Why Are Dollar Bills Worth Anything?

Tyler Durden's picture

Submitted by Frank Shostak via The Mises Institute,

Why are the dollar bills in people's pockets worth anything? According to some experts, the dollar bills carry value because the government in power says so. Other experts are of the view it is because people are willing to accept it as payment.

To say that the value of money is on account of the government or on account of social convention is to say very little. In fact, what experts are saying is that money has value because it is accepted, and why is it accepted? … Because it is accepted!

The Difference Between Money and Other Goods

Demand for a good arises from its perceived benefit. For instance, people demand food because of the nourishment it offers them. With regard to money, people demand it not for direct use in consumption, but in order to exchange it for other goods and services. Money is not useful in itself, but because it has an exchange value, it is exchangeable in terms of other goods and services. Money is demanded because the benefit it offers is its purchasing power (i.e., its price).

For something to be accepted as money it must have a pre-existing purchasing power, a price. So how does a thing that the government proclaims will become the medium of exchange acquire such purchasing power — a price?

We know that the law of supply and demand explains the price of a good. Likewise it would appear that the same law should explain the price of money. But there is a problem with this way of thinking since the demand for money arises because money has purchasing power (i.e., money has a price). Yet if the demand for money depends on its pre-existent price, i.e., purchasing power, how can this price be explained by demand?

We are seemingly caught here in a circular trap, for the purchasing power of money is explained by the demand for money while the demand for money is explained by its purchasing power. This circularity seems to provide credence to the view that the acceptance of money is the result of a government decree and social convention.

Mises Explains How the Value of Money Is Established

In his writings, Mises had shown how money becomes accepted.1 He began his analysis by noting that today's demand for money is determined by yesterday's purchasing power of money. Consequently for a given supply of money, today's purchasing power is established in turn. Yesterday's demand for money in turn was fixed by the prior day's purchasing power of money.

So, for a given supply of money, yesterday's price of money was set. The same procedure applies to past periods.

By regressing through time we will eventually arrive at a point in time when money was just an ordinary commodity where demand and supply set its price. The commodity had an exchange value in terms of other commodities, i.e., its exchange value was established in barter. To put it simply, on the day a commodity becomes money it already has an established purchasing power or price in terms of other goods. This purchasing power enables us to set up the demand for this commodity as money.

This in turn, for a given supply, sets its purchasing power on the day the commodity starts to function as money. Once the price of money is fixed, it serves as input for the establishment of tomorrow's price of money. It follows then that without yesterday's information about the price of money, today's purchasing power of money cannot be established.

With regard to other goods and services, history is not required to ascertain present prices. A demand for these goods arises on account of the perceived benefits from consuming them. The benefit that money provides is that it can be exchanged for goods and services. Consequently, one needs to know the past purchasing power of money in order to establish today's demand for it.

Using the Mises framework of thought, also known as the regression theorem, we can infer that it is not possible that money could have emerged as a result of a government decree or government endorsement or social convention. The theorem shows that money must emerge as a commodity.

On this Rothbard wrote,

In contrast to directly-used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium to the previous demand for direct use (e.g., for ornaments, in the case of gold). Thus government is powerless to create money for the economy; it can only be developed by the processes of the free market.2

But how does all that we have said so far relate to the paper dollar? Originally paper money was not regarded as money but merely as a representation of gold. Various paper certificates represented claims on gold stored with the banks. Holders of paper certificates could convert them into gold whenever they deemed necessary. Because people found it more convenient to use paper certificates to exchange for goods and services when these certificates came to be regarded as money.

These certificates acquired purchasing power on account of the fact that these certificates were seen as representative of gold. Note that according to the regression theorem, once the purchasing power of a certificate is established it can function as money regardless of gold since now the demand for money can be established. Remember the demand for money is on account of its purchasing power.

Paper certificates that are accepted as the medium of exchange open the scope for fraudulent practice. Banks could now be tempted to boost their profits by lending certificates that were not covered by gold.

