Silver, Copper, Nickel and the Slow Death of Money

[midwesterner (banned)]

[dumdeedoe]

Drats... I just tried to buy a 12 pack of soda at a grocery store and they wouldn't take my stamps as currency.....

[frankq]

Snappy comeback Mid. Now, care to address the question?

[midwesterner (banned)]

Feb 22, 2011 21:22:07 GMT -5 frankq said:

Snappy comeback Mid. Now, care to address the question?

Explaination for Q-TIP to try to understand, though usually outwitted, there might be hope here. Let's hope this time he can conceive the concept and actually respond in a thoughtful manner the to new concept he has not been exposed to before. Let us hope.

Gresham's law

Gresham's law is commonly stated: "Bad money drives out good", but is more accurately stated: "Bad money drives out good if their exchange rate is set by law."

This law applies specifically when there are two forms of commodity money in circulation which are required by legal-tender laws to be accepted as having similar face values for economic transactions. The artificially overvalued money tends to drive an artificially undervalued money out of circulation [1] and is a consequence of price control.

"Good" money is money that shows little difference between its nominal value (the face value of the coin) and its commodity value (the value of the metal of which it is made, often precious metals, nickel, or copper.)

In the absence of legal-tender laws, metal coin money will freely exchange at somewhat above bullion market value. This is not a purely theoretical result but may instead be observed today in bullion coins such as the South African Krugerrand, the American Gold Eagle, or even the silver Maria Theresa thaler (Austria). Coins of this type are of a known purity and are in a convenient form to handle. People prefer trading in coins rather than in anonymous hunks of precious metal, so they attribute more value to the coins. As there is also demand from coin collectors, coining is frequently profitable.

On the other hand, "bad" money is money that has a commodity value considerably lower than its face value and is in circulation along with good money, where both forms are required to be accepted at equal value as legal tender.

In Gresham's day, bad money included any coin that had been debased. Debasement was often done by the issuing body, where less than the officially specified amount of precious metal was contained in an issue of coinage, usually by alloying it with a base metal. The public could also debase coins, usually by clipping or scraping off small portions of the precious metal. Other examples of "bad" money include counterfeit coins made from base metal.

Examples

Silver coins were widely circulated in Canada (until 1968) and in the United States (until 1965 and 1971). However, these countries debased their coins by switching to cheaper metals as the market value of silver rose above that of the face value. The silver coins disappeared from circulation as citizens retained them to capture the higher current or perceived future intrinsic value of the metal content over their face value, using the newer coins in daily transactions. In the late 1970s, the Hunt Brothers cornered the worldwide silver market and drove the price far above its historic levels, intensifying the extraction of silver coins from circulation.

The same process occurs today with the copper content of coins such as the pre-1997 Canadian penny, the U.S. one-cent coin and the pre-decimal UK copper pennies and halfpence.

Gresham's law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be accepted at equal value under legal tender law) quickly becomes dominated by the "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keeping the "good" ones for themselves. Legal tender laws act as a form of price control. In such a case, the artificially overvalued money is preferred in exchange, because people prefer to save rather than exchange the artificially demoted one (which they actually value higher).
Consider a customer purchasing an item which costs five pence, who possesses several silver sixpence coins. Some of these coins are more debased, while others are less so—but legally, they are all mandated to be of equal value. The customer would prefer to retain the better coins, and so offers the shopkeeper the most debased one. In turn, the shopkeeper must give one penny in change, and has every reason to give the most debased penny. Thus, the coins that circulate in the transaction will tend to be of the most debased sort available to the parties.
If "good" coins have a face value below that of their metallic content, individuals may be motivated to melt them down and sell the metal for its higher intrinsic value, even if such destruction is illegal. As an example, consider the 1965 United States half dollar coins, which contained 40% silver. In previous years, these coins were 90% silver. With the release of the 1965 half dollar, which was legally required to be accepted at the same value as the earlier 90% halves, the older 90% silver coinage quickly disappeared from circulation, while the newer debased coins remained in use. As the price of bullion silver continued to rise above the face value of the coins, many of the older half dollars were melted down. Beginning in 1971, the U.S. government gave up on including any silver in the half dollars, as even the metal value of the 40% silver coins began to exceed their face value.

A similar situation occurred in 2007 in the United States with the rising price of copper and zinc, which led the U.S. government to ban the melting or mass exportation of one-cent and five-cent coins, respectively.

en.wikipedia.org/wiki/Gresham's_law

Question answered. Boy oh boy, you really continue to make a fool out of yourself each and every time you post. Give it up Q-TIP, your never going to win. There is a big difference between me and you, I listen and open my mind to new ideas, you close yours. This is why you lose, and will always lose in life.

