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Arizona follows Utah to establish precious metals as legal currency:

http://www.reuters.com/article/2013/05/01/us-usa-arizona-gold-idUSBRE94002320130501

 

With several other states considering similar measures, is this the beginning of a return to the gold standard, or just a protest to the nation's current monetary policy?

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It looks to me like it could be both a protest and the first steps, not to a return to a gold standard, but to a system of competing currencies.

Sigh. And while Objectivists here argue about arcane laws that have no actual bearing on our everyday lives, there's an absolute emergency going on that needs our attention going on in another forum.

From the article...

"He also pointed to the recent decline in the value of gold - which sank to $1,321.35 per ounce on April 16, its lowest price in more than two years - noting that 'anybody who thinks gold or silver is a really safe place to put your money had better think again.'"

I'm unsure if Senator Steve Farley recognizes that the US Dollar has about 1/20th of its value from the formation of the Federal Reserve.  Or that gas and diesel prices have certainly risen quite a bit over the course of his lifetime.  My point being that storing value in the US Dollar, I don't know if it is necessarily wise.  Should Farley "think again"?

Edited by SD26
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It seems like a protest, however it could be the first steps if further legislation takes place. I say that it seems like a protest because:"The use of gold and silver as currency would be strictly voluntary, with businesses left free to accept the precious metals as payment for goods and services as they choose"

 

So long as the dollar is still legal tender and payable for all debts in the US, this law will not have much impact unless a growing amount of people voluntarily ditch the dollar, which could happen if there is a currency crisis or increased lack of confidence.

 

My question is why is only gold and silver being allowed? What principle are these lawmakers working on where gold and silver are okay, but copper or iron are not?

Edited by thenelli01
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Arizona follows Utah to establish precious metals as legal currency:

http://www.reuters.com/article/2013/05/01/us-usa-arizona-gold-idUSBRE94002320130501

 

With several other states considering similar measures, is this the beginning of a return to the gold standard, or just a protest to the nation's current monetary policy?

Unfortunately, without federal cooperation, any attempt to move away from the current financial system is futile.

One could make the argument that these states are preparing for that eventuality (of the sudden dissolution of the Fed), but it's not like they can do much even in terms of preparation. Basically, all they can do is have a system of taxation in precious metals ready to go. That would only take very little time to set up from scratch anyway. Everything else (specifically, banking), is controlled by the feds.

So it's all fairly pointless. Well intentioned, but local politicians don't have the power to give us back the right to freely trade in precious metals.

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This is totally insane. Accepting gold as payment is already legal in all 50 states. We can already freely trade in precious metals all we want. There are no laws stopping anybody from doing this and there are billions and billions of dollars in transactions occurring every single day as living proof.

 

This shows you just how far from reality the "Tea Party" people are...

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This is totally insane. Accepting gold as payment is already legal in all 50 states. We can already freely trade in precious metals all we want. There are no laws stopping anybody from doing this

 

I agree the law is pointless, but to say we can "freely trade in precious metals all we want" is a lie. Businesses are forced to accept dollars as payments, individuals and businesses are required to pay taxes in dollars, and due to those two facts, we are paid for labor in dollars. Businesses can't say we only trade in gold/silver, they are forced by law to trade in dollars so to use the word free is distorting reality.

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This is totally insane. Accepting gold as payment is already legal in all 50 states. We can already freely trade in precious metals all we want. There are no laws stopping anybody from doing this and there are billions and billions of dollars in transactions occurring every single day as living proof.

 

This shows you just how far from reality the "Tea Party" people are...

I too was a bit bewildered about what exactly this bill does: i.e. what does it legalize that is not legal today, etc.

I dug up this, which I presume is a recent version.

 

Basically the law appears to give gold and silver coins and bullion a slightly different legal status. My interpretation of what it does is as follows:

  • Henceforth, anyone trading gold and silver for dollars will not be liable to pay Arizona State tax on the profits nor to  offset any losses against their taxes. 
  • People who buy and sell something, using gold rather than dollar on both sides of the transaction, will be liable to pay a tax on the profits in terms of gold. This raises so many questions that the the bill simply leaves unaddressed
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It looks to me like it could be both a protest and the first steps, not to a return to a gold standard, but to a system of competing currencies.