In a free-market economy, a bank that over-issues paper certificates will quickly find out that the exchange value of its certificates in terms of goods and services will fall. To protect their purchasing power, holders of the over-issued certificates would most likely attempt to convert them back to gold. If all of them were to demand gold back at the same time, this would bankrupt the bank. In a free market, then, the threat of bankruptcy would restrain banks from issuing paper certificates unbacked by gold.

The government can, however, bypass the free-market discipline. It can issue a decree that makes it legal for the over-issued bank not to redeem paper certificates into gold. Once banks are not obliged to redeem paper certificates into gold, opportunities for large profits are created that set incentives to pursue an unrestrained expansion of the supply of paper certificates. The uncurbed expansion of paper certificates raises the likelihood of setting off a galloping rise in the prices of goods and services that can lead to the breakdown of the market economy.

To prevent such a breakdown, the supply of paper money must be managed. The main purpose of managing the supply is to prevent various competing banks from over-issuing paper certificates and from bankrupting each other. This can be achieved by establishing a monopoly bank — i.e., a central bank — that manages the expansion of paper money.

To assert its authority, the central bank introduces its own paper certificates, which replace the certificates of various banks. The central bank money's purchasing power is established on account of the fact that various paper certificates, which carry purchasing power on account of their historical link to gold, are exchanged for the central bank money at a fixed rate. The central bank's paper certificates are fully backed by bank certificates, which have the historical link to gold.

It follows then that it is only on account of the historical link to gold that the central bank's pieces of paper acquired purchasing power.

Contrary to the popular way of thinking, the value of a paper dollar originates from its historical link to commodity money — which happens to be gold — and not government decree or social convention. Fiat money of the sort we use today could not and would not come about in a market setting. What the market created — gold-based money — the government had to destroy before leaving us with paper money whose value as a currency depends on the management practices of the central bank.

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Skiprrrdog's picture

The total weight of dried drug/blood crust (booger sugar) on the average bill is probably worth more than the bill itself...

Pinto Currency's picture

Paper money is accepted as payment because citizens are coerced to accept them as payment by legal tender laws.

Without the banks using government with legal tenders laws to force citizens to accept these unbacked paper tickets, nobody would accept them.

This Might Hurt's picture

They are backed by the stolen productive capacities of the American people, but that will fail soon enough.  Explained here..



manofthenorth's picture

Because since 1933 and 1964 we have NOT had a choice. These paper warrants were redeemable in Gold and Silver at the request of the bearer. The FED fucked the US out of the greatest money supply in the history of the world. The greatest heist in the history of mankind perpetrated not with a gun but a pen.

Federal Reserve Notes are warrants on debt and death, NOT MONEY. Paper rots, coin does not.


zeronetwork's picture

The dollar is worth the same as the gun in the hands of midnight (grave yard shift) convenience store robber. The moment store manager learns this gun has no bullets, robber will be hit in the face with broom.

manofthenorth's picture

This is what real dollar BILLS looked like. Notice that at the bottom it states clearly; 20 Dollars in Gold coin payable to the bearer on demand.


And in Silver, One Dollar in Silver payable to the bearer on demand.


Notice also these were the original certificates of deposit, it states at the top of the bills that these warrants certify that an equal sum of gold + silver were on deposit at the US Treasury.


Itinerant's picture

This article is BS from the ground up. We don't have to go to fairy tales about how money came to be used instead of barter, etc. We know from historical records how money was started, and we know from anthropological studies. Money was always mainly credit. Often they used IOUs expressed as a claim on barley or grain (that's why "grain" is a unit of gold). Claims were periodically balanced, usually when crops came in, and people evened scores with their laborers and the ale woman and the temple (=bank). Very little silver or gold passed through people's hands. That was true in frontier America as well, where people bought goods at the general store who kept a running bill.

 The very words we use belie the fact that money was not in the first place metal coins. Salary means salt, which does not spoil and was valued for its function in preserving food. Capital refers to heads of cattle, which represented moveable stock, as opposed to land which you could not transfer or take along.