[verrip1]

Mid wrote:

Question answered. Boy oh boy, you really continue to make a fool out of yourself each and every time you post. Give it up Q-TIP, your never going to win. There is a big difference between me and you, I listen and open my mind to new ideas, you close yours. This is why you lose, and will always lose in life.

You see. This is exactly what I have been talking about. Mid says he "listen and open my mind to new ideas". Yet Mid has the most closed mind on the board. Mid believes that the only possible investments ever, at any market cycle, are physical gold and silver.

It is MID who is the exemplar of close-mindedness. It is MID who cannot see the broad panorama of investment vehicles and closes his mind to a simple few.

MID is the pumper.

[midwesterner (banned)]

Feb 22, 2011 22:32:13 GMT -5 verrip1 said:

Mid wrote:

Question answered. Boy oh boy, you really continue to make a fool out of yourself each and every time you post. Give it up Q-TIP, your never going to win. There is a big difference between me and you, I listen and open my mind to new ideas, you close yours. This is why you lose, and will always lose in life.

You see. This is exactly what I have been talking about. Mid says he "listen and open my mind to new ideas". Yet Mid has the most closed mind on the board. Mid believes that the only possible investments ever, at any market cycle, are physical gold and silver.

It is MID who is the exemplar of close-mindedness. It is MID who cannot see the broad panorama of investment vehicles and closes his mind to a simple few.

MID is the pumper.

See, this is classic example of how one can not adapt to the changes. I never did say one investment class was all there is, I am saying we are in wealth preservation mode, and massive wealth will be lost or redistributed in the coming years.

Those as named above, fail to see this trend, yet peg me as close minded. I laugh at that, seeing as I was in stocks and still am a little, but now have adjusted my stratiegy to preserve my wealth with a gain attached bonus attached to it.

But don't worry, everything is fine, nothing has changed, empire is doing great, debt is not an issue, and we are a very, very strong nation able to create goods from our fine factories all over the states. Employment is at all time high, no worries about inflation, or anything of that sort. Just keep pumping wall st. like they want, and all will be fine.

There Verrip1 and Q-TIP, just repeat what I said above and fill in the blanks with that whenever you feel the need to agrue with me about my views, and the angry that you express instead of just ignoring me is obvious in that you have deep seeded issues about what if MID is right. That's ok, just do as I said above, and all will be fine.

I'll save you few cardboard boxes and markers you can write whatever you want on when that time comes. I do like a nice car wash every so often, or a shoe shine might be nice. ;D

[kman]

Just keep pumping wall st. like they want, and all will be fine.

Pumping the commodity exchange is different...is that correct Mid?

[midwesterner (banned)]

Feb 22, 2011 22:54:01 GMT -5 kman said:

Just keep pumping wall st. like they want, and all will be fine.

Pumping the commodity exchange is different...is that correct Mid?

Yep, I pump money, not paper. But you wouldn't understand, so back to wall st. with you.

[frankq]

Mid, you didn't answer the question, just a babble about gold. Why did all that money from the market selloff go into Treasuries if the USD is dead? In addition, as asked previously and have yet not gotten an answer, what stocks do you own? How can you own stock and call for market crashes at the same time? Me thinks the answer is that you are a bullshit artist extarordinaire!

[midwesterner (banned)]

Feb 23, 2011 13:32:36 GMT -5 frankq said:

Mid, you didn't answer the question, just a babble about gold. Why did all that money from the market selloff go into Treasuries if the USD is dead?

I did answer your question. Not even sure you know what your asking??? I showed you how this law and principle works.

LOL, USD is Dead, not at this very moment silly man. It's happening daily with inflation.

See folks, Q-TIP can not win a debate, won't answer my questions, then demands I answer his. He uses very simple 3rd grade tactics like " I can go into a store and buy a coke with a buck, so it's not worthless, hahaha, I win, MID silly". Now this is childish, and shows he hasn't the brains, or is unable to debate without being civil.

Again we go back to inflation, and I just can't seem to get you to understand that concept, so let's just drop it. I'll continue to put the truth out there for those that wish to hear it, you can live in bubble land and enjoy your cardboard box with the markers I'll send you so you can stand outside begging for what you need in live.

Q-TIP, I don't say this litely, but you are by far the most close minded and black and white thinking person with an ego complex, and stubborn as heck person I have EVERY talked with. No joke, you are pretty closed minded and sound silly daily after I school you constantly, you come back for more abuse. It's getting to the point I don't even want to play with you cause it's sort of cruel to pick on the weak.

I see this little kid swinging his arms at the big guy, and the big guy (MID) is just sticking his hand out on his forehead to stop the little bugger from landing a punch.

Give it up Q-TIP, your retirements will probably tank on your current course, and your laughing will be crying once all this comes to a head. Sorry, but we warned you of the problems ahead, you don't listen, can't feel sorry for you one bit cause you have all the information at your fingertips. You realize how many people would love to be exposed to this information on this board???

