I got into a debate on a retrogaming forum (login required so no link), regarding gold and silver as money. There is more pro-State propaganda regarding gold and silver than anything else.
A pro-State troll says “The free market discredited the gold standard.” Which free market is that? Is that the free market where President Roosevelt declared gold ownership illegal in 1933? Is it the free market that allowed the Federal Reserve to print more gold-backed paper than gold they had? The gold standard was ruined, on purpose, by government and banksters. Under a paper monetary system, it’s much easier for banksters to steal.
Around 1932, the State starting printing more gold-redeemable paper than gold they had. Anticipating a default on the paper dollar, people rationally started holding gold. They were decried as “greedy speculators”, but the real problem was that the Federal Reserve printed more gold-redeemable paper than gold they had. The rules of the Federal Reserve guaranteed an eventual default on the gold-redeemability of the paper Federal Reserve Note.
Look at it from an individual viewpoint. If your only two choices were gold and silver, which would you choose? With paper money, you can be robbed by inflation. Real inflation is a lot higher than the CPI.
With gold and silver as money, you can’t be robbed by inflation. Also with gold and silver, you can vote “no confidence” in the banking system by holding gold and silver. If you hold paper money, you get robbed by inflation, whether in a checking account or under your mattress.
That’s the reason Wall Street makes huge profits, even though they produce nothing useful. They profit from inflation. They get to borrow at the Fed Funds Rate (0%-0.25%), even though real inflation is much higher. Big banks borrow from the Federal Reserve at 0.25% and buy higher-yielding Treasury debt, making a practically guaranteed riskless profit. If gold and silver were legally recognized as money, you could opt out of that scam by holding gold and silver.
There is one reasonable reform that hasn’t been implemented. That would solve many of the monetary problems without a default on the paper dollar.
Declare that gold and silver coins are legal tender based on the spot price.
All capital gains taxes and sales taxes on gold and silver should be repealed. If you take a literal reading of the Constitution, those taxes are unconstitutional anyway.
Stores can charge a small and reasonable transaction fee, if you pay in gold or silver. A transaction fee of 1%-2% is reasonable. Banks also would be allowed to charge a small reasonable transaction fee, when trading between paper money and gold/silver. In the present, gold/silver/FRN transactions have huge fees, because that market is heavily regulated, restricted, and taxed. In a really free market, gold and silver would be very liquid. (That’s why “Start a gold/silver/FRN barter network!” is one of my favorite agorist business ideas.)
So, if silver is $30/oz, when you go into a store and buy something for $30, you can pay with $30 FRNs or an ounce of silver.
If you fix gold at an exchange rate of $2000/oz, then it doesn’t work once the paper dollar inflates beyond $2000/oz. If you let the price of gold and silver float, then you can use gold and silver alongside paper money. The government can mint coins that say “1 oz silver” or “1 oz gold”, but not print a denomination on them. The legal tender value will float with the metal price.
Under this system, the value of paper money would not go to zero, because when you pay taxes, you have a choice of using paper or gold.
This simple reform will never be implemented, because Congress is owned by the banking cartel. This is Ron Paul’s “competing currencies” proposal. This simple reform is never seriously discussed. That’s proof that Congress is completely owned by the banking cartel, and has no legitimacy at all.
I do agree with you. The paper fiat money system has many flaws. If governments could not borrow huge amounts of money and central banks could not print money from thin air (not back by savings from real workers), then there would be no money for endless wars.
However suppose you want to buy something worth 1.1 silver coins? Do you get own an axe and chop the silver coin up?
How will you pay for goods and services over the Internet? Well, I suppose you could have a bank account back by gold and silver.
So much commerce and shopping today is by debit/credit card and electronic money.
Replacing paper/electronic money by gold/silver is difficult. I suppose this is why Ron Paul proposed _competing_ currencies and not a total replacement.
Gold has some place as a store of wealth. It is no more dumb that having a banking system run by crooked fraudsters and their lackey, lick-spittle politicians.
Helicopter Ben said in a question system with Ron Paul that the Federal Reserve bank is a *Profit Centre* as they made more money than they gave to the banks as bailouts! Can you even count how many ways this statement is flawed? –> Money is not wealth, it is the workers and goods and commodities that back wealth that are all important.
