Stossel’s Currency Conundrum

[notme]

It is unfortunate that Stossel repeated this mis-truth that private currencies are illegal.  Though Ron Paul tends to spread this misconception as well, so he is not alone.

This is based upon an incorrect understanding of "powers" granted the Federal government by the Constitution.

In short, a "power" is basically permission to violate rights.  In the case of the power to "coin money", the power conveyed and the right violated are subtle.  It is not, as widely believed, the power to seize private property via monetary monopoly and inflationary confiscation.  That would have been in direct violation of the "just compensation" required by the takings clause in the 5th Amendment, and a general nullification of the basic right to property.

The power to coin money is simply the power to violate the usual presumption that possession equals ownership, in the limited case of "coins" minted by the Federal government.  That means that a coin, once minted by the Federal government, remains the property of the government even when placed in general circulation.  That is the reason you cannot mutilate or destroy them, and they can be seized at will (as was the case with FDR confiscating gold coins).  They are not yours.  

Actually, you can mutilate or destroy them.  Have you never seen the penny presses at tourist traps?  You put in 51 cents, and the machine presses your penny into a little keepsake with a new image on it.  They are all over Walt Disney World, for example.  I seriously doubt that Disney Corp is going to be caught off guard doing something illegal.

I've never seen a motorized one... they're always hand crank.  Maybe that way the customer is the one performing the mutilation and the corporation is insulated.

[MoonShadow]

It is unfortunate that Stossel repeated this mis-truth that private currencies are illegal.  Though Ron Paul tends to spread this misconception as well, so he is not alone.

This is based upon an incorrect understanding of "powers" granted the Federal government by the Constitution.

In short, a "power" is basically permission to violate rights.  In the case of the power to "coin money", the power conveyed and the right violated are subtle.  It is not, as widely believed, the power to seize private property via monetary monopoly and inflationary confiscation.  That would have been in direct violation of the "just compensation" required by the takings clause in the 5th Amendment, and a general nullification of the basic right to property.

The power to coin money is simply the power to violate the usual presumption that possession equals ownership, in the limited case of "coins" minted by the Federal government.  That means that a coin, once minted by the Federal government, remains the property of the government even when placed in general circulation.  That is the reason you cannot mutilate or destroy them, and they can be seized at will (as was the case with FDR confiscating gold coins).  They are not yours.  

Actually, you can mutilate or destroy them.  Have you never seen the penny presses at tourist traps?  You put in 51 cents, and the machine presses your penny into a little keepsake with a new image on it.  They are all over Walt Disney World, for example.  I seriously doubt that Disney Corp is going to be caught off guard doing something illegal.

I've never seen a motorized one... they're always hand crank.  Maybe that way the customer is the one performing the mutilation and the corporation is insulated.

I've seen both hand cranked and electric, so no.  If I recall correctly, all of those machine at WDW were electric.

[DeathAndTaxes]

http://codes.lp.findlaw.com/uscode/18/I/17/333

[ribuck]

http://codes.lp.findlaw.com/uscode/18/I/17/333

That clearly refers to paper notes.

I've seen some of these penny presses that have a sticker explaining (in small print) how and why the machine is legal.

I've also seen penny presses outside of the US that use US pennies, because it is prohibited to reshape the local currency.

[blablahblah]

It's written in a blog, so it must be true.

And disputed by you, so it can't be.

[DeathAndTaxes]

http://codes.lp.findlaw.com/uscode/18/I/17/333

That clearly refers to paper notes.

I've seen some of these penny presses that have a sticker explaining (in small print) how and why the machine is legal.

I've also seen penny presses outside of the US that use US pennies, because it is prohibited to reshape the local currency.

Well no that statute refers to both coins and notes however the point was that FRADULENT INTENT is required.

More info including letter from Treasury with explanation:
http://www.parkpennies.com/pressed-penny/penny-pressing-legal.htm

[blablahblah]

Interesting segment. It adds weight to my opinion that Bitcoin is being "managed", just like gold is.

