I think that banks are just taking the worn bills out of circulation as per their regular practice. I would think banks would prefer to have bills that are all the same “model” as it were.
Imagine what it would do to inflation: you own a car dealership, and you know that anyone who wants a car can just print up $20,000 for one. So you double your prices, and get twice as much money for the same car, knowing that someone will just need a few extra hours in the basement to come up with it.
Except that all the other merchants have the same idea. Bam: hyperinflation. As the money supply increases without a corresponding increase in real value, inflation results. Counterfeiting is illegal for the same reason that the government doesn’t simply print up enough money to pay off its debts.
assuming the trade in centers were a reasonable distance from almost all people, that would be logical. i would agree with that.
I think you guys are more or less proving my point. It was a rhetorical question - “Why can’t I counterfeit?” - it’s well known that this is inflationary - but a moments reflection here is well advised - why would, or should, a green piece of paper have any
worth in the first place, the ones with more zeros printed on them having a commensurate increase in purchasing power is rather bizarre on the face of it.
Again, I understand why FRN’s have “value” - because the government says so - but to paraphrase Monty Python, green pieces of paper with dead guys printed on them seems a silly thing to base our economy on… No, I’m not advocating a return to a gold standard or anything of the sort - but clearly there is a problem of “standard” - the unit of account is not standardized, the chief advantage of physical money with intrinsic value - inflation is a ‘hidden tax’ which robs people of their money and purchasing power and is a disincentive to saving and thrift.
Notice we don’t hear “The Meter lost several centimeters against the Yard in heavy measuring yesterday.”
I understand why they’d do it, but why wouldn’t they tell us? From the USBEP website:
Probably, but I can’t think of any reason why a bank would want the old-style bills anyway. Why would they prefer money that’s easier to counterfeit?
Incidentally, everyone, the USBEP website says they’re going to unveil a new $20 bill design in a couple of weeks! And it sounds like it’s a different color!
The economy isn’t based on pieces of paper, it’s based on trust.
If you believe that exchanging green pieces of paper for groceries will work tomorrow, and the grocer believes the same thing, all is well.
The system did make more intuitive sense when those pieces of paper were representative of things with intrinsic value (although even that’s debatable) such as gold. If you feel so inclined, you can purchase gold krugerands with your bits of paper, and feel more confident that your money will remain more or less stable – but just try getting change for a krugerand at your local Kroger.
The reason the economy fluxuates is because trust fluxuates. The more a vendor believes they will be able to buy with the money you give them for their item or service, when they in turn go to spend that money, the less money they will be willing to accept from you. Thus, if the vendor believes they can buy groceries for a week with the money you give them for a TV, then a TV and groceries for a week have roughly equivalent values in the eyes of the vendor, and they will set their prices accordingly. If they believe the money will only be useful as insulation by tomorrow morning, they will raise their prices accordingly, and thus, the amount of groceries or the size of the TV you can buy with the money in your hand goes down. Thus, the perceived “worth” of that money goes down, confidence in the currency goes down, the economy goes down with respect to other economies, and the dollar goes down with respect to, say, the rupiah. (Ha ha.)
You can’t compare monetary “standards” with dimensional ones, because they are fundamentally very different things. The government attempts to enforce economic standards by monitoring and responding to increases and decreases in the money-holder’s trust, but there is no such thing as an absolute standard for currency, because the availability, demand, and worth for different items goes up and down all the time, and money is merely a representation of how much stuff you can buy. Even gold only has value in terms of what can be bought with it, excluding certain applications in electronics and jewelry and such. Really, there’s no such thing as intrinsic value. That beanie baby is only worth what you can get for it from the highest bidder, no matter what the little handbook tries to tell you it’s worth.
Our economy isn’t based on those things. They are merely one method of transmitting ownership of money, which is a non-physical entity. Money and currency are not longer intimately connected. Money is now essentially a point of law.
You make some good points, but I think this one is a no-go. I make more money sitting at a computer than that guy does working at a steel mill, and that’s perfectly fair. I use my skills and equipment to my advantage (making 8 hours of my time more valuable to my employer than 8 hours of Joe “Why are there words on this TV?” Sixpack’s time), but so do the steel worker and the counterfeiter.
A talented artist might only work for an hour to make a painting he can sell for $100; a talented counterfeiter might work for an hour to make a bill he can pass for $100. In both cases, the value of the product is determined by what the buyer considers it to be worth. The counterfeit bill is valued at $100 because the ‘buyer’ (unwitting cashier) believes she can use it to purchase $100 worth of goods.
(However, the cashier won’t accept an obvious counterfeit, because she doesn’t believe she can use it to purchase goods - if it doesn’t fool her, it won’t fool whoever she wants to buy goods from. The fake bill is worthless to her because she knows it’s worthless to other people.)
Tedster, what’s so grand about pinning your wealth to bits of yellow metal? Or shiny rocks? Hell, any currency is farcical. That’s the nature of money.
The nature of purchase is different. The value of the dollar is set by common decree, affected by the Prime Rate set by the Federal Reserve. What that means is this: Money is worth what the people decide it should be, and that is influenced by how easy it is for them to get money. The only `fiat’ is social fiat, something everyone is a part of.
If it’s easy to go and borrow ten grand for home renovations, you’re going to be pretty free in your spending, driving down the value of the dollar because money is so easy to get.
If you need to mortgage the house to get ten grand, you’re going to be pretty damned frugal, floating the dollar pretty high because it’s difficult to lay hands on.
