U.S. mint suspends gold coin sales

[Mike Barskey]

FRNs are warehouse receipts, while T-bills and T-bonds, along with FRBN are debt notes.

I thought FRNs stopped being warehouse receipts when they stopped being backed by metal. From Wikipedia:

Federal Reserve Notes are fiat currency, with the words "this note is legal tender for all debts, public and private" printed on each bill.
...
Federal Reserve Notes are fiat currency, which means that the government is not obligated to give the holder of a note gold, silver, or any specific tangible commodity in exchange for the note. Before 1964, some notes were "backed" by silver and before 1933, by gold: that is, the law provided that holders of Federal Reserve notes could exchange them on demand for a fixed amount of metal (although from 1934–1971, only foreign holders of the notes could exchange the notes for gold on demand).[1] Since 1964 (see Silver Certificate), Federal Reserve Notes have not been backed by any single specific asset, but are backed by all assets held in collateral by the Federal Reserve, and by the power of the government to collect assets in taxes. While 12 U.S.C. § 411 states that "Federal Reserve Notes . . . shall be redeemed in lawful money on demand" this means US coins. Thus today the notes are backed only by the "full faith and credit of the U.S. government"—the government's ability to levy taxes to pay its debts. In another sense, because the notes are legal tender, they are "backed" by all the goods and services in the U.S. economy; they have value because the public may exchange them for valued goods and services in the U.S. economy.

Does that last sentence mean that, since people can exchange FRNs for goods and services (but not for any backing commodity stored in a warehouse), they are still considered "warehouse receipts?"

[Pat McCotter]

The funny part... it would be cheaper for the federal government in the long run to establish coins in higher denominations rather than print FRNs which have shorter lifespans and are more profitable to counterfeit.

Which is why they are pushing people to use the $1.00 coins. The Treas wants to phase out the $1.00 notes.

[John Edward Mercier]

FRNs are warehouse receipts, while T-bills and T-bonds, along with FRBN are debt notes.

I thought FRNs stopped being warehouse receipts when they stopped being backed by metal. From Wikipedia:

Federal Reserve Notes are fiat currency, with the words "this note is legal tender for all debts, public and private" printed on each bill.
...
Federal Reserve Notes are fiat currency, which means that the government is not obligated to give the holder of a note gold, silver, or any specific tangible commodity in exchange for the note. Before 1964, some notes were "backed" by silver and before 1933, by gold: that is, the law provided that holders of Federal Reserve notes could exchange them on demand for a fixed amount of metal (although from 1934–1971, only foreign holders of the notes could exchange the notes for gold on demand).[1] Since 1964 (see Silver Certificate), Federal Reserve Notes have not been backed by any single specific asset, but are backed by all assets held in collateral by the Federal Reserve, and by the power of the government to collect assets in taxes. While 12 U.S.C. § 411 states that "Federal Reserve Notes . . . shall be redeemed in lawful money on demand" this means US coins. Thus today the notes are backed only by the "full faith and credit of the U.S. government"—the government's ability to levy taxes to pay its debts. In another sense, because the notes are legal tender, they are "backed" by all the goods and services in the U.S. economy; they have value because the public may exchange them for valued goods and services in the U.S. economy.

Does that last sentence mean that, since people can exchange FRNs for goods and services (but not for any backing commodity stored in a warehouse), they are still considered "warehouse receipts?"

FRNs are exchanged for lawful money (coins), and all coins are made of metal.

Just before you copied it... I changed it. The original entry tried to claim FRNs are 'lawful money'... but the US Constitution, which gave the authority for the US dollar, does not empower Congress with this ability.

[SamIam]

FRNs are warehouse receipts, while T-bills and T-bonds, along with FRBN are debt notes.

I thought FRNs stopped being warehouse receipts when they stopped being backed by metal. From Wikipedia:

Does that last sentence mean that, since people can exchange FRNs for goods and services (but not for any backing commodity stored in a warehouse), they are still considered "warehouse receipts?"

FRNs are exchanged for lawful money (coins), and all coins are made of metal.

Just before you copied it... I changed it. The original entry tried to claim FRNs are 'lawful money'... but the US Constitution, which gave the authority for the US dollar, does not empower Congress with this ability.

I don't buy that John. Warehouse receipts that can't be exchanged for anything? You mention metal coins, that would actually be a pretty good deal given the metal in a penny is worth about 4 cents. However, they passed laws making it illegal to melt down coins, so your argument falls apart. By their law, they are not metal, they are coins. How can it be considered metal when I can only use it as a coin according to them?

I understand they are bank digits and exist only in their computer system. However, I think debt notes are a more accurate term, because what they call money represents debt; not anything of value, not anything stored in a warehouse, etc.

[John Edward Mercier]

The passing of the law does not change the arrangement.
A currency must meet the bylaws of its establishment, and must remain within economic laws else fail.

As I said I considered it a debt note, but MVPEL was able to convince me that it is more of a warehouse receipt. The reason for my previous position was that the US did not hold coin of value equal to the paper. But with the ability to reconstitute and set face value of the coin, the point became moot.

[toowm]

One page collecting Austrian papers on the mess:

http://mises.org/story/3128

[Friday]

I can't vouch for the veracity of this, but it is supposedly a personal email that was sent a week ago to someone I "know", Internetically speaking, on a discussion list I frequent:

>I sold 75 % of all my stock yesterday, both in my
> individual investment & in my main IRA account. I
> had lunch yesterday with a Congressman who was at
> the Treas. Sec. briefing on Capitol Hill on Thursday
> evening. The Congressman is liquidating a good
> portion of his stocks. He said much more dire
> times are ahead financially, according to the briefing.
>
> I don't believe the quick fix Congress is planning
> will stave off the bad times completely. Too little
> too late.
>
> Please remember that by sending you this info, I am
> not acting as your financial advisor and that I am
> an idiot in general on all subjects. However, this
> is a serious message.

[John Edward Mercier]

Depends a lot on sector and pricing.
But people should be managing portfolio and debt a little more tightly over the coming years.

They really never learned their lesson from the S&L Bust or the Tech Bubble.

[Pat McCotter]

They really never learned their lesson from the S&L Bust or the Tech Bubble.

Short-term gain trumps long-term stability every time.

[John Edward Mercier]

I could see the voters now if Congress reimposed the lending standards prior.
(40% down and a 15yr ARM)

Even when I bought people were dumbfounded by the 20% down and 15yr ARM at 12%.