And to back up my crazy tin-foil-hat assertions, here's a ZH article on gold: http://www.zerohedge.com/news/chris-martenson-explains-how-gold-manipulated-and-why-thats-okay

with the very interesting comment:

Gold is an important signaling mechanism, and our entire money system is faith-based. Of course anything and everything that could cast doubt on that system would be controlled if it could be controlled.

(my emphasis added)

Could Bitcoin be on that list?

But can it be controlled?

Like I mentioned once or twice while wandering about on the forum, there are some -- albeit indirect -- methods.

• Control of bitcoin adoption by managing public perception via the mainstream media. Bitcoin getting too popular, too fast? Just mention Silk Road in the news and how some unlucky investor got all his coins stolen. Otherwise, keep silent.
• Is the Bitcoin community becoming too innovative and too many great ideas popping up on forums? Easy! Just pay a few trolls to derail discussions and spread FUD.
• Is the above not working and Bitcoin is still performing too well? Hire a botnet. Sell coins irrespective of cost over a protracted period to "shape" the market. Not enough volatility? Buy and sell in large bursts.

Like they say, knowledge is power. But I don't want to get too carried away in my crazy tin-foil-hattishness, so I'm open to rebuttal if any of the above is somehow impossible.

[MoonShadow]

Interesting segment. It adds weight to my opinion that Bitcoin is being "managed", just like gold is.

And to back up my crazy tin-foil-hat assertions, here's a ZH article on gold: http://www.zerohedge.com/news/chris-martenson-explains-how-gold-manipulated-and-why-thats-okay

with the very interesting comment:

Gold is an important signaling mechanism, and our entire money system is faith-based. Of course anything and everything that could cast doubt on that system would be controlled if it could be controlled.

(my emphasis added)

Could Bitcoin be on that list?

But can it be controlled?

Like I mentioned once or twice while wandering about on the forum, there are some -- albeit indirect -- methods.

• Control of bitcoin adoption by managing public perception via the mainstream media. Bitcoin getting too popular, too fast? Just mention Silk Road in the news and how some unlucky investor got all his coins stolen. Otherwise, keep silent.
• Is the Bitcoin community becoming too innovative and too many great ideas popping up on forums? Easy! Just pay a few trolls to derail discussions and spread FUD.
• Is the above not working and Bitcoin is still performing too well? Hire a botnet. Sell coins irrespective of cost over a protracted period to "shape" the market. Not enough volatility? Buy and sell in large bursts.

Like they say, knowledge is power. But I don't want to get too carried away in my crazy tin-foil-hattishness, so I'm open to rebuttal if any of the above is somehow impossible.

It's a near certainty that all three methods are currently employed, but there are limits to how much influence these methods can impose.

[acoindr]

It is unfortunate that Stossel repeated this mis-truth that private currencies are illegal.  Though Ron Paul tends to spread this misconception as well, so he is not alone.

This is based upon an incorrect understanding of "powers" granted the Federal government by the Constitution.

In short, a "power" is basically permission to violate rights.  In the case of the power to "coin money", the power conveyed and the right violated are subtle.  It is not, as widely believed, the power to seize private property via monetary monopoly and inflationary confiscation.  That would have been in direct violation of the "just compensation" required by the takings clause in the 5th Amendment, and a general nullification of the basic right to property.

The power to coin money is simply the power to violate the usual presumption that possession equals ownership, in the limited case of "coins" minted by the Federal government.  That means that a coin, once minted by the Federal government, remains the property of the government even when placed in general circulation.  That is the reason you cannot mutilate or destroy them, and they can be seized at will (as was the case with FDR confiscating gold coins).  They are not yours.  

Actually, you can mutilate or destroy them.  Have you never seen the penny presses at tourist traps?  You put in 51 cents, and the machine presses your penny into a little keepsake with a new image on it.  They are all over Walt Disney World, for example.  I seriously doubt that Disney Corp is going to be caught off guard doing something illegal.

