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Author Topic:   United States Debt Default
New Cat's Eye
Inactive Member


Message 113 of 211 (625898)
07-26-2011 10:45 AM
Reply to: Message 86 by AZPaul3
07-22-2011 12:19 AM


Re: By the Nose
From my Message 61
From Crashfrog:

3) As stated the Treasury Secretary has unilateral authority to both mint and issue platinum coinage in any denomination and amount, as granted by Congress in US Code 31.5112(k).

The government can sell off any of the assets it has to raise cash, including it's stock of platinum, gold and silver bullion. It can sell the Washington Monument and the Vietnam Memorial as well.

Note in the section you described the provision that such platinum coins are "legal tender" is missing but is specifically stated in the other coinage sections.

Are you really this dense?

It makes sense to me. Just like they couldn't pay their bill with, say, a chunk of the Washington Monument, they can't just make coins and have them be legal tender.

So what makes something "legal tender" and how does that happen?

One of CF's links says this:

quote:
Congress provided the authority, in legislation passed in 1996, for the US Mint to create platinum bullion or proof platinum coins with arbitrary fiat face value having no relationship to the value of the platinum used in these coins. These coins are legal tender.

Really!? That doesn't seem right but I don't know. Any idea?


This message is a reply to:
 Message 86 by AZPaul3, posted 07-22-2011 12:19 AM AZPaul3 has seen this message but not replied

Replies to this message:
 Message 119 by crashfrog, posted 07-26-2011 1:56 PM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 131 of 211 (625979)
07-26-2011 4:15 PM
Reply to: Message 119 by crashfrog
07-26-2011 1:56 PM


Re: By the Nose
I don't really know much about this stuff, but I have been reading wikipedia!

How could the Treasury Department, the only body legally allowed to print money, print money that was counterfeit?

The way I understand it, the Federal Reserve is in charge of the money supply and the Treasury Department is not supposed to go around them in creating money.

The Treasury prints or strikes it such that it says "legal tender" on it.

It doesn't seem right that they could just put "legal tender" on something and then it is. I figure that there has to more of a process than just that.

Contra AZPaul, the Federal Reserve doesn't have a monopoly on the creation of dollars and never has. It has a monopoly on reserve notes, which is the predominant form of money in the United States, but it's not the only possible form.

So if they stamp the word "legal tender" on a chunk of the Washington Monument then it would be legal tender?

What if the bank refuses it?

If, like most people, you have some $2 bills socked away somewhere, then you're the holder of a Treasury note

I have some at home, I'll take a look at them when I get there later.

Unless they're coins. Coins issued by the Treasury aren't reserve notes, they're fiat money.

Isn't that kinda just a left-over consequence of the way that coinage and then later paper money emerged within the US? It wasn't planned specifically to be like that, right?

A $1 trillion coin struck by the Treasury has that value because the Treasury says so.

IMHO, it has that value when you can get $1 trillion worth of stuff for it, regardless of anyone's "say so".

That's what "fiat currency" means; that's what Buz is always complaining about, that our dollars are dollars not because they're backed by a dollar's-worth of something, but because the Treasury department says they're dollars. And everybody agrees to play along.

What if the bank refuses to accept the $1 trillon dollar coin?


This message is a reply to:
 Message 119 by crashfrog, posted 07-26-2011 1:56 PM crashfrog has replied

Replies to this message:
 Message 134 by crashfrog, posted 07-26-2011 4:24 PM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 133 of 211 (625982)
07-26-2011 4:23 PM
Reply to: Message 132 by crashfrog
07-26-2011 4:18 PM


Re: By the Nose
The Treasury released its own notes for almost the entire nation's history, and they remain legal tender.

But wasn't all that before the establishment of the Federal Reserve? Isn't that irrelevant today?

The proof of it is the $2 bill.

But isn't that just "grandfathered" in? They Treasury can't make $2 bills today and they're being "phased out", no?


Sorry for the cross-post, please bundle them up if you can.

Edited by Catholic Scientist, : No reason given.


This message is a reply to:
 Message 132 by crashfrog, posted 07-26-2011 4:18 PM crashfrog has replied

Replies to this message:
 Message 135 by crashfrog, posted 07-26-2011 4:28 PM New Cat's Eye has not replied

  
New Cat's Eye
Inactive Member


Message 136 of 211 (625987)
07-26-2011 4:47 PM
Reply to: Message 134 by crashfrog
07-26-2011 4:24 PM


Re: By the Nose
They're not supposed to but I've shown that the law says that they can, via this specific mechanism of platinum coins.

Maybe... I'm not sure it'd be legal tender.

Who else would have the authority to create money in the United States, CS, if not the United States Treasury?

I just don't think they can slap "legal tender" on something and then it is.

Sure! The United States Treasury determines what is and isn't money in the United States, according to the laws created by Congress. If the Treasury was authorized by Congress to mint and issue little pieces of concrete as money, then those little pieces of concrete would be money, the same way little pieces of paper and nickel are, now.

