> One researcher on the subject lists twenty-one different definitions for institutions drawing examples from economics, sociology, anthropology, and other redoubts of obscure scholarship.
Which researcher? I was expecting you to cite or link to Robin Hanson, but that was just my guess because I have his blog in my RSS feed.
>> it shows just how vulnerable such a standard would be to money-hoarding, deflation, and depression.”
>Krugman’s daily one-dollar buy would be worth just over $6 million in December of 2021
How does the price of Bitcoin going up counter his claim about deflation & money-hoarding? If the price had gone down, that would have confirmed an attack on Bitcoin as inflationary to the point of worthlessness.
> “Money is: (1) a unit of account, (2) a store of value, (3) a medium of exchange. Right now Bitcoin is none of those things (in any serious sense).”
Bitcoin still being valuable now debunks #2, not so much the others.
> That explains why gold has always retained its allure as a store of value.
It has allure, but that value is not stable. It varies a lot over time, as does Bitcoin. This is why people aren't using gold as money (rather than an investment) much nowadays. Even in Argentina where the government has inflated the national currency to the point where they elected a President on a platform of abandoning it, people prefer to use US dollars rather than some commodity as money.
Absolutely superb article about Bitcoin. Explained the esoteric system very well.
Probably my biggest mistake was not buying some Bitcoin in 2012, when Jon Matonis of The Bitcoin Foundation explained it to me, after he touched base with me on my 2012 Monetary Laws of the United States book, giving me a nice compliment.
Regarding the article--I must take strong exception to the passage "Governments can easily prohibit people from buying gold. It is difficult to hide should governments want to seize it as well. To take one underappreciated historical example, President Roosevelt signed Executive Order 6102 in 1933, which banned anyone from owning gold in the United States, a law that lasted until 1975. Americans were forced to sell their gold to the government at a rate of $20.26 an ounce."
While this passage accurately reflects common understanding, I argue in my books and newsletter issues, that American governments cannot "prohibit" everyday Americans (easily or at all) from owning gold.
Instead, from my reading of E.O. 6102, only "persons" defined as shareholders of member banks of the Federal Reserve System (who, by buying stock in member banks, became liable for bank liabilities [not just customer deposits, but also liable for honoring any Federal Reserve notes due in gold]), who were contractually obligated by Section 16 of the 1913 Federal Reserve Act, to back their customer deposits and note issuance 35% and 40% of face value, while yet honoring them in full, payable in gold.
In other words, E.O. 6102 was but a "margin call" on over-extended bank shareholders who had bet the farm and lost. Of course, that is not how it was positioned and enforced (against those who falsely concluded they were "persons", anyway).
To verify, ask yourself if a "bank" was a "person." Remember, this E.O. was issued by FDR. “Person” was explicitly defined within the executive order, in Section 1, “For the purposes of this regulation…The term ‘person’ means any individual, partnership, association or corporation.”
It doesn't matter what "person" means outside of this E.O., "For the purposes of this regulation" "Person" was to be understood as "ANY individual, partnership, association or corporation.”
"ANY" does not mean "EVERY."
While "ANY" "individual, partnership, association or corporation” COULD BE a "person" "For the purposes of this regulation," not all of them necessarily were.
No express exemption was given to who would not be a "person."
Thus, even though member banks of the Federal Reserve were made places where every other "person" was to deliver their gold, this fact does not by itself exempt banks from the definition.
If banks WERE a "person," then SOME "person" must deliver their gold to some other "person."
If banks were NOT a "person," then some entities, or some persons were yet exempted from being a type of "person" who had a legal obligation to deliver their gold.
The E.O. did NOT read, for example, that "All persons EXCEPT MEMBER BANKS OF THE FEDERAL RESERVE SYSTEM are hereby required to deliver…to a…bank…all gold coin, gold bullion and gold certificates…on or before April 28, 1933…”, it only read "All persons are hereby required to deliver…to a…bank…all gold coin, gold bullion and gold certificates…on or before April 28, 1933…”
Nor did the definition of "person" "For purpose of this regulation" mean "any individual, partnership, association or corporation, EXCEPT MEMBER BANKS OF THE FEDERAL RESERVE SYSTEM.”
IF some "individuals, partnerships, associations or corporations” are not "persons" "For the purposes of this regulation" without express exceptions, THEN so may others be, especially to keep from conflicting with the supreme Law of the Land, including the Fifth Amendment, which declares that "No person...shall be deprived of...property, without due process of law" and that no "private property shall be taken for public use without just compensation."