 

Here's an article by the UMPA (Utah Precious Metals Association) that makes the case for a choice in currencies:

 

"The conclusion of this review is that mainstream Economics is strongly supportive of choice in currency. The same could not be said of a straight return to the Gold Standard, which does have some proponents, but is generally frowned upon in mainstream academic circles. Thus, the current scientific consensus is that the reintroduction of gold and silver coins is feasible, desirable and largely uncontroversial, as long as it is done alongside national fiat currency."

https://www.upma.org/items/index/255/4

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I agree the law is pointless, but to say we can "freely trade in precious metals all we want" is a lie. Businesses are forced to accept dollars as payments, individuals and businesses are required to pay taxes in dollars, and due to those two facts, we are paid for labor in dollars. Businesses can't say we only trade in gold/silver, they are forced by law to trade in dollars so to use the word free is distorting reality.

 

Could you please cite the exact law where is says that a business operating in the US much accept dollars? We had this conversation a while back any nobody could find such a law.

 

There is no "forced monopoly" for US dollars on anybody except to pay your taxes. So yes, you can keep all of your wealth in Gold or Oil or soybeans, or stocks and then, for a few milliseconds, you need to convert that wealth to US dollars in order to pay your taxes.

 

Objectivists should not entertain conspiracy theories like this...

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Legal Tender Status

Another questioner asked:

I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?
 

The answer found on the US Department of the Treasury is:

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

 

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

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Could you please cite the exact law where is says that a business operating in the US much accept dollars? We had this conversation a while back any nobody could find such a law.

 

There is no "forced monopoly" for US dollars on anybody except to pay your taxes. So yes, you can keep all of your wealth in Gold or Oil or soybeans, or stocks and then, for a few milliseconds, you need to convert that wealth to US dollars in order to pay your taxes.

 

Objectivists should not entertain conspiracy theories like this...

 

 

Ha.

 

It is not a conspiracy theory. I would love to see someone try to make a currency to compete with the dollar... oh yeah, we already have.

 

Bernard Von NotHaus was tried and convicted of just that and of terrorist activities (!).

 

http://www.coinworld.com/Articles/ViewArticle/von-nothaus-guilty-on-all-counts

 

Von NotHaus, of Honolulu, was found guilty on all four counts — “of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States,” according to the Department of Justice. The jury got the case at 4:30 p.m. March 17, chose a jury foreman, then left for the day. It began deliberations at 9 a.m. March 18 and reached a verdict within 90 minutes.

 

So, let me get this straight. You are saying that because businesses/individuals can barter, they are not being forced to accept dollars? Currency is a necessary medium of exchange, which is why it serves as money. Until private currencies are allowed to compete with the dollar, businesses are forced to accept dollars.

Edited by thenelli01
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I would add to this that virtually all US businesses, currently, state in their (implied) contract that they require US dollars as payment. There is, however, absolutely nothing stopping you from denominating a debt in gold or platinum or push-ups. It's a free country.

 

And to be sure, many thousands of times each day, contracts which require gold as payment as honored on commodity trading floors.

 

Yes, in practicality you probably won't get too far in business if you start a coffee shop that only accepts gold and silver coins as payment, but that has to do with the free choices made by the free market, not a government conspiracy.

 

Now, is the State of AZ trying to "kick start" such a business decision? Maybe. Is this any different than the Federal government trying to "kick start" solar power by backing Solyndra? Nope.

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Ha.

 

It is not a conspiracy theory. I would love to see someone try to make a currency to compete with the dollar... oh yeah, we already have.

 

Bernard Von NotHaus was convicted for doing just that.

 

http://www.coinworld.com/Articles/ViewArticle/von-nothaus-guilty-on-all-counts

 

 

So, let me get this straight. You are saying that because businesses/individuals can barter, they are not being forced to accept dollars? Currency is a necessary medium of exchange. Until private currencies are allowed to compete with the dollar, businesses are forced to accept dollars.

 

The Liberty Dollar people were guilty of counterfeiting as they went out of their way to make people think that the US Government issued their coins, not a private company. There are thousands of companies making coins all over the US and none of them are under arrest.

 

It sounds like you are saying I can't compete with Google unless I call my new product "Google" and use the same colors and logo.

 

The only "conspiracy" here is that US dollars work just fine as a stable currency. If they didn't traders would be trading out of them as we speak, as they are perfectly free to do anytime they feel like it. US dollars are no more a conspiracy than the TCP/IP protocol is a conspiracy.

