HJR-192, Gold Redemption and Lawful Money

[psholtz]

Originally Posted by indio007

Dave I've seen you mention that US Notes are some how still pegged to gold? If the are how much is a US note is worth? Face value? Something else? Does it represent a share in some substantive fund who's value was pegged against a currency to gold rate of exchange? Say a US note is redeemed against the pegged value for credit on account.

I don't know if Dave would agree w/ this, but the Federal Reserve still values their gold stocks at $42.22 per ounce:

http://www.federalreserve.gov/releas...1107assets.htm
(Footnote 1 under 3.12, Footnote 3 under 3.13)

The same peg is mentioned in Title 31, "Transfer of Gold Certificates", section (b):

http://www.law.cornell.edu/uscode/31...7----000-.html

This gives a comfortable "operating margin" to the American Gold Eagle bullion coin, which at 1 oz. fine gold carries a face value of $50:



The Americans use the same gold/silver/copper alloy in their gold bullion coins as the British do, which is to say it's a form of "King's gold" or "Crown gold", where almost 10% of the weight of the coin is actually in silver. So even though the coin contains 1oz. fine of gold, it's substanially heavier than 1 oz. fine.. the 1 oz. fine of gold buys your $42.22, the silver in the coin adds a bit more value, and then I guess you have a premium since you're dealing in actual physical gold coin and not in paper, and I suppose that puts you pretty close to $50.

In certain ways, I suppose FDR *was* justified in pulling in the gold.. if you're going to repeg the dollar (which at the time was pegged to gold), and you want to repeg the dollar to $35/oz, you can't very well have a whole nation out there w/ change in their pocket, which all says 1 oz of gold is worth $20. You'd have to call that gold in, melt it down, and repeg it at your new, devalued exchange rate.

Which, of course, is exactly what FDR did.

Of course, logic would suppose that having all that gold dispersed across an entire continent, in people's pockets, people who would resist tyranny, would be protection enough against a despot like FDR..

Apparently it wasn't.

At any rate, it's clear that the "emergency" that prompted FDR to pull that gold in has passed.. whether or not HJR-192 has been rescinded (and I'm pretty sure that it has been), and that "emergency" is just what I described above concerning the re-minting. All gold coin (for all practical intents and purposes) held by persons in this country now carries the new $50 per oz value on its face.. all the old $20 gold coins have been pulled in, melted down and re-minted at a devalued exchange rate.

There is no more banking emergency.

[Shoonra]

Originally Posted by David Merrill

People simply give their paychecks to other people too seldom to justify Shoonra's explanation to be viable.

Actually, bankers will tell you, a lot of checks are endorsed over these days. Sometimes paychecks at groceries (or liquor stores!), perhaps more often payments to contractors and subcontractors who immediately want to pass the check along without the bother of depositing one check and writing another.

As for the 2004 news item that certain Treasury bonds mght be redeemed early by the Treasury: That is hardly a default or any other disappointment about the T-bills. It is not clear from the one clipping whether that early redemption actually happened or if the Treasury bonds involved were the same type as the Treasury issues for the Federal Reserve.

As for United States Notes being "inelastic" -- the 1862 law that created them specified that Congress was authorizing only a specific amount in face value -- $300 million IIRC -- and without anything specific to bank them up - unlike, say, silver certificates of even FRNs. They got their monetary value because, and only because, Congress said so, making them fiat money and more thoroughly so than even FRNs which are at least keyed to bona fide T-bonds. Calling United States Notes "lawful money" didn't necesarily make them more attractive as a form of currency than other forms of legal tender; if anything, it draws attention to the fact that United States Notes are less attractive. However, legally, United States Notes are legal tender and therefore, at least in theory, fungible with FRNs and silver certificates.

[psholtz]

Originally Posted by Shoonra

They got their monetary value because, and only because, Congress said so, making them fiat money and more thoroughly so than even FRNs which are at least keyed to bona fide T-bonds.

FRNs are also keyed to promissory notes deposited by member commercial banks that participate in the Fed System.

Since the Monetary Control Act of 1980, FRNs can also be (and have been) keyed to any kind of foreign debt that the Fed desires to take under its wings and "monetize", like bad Mexican debt, Argentinian debt, Russian debt, etc.

[psholtz]

Originally Posted by Shoonra

Actually, bankers will tell you, a lot of checks are endorsed over these days. Sometimes paychecks at groceries (or liquor stores!), perhaps more often payments to contractors and subcontractors who immediately want to pass the check along without the bother of depositing one check and writing another.