Incidentally, the rate for gold in 1933 was $20.67/ounce of pure gold.
Mathematical proof:
1837 gold standard was 232.2 grains of pure gold per $10 eagle, weighing with allow 258 grains (there are 480 "grains" [smallest unit of measure] in one troy ounce).
232.2 grains pure gold per eagle /480 grains per ounce = 0.48375 ounces of pure gold per eagle.
$10/0.48375 = $20.67/ounce of pure gold.
Of course, the main point (that FDR "bought" low and "sold" high the following day) is still valid, well, at least partially.
Since the power to "coin Money" and "regulate" its "Value" is constitutionally "vested" in Congress for the Union of States, then no President may revalue the American dollar.
So, the "dollar" that FDR created (worth then $35/ounce) was only a dollar for the District of Columbia, which District is NOT a "State" that is expressly prohibited (by Art. I, Sect. 10) from "emitting Bills of Credit" (paper currency) or making "any Thing but gold or silver Coin a Tender in Payment of Debts."
Since members of Congress may do as they please in D.C., except as they are specifically prohibited, then they can make a distinct District "dollar," just as other legal jurisdictions may (Canada, Hong Kong, New Zealand) that are not the same as the American dollar of gold and silver coin.
And, since only "States" elect members of Congress, and the "District" is NOT a "State," then there isn't even legislative representation in the District, even as representation is the fundamental building block of the Union. Thus, in D.C., members may delegate to the President their "exclusive" legislation authority for D.C., without violating a Separation of Powers doctrine, which doesn't there apply (since there is no legislative representation).
Federal Reserve notes are only legal tender in the District of Columbia (see my Beacon Spotlight discussion on the 1871 and 1884 Legal Tender Cases supporting that claim).
If anyone wants to read my fuller take on E.O. 6102, here's my Substack discussion of it (also see a 10-issue discussion on the devious conversion from gold and silver coin to paper currency):
> One researcher on the subject lists twenty-one different definitions for institutions drawing examples from economics, sociology, anthropology, and other redoubts of obscure scholarship.
Which researcher? I was expecting you to cite or link to Robin Hanson, but that was just my guess because I have his blog in my RSS feed.
>> it shows just how vulnerable such a standard would be to money-hoarding, deflation, and depression.”
>Krugman’s daily one-dollar buy would be worth just over $6 million in December of 2021
How does the price of Bitcoin going up counter his claim about deflation & money-hoarding? If the price had gone down, that would have confirmed an attack on Bitcoin as inflationary to the point of worthlessness.
> “Money is: (1) a unit of account, (2) a store of value, (3) a medium of exchange. Right now Bitcoin is none of those things (in any serious sense).”
Bitcoin still being valuable now debunks #2, not so much the others.
> That explains why gold has always retained its allure as a store of value.
It has allure, but that value is not stable. It varies a lot over time, as does Bitcoin. This is why people aren't using gold as money (rather than an investment) much nowadays. Even in Argentina where the government has inflated the national currency to the point where they elected a President on a platform of abandoning it, people prefer to use US dollars rather than some commodity as money.
Great history. I had never heard the clock tower story before, but I like it.
Absolutely superb article about Bitcoin. Explained the esoteric system very well.
Probably my biggest mistake was not buying some Bitcoin in 2012, when Jon Matonis of The Bitcoin Foundation explained it to me, after he touched base with me on my 2012 Monetary Laws of the United States book, giving me a nice compliment.
Regarding the article--I must take strong exception to the passage "Governments can easily prohibit people from buying gold. It is difficult to hide should governments want to seize it as well. To take one underappreciated historical example, President Roosevelt signed Executive Order 6102 in 1933, which banned anyone from owning gold in the United States, a law that lasted until 1975. Americans were forced to sell their gold to the government at a rate of $20.26 an ounce."
While this passage accurately reflects common understanding, I argue in my books and newsletter issues, that American governments cannot "prohibit" everyday Americans (easily or at all) from owning gold.
Instead, from my reading of E.O. 6102, only "persons" defined as shareholders of member banks of the Federal Reserve System (who, by buying stock in member banks, became liable for bank liabilities [not just customer deposits, but also liable for honoring any Federal Reserve notes due in gold]), who were contractually obligated by Section 16 of the 1913 Federal Reserve Act, to back their customer deposits and note issuance 35% and 40% of face value, while yet honoring them in full, payable in gold.
