A weekly column
In Government We Trust? Part 3I've discussed just a few benefits of sound money in the last two weeks, and contrasted them to the perils of fiat currency. Sound money keeps government spending in check, keeps trade fair and honest, which reduces the temptations, and many underlying causes, for governments to wage wars. It also gives you the peace of mind of knowing that your savings will be able to sustain you in your retirement.
So if sound money is such a good thing, what is stopping people from simply trading with each other in gold and silver? Why are you still being paid in fiat dollars, and why can't you pay for gas in gold? The answer is that the government has enacted policies that provide considerable stumbling blocks to such transactions.
One of the main stumbling blocks is Federal legal tender laws, which state that government-controlled fiat currency MUST be accepted for many kinds of monetary transactions. In light of this, Gresham's Law takes effect. Gresham's Law states that bad money drives out good money. Meaning, if someone is forced to accept your bad money, it is to your advantage to pass it off, like a hot potato, in exchange for something of value. Any good money you have, you will hoard. Eventually, real money is driven out of circulation and under people's mattresses, so to speak. In the absence of legal tender laws, people are free to accept the medium of exchange of their choice, and are likely to insist on payment in something of real value.
Related to legal tender laws, contracts in gold are not enforced. Meaning if two parties agree to exchange goods or services for gold, and end up in a dispute, the courts will simply settle the dispute in Federal Reserve notes. Governments should do very little, in my estimation, but it should enforce contracts and property rights through the courts. But in this instance it shirks this basic duty, when it comes to gold, as one way to keep control of our economy and the medium of exchange. One is also expected to pay sales tax on the purchase of gold. This is as ludicrous as if you paid sales tax at the bank when you converted dollars into quarters! The IRS also expects you to pay capital gains tax on gold, which is so backwards, since gains on gold really represent decline in the value of the dollar!
Legal tender laws should be repealed at the Federal level. Congress has the Constitutional duty to protect the integrity of our money. However, since it has passed this duty off, and the Federal Reserve has only debased our currency, Congress should no longer force Americans to do business in dollars if they would prefer to transact in gold, or silver, or cigarettes or seashells, for that matter. Free people should be free to associate and do business in ways that benefit them. Instead they are forced to use the unstable dollar to their own detriment, and the benefit the government.
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Comments: 9
Going back to the gold and silver notes would stablize this nation and bring about a return to rational spending we have lost.
That is a lie. This mess could have been totally averted, if George Bush had not practiced the policies he did. His fed chairman, at Bush administration urging, told federal banks that state banking watchdog agencies had no control over them, and then neglected to regulate banks on the federal level. When Fed regulation has been absent, state banking watchdog agencies have often averted predatory lending such as this, but Bush rendered them impotent this time. This all comes down at Bush's feet. Stop trying to rewrite Bush history already. Some of us know enough to expose your lies.
it is not the first time that economic means have been used for political reason.
The distraction from the war was the booming economy.
Scott lilly has a good report on the economy for the last 8 years.
Yes, it absolutely did. EVERYBODY knows this. Except you, McBooshie, and his economics advisor, whose legislation it was that brought this about.
"It had nothing to do with the Government in any way."
Right. And, beautiful pink elephants dance around in circles, while pretty purple pigs fly overhead. See, this is precisely the utter economic cluelessness that is the trademark of failed republiCON policies, that bring about disastrous economic collapses, both here and around the globe. The fact that you people STILL don't get it, after all of the suffering you've caused around the globe, proves, sadly, that we'll never see the complete death of these utterly failed economics policies.
Someone will ALWAYS be around to resurrect them at some point (Redink Ronnie in our case), and there will ALWAYS be JUST enough stupid people to fool into voting against their best interests, to get the policies in place. Then, after years of destruction and multitudes of recessions, we'll finally see the inevitable all-out collapse, and the dumbasses will jump up to say "It's not our fault!" This will be the SECOND republiCON great depression, and in both cases, they will have sworn it not to be their fault, when in FACT, both will have been DIRECTLY the result of their errant, foolish, destructive policies of heavily tipping the scales towards the wealthiest of the wealthy.
Look back in history. Every time that a nation has enacted these disastrous policies, it has resulted in economic collapse. Time and time again. Yet, every single time, it's "not their fault."
That lack of accountability is one of the most repulsive of all the repulsive republiCON traits, imo.
"The Fed has no connection to the Federa Government what so ever.
This is an entirely clueless statement. You apparently haven't been told that the federal reserve establishes how much money will be printed, and how much it will cost to borrow and loan it out. The federal reserve has virtually EVERYTHING to do with the federal government, save for the pomp and circumstance. You don't understand the role of central bankers in world history.