Nope, nope, nope.

So much wrong here.

@benjamindees - I agree there is a lot of misunderstanding of what the Constitution authorizes regarding money. That's part of why we have such a mess of the monetary system now.  

Taking a strict constructionist view of the Constitution you are correct the government only has the powers listed, and none more, so they can't seize private property. But we must also look at the context in which the power to "coin money" is given, and what that means.

First, what does coining money mean? For that matter, what is money?

Article 1 Section 10 is clear that States cannot coin money, so there is obviously something of importance here. But States are also not to make anything but gold or silver legal tender.

So taking Article 1 Section 8 with Article 1 Section 10 which gives Congress the power to coin money we arrive at a monetary system we would have if Americans currently used only gold/silver U.S. eagles from the mint as legal tender.

I believe this is what the Founders intended. And if we had this monetary system we of course wouldn't have inflation or the bloated and unsustainable debt and government we currently have.

So, answering the question what exactly is "coining money", I believe it is assigning a recognizable and persistent value to some commodity -- in our Constitutional case, gold or silver. So Congress is supposed to coin gold/silver coins and specify their value.

As to mutilation/confiscation, seizing property etc.

FDR didn't seize only gold coins. Executive order 6102 specified all gold coin, gold bullion, and gold certificates had to be delivered to the Federal Reserve. Indeed the current gold/silver U.S. Mint eagle coins we have now are a recent thing, brought about thanks to congressional efforts from Ron Paul.

There are actually two separate US Code sections on mutilation: 331 and 333, where 331 refers to fraudulent intent and specifically mentions "coins". Taking gold/silver coins into account that wording make sense.

http://www.law.cornell.edu/uscode/text/18/331

Section 333 refers to bank notes (bills, drafts, or other evidence of debt issued by any national banking associatioin, or Federal Reserve Bank, etc.) and the qualification is intent to render such evidence of debt unfit to be reissued.

http://www.law.cornell.edu/uscode/text/18/333

Penny machines at theme parks should be fine IMO because the "money" they are mutilating is unconstitional/illegal in the first place.  

If the pennies were made from gold or silver then as long as the machine didn't intend to defraud the value it would be legal.

[benjamindees]

Article 1 Section 10 is clear that States cannot coin money, so there is obviously something of importance here. But States are also not to make anything but gold or silver legal tender.

So taking Article 1 Section 8 with Article 1 Section 10 which gives Congress the power to coin money we arrive at a monetary system we would have if Americans currently used only gold/silver U.S. eagles from the mint as legal tender.

I believe this is what the Founders intended. And if we had this monetary system we of course wouldn't have inflation or the bloated and unsustainable debt and government we currently have.

So, answering the question what exactly is "coining money", I believe it is assigning a recognizable and persistent value to some commodity -- in our Constitutional case, gold or silver. So Congress is supposed to coin gold/silver coins and specify their value.

Correct.  The way that stable value is assigned to a commodity, whether gold or silver or anything else, is by keeping it in circulation.  The way to keep a commodity in circulation is by gaining ownership of it and taking reasonable measures to prevent it from being taken out of circulation.  And the method provided by the Constitution to keep a commodity in circulation as a stable measure of value, is by "coining" it.  This is the same method which has been used since Roman times.

Now, to nitpick, the commodity in question doesn't have to be gold or silver.  But, as you point out, only gold or silver can be forced upon the States or anyone else as legal tender.  So there is an obvious advantage to coining gold and silver.

You're right, though, that FDR was a bad example.  He violated the law in dozens of unconstitutional ways.  But that's beside the point, and doesn't change the fact that, according to the US Treasury, they (not you) own and control all coins in circulation and can make rules (even without Congress) preventing you from melting them down, for instance.

[acoindr]

The way that stable value is assigned to a commodity, whether gold or silver or anything else, is by keeping it in circulation.