In primitive societies, everything works by credit (gifts and obligations), and often accounts are never squared, since the community is tied together by such debts. Squaring all the debts (many which are intangible, like paying you mother back for the breast milk she fed you) would be tantamount to disssolving the community and having nothing to do with each other.

Silver and tin were used for commerical trading with strangers. From its earliest days, silver coins and such were associated with temples and public institutions, not with markets where eggs, manufactures, and pigs were bought and sold.

The dollar itself derives its value from the fact that you need it to pay taxes. That was also true for the coins one needed in ancient society to pay taxes. And coins were used to pay soldiers, since one does not have social ties with mercenaries.

Austrian stories about the origins of money are made up theories, and are in no way empirical.

Radical Marijuana's picture

Yes, Itinerant!

As soon I as glanced at the title of the article above, and read the summarizing sentences presented on Zero Hedge, I guessed that it had to be another article written by an author associated with the Mises Institute, which rather routinely is responsible for some of the stupidest articles republished on Zero Hedge. The ONLY thing that the so-called Austrian school of economics has going for it is that it is less stupid than the more more mainstream schools of economics, such as the Keynesian, which were those works by intellectual mercenaries that the international bankers approved of more.

As you stated, Itinerant:

"We don't have to go to fairy tales about how money came to be used instead of barter, etc. We know from historical records how money was started, and we know from anthropological studies."

"Almost everyone was taught that money was invented to replace the messy business of barter. … But ... anthropologist David Graeber, and other experts on the history of money, say that this is a myth. Instead, they say that money was invented to finance war, and to keep score while armies went about pillaging and looting."

"If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt — above all, because it immediately makes it seem that it’s the victim who’s doing something wrong."

— David Graeber

My studies of various Excellent Videos on Money Systems, and Some Monetary System Articles,

have led me to develop what I consider the best overall definition of the reality about "money:"


That is a more abstract form of the various ways that private property is based on backing up claims with coercions. Those views, in turn, are what happens when one attempts to think through how human beings and civilization live as manifestations of general energy systems, or as toroidal vortices of entropic pumps of environmental energy flows. After human beings are perceived and defined as separated from their environment and each other, then they necessarily live as gangs of robbers, or as pirates. Civilization necessarily operates according to the principles and methods of organized crime. However, one of the corollaries of that social situation is that the biggest and best organized gangs of criminals are able to dominate civilization, in ways which enable them to publicly get away with presenting themselves as NOT being gangs of robbers. Rather, an elaborate bullshit is developed which enables the presentation of systems of legalized lies, backed by legalized violence, as somehow NOT still basically being lies and violence.

As Itinerant correctly stated:

The dollar itself derives its value from the fact that you need it to pay taxes. That was also true for the coins one needed in ancient society to pay taxes. And coins were used to pay soldiers, since one does not have social ties with mercenaries. Austrian stories about the origins of money are made up theories, and are in no way empirical.

(As is often the case on Zero Hedge, many of the comments are better than the articles those comments are posted under!)

From the original SUBTRACTIONS follows the necessary ROBBERIES. However, those who were able to do that the most were thereby able to develop ways of thinking and communicating about those things in the most dishonest ways possible. Hence, what actually exists now are systems whereby the public "money" is made out of nothing as debts by private banks, whose frauds are enforced by governments. That had the history where the taxation systems backed up the monetary systems, because of the ways that people were required to pay their taxes using that form of legal tender. Meeting the demand to pay taxes to a sovereign power is what made the current forms of public "money" become "money." However, the same goes for the original versions of "money" as metal coins. Those were primarily put into circulation by the ways that those paid soldiers, or mercenaries in general. To put it another way, when the original American Money was backed by gold and silver, that was also backed by the death penalty for those who debased that form of Money.

Anything that can be "traded" may be robbed instead. The only things that exist are the dynamic equilibria between different systems of more or less organized lies operating robberies. Within that context, the more mainstream schools of economics, as well as their various controlled "opposition" groups, such as represented by the Mises Institute, et alia, deliberately ignore the ways that political economy operated INSIDE human ecology. NONE of the publicly significant schools of economics can be rationally reconciled with regarding human beings and civilization as manifestations of general energy systems, because they all tend to deliberately ignore that the money systems are backed by the murder systems. Indeed, the more mainstream the schools of economics become, the more they tend to deliberately ignore that!

