Bank of England notes have been issued since 1694, and they are all still legal tender in the UK. (Of course, no notes from that era are still in circulation as money; they have a far higher value as artifacts.) Bank of Scotland has been issuing notes since 1695, Royal Bank of Scotland since 1727; although these have never been legal tender, even in Scotland, the Bank of England will redeem them at face value for legal tender notes (though, again, none still circulate for this purpose).
I was simply pointing out that the US dollar is the only paper currency from that time period that is still (technically) spendable, legal tender. While it has lost 98% of its purchasing power since that time, that is apparently the only currency note that is still around.
Can you name another? While the UK still uses the pound, any notes from that time period are obsolete afaik. So far as fiat money goes, 100 years is an eternity. It really is remarkable.
[/QUOTE]
Yes - the notes of all four of those countries, issued by the central banks, retain their face value. In some cases, older notes have been withdrawn from circulation, so have to be exchanged for new notes, but still at face value.
The Bank of England and the Reserve Bank of New Zealand will demonetise older series, so they are no longer legal tender, but they still have face value and can be exchanged for current notes.
The Bank of Canada and the Reserve Bank of Australia do not demonetise, so old notes are legal tender. They can also be exchanged for current notes.
The Bank of Canada is also responsible for old Dominion notes, issued by the Government of Canada prior to the creation of the Bank of Canada in 1935, as well as for banknotes issued by the chartered banks prior to January 1, 1950. Those notes can also be exchanged for current notes at face value.
[QUOTE=Notes from Past Series]
All notes issued by the Bank of Canada since 1935 have legal tender status and retain their full value. If you don’t know how to check notes from past series, exchange them for newer ones at your local bank.
[/QUOTE]
[QUOTE=What should I do if I have any old or damaged notes or coins?]
Some currency has been demonetised, that is, it is no longer legal tender. The Reserve Bank will always pay face value for currency that has been legally issued for use in New Zealand but has ceased to be legal tender (including pre-decimal currency). To receive payment on old currency from the Reserve Bank, you need to return it to our office in Wellington. Retail banks are unlikely to accept currency that is no longer legal tender for deposit or exchange.
[/QUOTE]
And, although Irish pounds are no longer currency since Ireland entered the Euro zone, all old Irish notes can be exchanged for Euro notes at the exchange rate set when Ireland switched to the Euro:
However, as Sam Clem notes, if you have old notes you’d be foolish to exchange them at face value, because they likely have greater value as collectors’ items. In other words, old fiat currency appreciates in value. 
the govt taxes gold. Not a free market, bud.
There is no precedent for confiscation of fiat money.
There’s no need to confiscate fiat money, just announce that the old notes are wastepaper. And if taxation means there’s no free market then there hasn’t been a free market economy since 1000 BC.
Are you a young earth creationist? Gold and silver have existed for a lot longer than five thousand years.
Or are claiming that gold has maintained a steady value for five thousand years? If so, that’s nowhere near reality. The price of gold fluctuates wildly on a year by year basis, much less across centuries.
You’re incorrect. While businesses have the right to refuse old pound notes (or new pound notes or dollars or gold nuggets) the Bank of England will accept any currency note it has ever issued and exchange it for a current note of the same face value.
So you could take an 1814 pound note to the Bank of England and they’d give you a brand new one. Except they don’t make one pound notes since 1983 so it would be a coin.
I picked Corvettes and gold as two items I was easily able to find a year by year list for. But you could compare the values of any two products. How many six-packs of Coca-Cola is a movie ticket worth? How many tubes of toothpaste does a paperback book cost? How many pairs of blue jeans equal an airline ticket from New York to Los Angeles?
Now if the theory is correct that prices are stable and the only reason they appear to change is because the value of a dollar changes, then any of these comparisons should yield a constant rate. And it would be simple to enact a new monetary unit - let’s call it the Nemo for short - and the value of a Nemo would remain stable. However many Nemos you paid for an item this year, you could count of the fact that you would pay the same number of Nemos next year for that same item. Or five or ten or twenty years from now. The Nemo would be a currency with steady unchanging value.
But then reality rears its ugly head. If you make any of the comparisons I suggested, you’ll find the rates do not remain steady. My example with Corvettes and gold showed that. If you fixed the price of a Corvette at something steady like 1000 Nemos, you’ll see the value of an ounce of gold in Nemos jumps up and down. If you fixed the price of gold at some steady amount of Nemos, you’d have the cost of a Corvette changing all the time. And it would be the same with any item you choose.
