Liberty Dollar may have some competition...from VIRGINIA

[GoldandSilverEagles]

No -- what YOU are saying is BS. If the U.S. mint issues a one ounce silver coin with a face value of one dollar on it, then it can only be exchanged for one other dollar -- i.e., a FRN, or the equivalent in coins; or it can legally be exchanged for good to the value of the same sort of dollar.

Ok Tarzan.... would u care to back up your wishfullness with Federal Statute?

Despite your most fervent wishes, there is NO other dollar; and if you walk into a grocery store, buy some groceries, and tender your silver dollar in payment, the grocer will accept it and thank you for your patronage; and after you leave he will have a good laugh about the idiot who paid for groceries worth $1 with a silver dollar worth many times that amount.

ok, your a little slow.....you buy groceries that would normally cost 30 some in frns, and instead of using 30 ONE DOLLAR frns, you use a silver dollar.

Te FRN, despite your most fervent wishes, is a dollar -- the only dollar -- because under the authority conferred by the Constitution, Congress has said so.

Not exactly Tarzan....

31usc 5103.....TITLE 31 > SUBTITLE IV > CHAPTER 51 > SUBCHAPTER I > § 5103
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§ 5103. Legal tender
How Current is This?
"United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."

Last I looked, US gold and silver Eagles dollars ARE US coins.

Game, set, match.

Yep! And by ME!

[Nikki]

ok, your a little slow.....you buy groceries that would normally cost 30 some in frns, and instead of using 30 ONE DOLLAR frns, you use a silver dollar.

It's incredible how he TOTALLY doesn't get it.

The grocer looks at the silver dollar he is handing to him and says "This is one dollar. See? It says that right on its face. Where's the other $29 you owe me?"

Just because he says the coin is silver and actually worth $30 doesn't mean crap to the grocer. For all he knows, GASE could have put a nice paint job on a lead slug.

The coin is, in commerce, worth its face value --$1.00. If, on the other hand, GASE takes it to a metal dealer or coin merchant, they'll be happy to pay him a bunch of FRNs for it.

The grocer isn't required to treat it as anything more than $1.00, and if GASE walks off with the groceries, the grocer can call the police and have GASE arrested for petty theft -- a charge which WILL hold up in court.

[notorial dissent]

The point being, that in order to get that $1 silver eagle, or that $50 gold eagle the buyer, and that is what you are doing, buying that coin, has to shell out the face value plus the intrinsic and current value of the metal, while legally the coins may only be used for payment at face value, which makes their use in that fashion rather silly.

[GoldandSilverEagles]

ok, your a little slow.....you buy groceries that would normally cost 30 some in frns, and instead of using 30 ONE DOLLAR frns, you use a silver dollar.

It's incredible how he TOTALLY doesn't get it.

The grocer looks at the silver dollar he is handing to him and says "This is one dollar. See? It says that right on its face. Where's the other $29 you owe me?"

Just because he says the coin is silver and actually worth $30 doesn't mean crap to the grocer. For all he knows, GASE could have put a nice paint job on a lead slug.

The coin is, in commerce, worth its face value --$1.00. If, on the other hand, GASE takes it to a metal dealer or coin merchant, they'll be happy to pay him a bunch of FRNs for it.

The grocer isn't required to treat it as anything more than $1.00, and if GASE walks off with the groceries, the grocer can call the police and have GASE arrested for petty theft -- a charge which WILL hold up in court.

Nikki, imo you have a "chip on your schoulder."

You don't like me.

[GoldandSilverEagles]

The point being, that in order to get that $1 silver eagle, or that $50 gold eagle the buyer, and that is what you are doing, buying that coin, has to shell out the face value plus the intrinsic and current value of the metal, while legally the coins may only be used for payment at face value, which makes their use in that fashion rather silly.

notorial, be you a man or a woman outside of cyberspace. regardless. it is clear that you have not followed.. that you have not comprehended my words on this quatloos forum.

