Remembering The Fed's Definition Of "Sound Money"

Nothing quite like hearing it from the printer's mouth. From a 1961 FRB of Chicago paper: 

“In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value. What, then, makes these instruments - checks, paper money, and coins - acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so."

It is handy to be reminded every now and then that the only thing people transact in is symbolic confidence in the truly stable financial system.

Modern Money Mechanics

h/t Nobull

Comments

[cougar_w]

exactimently

[TruthInSunshine]

They'll be dancing in the streets. That's for sure.

Callin' out around the world, are you ready for a brand new beat?
Summer's here and the time is right for dancin' in the street.
Dancin' in Chicago (dancin' in the street)
Down in New Orleans (dancin' in the street)
In New York City
Philadelphia P.A., Baltimore and D.C now,
Can't forget the motor city,
Way down in L.A., every day they're dancin' in the street
Lets form a big strong line, and get in time,
We're dancin' in the street.

[Mr. E]

Feel free to send as much of the money you don't think will have any value to me.  

[Prometheus418]

I will also be happy to trade 10 Oz of silver for an Oz of gold, if there are any takers.

[Dinho360]

One difference now vs. 1961, however. Most of the money isn't even coins and paper anymore. It's miniscule electronic impulses floating around through the sky. By the way, your bank account is on the internet, accesible to anyone with an internet connection and the login info. Anyone read about that solar flare last night? A bigger one of those could probably flick off our "money" supply like a light switch.

[proLiberty]

"“Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so."

Then it would logically follow that the amount of *real* goods and services that a given amount of "money" would be exchanged for varies with the quantity of such "money".   When there is vastly more "money", then that "money" would naturally be worth less in terms of what is *real*.  This "money" is solely a unit of account and medium of exchange, for by their own words, they do not intend for it to have any intrinsic value.

A few years ago, a pharmacist in the Kansas City area was found to be selling a lot more bottles of a chemotherapy drug than he had been buying. It turns out he was diluting the drug with water. Apart from how it affected the treatment outcomes, everyone can understand this is theft by dilution. Bartenders get reputations for diluting the whiskey from time to time as well. Government is stealing our wealth by dilution of our currency.

It used to be that explanations like the one from the 1961 FRB quoted above were enough to satisfy people, but thanks to the internet, institutions like the Mises Institute, and popular political figures like Ron Paul, the public is finding a more accurate explanation about the real nature of money. As a result, they are beginning to understand that fiat money, when combined with taxes gains made from selling real assets is the grandest scheme of theft in all of human history.

[mt paul]

sound of money

drop silver round 

on hardwood floor

..pping..

[High Plains Drifter]

sounds nice doesn't it?   ha ha ha

[curmudgery]

The $ound of $uck

[vocational tainee]

Xeno  frog brougth a nice idea to my mind.Just imagine,we pay our goods with gold and silver coins and it is compulsory to carry all your money all the time with you.It would be interesting to see how many people would scream to get rid of that burden...

[slewie the pi-rat]

1961:   this song, covering willie nelson, reached #22 on billboard: YouTube - Funny How Time Slips Away By Jimmy Elledge 

[Vuvuzela]

Congress Can Not Delegate it;s powers, this was ruled by the Supreme Court Allready

So FED is an illegal business/corporation/printing press whatever  . Any one knows a good lawyer to ask about this

[Fedophile]

It is handy to be reminded every now and then that the only thing people transact in is symbolic confidence in the truly stable financial system.

+666

[blindman]

what beautiful comments! sound ...

[Vendetta]

Is the Fed's 'sound money' the sound it makes when it hits the dirt at the bottom of the cliff?

[dxj]

Ironically, those 1961 coins are now worth about $25 per $1 of face value.

[meat-popcicle]

   It's glass beads all over again.  See you at the pottery class!