This is why Common Tater’s belief that a stable currency unit is possible is wrong. Prices don’t change just because the value of a currency changes. Prices change because the value of everything is constantly changing. So you can’t have a currency unit that will keep prices the same.
I know that, but there is no precedent for it. There is a precedent for gold comfiscation and this knowledge had an effect on its price.
The point is gold has not been allowed to compete with fiat currency on an equal footing. So to say there is a free market for gold and it is just out-competed by fiat currency is plain wrong.
But anything that’s used for money can be confiscated. Indeed, anything that’s can be confiscated whether it’s used for money or not. There’s precedent for gold, but the lesson learned from that precedent is not one that applies to gold alone. Presumably if we monetise unobtanium, then governments have exactly the same incentive to confiscate unobtanium as they had to confiscate gold when it was monetised.
And, of course, fiat money can equally be confiscated. So, yes, there is a level playing field between the various things we could use as money.
Do not forget that the Reserve notes did not just spring up out of nowhere. Their link to gold in the first place is what allowed them to become the common medium of exchange. Government action broke this link, but by that time, people had psychologically accepted them as money instead of as a claim to money. You cannot create a fiat currency ex nihilo without pyramiding the notes on a sound base because people flat out will not accept them as money.
So if gold had not had the track record of stability, the dollar note plot would not have been able to been hatched.
No there is not. Gold is taxed, bud. Dollar note appreciations are not taxed.
No, the government would not confiscate dollar notes, which is what we are talking about, because that would make them worthless. Your example does not fit with dollar notes, which fits the real world situation.
When you say that gold is taxed, I take it your’re referring to capital gains tax on the appreciation in value of gold?
Gold, if monetised, could still be taxed. Fiat money, equally, can be taxed if the political will is there. You can have a levy on bank deposits, for example.
Dollar bills would only be worthless if the government confiscated them all. But if you want to tax people’s holdings of money, you can do it. And you can do it whether it’s fiat money or not.
If I purchase a house for $100,000 in “dollar notes” and sell it ten years later for $200,000 in “dollar notes,” the government will tax me for the profit. How exactly is gold “taxed.”
Possibly not the first time around. But now? Piece of cake. Most of the world’s currencies that circulate today have never been gold-backed; they were fiat from day 1.
That’s an asinine statement. There’s no meaningful comparison there in the first place, and in the second, as has been pointed out, every economy on Earth moved away from gold as currency decades ago when it became apparent that fiat worked a lot better.
You’ll probably reiterate a bunch of arguments that have already been refuted, but to just pick what seems to be the favourite of every fiat-money-skeptic out there. The government messing with the money is certainly a problem, but commodity standards are no where near a cure and will kill the patient.
the appreciation of gold is taxed. This negates a lot of benefit of using gold as money. If my dollars appreciate, there is no tax. For example, if I buy a gold oz for $1000 and sell it for $1200.
You do t seem to get the point about confiscation. Gold confiscation was a real thing. Their is cultural memory of a time when gold was confiscated, therefore it is an influence on the desire of individuals to hold gold, especially during certain times. This helps to account to the wild fluctuation of gold in terms of corvettes.
There is no precedent for mass confiscation of dollar bills, therefore an intellectual exercise like you present is irrelevant when it comes to influencing the desire of individuals to hold dollars. Of course govt could commit suicide and confiscate dollars, that wasn’t questioned.
Right so they are taxing the appreciation of your house. Just like they tax the appreciation of gold.
They were pyramided on dollar notes or pounds most likely. Both once backed by gold.
…I spend most of my paycheck on a month-to-month basis, and the rest goes into an account that guarantees interest at least equal to inflation. My business offers regular raises. Where, exactly, is my purchasing power being robbed? What, I lose 2% per year? That’s fairly meaningless to me, because my income goes up by the same, and I’m not burying my wallet in the backyard.
…:dubious:
OY! WE’S GOTS US AN IMMORTAL HERE!
What possible use could you have for money 200 years later? That’s just a little bit bizarre.
I mean, hey, if that’s your deal, then invest it in a sure bet, or find someone who is willing to peg your interest rates to inflation (which, by the way, is a straight-up raw deal - if you’re offering such a long-term investment, a real interest rate of 0% is a total rip-off and you could do much better, so you should have no trouble finding a bank willing to take you up). But that’s not the purpose of money. The purpose of money is to enable commerce! Money that’s just stowed away for 200 years is, effectively, dead money. It’s outside the economy doing nothing. Inflation actively discourages this kind of behavior, which is important to ensure the economy keeps moving. And finally, let’s say you went ahead and buried a few pounds of gold back in 1450. If you dug it up in 1650, I think you’d be in for a bit of a nasty surprise.