Heinlein, in his essays dealing with the value of money over time, often makes reference to the price of gold at a given point in history. That’s well and good, but he could just as easily have used the price of bread, or the price of iron, or the price of anything that existed then and still exists today. (So giving the price of a flintlock and the price of a Pentium 4 wouldn’t be too helpful in comparing the economies of 18th century America and 21st century America.) It’s all about what people wil agree to fork over when tempted by a common unit of value.
What, actually, does the “price of gold” mean when gold is the standard as it was during most of civilization? Actually, as far as I am concerned the real standand is that of labor. How many days work of a common laborer can you buy? The fact that so-called middle class people once had servants and no longer can means that the very meaning of middle class has fallen substantially, at least in my terms.
Someone asked about minting gold pieces. AFAIK, there is nothing illegal in minting gold coins. Back in the 1960s, when I was living for a while in Switzerland, there were US $20 gold pieces for sales in the windows of several large banks along Bahnhofstrasse in Zurich. They were being sold for CHF 200 IIRC and there was no pretense that they were authentic; you were just paying for the gold plus fabrication cost (and a tidy profit since CHF 200 was worth about $45 and the coins had less than an ounce of $35/ounce gold in them). It was illegal in the US for Americans to own these coins, but not because they were counterfeit but because it was generally illegal for Americans to own gold in those days. Nowadays all coins are “tokens” meaning without no intrinsic value, so manufacturing them would be counterfeiting.
Excuse me, but what do you mean by that?
No, no, no!
I’m sorry I wasn’t more clear in my post. I don’t mean that everyone should lose their money. I meant that there should be a limited time (several years, I guess) during which you can exchange your old notes for new ones, after which the old ones will become invalid.
This will have at least two benefits that I can think of:
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Thirty (or three!) years from now, if you try to spend one of the old style notes, the cashier (who has never seen one before and therefore has no idea of whether it is counterfeit or not) can easily refuse it without having to make a judgement call of her own.
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Do any of you people realize how much US currency is held by criminal elements, either inside or outside the country? Forcing them to go to a bank to exchange it will expose at least some of them, and I don’t understand why the law enforcement agencies haven’t pushed for it. Perhaps the reason is that it would also expose the many people who have large quantities of legitimate cash, but I imagine that they are far outweighed by the others.
No, I disagree - this was my point entirely. At one time, a “dollar” was specified by law as a certain (fixed) amount of gold or silver by weight. It didn’t fluctuate. How would you feel if the government re-defined the acre, so your farm, formerly 40 acres, is still nominally 40 ‘acres’, but is only half the size it was prior to redefining an “acre”. The government claims that “the acre policy was too restrictive” - what we are talking about is the unit of account. It is theft, plain and simple.
To answer a later question, the federal government actually “recalled” all gold coinage in 1933 during the Roosevelt administration. People were “hoarding” gold because of the stock market crash/depression. Presumably, when the government does it (Ft Knox) that’s not hoarding. It was illegal for Americans (generally speaking) to own monetary gold or gold certificates.
Convertibility of paper dollars to gold was still allowed by foreign governments only. The US government stood ready to buy and sell gold for $35 an oz, most foreign governments linked the value of their currencies to the US dollar, and indirectly, to gold. This arrangement worked fairly well from 1944 to the mid 1960’s, huge social expenditures at home coupled with the Vietnam war essentially bankrupt the US, with overseas government demanding physical delivery of gold in exchange for their dollars. President Nixon had little choice but to sever the remaining ties of the dollar to gold. The “oil crisis” and extreme inflation of the 1970’s was the result. Americans “right” to own gold was re-instated in 1975, iirc.
No, I disagree - this was my point entirely. At one time, a “dollar” was specified by law as a certain (fixed) amount of gold or silver by weight. It didn’t fluctuate. How would you feel if the government re-defined the acre, so your farm, formerly 40 acres, is still nominally 40 ‘acres’, but is only half the size it was prior to redefining an “acre”. The government claims that “the acre policy was too restrictive” - what we are talking about is the unit of account. It is theft, plain and simple.
To answer a later question, the federal government actually “recalled” all gold coinage in 1933 during the Roosevelt administration. People were “hoarding” gold because of the stock market crash/depression. Presumably, when the government does it (Ft Knox) that’s not hoarding. It was illegal for Americans (generally speaking) to own monetary gold or gold certificates.
Convertibility of paper dollars to gold was still allowed by foreign governments only. The US government stood ready to buy and sell gold for $35 an oz, most foreign governments linked the value of their currencies to the US dollar, and indirectly, to gold. This arrangement worked fairly well from 1944 to the mid 1960’s, huge social expenditures at home coupled with the Vietnam war essentially bankrupt the US, with overseas government demanding physical delivery of gold in exchange for their dollars. President Nixon had little choice but to sever the remaining ties of the dollar to gold. The “oil crisis” and extreme inflation of the 1970’s was the result. Americans “right” to own gold was re-instated in 1975, iirc.
I don’t understand this at all.
The amount of gold in my hand will not change regardless of whether the gov’t calls it 5 drachmas or 14 shekels or 11 pesos. They might decree certain price changes, but you’re talking about units of measurement, which makes no sense (yo me).
Likewise, in your example, if my farm was 40 acres before, so it is 80 acres now, and they’ve stolen nothing. What’s your point?
The more different in appearance the new $20 is from the old $20, the quicker the old ones will diminish in ordinary circulation, as people will be more likely to save them as sovereigns or for speculation.
Once this happens, the more likely people will notice the individuals passing bad old bills and the easier it will be to catch who is passing the bills.
According to the federal reserve, the average life of a $20 bill is about 4 years. ($1 - 22 months, $100 - 9 years). The BPE is unlikely to be able to print enough new $20s for a full recall early and it would become less and less necessary later.