Is there any nation that still uses the old gold/silver-based money system? Of course everybody uses metal coins today, and gold and silver are still considered things of value. But is there anywhere in the world today that still considers the value of a coin to be entirely dependent on its precious metal content? Or has the modern practice of deriving a hard currency unit’s value through a combination of tradition, state fiat, and supply/demand completely penetrated the globe? Is the modern, industrialized Western type of money system universal?
Please note that I already know that the value of money has always been dependent on supply and demand. If everybody suddenly recieved a million dollars/gold coins/whatever, we wouldn’t all be suddenly be filthy stinking rich; instead, the benefit of having a million dollars in one’s possession would sharply fall. I know this. It’s just that today supply/demand is expected to be a part of the value of money. Instead, I ask, has the modern system of paper money, having once been exchangeable for gold, and now backed by nothing but state fiat and the general consensus that this is a good way of doing things, completely replaced all other systems?
The term you want is specie, not coin. Specie is money made out of a precious metal, and it was the only generally-respected way of doing things until paper money really took off. Some people still want to return to specie, usually based on specious arguments.
Well, his use of the word `coin’ threw me, but I suppose you’re right, dial.
At the very least, the OP seems to be equating specie with the gold standard. And anyway, he might as well learn the term, anyway.
So I Googled, and found some good info on the gold standard. Apparently, what we call the gold standard was an international dealie with treaties and such to support and regulate it. It wouldn’t work as well if one country decided to go goldbug and the rest of the world remained floating.
The gold standard served to stabilize international currency relations because countries would be paid in gold for their exports. Such an influx of gold would devalue the country’s currency, and raise the price of its exports. That would drop demand, stabilizing prices.
The gold standard actually died in the Great War. German currency during hyperinflation, for example, was not based on the gold standard at all. It was revived by the Bretton Woods Agreement in 1944, and that collapsed in 1971. After 1971, most of the world evolved to the floating system the US now uses.
But from the site I cited, it seems that the gold standard has been in intermittent use in different countries since 1971. In 2000, the Commodity Modernization Act was passed (by who?), presumably to stamp out the gold standard in some trading collective (where?).
That says something about American hedgemony and the rise of the multinational as the real power in the world and the growth of the zaibatsu and how we’ll all become salarymen Real Soon Now, but I’m not sure what.
I’ve occasionally encountered American white supremacists and other right-wing radicals who insist Federal Reserve notes are “not legal money” because the Constitution authorizes Congress only to issue actual coinage in gold or silver. Maybe, maybe not. What I find interesting is their interest in the issue. Why are they hostile to paper money? The only reasons I can think of are:
The value of specie is supposedly immune, or resistant, to inflation. (But I think most of these guys are more likely to be debtors than creditors – wouldn’t they prefer an inflationary currency? The 19th-century Populist Party did – that’s why their main issue was “free silver.”)
Specie is, in theory, a form of money that could be coined even if there were no federal government or Federal Reserve there to issue it. A gold or silver coin is supposedly merely a small ingot of precious metal with a stamp attesting its weight and purity. It has value because of the metal it contains, which can be determined by an assaying process, which anyone can do with the right equipment. If you’re suspicious of government on general principles, obviously you prefer a form of money that can be nongovernmental.
There’s an American populist tradition, going back to the Andrew Jackson administration, of being highly suspicious of bankers and financiers. I don’t know why. Perhaps its because bankers do things your salt-of-the-earth farmers, tradesmen, etc., can’t properly understand. Perhaps its because farmers often get into debt, and debtors rarely admire their creditors.
There is a widespread assumption that the banking industry is dominated by Jews, 'nuff said.
Guineas and Half Guineas are still minted in the UK and are made of gold.
I suppose strictly speaking these coins would be legal tender but the only problem with that would be you would never know exactly how much the coin was worth due to the fluctuation in the price of gold.
Same in S. Africa, the Krugerrand is minted from 1/10th K/rand up to full K/rand but I don’t know if these are used as legal tender.
I have a couple of guineas and a half k/rand and I have no idea how much these are worth.
BrainGlutton: The Republic of Texas website is the main source I know of for this kind of specific nonsense, and it has a very legalistic, somewhat convoluted rationalization for specie that begins with the pseudo-Constitutional argument that the Government shall only issue specie, kind of moves on through the idea that specie will prevent inflation, and focuses on the notion that the Fractional Reserve Bank (their phrase, not mine) creates fiat money' through bookkeeping and other sleights of hand. They try to make sound ominous the fact that most money never exists in physical form, but instead is only real’ in the sense that it exists in ledgerbooks.
I think their main bitch is the unspoken thought that the Rich Bankers (who may well be Jewish, but the RoT never struck me as being anti-Semetic) can create' money using cabbalistic knowledge that the Common Joe will never have access to, and that the creation’ of money is the cause of inflation, something that hurts the Common Joe in a tangible way. They think that by basing money on gold, we’ll have a system where the Rich Bankers can no longer `create’ their own wealth to the detriment of the Common Joe.
It all comes down to this: The people who put forth these arguments have a shaky grasp of economics, history, and law. They only see a small worldview and everything else looks like magic. So they invent similarly magical processes to explain how they got shat upon, or how they think they got shat upon, and why some people are actually successful. Their near-religious use of talismanic phrases like fiat money' and Fractional Reserve Bank’ and `Lawful Money’ makes for interesting reading, but not for valid arguments.
It is interesting the same way a car wreck is interesting, and it is certainly not a defensible position.
(I cannot find the specific page where the people running the Republic of Texas (an apparently honest attempt to liberate' Texas from the US) laid all of this out, but every third page on the website has language like Lawful Money’ or `debt money’ or other semi-magical phrases invoked by those who defend the above-outlined nonsense.)
Well, it would be pretty hard to run a bank any other way, wouldn’t it? If a bank had to hold all its deposits, what would it have to lend out? Without the “fractional reserve” system, a bank would be no more than a secure place to store your valuables in a safe deposit box.
British One and Two pence pieces “coppers” are now made of coated steel (try a magnet) because they were costing
more to make (out of copper/tin etc I guess) than their face value. Could the old ones count as some sort of specie?
BTW, what are cents made of?
Oh, anyone know why the halfpence piece was retired?
BrainGlutton: `Lawful Money’ is a real term, too, but not the way they mean it. With them, it means specie issued by a government they happen to approve of. With everyone else in the world, it means legal tender.
I did know that the term `fractional reserve bank’ is a real phrase. But the way they mean it, it’s supposed to be Big Scary (but Utterly Farcical) Authority Figure that Breaks the Bank of the Common Joe to Benefit the Big Bankers. They think that because it doesn’t have enough on hand to cover all deposits, it must be stealing from its depositors and giving the Big Bankers an unlawful profit through sleight-of-hand.
Which is utter bullshit, but that’s all of the baggage the phrase carries for them. If you try to understand their language based on our definitions, you’ll get something that makes no sense, as opposed to something that makes little sense.
And, as I said, they’ve essentially turned all of those Big Scary Words into magical spells they can cast on the world to try to affect it. It’s never worked, but they still think it can…
(Oh, and comparing them to the Scholastics is a good call. With all of their mindless argument over meaningless semantics and utter lack of practical knowledge, no other group compares to them as well.)