Show Me State next after Utah? Looks like it.

[PaulStandsTall]

Let me just add my two cent and say if I were designing such a system, the dollar value of the metal would have no bearing on anything. The people for which I would store gold would understand I count gold by the ounce, not the dollar.

For example, the depositors in my bank would reference the weight and nothing else. "Hey, Jim, how much did that new car cost?" "Oh not much, just 100 ounces of silver."

Primitive right?

Nay, sound. Any reference to such a disaster of a currency as the dollar would certainly remove any credibility of my system

 

[Seraphim]

The Constitutional US Dollar is weight oriented. It's 374.5 grains of silver, if I am not mistaken.

Let me just add my two cent and say if I were designing such a system, the dollar value of the metal would have no bearing on anything. The people for which I would store gold would understand I count gold by the ounce, not the dollar.

For example, the depositors in my bank would reference the weight and nothing else. "Hey, Jim, how much did that new car cost?" "Oh not much, just 100 ounces of silver."

Primitive right?

Nay, sound. Any reference to such a disaster of a currency as the dollar would certainly remove any credibility of my system

 

[Steven Douglas]

Let me just add my two cent and say if I were designing such a system, the dollar value of the metal would have no bearing on anything. The people for which I would store gold would understand I count gold by the ounce, not the dollar.

For example, the depositors in my bank would reference the weight and nothing else. "Hey, Jim, how much did that new car cost?" "Oh not much, just 100 ounces of silver."

Primitive right?

Nay, sound. Any reference to such a disaster of a currency as the dollar would certainly remove any credibility of my system

This is the whole reason I went blue-in-the-face on the Gold/Instrinsic Value thread. When we say gold "standard", it is just a standard of measurement (of weight and purity). Gold is "VALUED" as a weight. But most people cannot help but see it in a different context - even when the context is abundantly clear.

The term DOLLARS, or UNITS was originally a WEIGHT (and purity) "value" for SILVER -- not the completely separate and unrelated "market exchange value" per unit for unlike things. It is no different than the "value" of anything declared and standardized in the entire metric system - be it a liter, meter, gram, or anything else.

No, we are FAR too easily distracted by the word "value" - as it is too easy to slip into thinking of it personal, utility, emotional or economic terms. And that fact is what caused the very word to be exploited. Against us, as people unnecessarily argue unlike terms even without their awareness.

You are absolutely correct, PaulStandsTall, and it is the very reason Ron Paul has advocated thinking of money, both price and value, in terms of WEIGHT only. No other specialized name required or even desired to make it a special case "cuz it's munny". KILL THE DOLLAR AND THE EAGLE - both terms have been hijacked and rendered meaningless.

An ounce of wheat is valued at ____ ounces of silver or _____ ounces of gold. Plain and simple, two separate forms of money, in terms anyone can understand - no need to complicate it with Value Conflating noodle-headedness.

 

[QuickZ06]

How does this not violate U.S. Constitution - Article 1 Section 8?

I saw this Q&A....

Q."Where may I find additional information on the evolution of Article 1 — Section 8 (Powers of Congress)...and specifically, 'To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.'"

A. This was included because under the Articles of Confederation, the states were permitted to coin their own money, which led to, at the least, confusion (though the federal government was able to set the value of gold and silver). This is addressed, briefly, in the Federalist Papers, number 42. See also number 44 for an explanation of Article 1, Section 10, which expressly forbids the states from coining money or issuing paper money.

Still a newbie at all this just trying to make sure I'm not reading more BS.

 

[Zippyjuan]

I think that is why the proposal converts the gold (or silver) to dollars when you want to spend it- putting it on a debit card you can take to merchants who will accept dollars. Basically you seem to (to me anyways) that you are lending them your gold to hold on to and when you need money for something they sell it (or part of it even) at whatever the price of gold (or silver) is at the time you need the money. In that way you would still be using dollars for all transactions but your "account" would be in terms of the metal.

Can you withdraw your gold? You likely won't get back the exact same coin you sent in to them.

Or are you restricted to businesses who will take the card and deduct a certain amount of metal- say grams of gold- and have a "grams balance" or whatever on the card and it would then be up to the merchant to figure out the exchange rate of the grams to dollars for his bookkeeping purposes? That puts the burden on the business instead of the card issuer.

Just my thoughts on how it may work. Not enough details in the proposal at this point to be sure how it would work in reality.

 

[KingNothing]

All this does, it seems to me, is instantly convert gold to dollars at the moment a transaction occurs. This makes owning gold more attractive, because it makes gold as liquid as cash.... buuuut

I wonder how they handle income tax on this. There's almost no point to it, other than convenience and encouraging people to invest in gold, if you're forced to pay taxes on "gains" made when gold "increases" in value and you convert it to dollars to purchase something.


And to the point someone raised about the value of gold fluctuating and possibly giving someone a balance of zero when they thought their account had value... well... my guess is that the gold-backed debit card will be linked to a checking out that must always have $x-dollars in it, and a credit card to account for any overdraws.

But that's just me spitt-ballin'. I don't know anything about this that I haven't read here.

 

[Steven Douglas]

Basically you seem to (to me anyways) that you are lending them your gold to hold on to...

