On Tue, 06 Mar 2012 02:44:51 -0000, Boppo <
btie...@yahoo.com> wrote:
> On Mar 2, 6:11 pm,
a...@cole83.fsnet.co.uk.nospam.com (Mobius) wrote:
>
>> Money, I still don't understand the f**king stuff, but then I haven't
>> got
>> much of it to worry about!
>
> I can't blame you, the powers that be are doing everything they can to
> obfuscate its history and especially its attributes.
>
> For example, American currency used to be imprinted with words to the
> effect of: This note may be redeemed for lawful money at any federal
> reserve bank.
>
>
http://people.ku.edu/~kaf/pmoney/images/5frn34.jpg
>
> Q1: What was the lawful money that the notes could be redeemed for?
Here in the UK bank notes are and always have been promisory notes, IOUs
in essence.
The banks acknowledge that the paper they are printed on has little
intrinsic value in itself, and therefore a bank note is a promise to
exchange the note for something of real value, money, formerly in the form
of gold and silver currency. The monetary value of a bank note is
principally maintained by the confidence in the banking system of the
individuals and businesses who circulate paper currency and who choose to
honour its face value when used in transactions. English banknotes[1] all
bear the words "I promise to pay the bearer on demand the sum of [n]
pounds" depending on the face value. A very, *very* long time ago this
might've represented a promise to exchange the note for a similar number
of pounds weight of silver!
So, historically, lawful money used to be tokens in the form of coins,
but which could also be melted down and would still retain their value.
HTH provide a smidgeon of background about how it's done this side of the
pond. I guess that way back in the mists of time the Fed probably imported
broadly similar rules and ideas from Britain and Europe.
--
Jay Linn
http://juggler.net/lestival