The debt controls were backed by the death controls. That enabled those debt controls to become runaway debt slavery systems, which have generated numbers which have become debt insanities. Those are set to provoke death insanities, due to the ways that the vast majority of people do not understand, because they have been conditioned to feel like they do not want to understand, that there actually exist combined money/murder systems. Rather, the vast majority of people have been brainwashed to believe in ridiculous bullshit, for generation after generation, such that they want to continue to believe in that bullshit, while all together amounts to the money systems becoming State Religions. Indeed, everything that most people think about "economics" is due to the biggest bullies' bullshit, which became the bankers' bullshit, as the dominate social stories, because those were integrated systems of legalized lies, backed by legalized violence, that were socially successful for those reasons, but no other reasons.

In general, there are no good grounds to expect that to get any better, rather than continue to get worse, faster, for the foreseeable finite future of Globalized Neolithic Civilization. Overall, the excessive successfulness of controlling civilization through applications of the methods of organized crime has resulted in civilization spinning out of control as runaway criminal insanities. Everything that civilization does is based upon being able to back up lies with violence, despite that doing so never stops those lies from still being false, and therefore, the more that civilization is able to continue to enforce frauds, the more that civilization as a whole becomes exponentially more fraudulent, which amounts to civilization becoming more and more psychotically insane.

The approaches of the various authors associated with the Mises Institute are to continue to indulge in superficially correct analysis, which deliberately does NOT connect political economy with human ecology, and therefore, deliberately does NOT discuss how the money systems are backed by the murder systems. Of course, that kind of superficial analysis then enabled one to NOT discuss that the only ways to change the debt controls would be to simultaneously change the death controls that backed those debt controls up. Natural selection pressures drove the development of artificial selection systems to become most socially successful by becoming most dishonest those could possibly become. All publicly significant discussions of "money" and "economics" are done in ways which have compromised with the history of the biggest and best organized gangs of criminals being able to make and maintain civilization. Therefore, the actually existing "money" system is based upon public governments enforcing frauds by private banks, which is the way that the biggest forms of organized crime are dominated by the best organized gangs of criminals.

The languages used to publicly discuss those phenomena were built on the DUALITIES of false fundamental dichotomies and the related impossible ideals. However, the only things which actually exist are the UNITARY MECHANISMS of energy systems. Since there is only one energy, there is only one political system, and that corresponds to the principles and methods of organized crime. However, since the biggest and best organized gangs of criminals made and maintained civilization, the publicly significant schools and news media all tend to misrepresent everything as much as possible, such that the biggest and best organized gangs of criminals are able to present themselves as NOT being criminals. Instead, language based upon false fundamental dichotomies and the related impossible ideals is able to blame others for being criminals, and thereby to advance bogus "solutions" based on impossible ideals, which always backfire badly, and cause the opposite to actually happen in the real world.

For instance, after the financial crises in 2008, people like Geithner, Bernanke, and Paulson, were all able to write books which asserted that they had somehow saved the world, when what they had actually done was participate in the established systems based upon enforcing frauds, in ways which enabled those systems to continue ... IF, IF, IF, there were developed genuinely better theories about "economics" in general, along with "money" in particular, THEN those should enable it to become possible to reconcile human economics with environmental ecologies. However, the actual ways that human ecology developed were through the history of warfare, manifesting as organized crime on larger and larger scales, such that the biggest and best organized gangsters made and maintained civilization to become what it is, where everything "economic" operates through fundamentally fraudulent financial accounting systems, whose structures are automatically becoming more fraudulent every day.