And you're saying that congress has already authorized them to do it with platinum coins?

By law, they cannot. When the Treasury issues money, it is by definition legal tender for all debts public and private. If you have a debt with someone, they're legally obligated to accept United States notes as payment of that debt.

Not totally, gas station are legally allowed to refuse bills larger than, say, a twenty.

From wiki:

quote:
the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues." There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

This message is a reply to:
 Message 134 by crashfrog, posted 07-26-2011 4:24 PM crashfrog has replied

Replies to this message:
 Message 137 by crashfrog, posted 07-26-2011 4:54 PM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 140 of 211 (626046)
07-26-2011 8:28 PM
Reply to: Message 137 by crashfrog
07-26-2011 4:54 PM


Re: By the Nose
I checked my stash... All of my $2 bills are from 1976 and say "Ferderal Reserve Note". But, I have a $1 bill from 1935 that says "Silver Certificate" and a $5 bill from 1963 that says "United States Note". So there you go.

What else could it be, CS? It can't be counterfeit. How could it be? The Treasury printed it!

Something that's neither legal tendor nor conterfeit. What do you call money that ain't money no more?

If United States Notes are deemed to no longer be legal tendor, then they wouldn't suddenly become counterfeit.

Isn't money today supposed to come from the Federal Reserve?

I just don't think they can slap "legal tender" on something and then it is.

And you're just wrong about that.

Oh, well, I don't believe you.

And you're saying that congress has already authorized them to do it with platinum coins?

Well, I quoted 31.5112(k), didn't I?

Assuming that "issue" means "make legal tendor" along with simply writing "legal tendor" on it makes something legal tender.

I'm not sure about those two.

Hrm, well, I guess I was wrong about that. Regardless, why would a bank refuse $1 trillion dollars?

I dunno, its a 'what if'... Prolly some silly banking reasons. Or simply because its just a coin. Or because its too big of a denomination. Or because they don't think the next guy will let them schlub it off on him.

It'd still fuck up your plan though, wouldn't it?

Also doesn't your cite prove AZPaul completely wrong that Treasury coins aren't legal tender?

It proves that Treasury coins have been legal tendor. I thought money today is supposed to come from the Federal Reserve.

By definition a coin struck and issued by the US Treasury would be a "United States coin." Didn't you find the exact legal statute that proves that a $1 trillion coin issued by the US Treasury would be legal tender?

Unless it has to go through the Federal Reserve now, or something, to become legal tendor.

But yeah, its looking like United States coins are legal tender.

And now from what I'm reading, it doesn't really look like being legal tendor is all that important. What with "trade dollars" n'all, I'm sticking with it being worth a dollar when you can get a dollars worth of shit for it.


This message is a reply to:
 Message 137 by crashfrog, posted 07-26-2011 4:54 PM crashfrog has replied

Replies to this message:
 Message 141 by crashfrog, posted 07-26-2011 8:42 PM New Cat's Eye has replied
 Message 147 by frako, posted 07-27-2011 8:36 AM New Cat's Eye has seen this message but not replied

  
New Cat's Eye
Inactive Member


Message 142 of 211 (626056)
07-26-2011 9:08 PM
Reply to: Message 141 by crashfrog
07-26-2011 8:42 PM


Notes? We don't need no stinking notes
Obviously not, since the law is still in effect, United States Notes are still legal tender, the Treasury is still empowered to produce them (since they produced them for years after the Federal Reserve Act), and still does produce them.

I mean, I don't know what more you want, I guess. Can you elaborate on what additional information you would find convincing? I'll try to find it.

I can look it up myself sometime, but I'd be interested in seeing more about the production process and how its decided what new coins today are to become legal tendor.

But there's another way for the Treasury to generate new dollars and it's to simply generate new dollars.

How often is that happening today?

Well, it's a function of the utility of money. I mean, anything can be money.

Saying that a coin is "legal tender" is a way of making everybody think "oh, this is money" the first time they see a new design on the dollar or something. It's a way of transferring the psychological heft of old dollars - from a time when a dollar really was a certain amount of gold or silver - onto new ones.

Assuming they'll go along with it. What if the bank doesn't want it and/or won't give them a trillion dollars for it?

And it's worked on you, right? You still take your paycheck in fiat currency backed by absolutely nothing, right? And people still take it from you in exchange for real goods and services, right?

I'm on direct deposit and I swipe my debit card at the grocery store.

I'm not to familiar with these "notes" y'all are referring to... I had to dig mine out of the closet upstairs!


This message is a reply to:
 Message 141 by crashfrog, posted 07-26-2011 8:42 PM crashfrog has replied

Replies to this message:
 Message 143 by crashfrog, posted 07-26-2011 9:51 PM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 148 of 211 (626120)
07-27-2011 10:31 AM
Reply to: Message 143 by crashfrog
07-26-2011 9:51 PM


Re: Notes? We don't need no stinking notes
Then they go to a different bank.

A different Federal Reserve?

Why would banks turn away money?

