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Different objects were used traditionally for money, for example gold, silver, pepper. All of these objects as far as I know have had some real value in industry beside their value as money. My question is whether money that has no value beside its value as money has a chance of becoming money without state laws? For example can something such as “BiCoin” (http://en.wikipedia.org/wiki/Bitcoin) gain popularity as money in the free market?
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The fiat money is horrible, it inflates and it is unstable. Why people still use it for transaction? Why don’t people return to gold? Its not that it is illegal to use non-fiat money in private transactions.
When you read the single page of this thread, the 27 pages in this thread, and the two pages in this thread and can bring something new to the discussion, it may be worth it to have a new thread about bitcoin.
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Maybe? The market is a process of discovery. If the Bitcoin gains wide enough acceptance then it may very well become an accepted form of money. I am personally tired of fiat currencies and believe that faster the world switches from using fiat money to gold or silver or some other element that exists the better.
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People must accept legal tender: US Dollars for all debts public and private. THen to make matters worse as people would still try to do business in real money vs the fiat crap, the US Government puts onerous taxes on gold and silver.
When you say people have to accept dollars in payment, what do you mean? As a private citizen I have no obligation to accept dollars as payment from someone, I can make any contract I want, I might require payment in bananas or pepper if I want to.
The courts will overrule you, and they will also establish a trade ratio between whatever you contracted in and dollars.
Listen to the last 5 minutes (the Q&A) of:
The Economics of Legal Tender Laws (by Jorg Guido Hulsmann):
http://mises.org/media/1521
Learn about the full weight of legal tender laws and it’s effects (historically and today):
http://www.youtube.com/watch?v=z-xR-xB84XQ
Government is “entitled” to a piece of the action, the books must be kept in fiat etc
I think the second half of the video is relevant on why people use the current fiat money.
Paul Einzig in ‘Primitive Money’ lists all sort of things that were used by people as currency. A quote from it :
“China is practically the only country about which we possess detailed evidence concerning the early evolution of her primitive currency. Terrien de Lacouperie in his ‘Catalogue of Chinese Coins’, produces a chronological list of the outstanding numismatic events from the earliest time to the 17th century A.D. It is based largely on W. Visserig’s standard work ‘On Chinese Currency’, published in 1877, and it is confirmed by a recent translation of an early work on the economic history of Ancient China. The pre-Chinese population of China had used cowries shells as a medium of exchange. When the Chinese arrived on the scene (24th century B.C.) they found cowries in general use. The Chinese invaders, who for many centuries constituted a minority of the population, regulated the circulation of cowries as well as that of tortoise-shells and other shells. Reference to cowries appear in ‘Ya-King’, the oldest Chinese book. The same book also mentioned tortoise-shell currency, used for large payments which would have required too many cowries. The use of cowries and other shells by the early Chinese as currency is also indicated by etymological evidence. The words denoting ‘buying’, ‘selling’, ‘riches’, ‘prices’, ‘cheap’, ‘dear’, and many others referring to money and wealth contain the ideographic sign denoting the word ‘shell’.”
I haven’t read much about bitcoin, but anything will be used as money if there is a group of people that exchange with each other and they all trust it.
To me bitcoin can be manipulated by stealing it’s code and competition would be heavy. Having said that it might be in regular use in virtual transactions. Traditional money used for production of physical goods , i think, pretty much has to be a commodity; it cannot be replicated easily (w/o effort) and will be accepted at a relative value at any given future time point.
People use FRN’s because they are misled into thinking that is money. It mostly serves for medium of exchange (no one saves money anymore) There are all kinds of laws that make different things “legal tender” or “money” or a “dollar”
read this for specifics: http://www.fame.org/pdf/viera_Texas_Law.pdf (an austrian (school) legal scholar)
Actually, private businesses can refuse Federal Reserve notes.http://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx
I have thought about pricing the wine in my tasting room in pre-1965 silver. I would need to find a coin change machine that could be adjusted to issue the right amount for FRNs.
Your use of FRNs is entirely voluntary. I was thinking I could save quite a lot on state sales tax in this way.
pennies aren’t federal reserve notes.