No. Not at all, in fact. There is no "loan" involved. It would be an allocated "holding", for a bailment fee (the actual meaning of "bank"), not a "deposit" like our current idiotic so-called "banking" system, where you implicitly agree to turn over title to your currency to the financial institution, which then "owes" you that amount (regardless if you have a "right now" claim). When you store your belongings in storage, the storage company does not take title to your property, nor can it be said that they "owe you" for these things. There are no IOU's involved, and so long as you make your storage payments, they are not free to use or otherwise encumber your property in any way.

When you need money for something YOU are the one, not "SELLING" it, but rather converting, exchanging one form of legal tender to another. The holding institution with which you have an account only acts as an agent on your behalf for that conversion. Otherwise, it is no different than walking up to any currency conversion exchange window and converting, say, Euros for Dollars -- nothing more than a legal tender exchange. You are the one doing the conversion, regardless of the agent's intermediary role, which acts with a specific power of attorney on your behalf.

Can you withdraw your gold? You likely won't get back the exact same coin you sent in to them.

Of course you can withdraw. And getting back the same coin is not important, nor is it necessary to establish an "allocated holding". Because the coins are fungible, allocations can be shifted, but at all times the coins (and even fractions thereof) would be allocated - NOT POOLED.

Or are you restricted to businesses who will take the card and deduct a certain amount of metal- say grams of gold- and have a "grams balance" or whatever on the card and it would then be up to the merchant to figure out the exchange rate of the grams to dollars for his bookkeeping purposes? That puts the burden on the business instead of the card issuer.

If you have a PayPal Visa or Masterard, are you restricted only to sites that accept PayPal, or is VISA or Mastercard the operative word? The entire process would be completely transparent to merchants. Purchases could be made at any company that takes debit cards. Read=Most. The difference: Merchants that accept only gold and silver coin could take title to part of your holding without any FRN intermediary conversion involved. That process would also be transparent to buyers.

If a merchant accepts all forms of legal tender, you would have a choice of paying in either. If a merchant specifically prices something in gold coin, silver coin, and Fed note denominations (three "face value prices" for three different forms of legal tender), you could choose which currency (or combination) to pay in - no differently than a purchase where you pay some of it with cash, some with a gift card, and the balance on a debit card. For those merchants that only accept FRN's, you could choose to pay with the card of your choice. If PM's are taking a hit, or on a dip, pay with your normal bank debit card. If PM's are doing well, pay with that card instead.

Simple. All of it.

 

[Zippyjuan]

When you need money for something YOU are the one, not "SELLING" it, but rather converting, exchanging one form of legal tender to another.

To me, converting gold into dollars is the exact same thing as selling the gold. When you trade dollars for euros for example you are also selling your dollars and buying euros. But that is just semantics- the action is the same.

If a merchant accepts all forms of legal tender, you would have a choice of paying in either. If a merchant specifically prices something in gold coin, silver coin, and Fed note denominations (three "face value prices" for three different forms of legal tender), you could choose which currency (or combination) to pay in - no differently than a purchase where you pay some of it with cash, some with a gift card, and the balance on a debit card. For those merchants that only accept FRN's, you could choose to pay with the card of your choice

Simple for the consumer perhaps but not for a business if they decide to use gold or silver (grams or whatever unit) in addition to dollars for units. They will have to calculate and post multiple price for everything and unless the IRS changes the laws have to convert all their metal priced sales back into dollars to figure taxes and bookkeeping- an additional expense for them. Along with new software for all their registers and store systems and tag generating systems.



I am not arguing for or against such a system- just trying to figure out how it would work in reality.

 

[Steven Douglas]

To me, converting gold into dollars is the exact same thing as selling the gold. When you trade dollars for euros for example you are also selling your dollars and buying euros. But that is just semantics- the action is the same.

Yeah? The same can be said when you go to make change at a store. You are "selling" your one dollar bill in exchange for some metallic currency in various denominations. The "legal" difference in this case, which is the only important difference, is in how it treated by the state. The state of Utah is calling it legal tender, and not subject to taxes based on a "sale". This does not affect how the Treasury and the IRS views it, of course (a capital "gain" that might in reality be a "currency value loss" only), but it opens the question for future legal and political challenges, now that the State of Utah has openly refused to dip from that trough, and get some of that gooey "commodity sale" chocolate on its face.

Simple for the consumer perhaps but not for a business if they decide to use gold or silver (grams or whatever unit) in addition to dollars for units. They will have to calculate and post multiple price for everything and unless the IRS changes the laws have to convert all their metal priced sales back into dollars to figure taxes and bookkeeping- an additional expense for them. Along with new software for all their registers and store systems and tag generating systems.

Ooh, I guess you've made an argument on their behalf, then? If I lose faith in FRN's as a merchant, as I predict many will in the future, I pretty much won't mind doing whatever it takes to protect my investment.

I think you are seriously underestimating the lengths people are willing to go to protect their wealth from erosion and theft.

One of the things that happens during hyperinflation is mass shortages - which in many cases gets exacerbated by price fixing measures by government which attempt to force merchants to suffer losses by edict. These shortages are not because goods are not available, but only because it is GUARANTEED that the seller will suffer losses, as the price will increase (as the value of the currency falls) in a relatively short amount of time. Rather than suffer these losses 'fer da gud o'da people', the merchant/farmer/whatever will simply not sell at all.

If you have a competing currency, on the other hand - one that is stable or RISING in value relative to the fiat currency, there will be NO such shortage, except, perhaps, to those who don't hold the right currency. If the alternate currency is available as a viable choice, merchants can combat the inflation insanity inflicted by meddling corrupt freaks, both public and private, by no longer accepting that currency.