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In case there is any confusion on the part of anyone who isn't a troll, when I say "freely trade in precious metals", I use the word free to mean the full range of possible actions, including banking, insurance, or any other possible types of contracts between consenting individuals, on any scale. And I of course stand by my assertion that that freedom has been taken away in 1913.

If anyone who isn't a troll wishes to ask me for any evidence or further explanation, I would be happy to oblige.

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Could you please cite the exact law where is says that a business operating in the US much accept dollars? We had this conversation a while back any nobody could find such a law.

 

There is no "forced monopoly" for US dollars on anybody except to pay your taxes. So yes, you can keep all of your wealth in Gold or Oil or soybeans, or stocks and then, for a few milliseconds, you need to convert that wealth to US dollars in order to pay your taxes.

 

Objectivists should not entertain conspiracy theories like this... 

 

This is what I found online to support my position.

 

Businesses Must Accept “Dollars,” but Not Cash

This means that US notes and coins are a valid and legal offer of payment for debts when tendered to a creditor. However, although businesses must accept dollars, that doesn’t mean they literally have to take your big wad of bill,s which is bulky, difficult to make change for, and, frankly, a breeding ground for germs.   A vendor can usually put reasonable conditions on the manner in which they will accept dollars, and one of those conditions can be that they’ll only accept dollars electronically, via credit card. Or, as the US Treasury explains on their website, “Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise."

 

 

Now, I may be wrong on this so if someone wants to clarify, that would be helpful. My understanding is that businesses must accept dollars but may set reasonable conditions: such as only credit/debit, no $100 bills, only dimes for bus rides, etc.

 

And no, I am not a 'conspiracy theorist', but I may have a misconception of the law.

Edited by thenelli01
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In case there is any confusion on the part of anyone who isn't a troll, when I say "freely trade in precious metals", I use the word free to mean the full range of possible actions, including banking, insurance, or any other possible types of contracts between consenting individuals, on any scale. And I of course stand by my assertion that that freedom has been taken away in 1913.

If anyone who isn't a troll wishes to ask me for any evidence or further explanation, I would be happy to oblige.

 

I would like to know what exactly you mean. It helps me formulate opinions.

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This is what I found online to support my position.

 

 

 

Now, I may be wrong on this so if someone wants to clarify, that would be helpful. My understanding is that businesses must accept dollars but may set reasonable conditions: such as only credit/debit, no $100 bills, only dimes for bus rides, etc.

 

And no, I am not a 'conspiracy theorist', but I may have a misconception of the law.

 

There is absolutely nothing in US law that states you must accept US dollars in returns for goods or services which you offer. Barter exists, and it is not illegal. Barter can be done with anything including gold coins if you wish.

 

The reason nobody does it is because nobody wants to carry around gold coins and dollars work just fine besides, not because of some law on the books.

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The reason nobody does it is because nobody wants to carry around gold coins and dollars work just fine besides, not because of some law on the books.

The reason nobody does it is because gold is not used as the world's currency. Everybody knows that if the government saw its control of money slipping to a currency outside of its control, it would swoop in so enormously and definitively and squash that effort. That, and most people seem to understand very little about fiat currency, not enough to put up a fuss.

There are laws, and then there are understandings. The government exerts its greatest control through manipulating the economy. There is no way in hell it is going to stand by and let a competing currency take away that control.

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Federal law mandates that creditors accept cash as payment. That's what that bit of writing on the money means. If you sell something big enough to require financing, federal law mandates that you accept cash for installments. Forcing cash to be the medium for the largest transactions represents an economy-wide use of force, and this is a big reason for why smaller purchases are usually made in cash. Force, Crow. Cash is forced on you and I.

Edited by FeatherFall
grammar, typos
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There is absolutely nothing in US law that states you must accept US dollars in returns for goods or services which you offer. Barter exists, and it is not illegal. Barter can be done with anything including gold coins if you wish.

 

The reason nobody does it is because nobody wants to carry around gold coins and dollars work just fine besides, not because of some law on the books.

 

I think you are misinterpreting what the legal tender laws say. Dollars must be accepted, but cash can be denied (i.e. checks only, credit/debit, no large bills, no pennies, etc.) so long as payment is denominated in dollars. Cash only must be accepted when paying debts, public charges, taxes, and dues.

