Liberty Dollar to close on 08/05/08?

[dannno]

i may be wrong here... but I see a fundamental flaw in issuing currency in silver.... which is that if you issue it when silver is $15/oz. and the price drops to $10/oz. .. then the value is diminished.

i understand that the coins will have face values... but what consumer would (or retailer) would take the risk unless the system was universal?

It's actually the opposite.

G Edward Griffin uses the analogy that back in Roman times, 1 oz of gold bought some nice handmade sandals and a hand made toga get up.

Today a handmade suit and shoes costs about the same as 1 oz of gold. Therefore the value of gold/silver holds relatively steady while the value of the currency is what is changing.

A competing currency ties these prices together so vendors know what to charge. The vendor or consumer will only lose money of the value of the dollar increases and he continues to keep his wealth in silver.

 

[theoakman]

i may be wrong here... but I see a fundamental flaw in issuing currency in silver.... which is that if you issue it when silver is $15/oz. and the price drops to $10/oz. .. then the value is diminished.

i understand that the coins will have face values... but what consumer would (or retailer) would take the risk unless the system was universal?

actually, the value hasn't changed much. It's the paper value of the dollar that's fluctuating rapidly. Go back to the 60s when your change was actually composed of silver. Those same pre-67 coins buy you nearly the same amount of gas as they did in the 60s. When you're grandfather says "I remember when this was 10 cents". He could still essentially pay 10 cents if he had an old dime.

 

[cbc58]

I understand all that but let's say we have fiat dollars like we do now... and then someone issues 1 oz. silver coins with a $20 dollar face value based on the price of silver being $20/oz. So there are competing currencies.

Now silver drops to $10/oz.

Now lets assume I am a retailer and I am selling a $40 widget. I can either accept 2 silver coins or $40 fiat dollars. If I accept $40 fiat dollars I can go out and buy 4 ounces of silver instead of getting two. I am basing value on the price of silver not the denomination on the coin.

What am I missing?

 

[bander87]

I understand all that but let's say we have fiat dollars like we do now... and then someone issues 1 oz. silver coins with a $20 dollar face value based on the price of silver being $20/oz. So there are competing currencies.

Now silver drops to $10/oz.

Now lets assume I am a retailer and I am selling a $40 widget. I can either accept 2 silver coins or $40 fiat dollars. If I accept $40 fiat dollars I can go out and buy 4 ounces of silver instead of getting two. I am basing value on the price of silver not the denomination on the coin.

What am I missing?

You're absolutely correct. This is a major flaw in the Liberty Dollar.

in real money, there is no such thing as "dollars", there is only weights!

People forget that the term "dollar" was created to define a specific weight!

I think, in a way, the liberty dollar in itself is fiat - they can increase the dollar amount of the currency without increasing the amount of silver.

 

[bander87]

It's actually the opposite.

...

The vendor or consumer will only lose money of the value of the dollar increases and he continues to keep his wealth in silver.

This original post was correct, and I think you have the right idea as well. If the price drops in silver, and it was because of the dollar, then the person who has the silver has lost money in USD.

 

[sratiug]

I understand all that but let's say we have fiat dollars like we do now... and then someone issues 1 oz. silver coins with a $20 dollar face value based on the price of silver being $20/oz. So there are competing currencies.

Now silver drops to $10/oz.

Now lets assume I am a retailer and I am selling a $40 widget. I can either accept 2 silver coins or $40 fiat dollars. If I accept $40 fiat dollars I can go out and buy 4 ounces of silver instead of getting two. I am basing value on the price of silver not the denomination on the coin.

What am I missing?

The retail value in fed notes has to be higher than the melt value in fed notes.

There is extreme value in overthrowing the federal reserve system and fractional reserve banking.

If the reason for silver to dropping in half was because the fed note went up 100% in value you'll have to lower your prices in half for your widgets too.

 

[sratiug]

It is impossible that the value of the fed note will rise in the long term at this point. That makes the Liberty Dollar a sound idea. The only concerns are the profit ranges imo. Right now it seems too much. But if people trust in the system and that the organization is not making huge profits all for themselves without benefiting everyone but actually for everyone's benefit, there is really no problem.

Retailers don't sell their product for what they paid for it or they couldn't pay their rent.

Liberty Dollar has a set formula for raising and lowering the base. I don't see how lowering the base could work. And I don't know how low the price has to go. But in the long run the value of fed notes simply cannot increase and must decrease, imo, given the financial situation of our country.

 

[Knightskye]

Then how do you justify a 50 dollar bill?

Tell me where I can ask for change for a quarter and get a 50.