When is the "Shire Silver" Going to Come Out?

[jcchriste]

I'm not sure any of that is really a good idea. on one hand, its practical to have a conversion rate on the price of silver, but on the other hand, then everyone will think of silver as a fluctuating bill of dollars, basically a dollar backed currency. If the dollar goes down, the value of your silver changes too.

prices in silver will respond to inflation in the dollar because the value of silver will change immediately, but the prices on the goods will not. Financial markets clear much much faster than goods markets. Therefor the 10 dollar cup of coffee will be wroth 20 dollars for weeks but might change in silver since we're still looking at dollars as the base.

The better approach would be to simply have two prices (think of books that have the US price and the CA price on them). One ounce of silver for a cup of coffee (or whatever price) independent of how the dollar price is doing. It may not be practical until Shire Silver becomes popular, and will not easily lend itself to a table on a website, but I think overall it is a better policy, since it does not link silver to the dollar and can be used to emphasize it as a form of "universal barter" rather than "alternative currency", which may be more effective legally, seeing how the liberty dollar went.

Of course, whatever each company wants to do is fine, so long as it works for them, and it may just be that some stores are listed as "independent silver prices" or something. But I think it would be better to encourage having that over something else.

[K. Darien Freeheart]

I'm not sure any of that is really a good idea. on one hand, its practical to have a conversion rate on the price of silver, but on the other hand, then everyone will think of silver as a fluctuating bill of dollars, basically a dollar backed currency.

Understood, but to a certain extent this is why I LIKE the idea. I'm sure in New Hampshire (being on the Canadian border) you'll rummage through a pocketfull of US coin and find some Canadian pennies. I'm even sure that cashiers don't really hesitate to toss them in the penny tray and count it as "one cent". This is how it was in Michigan. In Kentucky, however, cashiers actually returned Canadian pennies since they weren't familiar with them.

Before I held silver I thought in terms of USD worth of silver (and to a certain extent still do) because everything I knew about money was based on the USD. This is a frame of reference a lot of people simply can't break and a price based on the conversion rate would introduce people to the idea that silver holds value without requiring them to take a leap of faith. I do specifically mean this for the early stages and not as a long term solution. At some point, when it's viable, I'd like to begin operating soley on silver with a premium charged for accepting FRN but realistically I don't see that happening short-term.

prices in silver will respond to inflation in the dollar because the value of silver will change immediately, but the prices on the goods will not. Financial markets clear much much faster than goods markets.

Understood, but I really ask myself why this has to be. My business (sorry for being too vague, I'm still evaluating aspects of it and don't want to give too many details) will require I have a constant supply but NOT a stock pile of certain goods. This means I'll be paying market price each in short intervals and I can assure you from past experience that the goods do indeed fluctuate weekly. Buy steaks in bulk for a restaurant, for instance, and you'll see that the goods price (to the restaurant) fluctuates rapidly. It doesn't fluctuate to the CONSUMER becase many many many retailers are still in the "paper menu" paradigm. There's no real reason that a restaurant needs to take the loss to profit in the fluctuations of good prices except "it's usually done that way".

Granted, having set prices is a good thing. It's the reason every fast food chain has a dollar menu. I'm not arguing against that aspect. But the idea that prices are static, and not indicative of the market, is not set in stone.

he better approach would be to simply have two prices (think of books that have the US price and the CA price on them). One ounce of silver for a cup of coffee (or whatever price) independent of how the dollar price is doing.

Long term I think that's the best way to do things. Short term, however, there are premiums involved in the exchange so to pay the same electric bill with my profits, I'd need to actully bring in MORE silver than FRNs to cover the cost of the exchange to FRN. This, however, creates incentive to use FRN which is opposite of what I want to do. Short term I think it's best to provide incentive to trade in silver because the number of people willing to deal in FRNs is still astronomical. As silver is established and the incentive is less important, stable, fiat-agnostic prices would emerge in silver (I buy in ounces but I like the idea of grams better...)

