"End the Fed!" - WHY?!

[Rightguide]

Probably some psychological reason no longer relevant.



The value and utility of a note is what you can buy with it. What, do you think there can be any kind of money that always holds its value independently of events? There can't. A gold coin with a purchasing power based solely on the market value of its gold content can lose value in the event of a major gold strike, it's happened before.

Why is a bag of US silver dimes worth over $7000 in federal Reserve Notes, if those dimes have lost their true value. The real truth is their value in Federal Reserve Notes goes up because the value of that "note" continually goes down requiring more of them to purchase the same amount of silver US Dimes.

 

[Rightguide]

If I can spend it, it might as well be stone.

Yes but because there is no shortage of stones, you'll need a truckload to buy anything.

 

[Rightguide]

Probably some psychological reason no longer relevant.



The value and utility of a note is what you can buy with it. What, do you think there can be any kind of money that always holds its value independently of events? There can't. A gold coin with a purchasing power based solely on the market value of its gold content can lose value in the event of a major gold strike, it's happened before. It is no safer to put your money into gold than notes.

If that's true why aren't we still using Continental Dollars?

 

[KingOrfeo]

Yes but because there is no shortage of stones, you'll need a truckload to buy anything.

Well, there is a shortage of stones with Lincoln's picture on them. The value of money depends on its scarcity, and the value of fiat money depends on government's ability to limit the supply.

 

[KingOrfeo]

Why is a bag of US silver dimes worth over $7000 in federal Reserve Notes, if those dimes have lost their true value.

There is no such thing as "true value," only market value, and if a silver dime is worth more than 10 cents on the market, that just makes silver impractical for use in coinage. A silver dime made of only 10 cents' worth of silver would be too small to easily fish out of your pocket, and a gold dollar coin would be something you would have to handle with tweezers.

 

[KingOrfeo]

If that's true why aren't we still using Continental Dollars?

Because the supply of those was not effectively limited:

After the American Revolutionary War began in 1775, the Continental Congress began issuing paper money known as Continental currency, or Continentals. Continental currency was denominated in dollars from $ 1⁄6 to $80, including many odd denominations in between. During the Revolution, Congress issued $241,552,780 in Continental currency.[46]

Continental currency depreciated badly during the war, giving rise to the famous phrase "not worth a continental".[47] A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit.[48] "Some think that the rebel bills depreciated because people lost confidence in them or because they were not backed by tangible assets," writes financial historian Robert E. Wright. "Not so. There were simply too many of them."[49] Congress and the states lacked the will or the means to retire the bills from circulation through taxation or the sale of bonds.[50]

Another problem was that the British successfully waged economic warfare by counterfeiting Continentals on a large scale. Benjamin Franklin later wrote:

The artists they employed performed so well that immense quantities of these counterfeits which issued from the British government in New York, were circulated among the inhabitants of all the states, before the fraud was detected. This operated significantly in depreciating the whole mass.[51]

By the end of 1778, Continentals retained from  1⁄5 to  1⁄7 of their face value. By 1780, the bills were worth  1⁄40 of their face value. Congress attempted to reform the currency by removing the old bills from circulation and issuing new ones, without success. By May 1781, Continentals had become so worthless that they ceased to circulate as money. Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.[52]

For this reason, some Quakers, whose pacifism did not permit them to pay war taxes, also refused to use Continentals, and at least one Yearly Meeting formally forbade its members to use the notes.[53] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.[54]

After the collapse of Continental currency, Congress appointed Robert Morris to be Superintendent of Finance of the United States. Morris advocated the creation of the first financial institution chartered by the United States, the Bank of North America, in 1782. The bank was funded in part by specie loaned to the United States by France. Morris helped finance the final stages of the war by issuing notes in his name, backed by his own money. The Bank of North America also issued notes convertible into specie.[55] Morris also presided over the creation of the first mint operated by the U.S. government, which struck the first coins of the United States, the Nova Constellatio patterns of 1783.[56]

The painful experience of the runaway inflation and collapse of the Continental dollar prompted the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit or "make any Thing but gold and silver Coin a Tender in Payment of Debts."[57] This restriction of bills of credit was extended to the Federal government, as the power to "emit bills" from the Articles of Confederation was abolished, leaving Congress with the power "to borrow money on credit.".[58][59]

Note that the problem was solved only by creating a central bank, a precursor to the Fed.

 

[4est_4est_Gump]

Yes but because there is no shortage of stones, you'll need a truckload to buy anything.

I don't know. Milton Friedman once famously quipped that if you put the government in charge of the Sahara that there would soon be a sand shortage.

 

[Rightguide]

I don't know. Milton Friedman once famously quipped that if you put the government in charge of the government that there would soon be a sand shortage.

I think you fucked that up, want to give it another try?

 

[4est_4est_Gump]

I think you fucked that up, want to give it another try?

Not really...

 

[Rightguide]

Not really...

He should have said:

"If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand."

 

[4est_4est_Gump]

Yeah, I wasn't going to look up the actual quote...

 

[Rightguide]

Yeah, I wasn't going to look up the actual quote...

I hear ya. I just happened to know it.