Because they won't be able to get anything for it.

When coins are sold to the Federal Reserve, they are a "direct obligation of the Treasury". Its the Treasury's debt. Paper money is bought buy the Federal Reserve for cost, and then it becomes the Federal Reserve's debt as they pass it out to banks.

But if the Treasury doesn't have the money, then them making a coin that says that they do have the money, doesn't magically make the money appear. If the Federal Reserve wanted that money back for the coin, then the Treasury wouldn't have it if they paid their bills with it. So why would the Federal Reserve give them the money for it in the first place?


This message is a reply to:
 Message 143 by crashfrog, posted 07-26-2011 9:51 PM crashfrog has replied

Replies to this message:
 Message 149 by crashfrog, posted 07-27-2011 4:09 PM New Cat's Eye has replied
 Message 165 by AZPaul3, posted 07-28-2011 7:45 AM New Cat's Eye has not replied

  
New Cat's Eye
Inactive Member


Message 168 of 211 (626323)
07-28-2011 1:05 PM
Reply to: Message 149 by crashfrog
07-27-2011 4:09 PM


why one coin?
They get $1 trillion per coin. Why do you think they're not getting anything for it?

Because they won't have one trillion dollars that they can do all sorts of things with, they'd just have one coin.

quote:
2) When the Fed "buys" coins, they have to buy them at face value. This is because they're already money and therefore the Fed has no power except to make change. They have to get their quarters the exact same way you do - they have to exchange other denominations of money for them.

So they might prefer to not have to deal with the coin and just keep their actual one trillion dollars, i.e. they don't want to make change and have this coin that they're gonna have to schlub off on the next guy (who also might not want it)

quote:
Saying that a coin is "legal tender" is a way of making everybody think "oh, this is money" the first time they see a new design on the dollar or something. It's a way of transferring the psychological heft of old dollars - from a time when a dollar really was a certain amount of gold or silver - onto new ones. And it's worked on you, right?

What if it doesn't work on them, and they don't want to exchange one trillion dollars for one coin?

Anyways,

Why don't they just print up a bunch of coins of varying denominations and then just pay their bills directly with them? Why the one coin for a trillion dollars?


This message is a reply to:
 Message 149 by crashfrog, posted 07-27-2011 4:09 PM crashfrog has replied

Replies to this message:
 Message 169 by crashfrog, posted 07-28-2011 1:18 PM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 170 of 211 (626329)
07-28-2011 1:23 PM
Reply to: Message 169 by crashfrog
07-28-2011 1:18 PM


Re: why one coin?
So then why is the debt ceiling issue even happening, if all they have to do is stike up some coins and go pay their bills? Hell, why would there even be a debt? They wouldn't have to borrow the money from anybody and could just keep making more and more money as they spent it.

This message is a reply to:
 Message 169 by crashfrog, posted 07-28-2011 1:18 PM crashfrog has replied

Replies to this message:
 Message 171 by hooah212002, posted 07-28-2011 2:03 PM New Cat's Eye has not replied
 Message 172 by crashfrog, posted 07-28-2011 2:29 PM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 180 of 211 (626420)
07-29-2011 10:38 AM
Reply to: Message 172 by crashfrog
07-28-2011 2:29 PM


Re: why one coin?
Well, the scarcity of dollars is a real resource, and it's worth preserving instead of wasting needlessly. But when the need is great - to avoid a disastrous default, for instance - then it's worth exchanging a little of that scarcity for a real solution to the problem.

Why do you think that it hasn't been done?

Is trillions of dollars really a little of that scarcity?

I still don't think a bank would take the coin because its defeating the purpose of the Federal Reserve.


This message is a reply to:
 Message 172 by crashfrog, posted 07-28-2011 2:29 PM crashfrog has replied

Replies to this message:
 Message 182 by crashfrog, posted 07-29-2011 11:58 AM New Cat's Eye has replied

  
New Cat's Eye
Inactive Member


Message 183 of 211 (626458)
07-29-2011 12:42 PM
Reply to: Message 182 by crashfrog
07-29-2011 11:58 AM


Re: why one coin?
Because the Federal Reserve Board is supposed to handle this.

You said the Fed Res was irrelevant and they could just take it any bank. Why hasn't that happened? Has it ever happend at all? Why not?

I still don't think a bank would take the coin because its defeating the purpose of the Federal Reserve.

Who cares?

The bank cares... Who would want to be the guy that help them go around the feds? What kind of shit-list would that get you on?

More specifically why would a bank care if the Treasury does an end-run around the Fed just this once to save the country?

It could be illegal. There could be other backlashes from the Fed.

You're still not explaining the circumstances by which a complete bank boycott of the Federal government is engineered.

It wouldn't have to be acomplete boycott....


This message is a reply to:
 Message 182 by crashfrog, posted 07-29-2011 11:58 AM crashfrog has replied

Replies to this message:
 Message 189 by crashfrog, posted 07-31-2011 11:35 PM New Cat's Eye has seen this message but not replied

  
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