No, I disagree here. For example, paper is a physical commodity. Many governments, including the U.S., keep fiat paper money in circulation but that obviously doesn't guarantee a stable value, nor prohibit hyperinflation which results in zero value.

I actually said "persistent" value not "stable" value. And the way to assign that is simply by denomination. For example, the U.S. dollar is originally based on a unit of weight equaling 371 4/16th grains of pure silver, or the precise amount found in Spanish milled dollar coins.

It's only people that can agree as to whether or not anything used as money is stable  

However, I do agree that by declaring what is legal tender by decree or fiat, and thus imposing it in circulation does give an advantage and usually does result in some baseline value. Of course, as mentioned, that baseline value is never absolute, no matter how many years people become accustomed to it circulating (*cough* US dollar *cough*).

Now, to nitpick, the commodity in question doesn't have to be gold or silver.  But, as you point out, only gold or silver can be forced upon the States or anyone else as legal tender.  So there is an obvious advantage to coining gold and silver.

I agree here. And this is an important point. As I mentioned above whatever is declared legal tender has an advantage for being accepted as money. But as you say, what Congress coins doesn't have to be gold or sliver -- it just won't be legal tender. By this same token we return to your earlier point about the legality of competing currencies. I agree they are legal, whether created by Congress or individuals, as long as they are not gold or silver, and thus legal tender. So bitcoins are already legal according to the Constitution IMO.
 

You're right, though, that FDR was a bad example.  He violated the law in dozens of unconstitutional ways.  But that's beside the point, and doesn't change the fact that, according to the US Treasury, they (not you) own and control all coins in circulation and can make rules (even without Congress) preventing you from melting them down, for instance.

Hmm, I can't say I agree here regarding who owns legal Constitutional gold/silver coins created by the US Mint. I'd have to defer that to an actual Constitutional law expert like Tom Woods, but my understanding is the US Constitution trumps the US Treasury, and the Constitution was written to restrain government. I don't believe the government can claim ownership of any gold/silver US eagle coins I possess, nor prevent me from melting them down, so long as I am not attempting to defraud their value.

EDIT: Oh, and no, it's only Congress that can create laws, and any regulations/rules made by departments are to support but never contradict those laws. The U.S. Constitution is the highest law in the United States.

[rjk]

EDIT: Oh, and no, it's only Congress that can create rules/laws.

That's what the justices would like you to think.

[acoindr]

EDIT: Oh, and no, it's only Congress that can create rules/laws.

That's what the justices would like you to think.

The Supreme Court has the duty and power to interpret the law, not write it. That's why it's important to be clear in writing laws.

[rjk]

EDIT: Oh, and no, it's only Congress that can create rules/laws.

That's what the justices would like you to think.

The Supreme Court has the duty and power to interpret the law, not write it. That's why it's important to be clear in writing laws.

No shit, but have you been keeping up to date with all the goings-on in the courts? Justices way overstepping their bounds and basically inventing laws on the spot. 

[acoindr]

EDIT: Oh, and no, it's only Congress that can create rules/laws.

That's what the justices would like you to think.

The Supreme Court has the duty and power to interpret the law, not write it. That's why it's important to be clear in writing laws.

No shit, but have you been keeping up to date with all the goings-on in the courts? Justices way overstepping their bounds and basically inventing laws on the spot.  

Congress has been overstepping its bounds too. So has the president. I'm only pointing out what the system is, and how it's supposed to work. The three branches of government answer to the people. It's the people that are not holding them in check.

[benjamindees]

as long as they are not gold or silver, and thus legal tender.

Gold and silver are not automatically legal tender.  That is up to each State.  The Constitution just limits the options for possible legal tender to only gold and/or silver:

No state shall... make anything but gold and silver coin a tender in payment of debts;

The way that stable value is assigned to a commodity, whether gold or silver or anything else, is by keeping it in circulation.

