures and the
circular effect of both workers and businesses trying to enhance their
income through marginal increases in wages and prices.
In a similar vein, businesses and individuals with significant debt
liabilities benefit whenever the current real value of their debts shrinks,
regardless of whether it's from fiat money running amok or just normal
inflation. As your pay or pricing goes up to compensate for the shrinking
value of your paycheck or sales revenues, the relative cost to service your
mortgage or existing corporate paper becomes a smaller and smaller
percentage of your income. It's a zero-sum game that's bad for creditors
but good for debtors. Not that this effect is a significant motive to
devalue one's unit of currency (except where government debt is concerned),
but it does take some of the sting out of inflation.
Large devaluations in the purchasing power of money due to bad fiscal policy
are much more obvious and tend to occur over relatively short time frames,
whereas the other sources of loss of purchasing power tend to operate
constantly and quietly in the background. The other main difference is that
not much can be done about the latter; but the cheapening of fiat money is
totally under political control.
Beanie
"mazorj" <maz...@verizon.net> wrote in message
news:ikbdu7$o6h$1...@news.eternal-september.org...
> but the cheapening of fiat money is totally under political control.
Politicians all like to point out to the electorate on how the brought home the
bacon to their home district.
Since there isn't enough money around for fund all the pork, the only ways to
get it are borrow or print more money (aka quantitative easing).
Currently we do both.
China is the largest holder of US debt and is going to be left holding the bag
as the dollar dwindles in value.
The Chinese have a tiger by the tail - if they start to dump their T-Bills, the
dollar and the value of the t-bills will drop lock a rock.
If they hold on to them, there value will slowly be eroded by an inflation rate
that exceeds the interest being paid on the t-bills.
Either way, they will get screwed.
China need the US market to sell their cheap goods, so they have to play ball
with Uncle Sam and are willing, for the mean time, to bend over and take it as a
matter of political expediency.
mazorj
"Beanie" <b...@ea.ne> wrote in message news:ikbepo$1kk$1...@speranza.aioe.org...
Yep, much like the political expediency of the Mexican standoff that
prevents us from being too critical of human rights issues in OPEC nations.
We give lip service to human rights there but don't dare to do anything
substantive against most of the hands that control the oil spigots. So in
practice, we let the victims of such abuses bend over and take it.
As has been noted in Realpolitiks, nations do not have friends, just
interests. If the making of laws and sausages is too revolting for you to
see in action, don't even think about diplomacy and foreign policies.
Peter
I guess you may have missed something in the link I supplied. For
that case it was actually impossible for the government to printed
more. That was why the value remained.
To an extent, it is consistent with your point, but I think you missed
mine.
Beanie
-------------------------------------------------
What was your point, other than to be deliberately obtuse?
oly
> "Beanie" <b...@ea.ne> wrote in messagenews:ikbepo$1kk$1...@speranza.aioe.org...
>
> - Show quoted text -
Ostrich.
Head in the proverbial SAND.
Be an ostrich.
The great denouement is happening as we post.
Historically, the funny thing about the World's worst hyperinflations
is that 75% to 95% of the people's savings were toast WELL BEFORE the
spectacular "Lightening" stage of "the Hyperinflationary Blowoff".
Frankly, I hope to point my friends in the right direction.
If they are mentally incapable, well, my conscious is very sad but
clear.
oly
Peter
> What was your point, other than to be deliberately obtuse?
You alleged that a fiat currency must always decline in value and
subsequently mentioned as the obvious reason that there is an
irresistible temptation to print more.
I cited an example where it did not decline. It was an example where
it was impossible in the foreseeable future to print any more and that
fact became widely known. The value (purchasing power) of the
currency actually increased (and was validated by outside observers).
I believe that the cause of the increase was, in part, the knowledge
that printing more was not possible.
I freely admit that the period is only about 10 years, but the example
seems to me clear enough.
In case it is not yet obvious, I submit that the mind of mankind is
able to create other situations where the printing press cannot be
used to print unlimited currency. That such prudence is not commonly
observed does not make it impossible.
