Monopoly Men

[JamesB]

All of this is connected in trutherville, but this stuff is just as idiotic as their 9/11 crap. I got this link from a truther mailing list I am on.

http://www.slideshare.net/Mormons4justice/modern-pirates

Their ignorance of law, economics, and basic logic is just astounding. For example they argue that issuing paper money is unconstitutional based on this clause in the Constitution from Section 10:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Hello! That says that the states cannot issue their own money, it does not restrict what the federal government can do. If New York decided to start printing its own currency, that would be unconstitutional. Can these people read? The title of Section 10 is "Powers Prohibited of States" for God's sake.

Later they claim that we are paying 40% of the interest on our national debt to "them", which I presume means the fed. They are leaving out the fact that most of this interest is actually paid to the SSA. And any interest received on securities held by the fed in excess of their expenses is refunded back to the treasury.

http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/fro.pdf

Last year that came to $29 billion.

Morons, all of them

 

[JimBenArm]

This is so typical of TS1234. The topic was Monopoly Men, he starts rambling about Monopoly Money! Just because you couldn't be the Race Car this time...

 

[JonnyFive]

People should be free to use whatever money they judge is the best functioning. Being forced to use unbacked paper money (as we were forced) is akin to being forced to use rocks to pound in nails. It works, it's just not nearly as effective as using hammers. If hammers give way to nail guns, so be it.

TruthSeeker, no one is forcing you to use this currency. You are free to try to get merchants to accept gold, or shells, or little pieces of paper you call "Truth Bucks" accepted in exchange for goods or services.

I suspect you may have difficulty with this, but you are not coerced into not doing it.

However, barter is an inefficient system. Currency exists because it provides a simple representation of the ability to purchase goods or services. It has value because society as a whole agrees that it has value. The government provides a measure of security behind the value of the money we use by restricting its supply and punishing attempts to privately print additional money, which would inflate the economy and devalue the currency.

You seem to believe that gold backing makes money more valuable, or more "secure"... or something. You could not be more wrong about this. Gold's worth, as you yourself said, is determined by the market. This is true of all commodities. Gold is valuable mostly, like currency, as a form of representative currency. It is resistant to factors such as inflation because the quantity of gold is fixed. That does not, of course, mean that the value of gold is always fixed.

Backed currencies have issues that are different from, but no less real than, non-backed currencies. One of the critical problems of a backed currency is the issue of deflation, exaggerated by hoarding or holding the money supply. As you also dislike fractional reserve banking, I should point out that the combination of the two has the dangerous potential to start a serious deflationary cycle, akin to the one that caused the Great Depression.

If a better functioning money is discovered, the market will embrace it. On the market, there is nothing wrong with money substitutes, like paper money, or computer digits on a magnetic strip. It's just that the substitutes must be redeemable. On the market, they would never ever function as money without being redeemable in a commodity of real value.

Again, everything is worth only what others will pay for it. This is the reason the value of commodities, including gold, fluctuate. The concept of a "better functioning money" is a chimera. Currency represents many things - the amount of it in circulation, the strength of the economy backing it, the ease with which it can be forged, etc.

The only way for fiat money to function is to first establish a commodity money, then forcibly take over and monopolize the production of money, as was done.

If the production of a representative currency is not controlled, you cannot prevent insane inflation. Things like gold, platinum, oil, and cows are inherently limited, so their value is not subject to the kind of inflation caused by simply printing more money.

I think you should read up on what Germany did to try to pay off their debts from WW I. I think you will find it a very interesting study in what happens when a national currency is not well controlled. Once the currency buys nothing, no one will accept it as legal tender, and the social contract backing it breaks.

You also clearly don't understand fractional reserve banking. Tell me, what do you think fractional reserve banking is. I'll give you a hint: it can be practiced even with gold-backed currency. Hell, you could probably do it with a cow-backed currency.

 

[JonnyFive]

The gold standard in the U.S. really ended in 1933, although the U.S. participated in the postwar Breton Woods agreement, in which countries bought and sold gold at a fixed price until the early 70's. I'm not aware of any modern economy that uses the gold standard. The U.S. only used it for a few decades. As I mentioned above, U.S. currency is backed by government securities and gold certificates.

I think you may have it somewhat backwards.

A government security is not a backing for US currency, it is backed by US currency. It is the government's promise to repay you x amount, usually with some kind of time frame. In a worst-case scenario, the government can in fact simply print more money to satisfy its debts. This is what Germany did to pay off their WW I debt, and it completed ruined their economy with run-away inflation.

Gold certificates also aren't backing the US currency. This would be indentical to saying that the US currency is backed by gold, which it isn't.

There was a "gold certificate" (distinct from the current usage of the term, meaning a certificate signifying the ownership of x amount of gold) that was legal currency in the US for a while, but it's not longer legal to own, let alone considered legal currency.