No, I disagree here. For example, paper is a physical commodity. Many governments, including the U.S., keep fiat paper money in circulation but that obviously doesn't guarantee a stable value, nor prohibit hyperinflation which results in zero value.

Obviously maintaining a stable value also requires a few other details, such as choosing a non-self-replicating commodity as medium of exchange.  But the value of Federal Reserve Notes has nothing to do with the commodity value of paper, and was never intended to.  This is a non sequitur.  If a paper dollar had been set at a more realistic (commodity) value, such as 1/5000 of a block of firewood instead of 1/35 of an ounce of gold, its value would have been extremely stable over the last 100 years.  But, again, this was not its purpose.  It is not commodity currency.  So it is irrelevant.

I actually said "persistent" value not "stable" value. And the way to assign that is simply by denomination. For example, the U.S. dollar is originally based on a unit of weight equaling 371 4/16th grains of pure silver, or the precise amount found in Spanish milled dollar coins.

And finally we get to the crux of the matter.  I anticipated that you would disagree with my post because of this.  You have even spelled out the crucial point, without even recognizing it -- namely that the "value" of a medium of exchange only has meaning in relation to something else.  Your example is fine, though I must point out that it failed.  Beyond this failed attempt to maintain the value of the dollar in terms of silver, it should be obvious that it is even more difficult to maintain the "value" of an arbitrary medium of exchange in relation to all commodities simultaneously, though that is what the Federal Reserve is attempting to do, poorly.

But you miss the point that denomination is precisely the flaw of fiat currency.  The inherent value of a 10 dollar bill is no different from that of a 1 dollar bill.  And neither has any relation to the value of an ounce of silver.  The Federal Reserve has no authority to dictate the value of their little scraps of paper to anyone.  They have only diluted the value of their notes by endless printing, destroying our political system with bought-off politicians, and purchase of guns and steel in order to attempt to gain this authority.  Persistent value, though probably impossible in the long run, at the very least requires the rejection of the concept of denomination, instead relying on the inherent value of the commodity itself, without manipulation.

[acoindr]

as long as they are not gold or silver, and thus legal tender.

Gold and silver are not automatically legal tender.  That is up to each State.  The Constitution just limits the options for possible legal tender to only gold and/or silver:

Yes, I know. What I was referring to there was competing currencies, and should have more specifically said: as long as they are not gold or silver, and thus compete as legal tender. But since you are pressing me on this point I would have also defer the question of whether or not competing currencies could also be gold/silver to a Constitutional law expert.

Obviously maintaining a stable value also requires a few other details, such as choosing a non-self-replicating commodity as medium of exchange.  But the value of Federal Reserve Notes has nothing to do with the commodity value of paper, and was never intended to.  

I didn't say the value of Federal Reserve Notes had anything to do with the commodity value of paper, it was you that suggested it. You said: "The way that stable value is assigned to a commodity, whether gold or silver or anything else, is by keeping it in circulation."

I simply pointed out that paper is a commodity, so if your statement is correct its value could be assigned and made stable by keeping it in circulation. I then provided example of why that is false.

If a paper dollar had been set at a more realistic (commodity) value, such as 1/5000 of a block of firewood instead of 1/35 of an ounce of gold, its value would have been extremely stable over the last 100 years.

No, it wouldn't. This is also false. Let's walk through what you're saying, which is if I collect 5000 dollars as you describe I can turn them in somewhere for 1 block of firewood, right? And this would make the value of dollars extremely stable over the last 100 years?

I'll explain why that's false. Gold, unlike tree firewood, is hard to acquire when you have none. Scarcity creates value. If you gathered together all of the gold ever mined you could only build about 1/3 of the Washington Monument. Contrast that with the ample supply of tree firewood already available, not to mention what could be created and harvested on demand. This would mean your dollars backed by firewood would never have any significant perceived value. Far from having stable value firewood backed dollars would only be valuable and in demand when required for payment of debt, assuming they were declared legal tender. Further, it's obvious they would be inflationary because there is nothing realistically restraining their creation, since they could always be honored.