Beanie
>I freely admit that the period is only about 10 years, but the example seems to
>me clear enough.
The example you cited is a short term anomaly.
You know, I know it, everybody knows it.
You know you're wrong yet you keep grasping at straws.
mazorj
"oly" <oly...@aol.com> totally dodged my earlier question, and posted the
following non sequitur to the current thread commentary, when he randomly
typed
news:ed7d5c1d-eb0e-4e4d...@u12g2000vbf.googlegroups.com...
Ostrich.
Be an ostrich.
oly
======================
WTF does any of that have to do with my or Beanie's observations here? They
are not in opposition to your views, they are consistent with, and merely
expand on how the coming meltdown scenario might play out.
Instead of looking for opportunities to flame others after mis-reading their
comments as attempts to disprove your views, how about putting down that
bottle and answering my earlier question? It was:
"If we went overnight to solely using money that held inherent PM content
(gold/silver coinage) or notes fully backed by Ft. Knox holdings, would
there be a sufficient money supply so that there would be no negative effect
on commerce?"
You're the self-styled expert on money here. Put up or STFU, oly.
oly
> "oly" <oly2...@aol.com> totally dodged my earlier question, and posted the
> following non sequitur to the current thread commentary, when he randomly
>
> - Show quoted text -
I'm not particularly responding to Beanie's post, and his views and
mine are indeed along the same lines. I may have put the cursor in
the wrong place.
+++++++++++++++++++++++++++++++++++++++++++++++++++++
First, your "duck in a pen" mindset shows when you complacently
believe that the gold that's supposed to be in Fort Knox is still
there.
Second, the relationship between goods and services and the amount of
gold used as a circulating medium will naturally adjust if, a la Adam
Smith, the "invisble hand" of the free market is allowed to operate
without serious interference. It makes the same adjustments in a fiat
money system too, but instead of a gold-based stability where
sometimes prices go up, sometimes prices go down (and don't change
much over decades), you can pretty much count on prices only going up
in terms of paper money.
Third, bimetallism doesn't work. You gotta choose gold OR silver as
the standard. That's one of history's clearer lessons.
Fourth, I must come to the conclusion that I seriously don't care
whether or not you do well in the coming years, Mr. Mazor. The
financial and monetary system of the USA is obviously fairly impaired
and we are approaching a sharp break from what has been the status quo
in this country from the early 1970s.
Sauve qui peut, but penned ducks are sitting ducks.
Back to point two and the relationship between goods and money. I
like what Dr. Johnson said in Boswell's Journey to the Western Isles.
When well into Scotland, some host pointed out that forty hen's eggs
could be purchased for a shilling in that locale. Johnson's reply was
"It is not that are eggs are so common here, but rather that pence are
dear".
Nevertheless, despite the scarcity of pence, it was entirely possible
to establish prices and get the good Doctor some scrambled eggs.
Under a gold system, prices will be established and some rough
equilibrium will be maintained over time, so long as we abandon the
idea of central banking and serious government interference in free
markets.
oly
mazorj
+++++++++++++++++++++++++++++++++++++++++++++++++++++
BZZZT. Your "flamer on steroids" mindset shows when you look for errors
that aren't there. Look up the definition and use of "metaphor". Ft. Knox
was used as a symbol, not as the definitive location for held gold.
< Second, the relationship between goods and services and the amount of
gold used as a circulating medium will naturally adjust if, a la Adam
Smith, the "invisble hand" of the free market is allowed to operate
without serious interference. It makes the same adjustments in a fiat
money system too, but instead of a gold-based stability where
sometimes prices go up, sometimes prices go down (and don't change
much over decades), you can pretty much count on prices only going up
in terms of paper money.
Okay, so your answer is that we have enough government-held gold and/or
silver to do away with all forms of fiat money without disrupting trade and
commerce.
< Third, bimetallism doesn't work. You gotta choose gold OR silver as
the standard. That's one of history's clearer lessons.