However, that does not mean that gold-backed currency is automatically better, as TS1234 implies, or that our currency is worthless.

Ultimately, our currency is "backed" by the existence of the national economy, the ability of the government to control the currency supply, and the willingness of the market to exchange things for our currency. As I pointed out above, gold backing has its own problems.

Really, any modern economy is kind of built on nothing more than a common agreement not to simply crack each other's skulls open to feast on the goop inside.

 

[CurtC]

OK. I've got a stack of "Ace Baker's Gold Certificates". They are just as redeemable as any paper held "as collateral" against U.S. dollars. Which is to say, they are not redeemable for anything.

Will you lend me money based on this collateral?

This is solely dependent on whether I am confident that I can get one of my creditors to accept your Ace Certificates later. If I think that they will, I have no problem accepting them as payment to me. That's why dollars work now - we all know that they will have the same value tomorrow, and we trust that the government is not going to do something stupid to screw with that. Other countries have screwed that up in the past, in particular Germany after WW1 and Argentina in the 80s, but the US has a long history of prioritizing stability, and we made sure to make the Fed unaccountable to the politicians.

Ace, I agree with you to a large degree. Our dollars are not backed by anything tangible as far as I know, which disagrees with what Gravy said. I like the free market, not simply because it's the most efficient, but because it provides for the most freedom for the individual.

That being said, there were serious problems with the system prior to the establishment of the Federal Reserve. Free markets are susceptible to bubbles and crashes, and the establishment of the Fed has eliminated those (the 1929 stock market crash was a crash in that market, not the money market). I am willing to forgo a few individual rights to live in a more civilized society, and if you had experienced bank runs, you would be too.

Money is essential to an economy. Without money, society could do no better than primitive agriculture, if that.

Money is just something that holds value, to store it for later. Gold had traditionally been a good medium, because it's fairly rare, doesn't oxidize easily, and is pretty to look at. It has problems as well, such as what happened in Europe when Spanish galleons returned from the Americas loaded with it. But there's nothing special about gold other than those I listed - it's really a barbarous relic.

Dollars work just fine, even though the only thing behind their value is our trust that they will still be valuable tomorrow.

 

[A W Smith]

TS flaunts his ignorance again.

which is more stable. One of your "anus certificates" backed by a commodity you yourself choose on a whim? Or a dollar used as a unit of measure backed by an entire economy that everyone (but you) is familair with and knows the value of?

 

[JonnyFive]

which is more stable. One of your "anus certificates" backed by a commodity you yourself choose on a whim? Or a dollar used as a unit of measure backed by an entire economy that everyone (but you) is familair with and knows the value of?

If TS1234 puts on Youtube a video of himself trying to purchase something relatively expensive with hand-drawn "Truth Bucks" I personally promise that I will send him a special electronic bank note for ten billion Truth Bucks^*. I'm seriously, guys.





^*Electronic bank note in the form of PM message containing the phrase "This message is worth 10 billion (10,000,000,000) Truth Bucks (TB) - Issued by the bank of JonnyFive" only.

Not considered legal tender in the United States or Earth. Legal tender for all debts public and dhtarogton on Planet X.

 

[Cl1mh4224rd]

I propose reenacting an ancient form of currency: leaves. Yes, they're readily available now, as they were 2 billion years ago, so, individually, have negligible value, but our ancestors solved that problem, and so can we...

 

[jujigatami]

Also what our resident genius is forgetting is that people make their own currency all the time, usually, but certainly not limited to stocks.

Let me put it this way, lets say you are doing some landscaping for Bill Gates. When you are done, you ask for payment, and he goes in to his office and returns with a few shares of Microsoft. Would you take those as payment?

Unless you are a total idiot, of course you would. Why, because the shares in his company have value. It doesn't matter if the shares say "Microsoft", "Ace's gold certificates" or "US Dollar"(which is really nothing more than a share in the US economy). As long as the share has inherent value and can be sold on the market for some other form of currency, no problem.

Companies create currency all the time and use it to buy lots of things with absolutely no money in the form of government currency changing hands.

 

[CurtC]

We can help increase the value of our leaves by embarking on a massive deforestation campaign, burning down all the forests.

 

[JonnyFive]

We can help increase the value of our leaves by embarking on a massive deforestation campaign, burning down all the forests.

This is all starting to sound so familiar... almost like I read it in a book somewhere.

It was probably a history book of some kind.

I'm really looking forward to TS1234's replies to my comments, especially as to what he thinks "fractional reserve banking" is.

 

[CurtC]

It was probably a history book of some kind.

I read it in a travel guide, of sorts.

 

[JonnyFive]

I read it in a travel guide, of sorts.

Yes, that was it. It had some very large, friendly letters on the cover.