And finally we get to the crux of the matter.  I anticipated that you would disagree with my post because of this.

I didn't disagree with your post. I disagreed with parts of it, as indicated.

You have even spelled out the crucial point, without even recognizing it -- namely that the "value" of a medium of exchange only has meaning in relation to something else.

I find it amusing you presume to know what I do or don't know or recognize.  

You have even spelled out the crucial point, without even recognizing it -- namely that the "value" of a medium of exchange only has meaning in relation to something else.  Your example is fine, though I must point out that it failed.  Beyond this failed attempt to maintain the value of the dollar in terms of silver, it should be obvious that it is even more difficult to maintain the "value" of an arbitrary medium of exchange in relation to all commodities simultaneously, though that is what the Federal Reserve is attempting to do, poorly.

Who says there was an attempt to maintain the value of the dollar in terms of silver? And that it failed? If that were true you would not be able to exchange about 24 grams of pure silver (or ~0.85 ounce) for 1 dollar. Have you checked the exchange rates on silver lately? Far from 1 dollar, you can get about 27 dollars for that much silver today.

But you miss the point that denomination is precisely the flaw of fiat currency.

No, I believe it's you who doesn't have the point. The flaw of fiat currency is that it attempts to assign value where there might otherwise be none.

[benjamindees]

as long as they are not gold or silver, and thus legal tender.

Gold and silver are not automatically legal tender.  That is up to each State.  The Constitution just limits the options for possible legal tender to only gold and/or silver:

Yes, I know. What I was referring to there was competing currencies, and should have more specifically said: as long as they are not gold or silver, and thus compete as legal tender. But since you are pressing me on this point I would have also defer the question of whether or not competing currencies could also be gold/silver to a Constitutional law expert.

There's no need for experts.  If the architects of the Constitution had intended the Federal government to have a monopoly on legal tender, they would have written exactly that, instead of what they did write which was to leave the decision up to the States, within certain limits.

Obviously maintaining a stable value also requires a few other details, such as choosing a non-self-replicating commodity as medium of exchange.  But the value of Federal Reserve Notes has nothing to do with the commodity value of paper, and was never intended to.  

I didn't say the value of Federal Reserve Notes had anything to do with the commodity value of paper, it was you that suggested it. You said: "The way that stable value is assigned to a commodity, whether gold or silver or anything else, is by keeping it in circulation."

I simply pointed out that paper is a commodity, so if your statement is correct its value could be assigned and made stable by keeping it in circulation. I then provided example of why that is false.

So, since Federal Reserve Notes are not paper, nor even a commodity, then what exactly is your argument?  The value of toilet paper is fairly stable.

dollars backed by firewood would never have any significant perceived value.

You're right, probably not significant value, but I only claimed stable value.

assuming they were declared legal tender.

I thought we established that only gold and silver can be legal tender?

Who says there was an attempt to maintain the value of the dollar in terms of silver?

Uh, you did?  And you got it from Jefferson and Hamilton and the Coinage act of 1792:

For example, the U.S. dollar is originally based on a unit of weight equaling 371 4/16th grains of pure silver, or the precise amount found in Spanish milled dollar coins.

And it lasted until the 1960's...

And that it failed?

Nixon.

The flaw of fiat currency is that it attempts to assign value where there might otherwise be none.

Sounds like denomination to me.

[notme]

Nixon

If only he knew how much we would be importing today.

[acoindr]

as long as they are not gold or silver, and thus legal tender.

Gold and silver are not automatically legal tender.  That is up to each State.  The Constitution just limits the options for possible legal tender to only gold and/or silver:

Yes, I know. What I was referring to there was competing currencies, and should have more specifically said: as long as they are not gold or silver, and thus compete as legal tender. But since you are pressing me on this point I would have also defer the question of whether or not competing currencies could also be gold/silver to a Constitutional law expert.