[The Operative]

GaSE still doesn't get it. Bullion coins have the set face value that is much lower than their convertible value because they are meant to be held or traded for the bullion they contain. They are not meant to be a circulating currency. While they are considered to be U.S. coins, only a fool would use it at its' face value.

There is an easy way for you to stop using FRNs. All you have to do is simply use circulating coins of the U.S. Mint. Pennies, nickels, dimes, quarters, half-dollars, and non-precious metal dollar coins are circulating coins and they are an obligation of the U.S. Government and not the Federal Reserve. The Federal Reserve has to pay face value for the circulating coins which then enter circulation through the banking system.

I am certain that you will still prefer to use a coin containing one ounce of silver to buy a pack of gum.

[Pottapaug1938]

No -- what YOU are saying is BS. If the U.S. mint issues a one ounce silver coin with a face value of one dollar on it, then it can only be exchanged for one other dollar -- i.e., a FRN, or the equivalent in coins; or it can legally be exchanged for good to the value of the same sort of dollar.

Ok Tarzan.... would u care to back up your wishfullness with Federal Statute?

It's not wishfulness, Goldie; and in any event you supply the statute yourself.

Despite your most fervent wishes, there is NO other dollar; and if you walk into a grocery store, buy some groceries, and tender your silver dollar in payment, the grocer will accept it and thank you for your patronage; and after you leave he will have a good laugh about the idiot who paid for groceries worth $1 with a silver dollar worth many times that amount.

ok, your a little slow.....you buy groceries that would normally cost 30 some in frns, and instead of using 30 ONE DOLLAR frns, you use a silver dollar.

Yeah -- a silver dollar with a face value of ONE DOLLAR, and legal tender for ONLY that amount.

The FRN, despite your most fervent wishes, is a dollar -- the only dollar -- because under the authority conferred by the Constitution, Congress has said so.

Not exactly Tarzan....

31usc 5103.....TITLE 31 > SUBTITLE IV > CHAPTER 51 > SUBCHAPTER I > § 5103
Prev | Next
§ 5103. Legal tender
How Current is This?
"United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."

Last I looked, US gold and silver Eagles dollars ARE US coins.

Game, set, match.

Yep! And by ME!

In your dreams, Pal. U.S. gold and silver Eagles are indeed U.S. coins; and they are legal tender FOR THE AMOUNT STATED ON THEM! Why else do you think that the denomination is given on them -- or on any coin? And, you miss my point about FRNs being the only dollar. I said that because they are legally exchangeable for other forms of that dollar -- namely, coins, or your gold and silver Eagles of IDENTICAL value.

[Nikki]

Nikki, imo you have a "chip on your schoulder."

You don't like me.

I do not either like or dislike you. The only reason I, and many of the others, respond to your posts is to set the record straight for other readers who might otherwise be tempted to swallow your chum.

[silversopp]

GASe really doesn't get it...

Businesses accept money at their face value, not the value of the raw materials used to create the money. If what GASE is saying was true, there would be a number of businesses that would only accept a $1 FRN for the value of its raw materials - say 10 cents or so.

The value of silver/gold changes constantly. Cashiers do not have the current spot price of silver/gold at their register to value an ounce of precious metals properly. And historically, businesses NEVER did this sort of thing. There has always been the problem of people melting coins when the value of the materials exceeded the face value of the coin.

You can see this today, where the penny has a face value of 1 cent but contains about 1.7 cents worth of zinc and other materials (that's why there were some news stories a while ago about folks getting busted for melting pennies). There are no businesses that count pennies at 1.7 cents...business count pennies at 1 cent. Likewise, there would be no businesses that count one ounce silver coin at anything other than it's face value.

If you can convince a cashier to allow you to buy $1.70 worth of groceries for one hundred pennies, then you have something. Good luck, and let us know how it goes.

