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Submitted via IRC for TheMightyBuzzard
A bill recently introduced in Texas seeks to obliterate the Federal Reserve's much-maligned monopoly on currency by establishing gold and silver as legal tender — but the groundbreaking legislation, if passed, would also prohibit those precious metals from being seized by State authorities.
[...] Senator Bob Hall introduced the bill last month, which, the Tenth Amendment Center explains, "declares specifically that certain gold and silver coins are legal tender, and prohibits any tax, charge, assessment, fee, or penalty on any exchange of Federal Reserve notes (dollars) for gold or silver. The bill authorizes the payment of taxes and fees in gold & silver in certain circumstances. It would also prohibit the seizure of gold or silver by state authorities."
Would this matter in a nation where money is mostly plastic nowadays anyway?
Source: http://thefreethoughtproject.com/texas-bill-gold-silver-money-federal-reserve/
(Score: 1) by harmless on Sunday April 16 2017, @02:48PM (2 children)
Sunk the economy? Endless printing of money? Germany?!
Some numbers:
http://www.tradingeconomics.com/germany/gdp-per-capita [tradingeconomics.com]
http://www.tradingeconomics.com/germany/inflation-cpi [tradingeconomics.com]
So what the heck are you talking about?
(Score: 4, Insightful) by jmorris on Sunday April 16 2017, @03:48PM (1 child)
You might want to open a history book, you could learn something today. Ask Google to tell you about "hyperinflation" and the first hit (at least for me) mentions both the Weimar Republic (Germany) and Zimbabwe. You are welcome.
(Score: 2) by AthanasiusKircher on Sunday April 16 2017, @08:43PM
While you're right about history, there's a difference between well-managed inflation vs. a hyperinflation spiral. Hyperinflation can have a number of causes, but generally it is caused NOT by fiat currency, but effectively by the LACK of "fiat," in the normal sense of the word. "Fiat" currency is so-called because supposedly the money is granted value on the basis of the government, rather than "intrinsic" value. (Let's set aside the fact that things like gold as currency don't function on the basis of their "intrinsic" value either; their value is propped up by the same types of markets that other currencies are. The actual utility value of gold, which is closer to "intrinsic," is a lot less than its normal price.)
Anyhow, hyperinflation is generally the failure of the "fiat," because the government no longer has control of the currency. How does this happen? Well, it varies, but a lot of times it has to do with debts incurred in foreign denominations. The Weimar Republic had this issue with war reparations. They would have been fine if they owed money in Deutschmarks, but instead they were forced to pay money in foreign currencies. What that does is often set up a forced feedback loop where one country has to exchange currency to make payments, which floods the currency markets, which devalues the currency that started the exchange, which means the next payment has to be even MORE of the devalued currency, which then floods the market more, etc., etc.
It's a very specific phenomenon which wouldn't happen if debt were owed in the native currency. But when a government loses control of its finances by taking on debt in SOMEONE ELSE'S currency (while relying on payments starting in its own currency), all bets are off.
Anyhow, all of this is very different from managed inflation, e.g., as part of the Federal Reserve system. For the past several decades, targeted low inflation is a FEATURE of that system, not a bug. Yes, people who have giant money bins stashed away will lose some value over time, but we ALL benefit greatly from what SMALL amounts of inflation do for everyone, i.e., encourage investment and economic activity. Deflation is a disaster for almost any economy, because it encourages hoarding (and, in extreme scenarios, dumping of any non-monetary assets). Economic activity creates more opportunities for everyone, and a small rate of inflation drives that along.
Anyone who thinks they'd be better off in a deflationary economy has never looked at historical precedents for them or even thought through the basic steps of "what happens next" if you start seeing real deflationary pressures arising. Sure, the people who have giant money bins and basically enough to live on for the rest of their lives already will likely be fine, but the rest of the society will not. Since continuous zero inflation/deflation is just about impossible to maintain, a slight inflationary edge is both a buffer against the disastrous effects of deflation coupled with a mild pressure to drive economic activity through encouraging investment rather than hoarding.