Posts Tagged ‘legal tender’

From the October 7, 2013 Economic Policy Journal article, Is Bitcoin Money: What Economists Have To Say, Tom Woods said:

Tom Woods: Bitcoin is a medium of exchange but not money. This isn’t an insult to or a value judgment about Bitcoin. Austrians sometimes describe money as the most widely accepted medium of exchange in society. Clearly Bitcoin does not satisfy this requirement.

Mises, for his part, describes money as a medium of exchange in common use: “A medium of exchange which is commonly used as such is called money. The notion of money is vague, as its definition refers to the vague term ‘commonly used.’ There are borderline cases in which it cannot decided whether a medium of exchange is or is not ‘commonly’ used and should be called money.”

I don’t think Bitcoin is in common enough use to be called money.

Yet, only two weeks later, Tom Woods announced that Bitcoin would be accepted as payment for his Liberty Classroom courses.

What will you believe more? Tom Woods’ words, or his actions? — in actually accepting Bitcoin for payment of his goods and services two weeks later.

For more on Tom Woods’ ever-shifting position on Bitcoin, see my article, Tom Woods had no time for a Bitcoin conference, yet had time to misrepresent government-issued currencies.

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Stan MonteithHere is a summary I prepared of my interview with Dr. Stan Monteith on Radio Liberty, December 3, 2013.

2m – Canada now more economically free than the United States
3m – most recent to free enterprise in U.S. was for nearly 30 years after the end of the privately owned Second (central) Bank of the United States
3m – no World War prior to privately owned Federal Reserve central bank
3m – James Madison was against the power of Congress to charter a central bank prior to being President, once President, he chartered the Second Bank of the United States
4m – 4 revolutionary changes in 1913 – bogus direct personal income tax, direct election of senators, Federal Reserve and
5m – Rise of Petrodollar since 1947
6m – Canada more economically free because of its relatively increasing adherence to U.S. founding constitutional principles, and a deviation away from Canadian founding principles
6m – government privilege of banks creating credit tied to national currency
7m – Dick Cheney against bailout of big car manufacturers, but no problem with bailing out the big bankers
8m – reform of decentralization, decoupling of bank-issued credit to U.S. dollar
8m – gold standard was setting U.S. dollar relative to an ounce of gold
16m – U.S. has second-worst representation in its House of Representatives relative to any country in the world
16m – I identify Canada as more economically free and decentralized than U.S. in past few years due to better national representation and influence of majority French-speaking province of Quebec pushing for more decentralization to protect its powers
18m – most money in Canada is debt, just like U.S.
18m – Canada’s central bank is publicly owned, but still tied into privately owned Bank for International Settlements
18m – BIS regulation that you can’t borrow directly from your own central bank
19m – interest income from Federal Reserve goes back to the Treasury — over $70 billion recently, but most interest stays with the privately owned member banks
20m – usury originally defined as any amount of interest
20m – not possible for everyone to exponentially increase their productivity relative to compounding debt
27m – Tom J. “UsuryFree” Kennedy calls in, asking about usury-free community currencies
28m – Ithaca Hours, Mountain Hours
28m – Wayne Walton founded usury-free Mountain Hours
29m – local businesses will accept a portion of payment in MHs, or 100%
29m – an associate of the founder, Joby Weeks, lost money with his involvement with Ron Paul Liberty Dollars, and found that paper-based MHs circulated better than the gold coins, because gold was more valuable to hold on to, as a store of wealth, rather than function as a medium of exchange, which is the primary function of money
31m – value of local currencies determined in the marketplace, and they function to promote monetary reform
33m – community currencies are backed by the honesty and integrity of each entrepreneur, and the quality of goods and services they offer
34m – U.S. Constitution does not allow the federal government to “back up” the money supply with precious metals, nor does it allow it to declare any currency legal tender for private debts or payment of goods and services
42m – agree with caller who said the primary reason for giving Congress the power to coin money was to facilitate commerce that was running into problems with states minting and printing their own coins and notes, respectively
42m – Gresham’s Law, whereby bad currencies drive out good currencies, in the presence of legal tender laws – e.g. of Federal Reserve Notes and credit driving out gold, because gold is more valuable to hold on to
43m – difficulty of determining value of precious metal coins, because of how they were stamped by different states
43m – Congress’ power to coin money isn’t restricted to only gold and silver — copper coins were also coined — but no power to make them legal tender for private debts
44m – if States decide to make legal tender laws, they are then required to make gold and silver coin a tender in payment of debts (and not goods and services)
44m – caller supported local currencies for sequestering value locally, but need for currencies to facilitate international trade
47m – biggest problem now with monetary system is usury
47m – can’t have gold backed currency with usury, or eventually the private bankers will own all the money supply, or assets secured by their debts
47m – agree with Milton Friedman who told Bill Still that if you don’t end fractional reserve banking, you’ve done nothing to reform the system
48m – fractional reserve banking a ticking time bomb, and agree with those who say it’s fraud, because it’s your deposit functioning as a lottery ticket
48m – Islamic Banking charges fees instead of usury

