Liberty Dollar currency

[Pat McCotter]

So why not start a gold/silver depository and issue gold/silver certificates of deposit? These can be in various denominations of weight using either troy ounces or grams and fractional values.

The certificates would be backed by the gold/silver in the depository. Depositories would be trusted or not by how quickly they redeemed the certificates for the metal.

The profit incentive for the depository would be fees charged for accepting deposits and/or fees charged for making redemptions.

[Michael Fisher]

So why not start a gold/silver depository and issue gold/silver certificates of deposit? These can be in various denominations of weight using either troy ounces or grams and fractional values.

The certificates would be backed by the gold/silver in the depository. Depositories would be trusted or not by how quickly they redeemed the certificates for the metal.

The profit incentive for the depository would be fees charged for accepting deposits and/or fees charged for making redemptions.

Why not?  A good question.

Because good money cannot prosper in this environment.

[Pat McCotter]

Having just read the wikipedia entry for "Gresham's Law" I now understand that. Thanks for the reference, Mike.

[KBCraig]

http://en.wikipedia.org/wiki/Gresham's_Law

A good, succinct read. Thanks for the reference.

Kevin

[Lloyd Danforth]

I remember being told this when the gov stopped making silver coins in 1964.  I was amazed, even then, how fast silver dissapeared from circulation!

[Michael Fisher]

This is why I want to do an anti-fiat law civil disobedience where US dollars are rejected as currency.? This will probably anger the SS.

People will wonder why we're being thrown in jail for rejecting US dollars.? They'll probably get a confused look on their face.? Hopefully it will open their eyes to the scam that is every fiat currency on Earth!  Namely, that a fiat currency only has value because people are forced at gunpoint to give them value.

[tracysaboe]

Money is a means of exchange, nothing more.

Nonsence. Money is, the most "saleable" commodity. That's how money evolved. Gold, and Silver happen to cuurently be the most saleable commodities for various reasons, but the main one is because it has other values besides the value it has as a medium of exchange. The only system in which money doesn't have another value is when the state hijacks the money supply and takes away those other values by force (Stealing gold out of vaults, etc.)  which is what we have today.

There is an intrinsic problem with the LD (and other Hyackian schemes) and that is they are blatently at odds with the Austrian economic theory of how money developed.

Menger is the originator of this (at least in the Austrian School) and it was expanded by both Mises and Rothbard.

You see, money is worth something because it was worth something yesterday.

Liberty Dollars weren't worth something yesterday. (except for the value they had as silver.) If and when Silver becomes a dominent medium of exchange again, it's possible that it's value as a medium added to the value of silver would cause it to be worth more. But currently it's not the dominent medium of exchange and as such it's not worth $10 except to people who are already idiologically charged into believing it. But they're not worth $10 to the average businessman.

The only way they're going to become worth $10 is if a majority of people who purchase from said businessman, don't mind recieving their change in LDs. The only way that's going to happen is if a majority (or at least a large minority) of people begin accepting it. The only way that's going to happen is if they already believe it's worth $10 because that's what it was worth the day before.  But it was never worth $10 the day before.

You see Hyakian methods of competing with the fed suffer from this clash with how money becomes money. It's not because somebody says "here. This is money" but because it's already intrinsically saleable and people start accepting it as a medium between barters already because of that saleability.

For more info see http://www.mises.org/story/1503

Of course there are problems with Rothbard's theory for how to abolish the fed also. That is, he thinks we can convince the government to reset a dollar and keep it there to equal 1/1000 ounce of gold (or whatever it would be now.) so that people can all sell their dollars for gold to the treasury and get the money supply denationalized that way.

So, you know, whatever.

I don't believe it's a scam, but it's really not going to work -- unless you're in a community of libertarian/constitutionalist geeks to begin with.

In which case you could probably exchange gold and silver with each other for much less hassel.

Tracy

[KBCraig]

Money is a means of exchange, nothing more.

Nonsence.
The only way they're going to become worth $10 is if a majority of people who purchase from said businessman, don't mind recieving their change in LDs. The only way that's going to happen is if a majority (or at least a large minority) of people begin accepting it. The only way that's going to happen is if they already believe it's worth $10 because that's what it was worth the day before.

All of which means, money is a means of exchange.

Kevin

[tracysaboe]

Yes, but the way in which it becomes money is by having a comodity value previous to becoming money. 

Tracy

[mikefam]

Lawful money and legal tender are 2 compleatly  seperate beasts  the 2 words can not be interchanged for their meanings are different(see proof look on and peice of federal reserve note printed prior to 1963. lawful money is suprior to legal tender in law. Liberty dollars are Lawful money  Frn's are legal tender mostpeople naturlly keep(horde) lawful money. i dont know that i can bring myself to pay the shipping charge from norfed to help people collect high price silver.
there is over a million dollars of norfed in circulation and when i use it i never see any change in norfed or when i go to the stores in my area they never give it out as change(even if they know i'm a norfed user) so everybody is hording it(except those that pay to get it from norfed directly)there paying the shipping for the merchants would be silver collection.
i'm interested in NORFED so if anyone can successfully use the norfed paper money in circulation of currency that would be an exciting development.   
Just wait till the 30 day moving prive of silver stays above $7.50  for 30 consecutive days though  we may just have to wait till after that to see what will really happen to the liberty dollar

[Michael Fisher]

Just wait till the 30 day moving prive of silver stays above $7.50 for 30 consecutive days though we may just have to wait till after that to see what will really happen to the liberty dollar

I think their LD margins will jump from ~40% to over 100% unless they create a "$15" bill.

How good will people feel using THAT as currency?   

[Michael Fisher]

Here's a very good article about free markets.

http://www.kitco.com/ind/Hultberg/sept152005.html

I assumed austrian economics already understood that fractional reserve banking is not a crime because it is voluntary and whatever currency would naturally be used in a free market, even paper money, would be morally acceptable and possibly even necessary to economic growth, as long as there is absolutely no government intervention in the currency.  I did not realize that Rothbard and Mises had ever spoken out against these principles, but... nobody's perfect. 

This guy is even more pro-freedom than Rothbard or Mises on the question of a free market currency.   But he seems like a moderate on many other issues.

[tracysaboe]

Mises never spoke out against fractional reserve banking. Rothbardon the other hand, thought it was fraudulent.

The two actually had very sharp disagreements on this issue.

If people are willing to use a bank that lends out half of it's money, or a quarter, or a tenth, or 70%. I don't have a problem with that. It's just that the bank should state what it's polocies are to it's customers and in the fractional researve banking prior to the federal researve weren't doing that. They many times had legal protection from the state against losses. Their were some banks that were very reputable that only lent out about 10% of it's money. Those banks thrived durring downcycles in the economy.

Tracy

[Ron Helwig]

Here's a very good article about free markets.

http://www.kitco.com/ind/Hultberg/sept152005.html

Actually not so good. The author is confusing "financial instruments" with "money".

I still don't understand your animosity towards the Liberty Dollar. Sure, it isn't absolutely perfect, but it is a useful and necessary step. There is no way the general public is going to switch from "dollars" to ounces without an intervening step.

Did your protest against licensing result in an immediate elimination of licensing? No, of course it didn't. It was simply a step in that direction. If a law gets passed as a result of your protest that merely lessens the licensing requirements, would you fight against that as not being good enough?

[Russell Kanning]

I agree Ron