So by limiting the PM to gold OR silver, my question becomes even more
constrained as does the answer. Is there enough government-held gold to do
away with all forms of fiat money without disrupting trade and commerce?
*Alternatively* is there enough government-held silver to do away with all
forms of fiat money without disrupting trade and commerce?
And you MUST deal with my qualifying condition: "Without disrupting trade
and commerce." Otherwise your response is non-responsive.
< Fourth, I must come to the conclusion that I seriously don't care
whether or not you do well in the coming years, Mr. Mazor. The
financial and monetary system of the USA is obviously fairly impaired
and we are approaching a sharp break from what has been the status quo
in this country from the early 1970s.
When have I ever said otherwise? IMO the debatable question is whether it
will "just" result in a nasty hard landing and hard times that surpass the
Great Depression in its effects, or will it bring the whole house down
around our ears.
< Sauve qui peut, but penned ducks are sitting ducks.
So what's the view from the duck pen of a state employee working and living
in a state capital as a state bank examiner? You expect us to believe that
your views aren't a product of that parochial hot house? If you work in a
sewer long enough, oly, even roses start smelling like sewage.
< Back to point two and the relationship between goods and money. I
like what Dr. Johnson said in Boswell's Journey to the Western Isles.
When well into Scotland, some host pointed out that forty hen's eggs
could be purchased for a shilling in that locale. Johnson's reply was
"It is not that are eggs are so common here, but rather that pence are
dear".
A clever but insufficient analysis of supply and demand. If eggs were
scarce as hens' teeth on the Western Isles, do you think they still would
have been going at 40 to the shilling?
< Nevertheless, despite the scarcity of pence, it was entirely possible
to establish prices and get the good Doctor some scrambled eggs.
So what? They also could have agreed to exchange a linen handkerchief for
however many eggs. The point is, you have precisely illustrated my point
that a distorted money supply will result in distortions across markets and
regions.
> Under a gold system, prices will be established and some rough
equilibrium will be maintained over time, so long as we abandon the
idea of central banking and serious government interference in free markets.
I never said it wouldn't. It's the process of plummeting to a new money
supply/price equilibrium, and whose oxen will be gored how and how badly as
that happens, that is at issue here. You can hardly compare the one-time
local purchase of a few eggs with the much more massive scale of downsizing
a nation's entire money supply.
On a numismatic note, if deflation from a shrunken money supply brings back
the 5-cent 1-oz. candy bar, at least we won't be hearing many more calls to
abolish a "useless" 1-cent coin.
:-)
(Which raises an interesting question: FRB notes presumably could be
recalled and replaced fairly quickly at a fixed rate of exchange, but what
happens to circulating coinage? Wouldn't it take significantly longer to
mint all the needed "new" pennies etc. than the printing of the repacement
notes? And unless and until that happens, holders of "old" coinage will get
a windfall profit as long as, say, 4 "old" state quarters can be used
instead of whatever $1 note replaces the FRBs.)
Bremick
Following all this with some interest. Could we alone return to a
gold/silver-backed currency in today's global economy? Wouldn't all
countries have to act in unison and use the same PM as the basis for their
own money?
Beanie
> (Which raises an interesting question: FRB notes presumably could be recalled
> and replaced fairly quickly at a fixed rate of exchange, but what happens to
> circulating coinage? Wouldn't it take significantly longer to mint all the
> needed "new" pennies etc. than the printing of the repacement notes? And
> unless and until that happens, holders of "old" coinage will get a windfall
> profit as long as, say, 4 "old" state quarters can be used instead of whatever
> $1 note replaces the FRBs.)
I imagine that clad coinage would be demonetized.
Why not just issue gold and silver coinage in troy ounces or fractions thereof?
I'm pretty sure people would readily adapt to that system.
I've seen people adapt to a runaway inflation, so adjusting to minor PM
flucuations should pose no problem.
FRNs will, sooner or later, become worthless.