For my previous interviews on Radio Liberty, see here.

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The Facebook page for my talk at the 9th annual Usuryfree week event in Toronto on November 16, 2013 from 7 to 9:30 PM EST can be found here.

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English: A 250kg gold bar in the Toi gold mine...

I covered the following articles on my inaugural episode of Exposing Faux Capitalism on Oracle Broadcasting on Sunday, June 24, from 1 to 3 PM Eastern.

1) The U.S. Constitution doesn’t say money should be gold or silver coin

2) The Constitution doesn’t insist on a gold or silver-backed currency

3) A constitutional monetary system

4) Congress’ exclusive power to coin money doesn’t prevent private individuals from coining currency

5) The distinction between legal tender for payment of debts and payment for goods and services

6) A Money Power trap: Saying that private money creation is the problem

7) Don’t just blame Lincoln for a national legal tender law — Washington signed one, too

8) One of the 10 planks of the Communist Manifesto isn’t just a central bank

Sorry for the intermittent audio issues, which I plan to address for the second episode.

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Edwin VieiraDr. Edwin Vieira, who is touted in the libertarian community as a constitutional authority on money and is a holder of four degrees — including a PhD and JD from Harvard — should know better about what the U.S. Constitution says about legal tender.

In his 2011 presentation, “What is Constitutional Money?,” he says, in reference to Article 1, Section 10, clause 1 of the Constitution regarding the States (at 13:57):

There’s a reserve power and actually a duty to make gold and silver coin a tender in payment of debts.

That clause says that no State shall “make any Thing but gold and silver Coin a Tender in Payment of Debts.”

From the context of the entire clause, it is clear that it is saying what is prohibited to the States. Therefore, to say that they shall not make anything but gold and silver coin a tender in payment of debts is to say that if they choose to exercise their power of enacting legal tender laws, then they are required to make only gold and silver coins a tender in payment of debts.

The same clause allows restricts the States from imposing duties on imports and exports, unless they have the permission of Congress. Therefore, if they do have such permission, then they can do what is permitted, and in the case of legal tender laws, they are permitted to enact them, and then and only then are they required to make gold and silver coin a tender in payment of debts.

I give a further analysis of this clause in my article, The U.S. Constitution doesn’t say money should be gold or silver coin.

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$5 George Washington 200th anniversary of deat...

From the U.S. Treasury Department’s legal tender FAQ (emphasis mine):

I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn’t this illegal?

The pertinent portion of law that applies to your question is 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.”

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. 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.

One consequence of this distinction is that the U.S. Constitution’s clause stating that no State shall “make any Thing but gold and silver Coin a Tender in Payment of Debts” shows that it is only referring to the constitutional authority of the States to make gold and silver coins legal tender for payment of public and private debts, and doesn’t force private businesses and individuals to accept them as payment for goods and services.

I demonstrated earlier how that clause doesn’t require the States to implement legal tender laws, but if they do, then they are mandated under the Constitution to make only gold and silver coins legal tender in payment of public and private debts, but not for payment of goods and services.

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Gary northIn his February 1, 2012 article, Ben Bernanke: The Official Counterfeiter, Gary North says of U.S. Notes:

They were taken out of circulation in 1971, the year that Nixon took the country off the gold exchange standard. Today, we still see these words on Federal Reserve Notes: “This note is legal tender for all debts, public and private.”

The Federal Reserve’s Notes looked very much like the Treasury’s greenbacks until the U.S. Notes were taken out of circulation.

And they still do look like the Treasury’s greenbacks, since United States Notes are still valid legal tender, despite being taken out of circulation by the government (but not all private individuals) in 1971.

Here, he is giving the false impression that U.S. Notes are as irrelevant as currency in the United States since 1971 as a Roman coin with Caesar on it.

The U.S. Treasury Department states, as of April 29, 2012:

Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender.

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