There's no need for experts.  If the architects of the Constitution had intended the Federal government to have a monopoly on legal tender, they would have written exactly that, instead of what they did write which was to leave the decision up to the States, within certain limits.

Fair enough. Then I'll imagine for now it's only States that can't coin gold and silver. Private individuals and Congress can.

So, since Federal Reserve Notes are not paper, nor even a commodity, then what exactly is your argument?

Federal Reserve Notes are not paper?  

And you think paper can't be a commodity? Let's say the U.S. experiences massive hyperinflation resulting in total loss of confidence in the dollar, or more accurately Federal Reserve Notes. The many newly poor and homeless on the streets might be glad for paper to burn for warmth. You're saying a vendor wheeling stacks of FRNs down the streets in a wheelbarrow (perhaps along with matches) selling for gold rings, bracelets, etc., and the people lining up to buy a source of warmth for the night wouldn't be purchasing a paper commodity? Which universe exactly are you in?

You're right, probably not significant value, but I only claimed stable value.

Nice try.

The value wouldn't be stable either. If there was any value you can bet those with the ability to create more dollars (the govt.) would do so since they would not be restrained by the ability to honor the backing. This would mean inflation and loss of value, even if the value was small to begin with. You either have zero value, or some value. I've shown why your statement is false, unless you meant a stable value of zero?

I thought we established that only gold and silver can be legal tender?

Do me a favor and get a paper dollar from somewhere. Look for the words "legal tender" on it and let me know if you don't find them. We established the Constitution says only gold and silver can be legal tender.

Who says there was an attempt to maintain the value of the dollar in terms of silver?

Uh, you did?  And you got it from Jefferson and Hamilton and the Coinage act of 1792:

I said the value of the U.S. dollar was based on a certain amount of silver. I did NOT say there was an attempt to maintain that value. Your problem appears to be failure to account for fine distinction. The Constitution gives Congress the power to coin money and regulate the value thereof. If Congress instructs the U.S. Mint to create 1 dollar coins consisting of 1 ounce of silver then Congress is legally exercising its Constitutional authority. This says nothing of any "attempt" to maintain the value for a dollar. The legal instruction to the Mint is not an "attempt", it's an instruction.

Now if people in the marketplace want to price their goods in dollars and accept those 1 ounce silver coins Congress had minted that's their business. People are NOT forced to use those coins if they feel they don't provide enough value. People are ONLY required to accept them for settlement of debt owed them if they are declared legal tender.

So I hope you can see, as I said above, it's only people that can ultimately decide the value of something. Foreign coins consisting of 2 ounces of silver might be the preferred choice of the marketplace to use as dollars, for example. And in this case Congress still hasn't failed at any attempt. They can go on defining 1 dollar as 1 ounce of silver. Some in the marketplace will recognize that value simply because it's the legal national currency.

But as I've pointed out the people and the marketplace have never rejected that definition of a dollar. Indeed, people WISH they could get as much silver per dollar as the original definition stipulates. So where is the failure?

Indeed, what we are missing IS an attempt to maintain the value of a dollar in terms of silver. IF this WAS the attempt we would never have stopped paying out silver/gold.

We may have had failure in political decisions in history, yes, but we haven't had failure for trying to define the ratio of silver to 1 dollar.

The flaw of fiat currency is that it attempts to assign value where there might otherwise be none.

Sounds like denomination to me.

I'm sorry what it sounds like to you. Let me tell you what each is.

Fiat is a decree. So fiat money is money that becomes so by decree. This means if the government wants to declare that sticks are money, then sticks will then be money by decree. The problem, which should be obvious, is that simply declaring that something (like sticks) has a certain value, or any value at all, is inherently flawed. Why? Because the assigned value has to be accepted by people who have free will and probably other ideas about what is valuable to them.

Denomination is a value or size (as of money), or the act of denominating.