Better the gubmint gets a handle on it now rather than allowing the monetary
situation to descend into chaos.
I don't know if the gubmint has enough gold/silver to back the currency required
for daily commerce but I'm almost positive that the US public AND the gubmint
together have enough PMs to make the system work.
Offer free conversion into US coin of any gold and silver held by the public.
I'm in my 60s, so the chances of the system crashing and burning as in post-WWI
Germany in my lifetime are, IMO, remote.
Nevertheless, I feel the FRN system is a giant con game and is doomed to
eventual failure, certainly within the next 50 years.
oly
> "mazorj" <maz...@verizon.net> wrote in message
>
> news:ikeejd$3uf$1...@news.eternal-september.org...
>
>
>
>
>
>
>
>
> - Show quoted text -
Well, in the late 19th Century, the financiers of the Western European
nations certainly "pushed" the Gold Standard and probably more or less
forced it on both Mexico and China, who would have been much better
off to use silver.
Along with the new silver coming from the U.S. Comstock Lode PLUS the
large demonitized silver holdings of Germany thrown on the world
market, silver prices tumbled and destabilized Mexico and China (both
experienced political revolutions about 1910 and these weren't just
coincidences - they were preceeded by financial revolution). Also,
Porfirio Diaz and his finance minister were easy men to bribe.
Please note that I would expect some silver "token" coinage under any
form of Gold Standard, but the silver tokens would be relatively base
and they would have only limited convertability into Gold.
Thirty years ago, we had enough silver for operation of a Silver
Standard. Some people say that there is more physical gold today than
physical silver. I'm skeptical, but that could be the case.
I could also cite somebody's thoughts on Gresham's Law and a reverse-
Gresham's Law that kicks in at the very late stages of currency
depreciation [there are those who have posited that in the very end
game of a hyperinflation, people return to using some kind of Good
money and that it then drives out the Bad money because the Bad Money
becomes totally useless and unacceptable].
But instead let's just note that NOT all nations went OFF of silver
coinage at the exact same time in the 1960s and 1970s and the system
didn't have problems for that reason (but hell yes, there were
currency problems in those years). Similarly, the 1920s and 1930s
showed nations abandoning Gold, but not all at the exact same time.
In the reverse situation of adopting a Gold Standrad, I think that
somebody, somewhere could take the first steps to return to a Gold
Standard and that others could (or would be forced by the market)
follow a bit later.
oly
oly
> "oly" <oly2...@aol.com> wrote in message
>
> - Show quoted text -
Here's a good opportunity for you, Mr. Mazor:
http://www.zerohedge.com/article/egypt-bans-export-gold-any-form
Happily for you, the Egyptians will let you take out as much of their
paper money as you want!!!
oly
Beanie
>Here's a good opportunity for you, Mr. Mazor:
>http://www.zerohedge.com/article/egypt-bans-export-gold-any-form
>Happily for you, the Egyptians will let you take out as much of their paper
>money as you want!!!
You can bet on it that Hosni and his kin have most of Egypt's gold safely
stashed away in Europe or the Bahamas.
Next step for Egypt: seize all civilian gold and give them worthless paper money
for it. FDR did it, so why not Egypt?
Even now Egyptian currency isn't even useful as toilet paper...
mazorj
"Beanie" <b...@ea.ne> wrote in message news:ikelun$dkl$1...@speranza.aioe.org...
Minor correction for the record: FDR didn't "seize all civilan gold."
People continued to hold gold used in jewelry and industrial applications.
Exceptions also were made for certain gold coins that held significant
numismatic value.
I do agree, though, that when they check whatever are the Egyptian
equivalents to Ft. Knox, those cupboards will be virtually bare.
Bremick
"Beanie" <b...@ea.ne> wrote in message news:ikelun$dkl$1...@speranza.aioe.org...
I was amazed at reports that the average upper middle class citified
Egyptian makes only about $7,000 per year.
mazorj
http://www.zerohedge.com/article/egypt-bans-export-gold-any-form
oly
=======================
No thanks. I don't think that even a moderately rational currency
speculator or arbitrager would touch their paper now. However...
