Washington State proposed bill to make gold and silver legal tender

Discussion in 'Bullion Investing' started by GreatWalrus, Jan 31, 2012.

  1. jjack

    jjack Captain Obvious

    This will have no impact, as long as dollar continues to the currency of choice for trade i see no major changes in price of gold or silver. However in the long run we will have to pay for artificially keeping the rates low.
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  3. medoraman

    medoraman Supporter! Supporter

    Well we do have the experience of so many countries where their currency was inflating and they started bartering gold and silver.........wait, I guess we don't. All of the cases I can think of, (Wiemar Republic, Turkey, Russia, Zimbabwe), all reverted to using a stable currency instead of any commodity bartering.

    Its a pretty outlandish claim to say the population en masse will turn their backs on their currency and resort to commodity bartering. Do you have any examples of this from the past century that was not in the middle of a war zone?
  4. InfleXion

    InfleXion Wealth Preserver

    I think the burden of proof is on fiat currency which has never had an implementation that did not fail other than the ongoing current one which has caused debt levels never before seen, and lead to a technocratic society as opposed to a democratic one. So I would hardly give it a passing grade at this point anyway. Bartering isn't the ideal way to go either, but precious metals have proven to enforce sound money countless times throughout history simply by their nature and role in the free market. It isn't the same as commodity bartering unless there is no reliable price discovery mechanism in place, or else then you have a barter system regardless.
  5. ctrl

    ctrl Member

    I love how this is a suggestion during a discussion about constitutionality. The very section of the constitution that these washingtons state lawmakers are basing this (flawed) bill on (coming from flawed reading) very explicitly says that the states cannot issue money, that means that issuing their own "independent currency" is ever-so-oh-my-god-how-can-you-miss-that obivously unconstitutional.

    Also note that the wording these lawmakers are (mistakenly) basing this off of is in reference to STATES, not the FEDERAL government, which has the right/ability (as upheld multiple times in court) to issue dollar currency.
  6. medoraman

    medoraman Supporter! Supporter

    Why is the burden of proof on the existing system? What we have right now is the de facto reality, I would think anyone proposing a wholesale change to the de facto reality, since this is an extraordinary change, should be the one providing extraordinary proof.
  7. fatima

    fatima Junior Member

    A century ago, 100% of the commerce in the USA took place with silver & gold coin, or certificates that could be redeemed for these coins i.e what you call "commodity bartering".

    It's not unusual or weird as your question would purposely lead one to believe.

    On the commentary about the Wiemar Republic, the Republic used one of the most stable currencies in Europe, the Goldmark. During WW1 & war reparations to the allies crushed the economy and the people were forced onto the fiat papiermark and that is when the hyperinflations started with the paper notes. Eventually these were replaced by the Nazi Reichmark. During this time, the people who held onto the gold & silver Goldmark could use them to maintain purchasing power on the black market. So yes, it existed.

    It should be noted the Nazi knew exactly how the Reichmark was going to fail (due to the interest) and their plan to address it was to bring in slave labor from captured countries to keep the economy ahead of it.
  8. coleguy

    coleguy Coin Collector

    To be fair, though, at that time silver and gold and paper backed by both, was all they had, just like today we use what we have available to us. I don't see people here pining for the days when we used to use seashells and ivory as currency.
  9. fatima

    fatima Junior Member

    So when did we use seashells and ivory? Or is the question posted as a counter because you don't have a logical argument otherwise? People here have been pretty clear about the perils of fiat money so I recommend that you read back through the topic if you are really confused.
  10. CamaroDMD

    CamaroDMD Supporter! Supporter

    That's actually not true at all. The Constitution states in Article 1, Section 10, Clause 1...in part "No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts." What this means is that a state cannot issue any kind of money other than gold or silver. The states can't, but the federal government is not held to this. Since states no longer issue currency of any kind, this portion of the clause is of no value today.
  11. coleguy

    coleguy Coin Collector

    You're kidding, right? People used them for tens of thousands of years. Basically what I'm saying is, people use the currency that is available. No confusion there...we're doing it now, unless you use something different. The value isn't in the materials themselves, but rather what they represent. People forget that currency itself isn't a commodity, and never has been.
  12. fatima

    fatima Junior Member

    No I'm not kidding. You brought that nonsense into the conversation. On the other item, you are absolutely wrong about the value of the materials is what is traded. I recommend that you go and read the coinage act of 1792. Transactions were specified in gold & silver, not dollars & cents. The US Mint only provided a convenient and reliable assay that your gold coin held the amount of gold as stated. Nothing more, nothing less.

