Lack of Confidence In Fed Reserve Notes Showing Up Everywhere

February 22nd, 20106:05 am @


I was surprised, but pleasantly so, to hear about a local SC politician trying to re-impress the value of gold and silver coinage in today’s society of the dollar losing more value more quickly than ever. Rep Pitts from SC introduced a bill in the South Carolina that would make not just federal reserve notes legal tender, but also silver and gold bullion (which was outlawed and robbed of the American people in the mid-20th century).

I saw a lot of great comments and discussion on the topic on the website Palmetto Scoop, but one really stuck out. I’ve attached the comment below, very much worth the read. And here’s the original post:

I understand where both sides of this discussion are coming from. But most people are commenting without knowing and understanding the history of currency, in the US and internationally. But this guy gets it:

Posted by Goldigger on 02/18/10 at 7:57 am
“Vast Variety in post #5″ obviously doesn’t realize gold is global. Today, gold coins are still highly desirable as a trusted store of value and as a recognized medium of exchange. Additionally, gold bars are held by central banks to assure their ability to make international payments.

Gold is highly liquid, has few geographic boundaries and can be bought, sold and stored in most parts of the free world.

Because of its global market, the price of gold cannot be easily manipulated by any single nation or borrower. On the contrary, gold is widely thought of as the foundation of the world’s monetary system. In a world where other assets, such as currencies, are depreciated by high inflation or interest rates, gold acts as a superior hedge against inflation.

Gold and silver coinage has been used as a medium of exchange and a store of value throughout recorded history. That’s why it seems funny to me that some of you view the idea as some new and crazy way of exchange. Lol.

From Abraham in the Old Testament to your grandfather, they all understood that gold and silver coins are “real money”. As in “Vast Variety’s post #6″, Perhaps that’s why America’s Founding Fathers designated gold and silver coins as the only “tender in payment of debts” in Article 1 Sec. 10 of the U.S. Constitution. So if South Carolina chose this path they would be the only one’s obeying the U.S. Constitution wouldn’t they? Can that be wrong?
Gold coins were removed from circulation in the U.S. upon Franklin D. Roosevelt’s issue of the Presidential Executive Order of 1933. Under this order all circulated gold coins and gold bullion had to be surrendered to the Federal Reserve Bank.

As far as printing our own money, it’s not as illegal as we thought.

Last year, two Detroit tavern owners were sitting at the bar, sampling their beverages and bemoaning the local economy — no one in the city had cash, and when they did, they spent it in the suburbs. Then the pair hit on a solution: Print their own money.

It is, after all, perfectly legal for anyone to issue currency, as long as it doesn’t look too much like a U.S. dollar. Thus was born the “Detroit cheer”, a local scrip accepted by a handful of city businesses.

Residents in tiny North Fork, Calif., just launched the “North Fork share”, and folks in Piedmont, N.C., spend the newly issued “the plenty”, a currency depicting local flora and fauna like the ever-popular turkey vulture. Brooklyn, N.Y., is preparing to launch the “torch”, while South Bend, Ind., is set to print what it calls “MACs”.

Susan Witt, the executive director of the E.F. Schumacher Society, a think tank devoted to decentralized economies, says she gets calls daily from towns across the nation looking to join the movement.

Read it here.

Gold’s Value is a Safety Net

A common example is the saying that an ounce of gold could buy a quality men’s suit at any point in history. In addition, in times of political and economic uncertainty, gold’s value traditionally rises.

The King, stamping gold coins or bars with his personal heraldic device, made gold his king dorrys “coin of the realm” or “legal tender.” During the following 2,500 years in the evolution of world trade and commerce, gold emerged as the preeminent global currency as thousands of gold coins were minted by many countries.

The U.S. dollar was originally backed by gold. Meaning if someone gave you paper money, it was an I.O.U. this amount in gold. In 1971 Nixon was forced to close the “gold window” and the U.S. dollar was no longer redeemable in gold. Now paper notes are I.O.U.’s for nothing. Imagine in one hand, you hold an unprinted piece of linen paper and in the other you hold an unstamped piece of gold. Which has more value?

“The destiny of a currency determines the destiny of a nation,”
according to Dr. Franz Pick, a noted free market economist. With
today’s dollar retaining a mere three cents of it’s original buying
power as a century ago, (Between 1915 and 2008 the dollar shrank to just 3 cents!) it’s easy to see why the world sees the U.S. as
a nation in decline. Reversing the dollar’s decline seems remote,
given our debt and deficit addictions. Gold is now the world’s only
currency that has retained a store of value over time; buying
roughly the same goods or services today as it did three centuries

Would you invest your life savings in a company with a track record like the U.S.

Do you think the trillions in U.S. government bailouts will strengthen or
weaken the dollar given that we are facing trillions of dollars in national debt?

What’s really at risk now is the dollar’s role as reserve currency. Unless foreigners continue to buy dollar-denominated assets, the exploding US trade and budget deficits threaten to sink the US dollar.

When paper money eventually folds as major world economies begin to devalue their currency and the others must follow in a race to the bottom to keep their goods affordable for export. So then what will shop keepers prefer in payment for goods and services, gold or that phony IOU-for-nothing paper money? You tell me.

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