 

[Myriad]

I've thought up a few more examples of privately issued and privately controlled quasi-currencies, of no intrinsic value, being used and traded beyond the domains they were originally intended for.

1. Frequent-flyer miles.

2. Trading stamps (best known as "green stamps") -- this one dates me!

3. Virtual money from online massively multiplayer role playing games.

4. In Boston, where public transit is heavily used (and I'm sure in other towns too), most individuals will accept subway tokens for small cash debts.

5. Casino chips.

cf food stamps: a different kind of money also issued by the gubmint, with legal restrictions on its usage intended expressly to prevent it from being too equivalent to money.

Also, one more thing, TS: If the debtor and the creditor both agree on some alternative form of payment, such as bricks, then they can go ahead and settle the debt that way. No law prevents this (as long as the fair market value of the goods is reported as required for tax purposes). The law only says that if the debtor insists on paying off in dollars (and barring a contractual agreement to discharge the oblivgation in some other way, such as a commodities futures contract), the creditor must accept them, and cannot make the debtor jump through arbitrary hoops to pay in some other way.

And I'm not even sure that that law really exists, or if it does, how broad its scope really is. Some retail vendors I purchase from do not accept cash. E-bay sellers appear to be free to specify exactly what forms of payment in what currency they'll accept, and many do not accept payment in cash. Every bill I receive in the mail says, "Do not send cash through the mail." (Basically they appear to be saying, "We accept cash but if you try to pay that way through the mail, we promise to steal the cash and deny receiving it.") Most toll booths now have "NO CASH" lanes.

Respectfully,
Myriad

ETA: TruthSeeker, where did you go? Don't you have any more questions about my personal financial matters?

 

[JonnyFive]

I've thought up a few more examples of privately issued and privately controlled quasi-currencies, of no intrinsic value, being used and traded beyond the domains they were originally intended for.

(snip)

And let's not forget the giant barter economy that is Craigslist.

Maybe we should lay off, I think we're scaring away TS with all this information to digest.

TS, you need to learn you some basic economics before you start this kind of thing here.

 

[chipmunk stew]

I've thought up a few more examples of privately issued and privately controlled quasi-currencies, of no intrinsic value, being used and traded beyond the domains they were originally intended for.

1. Frequent-flyer miles.

2. Trading stamps (best known as "green stamps") -- this one dates me!

3. Virtual money from online massively multiplayer role playing games.

4. In Boston, where public transit is heavily used (and I'm sure in other towns too), most individuals will accept subway tokens for small cash debts.

5. Casino chips.

• Store coupons
• Admission tickets
• Deeds & titles
• ...

There are loads of pseudo-currencies that have no intrinsic value. The value is in what the one can expect to receive in the market in exchange for the piece of paper.

 

[Sword_Of_Truth]

To this day, if I refuse to accept U.S. dollars in payment of debt, I can be charged with a felony.

Choice?

I find this an interesting statement.

Can you provide evidence for this claim?

Surely in a nation of 300 million people, there must be several people you can list who have violated this statute and been prosecuted and sentenced.

I await your response.

 

[Sword_Of_Truth]

There are loads of pseudo-currencies that have no intrinsic value.

Oh, absolutely. Where I come from, there are large numbers of people who conduct thier trade in canadian money.

 

[HeyLeroy]

Oh, absolutely. Where I come from, there are large numbers of people who conduct thier trade in canadian money.

CT money

There are many people (individuals; I can't state the same for businesses) who'll accept this CT money to settle debts.

 

[Gravy]

You're the one who said U.S. dollars were "backed by government securities and gold certificates".

OK. I've got a stack of "Ace Baker's Gold Certificates". They are just as redeemable as any paper held "as collateral" against U.S. dollars. Which is to say, they are not redeemable for anything.

That's because you printed your own, which is actually called counterfeiting. However, real gold certificates are redeemable for cash at face value. Cash is worthless because it's not redeemable for gold? My bartender, who has never once bitten a dollar bill to test its authenticity, disagrees.

The U.S. economy used the gold standard for a few decades only. Miraculously, the U.S. still exists. In fact, many countries store their gold in the U.S., because they believe it will be safe here. These countries each have a fenced-off room in the basement vaults of the Federal Reserve Bank of New York. Debts between countries are settled by moving gold from one room to another. Of course, representatives from those countries aren't there to see the gold being moved (although you can take a tour there and see that happening). They keep track of their wealth with things called "accounts," which are numerical abstractions. Most of these accounts are in the form of computer programs, which are alphanumeric codes that cause computers to create sequences ones and zeros which are stored on magnetic and optical media. Frightening, isn't it? Makes you want to move to a remote cabin in Idaho and live on elk jerky, doesn't it?

You must get terribly confused when watching "Antiques Roadshow."