[ArthurWankspittle]

Two points: If we were to change to using gold based currency, where are we getting all the gold from?
If a silver dollar was worth $.30 in metal (as opposed to $30+) would you make the same argument ?

[Pottapaug1938]

Another thing to consider is some place like China mining gold and storing it away until the point where it floods the market with it. That would wreck your precious gold-based money, just as President Grant wrecked the plans of Jay Gould and Jim Fisk to cormer the gold market back in 1869 by releasing government-held gold onto the open market.

[Brandybuck]

Two points: If we were to change to using gold based currency, where are we getting all the gold from?

First of all, we would not be using 100% gold reserves. That's just silly, and those who advocate it are economically illiterate (though they do have the ability to quote Mises out of context).

Most rational folks advocating a "gold standard" want free banks using fractional reserve banking. While free banking is still a scary radical idea for many people, it is at least grounded in economics, and not mimeographed crank newsletters.

[The Operative]

Most rational folks advocating a "gold standard" want free banks using fractional reserve banking. While free banking is still a scary radical idea for many people, it is at least grounded in economics, and not mimeographed crank newsletters.

The U.S. has been there and done that. The economic conditions of that era led to the call for a central bank.

[grixit]

Two points: If we were to change to using gold based currency, where are we getting all the gold from?

First of all, we would not be using 100% gold reserves. That's just silly, and those who advocate it are economically illiterate (though they do have the ability to quote Mises out of context).

Most rational folks advocating a "gold standard" want free banks using fractional reserve banking. While free banking is still a scary radical idea for many people, it is at least grounded in economics, and not mimeographed crank newsletters.

Free banking, you mean like the so called wildcat banks of the post-Ohio expansion? The ones that Andrew Jackson was hooked up with?

I definitely don't want them back.

[Brandybuck]

Free banking, you mean like the so called wildcat banks of the post-Ohio expansion? The ones that Andrew Jackson was hooked up with?

That is most definitely NOT what I want. Banks of that era were under a hodgepodge of state regulations and requirements. These regulations were not for the purpose of consumer safety, but for the enrichment of state coffers or to patronize populist sentiments. Examples included restrictions on branch banking, must be state chartered, requirements to hold state bonds, etc. It was an era of decentralized banking, but it was hardly free.

Free banking means that banks are treated like any other business and not subject to special regulations beyond those applicable to all businesses . Examples that worked were Canada and Scotland during roughly the same time period. The claim is not that free banking would be a utopia, merely that it would be better than a central banking system.

Wikipedia has a fair and balanced treatment of the subject. http://en.wikipedia.org/wiki/Free_banking

[silversopp]

So...under a free banking system, each bank could determine their own reserve requirement, interest rates, etc. A bank that has a 20% reserve would be much safer but would likely pay out a smaller interest rate on deposits because it can not loan as much. On the other side, a bank that only has a 5% reserve could pay higher interest rates on deposits but carry higher risk.

I can see an advantage to being able to pick and choose your level of risk tolerance for your deposits. I also see an advantage to competition determining interest rates, not a centralized government that can screw up an economy when they adjust rates too far in either extreme.

I would assume that under such a system private companies would provide deposit insurance to replace the FDIC, and those companies would have a vested interest in verifying that the banks are keeping true to their advertised reserve rates - as they would be bearing the risk of failure.

Would be interesting to see how that would work out.

[Prof]

So...under a free banking system, each bank could determine their own reserve requirement, interest rates, etc. A bank that has a 20% reserve would be much safer but would likely pay out a smaller interest rate on deposits because it can not loan as much. On the other side, a bank that only has a 5% reserve could pay higher interest rates on deposits but carry higher risk.

I can see an advantage to being able to pick and choose your level of risk tolerance for your deposits. I also see an advantage to competition determining interest rates, not a centralized government that can screw up an economy when they adjust rates too far in either extreme.