Indeed, it is barely possible to exaggerate the dilemmas which arise from the ways that people who make "money" are doing so by participating in monetary systems which are actually based upon being able to enforce frauds. The existing monetary systems becoming based upon increasing abilities to enforce frauds, that are becoming exponentially more fraudulent, require that the people doing that more and more deliberately ignore the principle of the conservation of energy, as well as misunderstand the concept of entropy in the most absurdly backward ways. The essential ironies are that natural selection pressures have driven the development of artificial selection systems to become based on the maximum possible dishonesties about themselves. Although the laws of nature are NOT going to stop working, those laws of nature have driven Globalized Neolithic Civilization to develop runaway psychotic attitudes, due to its enforced frauds demanding that the laws of nature be deliberately ignored and misunderstood as much as humanly possible.

The Austrian School of economics, as championed by the Mises Institute, may be slightly more realistic than the Keynesian School, etc., however, those all share the same basic ways in which they deliberately divorce human economic affairs from their surrounding environmental energy systems. It is NOT possible to develop better ideas regarding "economics" in general, along with "money" in particular, unless one admits and addresses the ways that the actual history of those can not be separated from the history of warfare. Since successful warfare became based on backing up deceits with destruction, successful finance became based on enforcing frauds. However, at the same time, the best available professional liars and immaculate hypocrites developed their languages to be able to bullshit about that as much as humanly possible.

Since the existing systems ARE based upon enforcing frauds, those systems ARE operated by the best available professional hypocrites. Therefore, the Mises Institute manifests as the works of professional hypocrites, who were merely relatively less socially successful than the even better professional hypocrites that worked even more so as intellectual mercenaries for the international banksters, to promote the kinds of economic bullshit which those banksters even more approved of. Meanwhile, those systems based upon enforcing frauds are automatically becoming more and more fraudulent. The deeper problems are due to the ways that civilization is necessarily controlled by its murder systems, while the most successful murder systems are able to be the most dishonest about themselves. That is what has enabled "economics" to develop as a special case within the history of warfare, such that "money" arose through that history, to become what it is today, namely the enforced frauds done through banker dominated governments.

Since human beings necessarily live as gangs of robbers, Globalized Neolithic Civilization has become the biggest and best organized gangs of robbers, whose increasingly paradoxical problems are trends towards final failures from too much of that kind of success. Meanwhile, it continues to be politically impossible to have any relatively rational public debates regarding "economics," or "money," because of their real history. Although it appears to be theoretically possible to better understand how human beings and civilization actually live as energy systems, the history of warfare has driven those systems to become based on the maximum possible deceits and treacheries, because those were the most socially successful strategies. Within that context, "economics" has been drowning in its own bullshit, with the publicly promoted notions regarding what "money" was supposed to be becoming some of the most well-developed bullshit-based theories, that deliberately ignored the most important social facts as much as possible.

Warfare was the oldest and best developed form of social science and social engineering, which was the context within which economics developed. That is how and why many people mistakenly think that economics is NOT a science, whereas it rather is an extremely successful science, which happens to be based upon being able to enforce frauds. The established systems of legalized lies, backed by legalized violence, have resulted in extremely tiny minorities of the human population being able to assert that they "own" almost everything, while the public powers of the dispossessed masses of the rest of the population are used to back up those symbolic robberies, through those enforced frauds. Furthermore, that continues to automatically get worse, faster, because there is almost no genuine opposition, but only various layers of controlled "opposition" groups, which surround the central core of triumphant organized crime, namely banker dominated governments.

What is theoretically necessary to ameliorate that situation would be for enough people to better understand the principles and methods of organized crime. However, that continues to appear to be politically impossible, since the best available professional hypocrites continue to be most socially successful by spouting the maximum possible bullshit about all of that. The ONLY way that there could be developed better monetary and taxation systems would be IF enough people understood that money is measurement backed by murder, and must necessarily continue to be. However, in those respects, the vast majority of people continue to act like incompetent political idiots, while a tiny minority are quite competently malicious.

In that overall context, I would be quite surprised if any author associated with the Mises Institute were to coherently and comprehensively admit and address the human ecology issues, within which all of the political economy issues actually operate. Rather, what I expect them to continue to do is what Itinerant stated: "This article is BS from the ground up."

A Nanny Moose's picture

taking into accout the comments above.....IOW...the $ is worth anything because...fuck the goyim.