Gold appreciating in value is only taxed if you sell it for dollars. And why would you ever do that, trading in real money for worthless paper?
Just keep your gold coins in a vault and you’ll never pay a silver dime of taxes on those coins.
Of course, gold coins locked in a vault in your basement aren’t money. They are only money if you use them as money, and if you lock them in a vault they aren’t being used as money. And if you take them out of the vault to use them as money the easiest way to do that would be to trade them for some of the fiat currency that the kids today are using.
Gold coins aren’t money today for the same reason that whiskey, cigarettes, cowrie shells, cacao beans, buckskins, cattle, corvettes, and giant stone disks aren’t money. They aren’t money because they aren’t used as money. Yes, gold coins can be used as a store of value, which is one of the functions of money. But they aren’t used as a unit of account, and most importantly are not used as a medium of exchange. A vintage corvette parked in your garage is a store of value if you can sell it for what you paid for it. Same with gold coins. But the corvette isn’t money, and neither are the coins.
If you want to use precious metal coins as money, you’re certainly free to take your weekly pay down to the coin shop and exchange your arbitrary fiat dollars for tangible gold and silver, and then exchange those coins for whatever you deem fit. The only problem is that the bank would rather be paid in dollars, the grocery store would rather be paid in dollars, the phone company would rather be paid in dollars, and so on and so on.
If you anticipate that fiat dollars might suddenly and precipitously lose a lot of value overnight, by all means go ahead and exchange them for tangible assets today. You’ll have some valuable goods, and the guy you bought from will be stuck with fiat dollars that are now nearly worthless.
Except it probably won’t go down like that. What would really happen is that inflation would start to crank up and up and up, and you’ve have plenty of warning that your fiat dollars would be worth a lot less pretty soon, and so you’d dump them as soon as possible, along with 300 million of your closest friends.
Threads like this are like Rorschach inkblot tests—we all see what we want to see.
I try to test my communciation skills by getting people to see their fallacy. It appears I’ve failed with Common Tater. Being a masochist, I’ll try one more time. Mr. Tater, if you really want to fight your ignorance start with a few simple questions:
[ul][li] Are you worried about a sudden Zimbabwe-style massacre of your wealth, or are you more concerned about the steady erosion of your wealth? (Loss of 3% per annum will compund up to 75% after 45 years.)[/li][li] What percent of your wealth is in the form of cash? If the dollar is suddenly worth half what it was, what will happen to the value, in dollars, of your home? If you’re young, most of your wealth will take the form of your skills and future earning power. What happens to salaries when there’s inflation?[/li][li] If the Kenyan dictator suddenly declares that the country is using zlotls instead of dollars, at a 10,000-to-1 exchange rate, so your $200,000 house is now worth 2 billion zlotls, what’s happened to your wealth?[/li][/ul]
I realize some of these questions are insultingly easy, but I want you to switch modes. Focus on the right questions; don’t assume that your pre-arranged answers make sense. Your worry about inflation seems to make sense only if you’re planning to pass your wealth to your grandchildren by placing banknotes in a time vault to be opened years later.
You want a “constant unit of value.” One thing I hoped you’ve learned from the thread is that the U.S. dollar, which is held by government action in a fixed relationship to the CPI “basket” (although diminished by 2% annual inflation) is the best that can be done. I’ll assume you understand this and that it’s that 2% inflation you object to. Indulge me long enough to give a serious answer to the question Who are the winners and losers from that inflation? (Earlier you seemed to imply that the government used inflation to take wealth from citizens. How do you think the government spends this illicit wealth? Would you prefer higher taxes?)
I wonder how people with a peculiar understanding of inflation would do on the bellboy’s missing dollar riddle.
But just like a Rorschach test, others focus on completely different aspects of the thread topic. It is interesting how Spain suffered economic problems with the arrival of huge metallic wealth from the New World. Or how the phenomenally wealthy Mansa Musa of Mali donated so much gold on his pilgrimage that “the Egyptian economy was ruined for years to come.”
And of course there’s the guy who views all economic questions through a “teh government is teh evil thief” prism:
Serious question: Mr. Farnaby: Have you ever read an objective history text?