If I'm reading you correctly, you have shifted the issue from my question
about adequate money supply if we abolish fiat money, to questioning whether
the actual Ft. Knox actually holds the amount of gold that has been
reported.
My take on that is that it sounds a bit fantastical but none of us will know
unless the Treasury allows an open audit to be performed. If that's what it
takes to get to the truth whatever it may be, I say "Git her done!"
However, if the conspiracy theory you seem to favor is accurate, that only
exacerbates the question I posed about whether switching away from fiat
money to a gold standard (which seems to be your PM of choice) will provide
a sufficient money supply so that trade and commerce will not be affected.
Given that a defining characteristic of fiat money is that at best only a
small percentage of it could be exchanged for existing PMs held by the
issuing government, you can get a rough approximation of how much
devaluation would occur by dividing the current dollar value of all the
government's held gold (which directly or indirectly becomes the new money
supply) by the current dollar amount of all fiat money now circulating. For
example, if the ratio of the value of the government-held gold supply to the
existing fiat money supply is 1:10, then in theory the equilibrium point
would have to be that one "new dime" has to have the same purchasing power
as one current "fiat dollar". IOW, deflation reaches 90%, over what may be
a very short time span.
Note that the current supply of fiat dollars includes all the dollars that
were "created out of nothing" by lowering banks' reserve requirements
against money they lend. That's a lot of fiat money that exists only on
bank ledgers, and it's over and above the physical fiat money created by
government mints and printing presses.
oly
>
> - Show quoted text -
I wouldn't say that I buy into "Conspiracy theories" per se; I am just
a very very deep skeptic of whatever happens to be the "official party
line" or the "accepted wisdom".
oly
oly
> "Beanie" <b...@ea.ne> wrote in messagenews:ikelun$dkl$1...@speranza.aioe.org...
> > "oly" <oly2...@aol.com> wrote in message
> >news:e14eee25-371b-4385...@o21g2000prh.googlegroups.com...
> >>Here's a good opportunity for you, Mr. Mazor:
> >>http://www.zerohedge.com/article/egypt-bans-export-gold-any-form
> >>Happily for you, the Egyptians will let you take out as much of their
> >>paper money as you want!!!
>
> > You can bet on it that Hosni and his kin have most of Egypt's gold safely
> > stashed away in Europe or the Bahamas.
> > Next step for Egypt: seize all civilian gold and give them worthless paper
> > money for it. FDR did it, so why not Egypt?
> > Even now Egyptian currency isn't even useful as toilet paper...
>
> I was amazed at reports that the average upper middle class citified
> Egyptian makes only about $7,000 per year.
I have recently read that many educated Egyptians in the schools or
middle government posts make $250 to $300 per month. But it is
possible that those people also recieve "in-kind" benefits like hot
meals at work, etc.
oly
Bremick
-----------------
It's gotta have some adverse effect eventually-- and apparently it did--
watching all the typical western tourists able to handle $200 a night hotels
with money left for restaurant meals, guided tours, pharoah doodads, etc.
oly
>
> - Show quoted text -
Well, a local coin dealer here went to Egypt in the summer of 2007.
His report was that security was very very tight at that time at the
major western-style hotels and at the prime sites like the Cairo
Museum and the Pyramids. I doubt that he met many average Egyptians
at all, probably none who didn't regularly interact with foreigners.
Gotta remember, a bunch of German tourists got machine gunned in the
Valley of the Kings not that many years ago.
This same coin dealer just missed being in Bali at the time of the
night club bombings. He was on his way there, less than a week away.
The guy has great great luck.
oly
mazorj
> I wouldn't say that I buy into "Conspiracy theories" per se; I am just
a very very deep skeptic of whatever happens to be the "official party
line" or the "accepted wisdom".
>
> oly
Duly noted, although that already was my impression of your attitudes. The
"conspiracy theory" reference was only to the rumor, not to your personal
inclinations.