...and also because....fuck the goyim

Oh...and for some reason, the goyim are stupid enough to accept THE EXACT SAME FUCKING MAGICAL rectangles of paper, with varying denominations, in trade for their lives (i.e. production).

....because publik skewlz.....because fuck the GOYIM.

Radical Marijuana's picture

The currently established international banking system is Globalized Neolithic Civilization, whose roots can be traced back to what may be metaphorically referred to as "Babylonian." Just as we still basically use Babylonian chronology, we still use Babylonian banking. The only connections between human laws and natural laws are the ability to back up lies with violence. However, doing so has resulted in civilization being almost totally dominated by the most egregious bullshit possible, amongst which the banksters' bullshit is the most outrageous.


The Babylonian Woe

The oldest forms of Neolithic Civilization, which have continued down through to today, were the Egyptian series, and the Mesopotamian series. It is arguable that the Jewish books of organized gang rules were developed by those who survived through both Egyptian and Mesopotamian experiences, which was how and why those who converted to adopt those Jewish books of organized crime rules have become some of the most frequently dominate groups in the pyramidion people, at the top of the currently established social pyramid systems. One of the typical characteristics of rules for organized crime gangs are the degrees to which those treat people who are members of their gang differently than those who are not deemed to be members. One of the manifestations of that has certainly been the attitude: "fuck the goyim."


striped-pad's picture

I don't think the history of where money came from matters.  What matters is what makes a good form of money, and actually credit isn't bad.

Look at people's balance sheets, and especially their net worth.  IOUs from other people add to your net worth, so they are valuable.  Our current money is IOUs from banks.  They are a good form of money as long as the banks are solvent (i.e. they can keep their promises).  What you must avoid is insolvent banks, because they debase the currency.

That means no bail-outs of banks to try to make people feel more confident about the value of debts which in fact can't and won't be paid.  The most effective way of destroying a society is by systematically destroying the value of its money (by circulating IOUs which can't be honoured, but which people are conned into exchanging real goods and services for).


False_Profit's picture

what is paper money worth more than?

digits in a computer...

cash money/currency is FREEDOM...


a cashless society is an enslaved society...



nicht vergessen...

Gott mit uns...


Only Congress has the power to mint coin and currency.

Make it Pay to The Bearer On Demand currency again so it actually represents value - before the Chinks or the Rooskies do it, and become the World Reserve Currency replacement for the US dollar. 

Dragbin Deaf Con in 3...........2...........1.........Buh teh Bitcoin Preciouses, stoopid Hedgies !

Mountainview's picture

I always wonder why? If you look at the heep of existing debt or even Liquidity (M2) you wonder why someone would accept this artefact for payment.

DaNuts's picture

I just phoned Bank of India in London to get some holiday money.

Me: Do you have 500 rupee notes?

BoI: We do not deal in Indian money

knukles's picture

Because you, we, the collective consciousness, believes they're worth something.

Raffie's picture

Like I have said many times "The value of money is like art. It's whatever they it is." No rhyme or reason about it.

The Most Interesting Frog in the World's picture

Let the market decide!  Done alot of research on this issue if you are interested...

Should We Go Back to a Gold Standard?

Milton Churchill

Able Ape's picture

99 out of 100 Americans would choose a 100 Dollar Bill over a 1oz. Gold Eagle coin - such is the "superiority" of our educational system...

Nobodys Home's picture

A while ago, silver was somewhere around $17. I brought a ten ounce bar to work and offered to trade it to any taker for $100. No one took me up on it. After which we all had a discussion on money, metals and the dollar. It was a fun night at work.

adr's picture

A dollar has value because that is what I am given in exchange for my labor and critical thought. Through my labor,  products are created that other people wish to trade for with what they received from their labor. 

A dollar declines in value when those who wish to obtain dollars without expending labor or thought, get them through fraud or counterfeit. 

The Fed exists to counterfeit dollars and give them to a select class of individuals who produce nothing of value and consume more currency that can ever be spent. 