You guys gotta check out George Gordon telling the Check Story:

http://www.georgegordon.org/A/P/0191a-32.mp3
http://www.georgegordon.org/A/P/0191b-32.mp3
http://www.georgegordon.org/A/P/0191c-32.mp3
http://www.georgegordon.org/A/P/0191d-32.mp3
http://www.georgegordon.org/A/P/0191e-32.mp3
http://www.georgegordon.org/A/P/0191f-32.mp3
http://www.georgegordon.org/A/P/0191g-32.mp3

[indio007]

These leads me this point. If Us notes are pegged to gold of a certain value.

Say a $100 US Note being equal to $100 worth of gold that was pegged at 42.22 per ounce. Then your us note would be roughly worth 2.125 ounces of gold. When the 2.125 ounces of gold are converted to book money they need to credit that account using the current exchange rate for USD currency vs gold. Which is $866 per ounce as of this writing.

[Shoonra]

The point about United States Notes is that they were NOT "pegged" to anything. They were without precious metal backing, or T-bills, or anything else. They were, supposedly, unaffected by the scarcity or amount of gold, etc. They were simply issued by Congress as money -- the closest thing to a precaution was that the amount of face value was (and remained) rigidly limited. Essentially, the only backing was the credit and all the assets (not just gold) of the US govt; most of the time this would be more than adequate but in the darker days of the Civil War it wasn't such as sure thing.

[David Merrill]

Originally Posted by Shoonra

The point about United States Notes is that they were "pegged" to anything. They were without precious metal backing, or T-bills, or anything else. They were, supposedly, unaffected by the scarcity or amount of gold, etc. They were simply issued by Congress as money -- the closest thing to a precaution was that the amount of face value was (and remained) rigidly limited. Essentially, the only backing was the credit and all the assets (not just gold) of the US govt; most of the time this would be more than adequate but in the darker days of the Civil War it wasn't such as sure thing.

Sometimes when Shoonra says something like that, that is blatantly untrue it works up a bit of a sweat. I think how seldom Shoonra (Bernard J. Sussman) actually out and out lies here on Suijuris and start to wonder if I have been spinning a bunch of crap instead of him doing it when a few learned members force him to touch rubber to the road so to speak - a reality check.

In his post Shoonra is talking about fiat in the heart of the war and emergency of the Civil War. So in those times people do what they can against a hope of credit - see attachment from the Mason library. [Sometimes I wonder if Sussman is a Mason? He writes in alignment with the ADL; that's for sure. The Israelite Priest medals attached are found in the Mason museum. Note in particular the Dagon Pope hat on the rightmost medal...]

http://friends-n-family-research.inf...ll_juliard.jpg

Now pay particular attention to Payment 294-3 in the right-hand column there. And considering the context of extending issuance of US notes - fiat currency (and all that means technically is paper that can be exchanged for a set amount of precious metal) being extended into peacetime. - That the US will continue to issue US notes. The only reason the fiat currency - US notes - were being allowed into the post-war "peacetime"* was that they would have a set value - like Shoonra has already admitted lately.

Shoonra tells us the truth that US notes, in limited circulation within the Treasury are inelastic. So therefore his post quoted here is a lie. He knows better than to say that the amount of gold to be redeemed by US notes was not and is not to this day set. That would make US notes either unlawful or at best elastic as FRNs. (See the Title for the Federal Reserve Act attached.)

Provide an elastic currency...

Since Shoonra knows US notes are inelastic, him saying the exchange rate back to metal floats is a lie.

Regards,

David Merrill.



* Actually the emergency continues after the war as no state or confederacy of states is allowed to secede from the Union.

[Shoonra]

My typo. I meant to say that United States Notes were NOT pegged to anything. They were purely fiat money.

[David Merrill]

Originally Posted by Shoonra

My typo. I meant to say that United States Notes were NOT pegged to anything. They were purely fiat money.

Well then nevermind except the lesson about fiat currency. It can actually be redeemed in a specific weight of precious metal. Fiat means more that it can circulate indefinitely from party to party for goods and services without ever being redeemed in metal.

US notes were and still are inelastic. FRNs are elastic and that is why they are redeemable in lawful money - US notes. Since 1971 those US notes will be tendered in the form of FRNs and it is likely that the bank where you non-endorse and cash your paycheck will make no special entry about your paycheck being redeemed. Like the suitor who got a rubber paycheck and his bank was required by procedure to return it to him; the bank tore off the non-endorsement first. (see attachment)



Regards,

David Merrill.

[PANICPASS]

Shoonra wrote:

(I think not many of those contracts are still in effect) and new contracts with gold clauses can be made.

Can you give an example of what a contract paid in gold would say? By what standard of weight would the gold be measured by? Bullion ?