In other words, E.O. 6102 was but a "margin call" on over-extended bank shareholders who had bet the farm and lost. Of course, that is not how it was positioned and enforced (against those who falsely concluded they were "persons", anyway).
To verify, ask yourself if a "bank" was a "person." Remember, this E.O. was issued by FDR. “Person” was explicitly defined within the executive order, in Section 1, “For the purposes of this regulation…The term ‘person’ means any individual, partnership, association or corporation.”
It doesn't matter what "person" means outside of this E.O., "For the purposes of this regulation" "Person" was to be understood as "ANY individual, partnership, association or corporation.”
"ANY" does not mean "EVERY."
While "ANY" "individual, partnership, association or corporation” COULD BE a "person" "For the purposes of this regulation," not all of them necessarily were.
No express exemption was given to who would not be a "person."
Thus, even though member banks of the Federal Reserve were made places where every other "person" was to deliver their gold, this fact does not by itself exempt banks from the definition.
If banks WERE a "person," then SOME "person" must deliver their gold to some other "person."
If banks were NOT a "person," then some entities, or some persons were yet exempted from being a type of "person" who had a legal obligation to deliver their gold.
The E.O. did NOT read, for example, that "All persons EXCEPT MEMBER BANKS OF THE FEDERAL RESERVE SYSTEM are hereby required to deliver…to a…bank…all gold coin, gold bullion and gold certificates…on or before April 28, 1933…”, it only read "All persons are hereby required to deliver…to a…bank…all gold coin, gold bullion and gold certificates…on or before April 28, 1933…”
Nor did the definition of "person" "For purpose of this regulation" mean "any individual, partnership, association or corporation, EXCEPT MEMBER BANKS OF THE FEDERAL RESERVE SYSTEM.”
IF some "individuals, partnerships, associations or corporations” are not "persons" "For the purposes of this regulation" without express exceptions, THEN so may others be, especially to keep from conflicting with the supreme Law of the Land, including the Fifth Amendment, which declares that "No person...shall be deprived of...property, without due process of law" and that no "private property shall be taken for public use without just compensation."
Incidentally, the rate for gold in 1933 was $20.67/ounce of pure gold.
Mathematical proof:
1837 gold standard was 232.2 grains of pure gold per $10 eagle, weighing with allow 258 grains (there are 480 "grains" [smallest unit of measure] in one troy ounce).
232.2 grains pure gold per eagle /480 grains per ounce = 0.48375 ounces of pure gold per eagle.
$10/0.48375 = $20.67/ounce of pure gold.
Of course, the main point (that FDR "bought" low and "sold" high the following day) is still valid, well, at least partially.
Since the power to "coin Money" and "regulate" its "Value" is constitutionally "vested" in Congress for the Union of States, then no President may revalue the American dollar.
So, the "dollar" that FDR created (worth then $35/ounce) was only a dollar for the District of Columbia, which District is NOT a "State" that is expressly prohibited (by Art. I, Sect. 10) from "emitting Bills of Credit" (paper currency) or making "any Thing but gold or silver Coin a Tender in Payment of Debts."
Since members of Congress may do as they please in D.C., except as they are specifically prohibited, then they can make a distinct District "dollar," just as other legal jurisdictions may (Canada, Hong Kong, New Zealand) that are not the same as the American dollar of gold and silver coin.
And, since only "States" elect members of Congress, and the "District" is NOT a "State," then there isn't even legislative representation in the District, even as representation is the fundamental building block of the Union. Thus, in D.C., members may delegate to the President their "exclusive" legislation authority for D.C., without violating a Separation of Powers doctrine, which doesn't there apply (since there is no legislative representation).
Federal Reserve notes are only legal tender in the District of Columbia (see my Beacon Spotlight discussion on the 1871 and 1884 Legal Tender Cases supporting that claim).
If anyone wants to read my fuller take on E.O. 6102, here's my Substack discussion of it (also see a 10-issue discussion on the devious conversion from gold and silver coin to paper currency):
https://matterickson.substack.com/p/can-the-united-states-again-confiscate
Hopefully, neither the author nor host will mind my posting of the link (if either do, I will delete [or the host may unilaterally]).