    In fact, the coinage act of 1792 established that anyone could bring in gold bullion, and the Mint would assay it and then mint it into coins for no charge. The value was in the gold, not in the fact that it had been stamped by the mint. If natives of the far off past had reason to trade in ivory and shells, it would have been because those items were rare and coveted. It wasn't because those items had been handed out by some government.
  13. Silvertip1958

    Silvertip1958 Member

    I don't see how one state could do it and not the others. Let's say they lock it in on $35 an ounce, but the market goes up to $50. All of the silver will cross the border to cash out. If it went down to $25, then it will all come pouring back in. They would have leave it a current market, right? That might be confusing to businesses and would force them to play the market with sales.
  14. yakpoo

    yakpoo Member

    Normally, I would weigh in here...but I gotta get my Hot Pockets home before they thaw.

  15. medoraman

    medoraman Supporter! Supporter

    A century ago commerce was conducted with money as the US government declared it to be, including large dollar values of paper dollars since the public demanded paper money over heavy gold and silver money. This state law is not declaring, (since they do not have the power), PM as legal currency. Its just forcing the state to effectively become a commodity dealer, posting "buy" prices every day. I recall reading a lot more transactions taking place in French and Swiss currencies than PM bars during this time when people wanted "hard currency".
  16. fatima

    fatima Junior Member

    Romania has just passed a law that denies state benefits to anyone found to have more than 100gms (little more than 3 troy ounces) of gold. Gypsies are claiming that it unfairly targets them as due to discrimination they operate outside the regular fiat money based economy. Of course governments really don't want it's citizens to hold gold.

    Note that Romania does not care if people have corn, wheat, hog jowls, copper or real commodities.

    I think it's clear enough that gold isn't a "commodity". It's a global alternative currency to the fiat mess being created by the world's central banks. This action in Romania demonstrates this is still the case here in 2012. While a lot of Americans have yet to wake up to their slumber over it, it is a good sign to see that at least some have it figured out.
  17. InfleXion

    InfleXion Wealth Preserver

    What the Constitution states is this: "No State shall... make any Thing but gold and silver Coin a Tender in Payment of Debts"

    Which means that a state may ONLY make money out of gold and silver. The Federal government on the other hand is only allowed to do what is specifically outlined in it's duties by the Constitution, and since the Constitution does not delegate this function to the Federal level then they have no legal right to be in charge of money craetion.
  18. InfleXion

    InfleXion Wealth Preserver

    I look at it as that the burden of proof is on the system that has not proven itself to be successful. De facto reality doesn't make it superior. Would you argue that the German reality under Hitler was ideal because it was the de facto at one time? I know that's extreme, but it took a series of extraordinary changes to get where we are, a series of changes which could not have provided extraordinary proof because no such proof exists to support unsound money. Bretton Woods was nothing more than a bait and switch.
  19. InfleXion

    InfleXion Wealth Preserver

    You are correct about the Constitution does not say only gold and silver can be money. I did not translate it exactly right.

    However, the Federal government can't legally do anything except what the Constitution explicitly allows. If you can find a passage that specifically gives this power to them then I will agree with you completely.
  20. medoraman

    medoraman Supporter! Supporter

    "Promote the general welfare". That is the clause that has allowed the entire 20th Century US government to take shape.

    Good luck getting that genie back into the bottle.

    I agree with you Inflexion, just citing the most abused section of the Constitution used to allow things.
  21. InfleXion

    InfleXion Wealth Preserver

    I was not aware of that particular clause, how open to interpretation. :) Well, I think one could make a case that it has not been good for general welfare. Gotta love the gray areas. Still, if anything can be argued to constitute promoting the general welfare then the Constitution is moot anyway. Plus, whose welfare is being promoted, and at whose expense? The founding fathers made a blunder with that one..
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