No, you dont chop them up and more than you chop up a quarter when you need a dime.
Here is a link for 1/10 oz Silver:
http://www.providentmetals.com/1-10-tenth-oz-999-fine-silver-buffalo-round.html
You can buy 1/10, 1/4, 1/2 and 1 oz rounds right now. Why couldnt the US mint produice them?
That is interesting. They do have slightly better prices than APMEX. It depends on the quantity purchased. I’ll have to research them more.
I haven’t made any PM metal purchases myself (yet). I’m researching. I expect to buy some in the near future.
I have bought some 1/4 and some 1/10 silver rounds.
There is something cool about holding concreate assets instead of a promisary note backed by lies.
“Free market” money and deregulation enables absolute manipulation and fraud, where the government is monetizing and demonetizing currencies and where bankers are inflating one currency while creating deflation in another currency, leading to the bankers and commodity traders getting richer at the expense of the poor. Declaring silver or other commodities or currencies, in addition to gold, as legal tender will still have the problems of government corrupting commodity markets and will only create more problems and more ways for the bankers to create monetary complexity and manipulate the value of the currencies. The problem, as it has been in most of our history, is that our money is the socialized “free market” currency, where both soft or hard money is created as interest-bearing bank credit through fractional reserve banking authorized by the Congress as acceptable public legal tender, rather than true public debt-free legal tender issued and regulated by the Congress.
An absolute hard currency would be just as destructive, wasting commodities, artificially increasing the value of the commodities as governments declare them legal tender, allowing the producer or owner of such commodities to steal wealth through monetary expansion, artificial prices, and economic rent. Worse, an absolute hard currency would be deflationary, pushing people out of the economy and into economic stagnation, simply because there is not enough money to have them join the economy.
Hard currency, “free market” currency, and “free banking” are not solutions which respect the free market. They are solutions which corrupt free markets to favor aristocrats with the force of government. The government corrupts free markets in the worst possible way when it declares such “free market” currency to be legal tender. The only true free market currency is when it is left in the free market uncorrupted by government. Gold and silver are already free market currencies because the government does not accept gold and silver for payment of taxes and because banks chartered by government do not accept gold or silver for payment of debts. It is Orwellian for so-called Libertarians like Ron Paul and the Austrian School of Economics to call something free market economics when it is a corruption of economics by the government in the worse possible way. This is a common theme among Ron Paul and other supporters of the Austrian School of Economics. We see this theme again with land, with the government granting title to land and calling it “free market” economics or worse, anarcho-capitalism, when a main tenant of anarchy is that property is theft. The government granting and enforcing title to land is considered government intervention in free markets by true anarchists.
“Free market” money and deregulation enables absolute manipulation and fraud, where the government is monetizing and demonetizing currencies and where bankers are inflating one currency while creating deflation in another currency, leading to the bankers and commodity traders getting richer at the expense of the poor. Declaring silver or other commodities or currencies, in addition to gold, as legal tender will still have the problems of government corrupting commodity markets and will only create more problems and more ways for the bankers to create monetary complexity and manipulate the value of the currencies. The problem, as it has been in most of our history, is that our money is the socialized “free market” currency, where both soft or hard money is created as interest-bearing bank credit through fractional reserve banking authorized by the Congress as acceptable public legal tender, rather than true public debt-free legal tender issued and regulated by the Congress.
An absolute hard currency would be just as destructive, wasting commodities, artificially increasing the value of the commodities as governments declare them legal tender, allowing the producer or owner of such commodities to steal wealth through monetary expansion, artificial prices, and economic rent. Worse, an absolute hard currency would be deflationary, pushing people out of the economy and into economic stagnation, simply because there is not enough money to have them join the economy.