[dalebert]

As long as the market is mixed, i.e. some are trading in FRNs and some in silver, then you should be able to make use of either. As more merchants start accepting silver, you will have more use for the silver you receive in trade. Like you said, you'll need FRNs to pay your electric bill but you'll almost certainly get enough FRNs for that. The portion of silver you receive, should to a large extent, be proportional to it's degree of acceptance, perhaps a little higher due to having more FSP customers who want to patronize you for accepting silver. However, you have to think of those customers as customers you might not otherwise have at all. Getting silver is certainly better than not getting that business at all, even if you can't freely spend it everywhere or have to convert it or just want to put it away for hard times, right?

Obviously a merchant can decide what works best for him/her but I think it makes sense to have prices set in silver rather than constantly exchanging based on the FRN price. To a large extent though not exclusively, the fluctuation in silver price in FRNs is tied to the unstableness of FRNs. Seeing a separate price in silver could help people to see that silver is more stable. As the other price is inflating, they will have to pay more and more FRNs while the price in silver would tend to stay the same, giving an incentive to pay in silver.

I was already planning to accept silver at my table at Porcfest and I think I said at spot value. After giving a little thought to it, I realized that I'd be charging people a premium to trade silver if I accept rounds at spot. Rounds are worth a little more than spot. Then I was thinking, why do I want to discourage any customers? It's a common and effective marketing practice to offer a discount to a certain group of people. It's good advertising and people like the feeling of getting a lower price than "normal". As long as you have a profit margin figured in even with the discount price, it can be a good plan. So I'm thinking I will more likely take my FRN price and round it down a bit to an even silver round price or something like that, essentially giving a small discount to people trading silver. If someone is considering buying something, that little extra incentive might be all it takes to get them off the fence to make an impulse purchase that they might not otherwise have made at all.

[K. Darien Freeheart]

As more merchants start accepting silver, you will have more use for the silver you receive in trade. Like you said, you'll need FRNs to pay your electric bill but you'll almost certainly get enough FRNs for that.

Yeah, that's true. I suppose I bobbled by endpoints there... There's no way in hell I'd be taking in so much silver that I couldn't pay the electric bill in FRNs unless silver is widly accepted... in which case I may be able to pay that bill in silver.

The portion of silver you receive, should to a large extent, be proportional to it's degree of acceptance, perhaps a little higher due to having more FSP customers who want to patronize you for accepting silver.

That's true, but at the same time, very little comes from this small agorist economy unless the pace of the movers (in my distribution area) is enough to be injecting more wealth into the agorist economy OR unless the economy itself is going "mainstream". All the FSPers accepting silver means very little if it's not inspiring others to accept silver too. Your points are fair, I'm just trying to see how I'd personally encourage others to learn more about money.

[dalebert]

Oh wow. I just realized this one is also called "Funny Money".

http://anarchyinyourhead.com/2007/11/24/funny-money/

[sandm000]

That reminds me of Zimbabwe's inflation, between the time that you order and pay for your sandwich inflation has caused the price to go up 3-4% which can be a problem while grocery shopping.  People have to carry bales of cash around.

PS anybody know where I can buy bales of Zimbabwean cash? At less than the government (Zimbabwe's) rates?

[dalebert]

What do you guys go by to figure out a good price on an ounce of silver? Like, what's the appropriate spot on a round vs. a 10 oz, and etc.?

[Coconut]

I've toyed with the idea of using metals as my base of pricing. One wedding shoot = half ounce of gold. It's about what I'm charging now, but puts an actual value on it.

[41mag]

What do you guys go by to figure out a good price on an ounce of silver? Like, what's the appropriate spot on a round vs. a 10 oz, and etc.?

http://www.kitco.com/market/

[Lloyd Danforth]

I guess they are going with the Lloyd

http://shiresilver.com/

[Tom Sawyer]

 

[Ron Helwig]

Sorry about taking so long, but I've been busy with stuff like trying to come up with money to pay the mortgage.

I should be able to get back to working on it some next week.