I would assume that under such a system private companies would provide deposit insurance to replace the FDIC, and those companies would have a vested interest in verifying that the banks are keeping true to their advertised reserve rates - as they would be bearing the risk of failure.

Would be interesting to see how that would work out.

However, without regulation, the experience with free banking has not been particularly good. While some bankers will always behave with fiduciary caution concerning deposits, others will not (even in a environment of regulation, we have seen systemic fraud and looting when someone figures out a way to rig the system).

And, with free banking, and no central bank, runs on the bank are a real problem, because, with any form of of modern banking, banks will only maintain some fractional reserve. If a bank cannot raise cash, a run can destroy the bank.

Finally, private insurance is also risky; again, insurance companies go broke, all of the time. How would you know that the insurance on your deposits was "good" without investigation of counterparties to the risk?

Central banks/governmental agencies are in place for a reason.

Again, free banking is a legitimate theory among those from the Austrian school. I just think it is a very bad theory in a modern economy.

[Pottapaug1938]

So...under a free banking system, each bank could determine their own reserve requirement, interest rates, etc. A bank that has a 20% reserve would be much safer but would likely pay out a smaller interest rate on deposits because it can not loan as much. On the other side, a bank that only has a 5% reserve could pay higher interest rates on deposits but carry higher risk.

I can see an advantage to being able to pick and choose your level of risk tolerance for your deposits. I also see an advantage to competition determining interest rates, not a centralized government that can screw up an economy when they adjust rates too far in either extreme.

I would assume that under such a system private companies would provide deposit insurance to replace the FDIC, and those companies would have a vested interest in verifying that the banks are keeping true to their advertised reserve rates - as they would be bearing the risk of failure.

Would be interesting to see how that would work out.

However, without regulation, the experience with free banking has not been particularly good. While some bankers will always behave with fiduciary caution concerning deposits, others will not (even in a environment of regulation, we have seen systemic fraud and looting when someone figures out a way to rig the system).

And, with free banking, and no central bank, runs on the bank are a real problem, because, with any form of of modern banking, banks will only maintain some fractional reserve. If a bank cannot raise cash, a run can destroy the bank.

Finally, private insurance is also risky; again, insurance companies go broke, all of the time. How would you know that the insurance on your deposits was "good" without investigation of counterparties to the risk?

Central banks/governmental agencies are in place for a reason.

Again, free banking is a legitimate theory among those from the Austrian school. I just think it is a very bad theory in a modern economy.

To pick but one example, I only need to remember the savings and loan scandals of the 1980s to come up with a reason why, to paraphrase the Prof, free banking is a very bad idea.

[LPC]

So...under a free banking system, each bank could determine their own reserve requirement, interest rates, etc. A bank that has a 20% reserve would be much safer but would likely pay out a smaller interest rate on deposits because it can not loan as much. On the other side, a bank that only has a 5% reserve could pay higher interest rates on deposits but carry higher risk.

I can see an advantage to being able to pick and choose your level of risk tolerance for your deposits. I also see an advantage to competition determining interest rates, not a centralized government that can screw up an economy when they adjust rates too far in either extreme.

I would assume that under such a system private companies would provide deposit insurance to replace the FDIC, and those companies would have a vested interest in verifying that the banks are keeping true to their advertised reserve rates - as they would be bearing the risk of failure.

Would be interesting to see how that would work out.

I think we know how it would work out, because what you are describing sounds very much like the "shadow banking" system that arose in the mortgage industry. Each investment bank set their own reserve requirements, and became highly leveraged. And private insurance (e.g., AIG) was used to "spread risk" and supposedly protect investors.

The end result was that several large financial institutions ceased to exist, several others required a large amount of government support to survive, and the world financial markets almost collapsed.

It was interesting, to be sure, but I don't think we want to do it again.

[Gregg]

Would be interesting to see how that would work out.

google Marvin Warner, and you can see how it worked out in Ohio in the early 80s.