In other words,  fuck the Tribe and their evil lifestyle. 

CHoward's picture

The one is worth something just like the ten is worth something.  This is a stupid article.

A Nanny Moose's picture

I will give you all of my 1's for all of your 10's.

indio007's picture

Eliminate your income tax. Endorse your FRN.

Then it's debt not an asset.

No it's not illegal to endorse your FRN's.


Akzed's picture

What's the difference between "legal money" and "lawful money," if any? Thanks.

indio007's picture

I think you mean legal tender.

There is overlap of legal tender and lawful money.

A US issued gold coin is lawful money and legal tender.

You could trade for it's intrinsic value i.e. weight and purity.

There is also the face value. This is the legal tender value.

Obviously they are not the same.

To really give the details is that there are 2 types of contracts.

An executed contract and an executory contract.


1oz Gold coin for a chicken is an executed contract. The deal is done. Ownership has transferred completely between both parties.

$5 gold coin for a chicken is an executory contract because the person that received the coin has not gotten the value he gave the chicken for. The value of the coin is not the gold. It's the $5 accounting value.

The coin is like a promissory note. A "dollar" is a specific amount of gold or silver (bimetallic standard in the usa)attached to it by the USA. It is not correspondant with the gold amount of the coin that says $5 on it's face. Well there are gold coins that say a dollar and are a dollar but it says dollar not $1.

The coin is supposedly redeemable for 5 DOLLARS (equal to 5 spanish pieces of eight)at the US treasury.


Rights have not transferred completely. While the personal right to the chicken transferred he is still in debt. The coin holder has a lien (in rem) on the chicken until he receives value for the coin.


The same thing applies to paper notes. The sale is not for intrinsic value. It's for an extrinsic value which is not part of the original transaction.

In short,

executed = transfer of two considerations for their intrinsic value.

executory = One or both of the considerations are postponed to some future event that is extrinsic to the transferred considerations.


Legal tender can be anything. It doesn't have to have value or maybe it does.

Lawful money has to have intrinsic value or represent intrinsic value directly like a silver certificate gold certificate or warehouse receipt. For real certificates there is a specific bar of gold often with a  matching serial numbers that is on the certificate as well. The object is just not in hand but the specific object need only be collected from a third party who has zero rights to the object.


I could go into more but if you feel curious go here

Lawful money citations



If you want to know why you sign your FRN's to avoid taxes?

There would be no profit. You are the party liable to pay the note not the Federal Reserve.

There is no gain,no profit.

Your creating a liability.


I know many people say you can't write on money at all.

The law says you can't deface the money for the purpose of making the note unable to circulate.

By endorsing you get the added bonus of diluting the Fed's liability on the note.

A note has individual and joint liability to all endorsers.


Ever wonder why you sign the back of a check? It makes you liable if the check bounces. Your the last endorser.






Hands off m yBox's picture

Ever tried to wipe with anything else?

cowdiddly's picture

,Yea after trying to use three quarters, two dimes and a nickle and you begin to comprehend a dollar bills REAL intrinsic value.


Rich from PDT's picture

For one simple reason... because we (and most of the world) agree to exchange them with each other for goods and services.


No Cucks, No Fags, No Weak White Men!

TVP's picture

THANK GAWD FOR CENTRAL BANKS! How would we EVER live without them managing our currency and lives?  

Maybe Million Dollar Bonus can chime in on this one?  

Akzed's picture
MONEY LAW The Coinage Act of April 2, 1792 (1 Stat. 246)


The Congress shall have Power To...coin Money, regulate the Value thereof, and of foreign Coin.... Article I, Section 8, Clause 5

Old hat, I know.

Fathead Slim's picture
Fathead Slim (not verified) Akzed Dec 22, 2016 9:58 PM

Notice, though, that there is no grant of power in that article for Congress to hand off that power to a cartel of private banks.