 

Here is an example that someone gave online, which illustrates what I mean.

 

 

If you go to a store in the USA and they are selling a computer for $50, they can't demand payment in Euros. They can't demand payment in Pesos. They must accept US Tender which is US Dollars but they can certainly establish the method of accepting that payment. So they can demand it by credit card or money order but they can refuse cash, checks or debit cards. All they are required under US law to do is base the price and accept payment only in US dollars denominations, not that they have to accept actual cash

Read more: http://www.city-data.com/forum/shopping-consumer-products/1496375-spencers-wont-accept-cash-4.html#ixzz2S6nllccd

 

Again, if anyone wants to step in and say I am wrong, feel free to, but I don't think I am.

Edited by thenelli01
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I think you are misinterpreting what the legal tender laws say. Dollars must be accepted, but cash can be denied (i.e. checks only, credit/debit, no large bills, no pennies, etc.) so long as payment is denominated in dollars. Cash only must be accepted when paying debts, public charges, taxes, and dues.

 

Here is an example that someone gave online, which illustrates what I mean.

 

 

Read more: http://www.city-data.com/forum/shopping-consumer-products/1496375-spencers-wont-accept-cash-4.html#ixzz2S6nllccd

 

Again, if anyone wants to step in and say I am wrong, feel free to, but I don't think I am.

 

Yes, if a store advertises something for sale for "a thousand US dollars" then they have to accept dollars. To fail to do so would be false advertising. The rules you are reading are about what constitutes US dollars in various forms, etc.

 

If the same store changed their ad to say, "an ounce of gold" then they are free to do so, and in that case they are very much free to not accept dollars as payment (there would be no price for starters). Barter is legal in the USA. Insofar as barter is legal, then there is no meaningful "monopoly on money" by the Federal Reserve.

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Federal law mandates that creditors accept cash as payment. That's what that bit of writing on the money means. If you sell something big enough to require financing, federal law mandates that you accept cash for installments. Forcing cash to be the medium for the largest transactions represents an economy-wide use of force, and this is a big reason for why smaller purchases are usually made in cash. Force, Crow. Cash is forced on you and I.

 

Please cite the exact federal statute that says this. Tell me where it says I cannot offer something for sale in exchange for ounces of gold. Be specific.

 

While you're at it, tell everybody at this site they are all breaking the law:

 

http://www.tradeaway.com/

 

Or better yet, tell everybody on a trading floor with a futures contract that they are breaking the law...

 

The only thing the law says is that if somebody sells something and demands US dollars, then you have to give them these green things made by the US government, and not some copy.

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The reason nobody does it is because gold is not used as the world's currency. Everybody knows that if the government saw its control of money slipping to a currency outside of its control, it would swoop in so enormously and definitively and squash that effort. That, and most people seem to understand very little about fiat currency, not enough to put up a fuss.

There are laws, and then there are understandings. The government exerts its greatest control through manipulating the economy. There is no way in hell it is going to stand by and let a competing currency take away that control.

 

Thanks for at least conceding my point that there's no actual law...

 

As for what a government "might do" sometime in the future, well, we could imagine scenarios all day and all night. In the here and now, barter in the USA is legal, Forex is a multi-billion dollar daily operation, and futures contracts involving payment in non-dollars are all over the place. So far no clamp-down, and all of this has been going on for decades...

 

As for control, the primary benefit a country sees from having its own fiat currency is that they issue debt in said currency, and may default on that debt in a granular way by inflating it. If all businesses in the USA suddenly switched away from using US dollars, this power would still be intact. If people bought US debt and they defaulted on it, then they'd be out of luck no matter how the debt was denominated...

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ere is an example that someone gave online, which illustrates what I mean.

I doubt this is true. If a store really wanted to sell everything in Euro only, I doubt there's a law that it is illegal. I'd be interested in knowing, if it were.

Is it illegal to have a store where everything can only be bought in Bitcoin? I don't think so.

The reason most U.S. stores do not restrict themselves to Bitcoin or Euros is practical: they'll hardly get any customers. As far as I know, it is not illegal.

 

Among FDR's various shenanigans was getting rid of the "gold clause". However, that was used to wipe out some portion of debt. As time passed, it became less relevant, and (according to the Wiki) the gold clause is legal once more.

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