More than you can imagine.

[frankq]

Now Mid,

Don't make me spank you again here like I did on the "End of America" post. Take another Prozac. When you settle down, you can take your thumb out of your mouth so we can all understand you and we'll continue our conversation.

[Virgil Showlion]

Mid and Frank: take it outside. Any further posts by either of you in this thread will be deleted.

Any further attacks against each other will be moved to the DOGFOIL thread.

- Virgil (Mod)

[kman]

There is a DOGFOIL THREAD?

[Aman A.K.A. Ahamburger]

K4Q!

[frankq]

Wow. Looks like I've been censored. I guess that's how it's done in Canada.....

[domeasingold]

Be careful what you say about Illinois state pensions.

[kman]

Mid told me " he got out of his 401k and IRA" he has some select stock and of course metal.


I never did get an answer as to what get out of my 401k means...self directed?...cashed took the penalty???

It just could be...he has no idea what he is talking about.

[frankq]

Mid. You should see the Canadian Rockies by motorcycle. Next, you should really take in the wilderness areas about 250 miles north of Thunder Bay. Lots of excellent bow hunting for black bear and good walleye fishing. Personally, I like Manitoba for big pike. Of course, if you're driving, it's tough to beat Eagle Lake for great all around fishing, one of my favorite spots. Andy Myers Lodge at Vermillion Bay is the best hands down. I can hook you up with a trip if you want......

[frankq]

Feb 24, 2011 20:35:43 GMT -5 kman said:

Mid told me " he got out of his 401k and IRA" he has some select stock and of course metal.


I never did get an answer as to what get out of my 401k means...self directed?...cashed took the penalty???

It just could be...he has no idea what he is talking about.

Well there is only one way to "get out" of an IRA or 401K and that comes with a 10% spanking plus the tax. Lots of survivalist types did that not long ago. They should earn their money back right around the time Haley's Comet returns...

[Virgil Showlion]

Grrrr! What part of "Any further posts by either of you in this thread will be deleted." do you fellows not understand?

Now I have to go and copy your posts to the deletion log on the admin board, and that means I have to log into the admin board...

And... then I have to click the delete button twenty times...

Hm. "Move posts". Never tried that before. Let's see how it goes...

ETA: It worked. Frank, Mid, in sticking to my guns, your attacks on each other's retirement plans can now be found in the proud DOGFOIL Zone (keep it bookmarked).

You may continue to post in this thread so long as your comments are neither directed to nor make any mention of each other. Any comments that don't meet this standard must be posted in the DOGFOIL zone.

- Virgil

[decoy409]

Well I made a point Virgil and Frank Q. can't seem to grasp the response. So, I am through trying to get through to him.
He tried to make a 'valid' point, I corrected him, and he cares not to be corrected when he is not correct.
So I give up trying with him. If you have noticed, I really have not even been addressing him. However people should not be believing that the note is still backed by gold as it once was.

[kman]

When was I uninvited?

[Virgil Showlion]

Kman and decoy, you are both reasonable people and are welcome to post your opinions re: nickle, copper, and the slow death of money at your leisure.

[decoy409]

Did ya here that Kman! Now that makes my day! Thanks Virgil!

[kman]

We should have that post bronzed Decoy.

When the hell did we become centrists.

[frankq]

Yes Decoy you are indeed reasonable. Tell me, has the FEMA death camp train you discussed in past posts made any stops in your neck or the woods yet? I mean, they must have some plan for those..uh.. what was it, a million coffins? LOL!

[Virgil Showlion]

Congrats, silverbugs.

• Buying Silver At A Time When Even The Canadian Mint Says "It Has Sold Everything It Has"
• Paul Mylchreest: Gresham’s Law Squared – Gearing Up For Game Over

  "It’s getting serious, Gresham’s Law is kicking in and this isn’t any “run-of-the-mill” Gresham’s Law either – it’s “Gresham’s Law Squared”. Not only is there huge hoarding of gold and silver, but it is being compounded by the simultaneous transformation of the gold and silver markets themselves. Having been dominated by paper claims to bullion, all that matters now is ownership of the physical metal itself."

• And the coup de grace: Silver Backwardation Surges To Over $1.00

To my fellow Canadians, props if you were able to buy silver while you still could.

But remember...


There. Is. No. Inflation.

Repeat after me.

There. Is. No. Currency. Crisis.

Good. One more time.

There. Is. No. Inflation.

And again...

[kman]

It's a lump of metal...face value means nothing

[Virgil Showlion]

It's a lump of metal...face value means nothing

It's money and it can't be willed into existence by some insane pseudo-dictator at a central bank. That alone makes it an almost one-of-a-kind nonperishable asset.

[kman]

A rare Model A pick up truck becomes reliable transportation..no longer a collectors item.