Also old hat.

negatratoron's picture

It is a valuable service to mint a light, transportable currency that cannot easily be counterfiet.  The only reason the US dollar wouldn't be a successful currency would be if they literally counterfieted it themselves.  Some people think they might actually do this, which is why they store their wealth in other commodities like gold.

northern vigor's picture

I kept having a recurring thought as I read this. Years ago I bought a history book on the TD Bank, written in the late 1950s.

The Toronto bank managers in the 1860s envied the largest bank in Canada, the Bank of Montreal. At the time, the chartered banks had to keep gold to issue dollars. The Canadian government did not issue dollars yet. The CEO of the Bank of Montreal loaned it's gold to the US government during the Civil War. The US dollar was depreciating in value quickly as the Confederate side was winning the war. To make things worse, the arms manufacturers in the north east could not get credit to manufacture. Lincoln borrowed the B of M gold, by putting up US dollars as collateral, and then paid high interest rates. The B of M then loaned the US dollars to the US arm manufacturers. The old Irishman running the bank was double clutching every one, and making huge profits. The Toronto managers stood there with their noses pressed up against the proverbial window of opportunity, too scared to loan their gold out.

blindman's picture

economics is voodoo and bullshit,
just like debt money. so it goes...
Steve Earle Guitar Town / My Old Friend The Blues
bills have value because employees are
ordered to accept them for services and
release of possession and security control
of "property". it is a trance soaked in
ignorance, ongoing, the basis of perverted "culture".
you can see it on t.v..

Rehab Willie's picture

100 years ago you could buy an oz of gold for $20.00.  

Today, that $20.00 is worth $1.00 and gold is $1100.00


Nobodys Home's picture

An ounce then and an ounce now will still buy you the same things.

YourAverageJoe's picture

In 2011, an ounce of gold would have bought $1850 worth of stuff. Today it will buy $1100.

Guess who bought in 2011?

DarkPurpleHaze's picture

Year end predictions that sounded a lot like the year before etc.


“Gold Market Will Break This Year!” Andrew Maguire, Craig Hemke, & Max Keiser Break Down GOLD MANIPULATION

In the latest Keiser Report, Max and Stacy interview two precious metals analysts – Craig Hemke and Andrew Maguire.  The two give their forecasts for the gold market and discuss the latest in several admitted cases of gold price manipulation:

http://www.silverdoctors.com/gold/gold-news/andrew-maguire-craig-hemke-m... A perfect example of fake analysis that they hope no one remembers or paid attention to.


logicalman's picture

The US dollar was originally defined as 'three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver.'

Gold came in quite a bit later.

Silver and gold are both harder to counterfiet than any paper.


Clock Crasher's picture


Due to the financial irresponsibility and incompetence of your leaders

Cobra has found it necessary to restructure your nations economy

We have begun by eliminating the worthless green paper

Cobra's Economic Recovery Plan


If you want money to buy food for your children

Bring all your valuables to the nearest branch of ...

There, all goods will be exchanged for Cobra Currency!

jfb's picture

Very true. Now something related to the "cashless paradise" that they are trying to sell. In India when they banned the 500 and 1,000 rupees notes, the people who could not get ride of them easilly or who had no bank account were selling them at a discount. More than 80% of the notes were returned in the banking system, and now the remaining notes are traded with a _premium_ even if they have no legal tender. Ultimatelly it's the people who decides which money they want to use.

You will see the samething when they try to abolish cash in the West (as long they do it suddenly): Most people will rush to the bank to deposit their notes even with ZIRP because they will think that their notes & coins have no value by government decree. Then the banks will steal them 10%, 20% (NIRP) to inflate their capital and the notes that weren't withdrawed from the system will gradually worth more than previously when the people wake up. But notes can not last indefinitelly, something shinny will have to replace them, any idea which metal?

Uranium Mountain's picture

I traded $486 fiat USD today for 25 Silver Eagles today.  Feels good... 

blindman's picture

The Triplets of Belleville (2003) - Belleville Rendez-

0hedgehog's picture

Since the end of gold/silver backing behind fiat currencies they have become FAITH based only. Once that faith diminishes, it's a relatively short path to worthlessness. The world will be forced back onto a metal standard in my humble opinion. China will likely be first to return.