Recently I had a discussion on the Seeking Alpha financial website with someone who claimed that “silver is not money.” I took issue with what he said and made this reply to him. I have left out names.
Is Silver Money?
First and foremost, it seems to me you are ignoring the historical reference of money and silver being used as such. It seems you claim that by some government decree we should ignore said history. The government decree being in 1971 when Nixon took us off the gold standard. Any history major doesn’t discount slavery because there is no slavery today. It is embedded since Biblical times.
Silver is a store of value and money. It can be exchanged for goods, services or scrip of the day. It can be utilized as money when fiat systems (of which throughout the history of mankind they always do), implode. How is this time any different? How will this come about, this miracle of debt reduction? Do you really believe in the Tooth Fairy? Or in this case, the Bernanke Fairy?
American Silver Eagles Are Legal Tender
Right now, in the U.S., silver is still money, as the U.S. Mint stamps a dollar figure on the American Silver Eagles they produce. But is the value of the Silver Eagle what it can be exchanged for or the $1 face amount? If silver is not money, then it is only worth $1 by your definition. Which is it? I mean after all, it is deemed legal tender just as Federal Reserve Notes are.
A better question to answer would be, why did the bankers object to the average citizen bringing in their dug up silver to the banks in the early 1900’s and creating their own coins? How could this possibly upset them? It upset them because the one’s digging up the silver were interfering with their monetary system. Bankers don’t like competition. That’s why they met in Jekyll Island and created the Federal Reserve System to begin with. They wanted a monopoly on the creation of money.
The Constitution Says Silver Is Money
Silver was used as coinage (which is the Constitutional definition of money, Article 1 Section 10) until 1964.
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
A 1964 Roosevelt dime could buy you a loaf of bread in the year of mint and the value of silver content in a Roosevelt dime, over $2.00, can buy you a loaf of bread today. How? All you need to do is exchange it for the current scrip (FRN’s).
One cannot take Icelandic Krona, German Marks, Mexican Pesos or Argentine Pesos during their currency devaluation and maintain the same purchasing power. They could have exchanged those currencies for silver or gold prior to the devaluation and you still can today.
Are Federal Reserve Notes Money?
Can today’s fiat bills, aka, Federal Reserve Notes, be called money? Can money be a debt? What is the definition of the word “note?” Are they a store of value? What really backs Federal Reserve Notes?
Silver (and of course gold) are no one’s debt. Silver and gold are money because they stand the test of time (centuries, not 4 decades) as such and stand the test of government intervention into the monetary system (which failed twice before in the U.S. I might add).
Would our government be allowed to take our nations debts to the levels they have, sans any “declared” wars if Federal Reserve Notes were not removed from their ties to silver and gold?
Silver Is Also Insurance Against Government Abuse of the Monetary System
Silver and gold are not just money, but insurance against what our government has done to our monetary system since the enactment of the Federal Reserve Act of 1913. There is no logical way out of the hole they have dug except through inflation. While we may agree on the short term aspect of things being deflationary as we experience the credit contraction caused by the banks loaning fractionally more than their historic norms (another discussion), no politician will ever get elected by saying they will tax you more. Think Walter Mondale here.
But they will raise taxes.
And I never said that inflation is the only way government pays for things. I said “Future inflation is the only way that leviathan can pay for things (as opposed to increasing taxes and risking revolution).” The government has control of everyone’s 401k’s, IRA’s and pension plans, as well as tax-deferred annuities. They can raise taxes to 95% if necessary as they did during WWII. See what I wrote in February 2008 on this: Which Would You Prefer, Higher Taxes or Higher Inflation?
Revolution would come, just as it has in Greece, where the government paid union workers can’t keep feeding off the government troth. Government threatens austerity and cutbacks, rather than raising taxes and people revolt. Why? Because Greece can’t print their own money. Luckily for us in the U.S., we can print our own money right? I mean, how would we pay for things? $2 trillion plus deficit? No problem. Hey Fed, cut us another check will ya? We’ll pay you interest forever…until we can’t any longer.
Revolution Or Civil War?
If half the U.S. citizens revolt because of higher taxes, the other half, aka government employees, will be on the other side. Talk about your civil war, lol. I’m trying to prevent such from happening. But it’s much easier for the government to keep paying wages to its employees by debasing the currency rather than taxing its citizens more. Pay them in discounted dollars. Keynes knew about this. But the citizenry is much more aware today. And they buy silver and gold to maintain their purchasing power. Whether or not there is a return to Constitutional definitions and use as such is somewhat moot.
People have free will to do what they want based on the debate you and I are having and come to their own conclusions. Time will take care of who is right. I hope you are right. That’s what my second book is trying to accomplish. However, I am also including ideas on what to do now to prepare should you be wrong. I care more about our future as a gold dealer than our own government does. I am a realist. Congress can’t see their nose past their last paycheck and lobbying black tie function.
Speaking of Free Will – Buy Silver Today
I don’t push my company that often in my articles. I sell gold and silver at just 1% over my cost and my prices are guaranteed to be the lowest. I also only sell bullion gold and silver with no bait and switch to other, high commissioned products like most every other gold dealer does. Many people don’t know that gold and silver can also be put in one’s IRA. I wrote a book helping investors learn more about gold and silver, before buying. The book is called, “Buy Gold and Silver Safely” and is available on Amazon.com or here, as well as Kindle and other places. Click here to learn how you can purchase the book. But for those who know they need to acquire some silver, I have the following to say…
Silver is selling at a discount over just a few weeks ago. Dollar cost averaging into a position now makes sense. The future price appreciation, guaranteed by government and Federal Reserve monetary destruction is plain for all to see (or at least anyone who has read my articles over the years). People will look back at the prices today and say to themselves, why didn’t I buy at those low prices? Perhaps you said this just a few weeks ago when you saw the price move higher and higher. A 90% silver bag is still the best buy when it comes to silver. Thy are the old quarters and dimes that used to be money here in the U.S. The cost to acquire them is presently a little higher than 1% over spot as opposed to the American Eagle Silver Coins which are presently more than $4 an ounce over spot because of lack of allocation to gold dealers from the U.S. Mint. This low price and cost to acquire the 90% bags won’t last. No one is selling. At some point the premium to acquire will be much higher. It was as high as 9% not too long ago. Call 888-604-6534 and speak to a representative of Buy Gold and Silver Safely today and see about about acquiring some silver. A few years from now you’ll be glad you did (if not sooner).
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About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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