The Coming Currency “War”
Gold or Paper?
We studied the period in U.S. history when silver advocates were politically important as a group in the Democratic Party. They wanted “free coinage of silver” as a way to promote inflation. Farmers and others, deep in debts, also liked the inflationary paper money “greenbacks” issued during the Civil War, and wanted more of them.
During the Civil War, many basic commodities had two prices. Many buyers wanted to pay in paper “greenback” dollars. Those had green ink on the back of the dollar bill for the art work. The fronts of all dollar bills have always been black ink.
- A seller (merchant, trader) might set some quoted prices in Greenbacks.
- A seller was also free to set other quoted prices, a different currency – Gold Dollars.
- The United States economy was officially a parallel currency system of payments. Tariffs were only payable in gold dollars, but income taxes were measured in greenback dollars.
As defined in US Law by Congress before – and during – the Civil War. Interestingly, the Confederate States also continued to use the US dollar coins by weight, and in circulation. A few specimens were minted with a new design for the CSA, but never in circulation. The exchange rates were mostly between USA “dollars” and CSA “dollars.” Southern governments and private banks caused a disastrous paper inflation, just as during the American Revolutionary War, but it was all “legal tender”: parallel dollar currencies.
The Gold Dollar
On December 17, 1985, President Ronald Reagan signed Public Law 98-185, the “American Eagle Gold Bullion Coin Act.” It called for the US Mint to manufacture and sell to the public legal tender gold coins with One Troy Ounce and fractions for smaller coins. The gold dollar denomination for the coin is $50. [ 31 USC 5112 ]
The normal electronic payments-processing, in units of the “gold dollar,” are already occurring in the United States. The UPMA.org in Salt Lake City issues a Visa card for access to the payments system, and automatic exchange between paper and gold dollars.The Visa card is managed by TrueLinkFinancial.com and one’s gold holdings can be spent in paper currency units by setting up a gold-balance automatic overdraft system, so your savings in gold are not exposed to the up/down of the “dollars” on the card. Paper values stored on the card temporarily would appreciate or depreciate as the rate on gold moved, but you could always make a “paper dollar” payment for daily use, even in euro or yen. International oil and gasoline are priced in paper dollars.
I am suggesting that in the future, we may see sellers asking buyers “What will be your form of payments?” The plausible answers might be (1) euro, (2) yen, (3) pound, (4) US dollar, (5) US Gold Dollar. This last, of course, is 1/50 the recent London PM fix level for gold. [ 31 USC 5112 ]
On Nov.1, 2015, a payment of $100.00 would buy you about 2.724 grams of gold. One “gold dollar” as established by Congress in 31 USC 5112 is equal to .02129
mg of gold. If you extend the chart above to a more recent date the exchange rate between paper and gold “dollars” is $24.17 Federal Reserve Accounting Unit Dollars for one US Mint coined dollar, down from $22.84 just 100 days earlier.
- [ Author’s update: The price of gold (value of the USD) has changed: on Feb.7, 2016, it was 1/$1,208.61 oz. = 25.735 mg of gold, and one Gold Dollar = $24.17.
This Gold Dollar currency, authorized by Congress in 1985, re-established the market conditions we saw during the Civil War, particularly in the North.
- A payment of $100 in Federal Reserve Accounting Unit Dollars will get you only 25.735 mg of gold as of Feb.7, 2016 – down from 25.724 mg about 100 days earlier. ]
Remember it is the inverse math of dollars divided by gold, not price-quoted gold milligrams (weight in dollars).
A “parallel currency is not unusual in economic history, but governments do not like losing the monopoly first declared by Caesar Augustus. Personally, I think it is time to stand with Brutus and denounce the Imperium of currency monopoly.