Hard currency, “free market” currency, and “free banking” are not solutions which respect the free market. They are solutions which corrupt free markets to favor aristocrats with the force of government. The government corrupts free markets in the worst possible way when it declares such “free market” currency to be legal tender. The only true free market currency is when it is left in the free market uncorrupted by government. Gold and silver are already free market currencies because the government does not accept gold and silver for payment of taxes and because banks chartered by government do not accept gold or silver for payment of debts. It is Orwellian for so-called Libertarians like Ron Paul and the Austrian School of Economics to call something free market economics when it is a corruption of economics by the government in the worse possible way. This is a common theme among Ron Paul and other supporters of the Austrian School of Economics. We see this theme again with land, with the government granting title to land and calling it “free market” economics or worse, anarcho-capitalism, when a main tenant of anarchy is that property is theft. The government granting and enforcing title to land is considered government intervention in free markets by true anarchists.
If something is legal tender, it is money. And money is not taxed. So problem solved. Maybe.
To Anonymous Coward. “chop the silver coin up?” Are you serious? If you give a cashier a $100 dollar bill for a $50 dollar purchase, do you expect her to tear it in half to make change?
Legal tender status means that the hard money circulates in parallel with the soft. You can make change with “change” or FRN dollars or pennies or whatever.
There are sales taxes, capital gains taxes, and reporting requirements on gold and silver. That is immoral and unconstitutional. Unfortunately, almost every judge disagrees with me.
You can use APMEX fractional silver (1/2, 1/4, and 1/10 oz) for making change. You can also use “junk silver” (pre-1964 State dimes and quarters). It isn’t that hard to use gold and silver as money, once people are used to it. Unfortunately, in the present, people who try to make it easy to use gold and silver as money wind up in jail. (examples are Bernard NotHaus and Franklin Sanders).
This subject always brings out the pro-State trolls. There’s more State propaganda on money and banking than almost any other issue.
I truly love your site.. Very nice colors & theme. Did you develop this website yourself?
Please reply back as I’m hoping to create my very own site and want to find out where you got this from or what the theme is named. Thanks!
This is the “simplemarket” theme. I also added some custom PHP.
The only way for commodity money to actually not suffer from the same flaw as the FRN system (issued as interest bearing debt) is to totally outlaw any abstract or symbolic representation of the commodity. This means no gold/silver certificates, checkbook money, accounting entries, electronic money or anything else other than the cold hard metal itself representing the commodity. The reason for this requirement is that there will develop again a fractional reserve ratio based on how much gold is stored on average in bank vaults, and how much the gold banksters can get away with issuing multiple duplicate representations of this same gold as interest bearing loans.
Also, the current banksters already control a huge portion of the gold. If gold’s value is still allowed to float against the FRN as like a traded commodity, it can be cornered and its value tampered with.
If you require that the only legal representation of gold/silver is the physical metal itself, then that alleviates somewhat the fatal flaw of interesting bearing debt fiat creation, but only so much as the proportion of gold to FRN in the money supply. The FRN supply will always be a drag on the value of money.
I assume that the intent of “competing currencies” is to diminish and ultimately eliminate the ratio of FRN to gold money through the demonstration that tender issued as interest bearing debt will inevitably have less and less value compared to the commodity money. If this is the outcome, and the only valid representation of the commodity money is the commodity itself, then we will be left hoarding around and hiding gold everywhere, which is not feasible.
I believe the solution is for the state to issue fiat currency debt free, like greenbacks, in any of its current convenient representations, when required. Bill Still has laid out a couple of simple foundational rules for this:
1. Make it illegal for the state to borrow money
2. Make it illegal for banks to loan money they do not have (give the monopoly to create money back to congress)
I can understand people having a problem with state issued money though, but if it is issued interest free, then it is better than money issued as interest bearing debt by private corporations for their profit. The reason people don’t trust the state to begin with is because it is controlled not by the people, but rather by the private financial bloc that issues our money currently. State issued money and full reserve lending would ideally marginalize these folks and make the state more legitimate.
The problem with metal-redeemable paper money is the legal tender laws that force people to accept it at par with metal. People are free to make fractional reserve deposits, as long as they’re aware of the risk and the bank owners are personally liable for the losses.
Most of the “abuses” of various monetary systems can be tied to the State. That’s legal tender laws. That’s laws that protect fractional reserve bankers, such as limited liability and bank holidays.