The Benefits of the Fair Tax
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19-02-2014, 11:58 AM
RE: The Benefits of the Fair Tax
(19-02-2014 11:12 AM)Chas Wrote:  We used to have silver dimes, quarters, half dollars, and dollars. Their values were fixed and not tied to the value of the metal.
The metal itself does not change the face value of the coin - regardless of the metal, it is fiat currency.

I have to agree, *if* a denomination is stamped on it or some other fixed equivalence is placed on it. The moment the 'dollar' was created, we had a fiat currency, even though precious metals used to be involved. However, the ending of the gold and silver standards, made unlimited inflation possible - which is of course, a very regressive hidden tax that hits wage earners the hardest.

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19-02-2014, 12:17 PM
RE: The Benefits of the Fair Tax
(19-02-2014 11:46 AM)frankksj Wrote:  
(19-02-2014 11:12 AM)Chas Wrote:  Did you miss this? U.S. coinage has no precious metals whatsoever.

First, that's wrong. Article one of the US Constitution says "shall not... make any Thing but gold and silver Coin a Tender in Payment of Debts". The original US $ coins WERE gold, and anything else is actually a violation of the constitution. Regardless, even when the US was minting coins of copper for convenience, since gold was too scarce, such as the 50's and 60's, it still was NOT a fiat currency, because 3,500 copper pennies were convertable on demand into 1 oz. of pure 24-carat gold (the 1 oz of gold was pegged at $35). So, in 1970, all coins, no matter what they were made of, could be converted into pure gold. That's representative currency, meaning it represents a commodity, so whoever is issuing it, and whether it's made of paper or some cheap metal, the issuer must exchange it for the commodity that backs it up.

The whole point of a representative currency is one thing: to prevent the issuer from just making more of it. So, all this discussion is really irrelevant until you answer the core question: Should the central bank (in the US, it's owned by the big banks) be able to make as much currency as they want so that if they want money they just print it and devalue the money that's already in circulation (fiat currency)? Or should they be required to convert it into a commodity at a set price to ensure that if they want money, the have to get it from the people transparently (representative currency)?

You still haven't answered. Which is a better system? fiat or representative?

Really where does it say that?


Section 10.
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.
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's [sic] inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.


Huh lets see we cut out the part that makes your statement a lie. It is forbidding states from making currency not the federal government.

(31-07-2014 04:37 PM)Luminon Wrote:  America is full of guns, but they're useless, because nobody has the courage to shoot an IRS agent in self-defense
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19-02-2014, 02:05 PM
RE: The Benefits of the Fair Tax
(19-02-2014 11:46 AM)frankksj Wrote:  
(19-02-2014 11:12 AM)Chas Wrote:  Did you miss this? U.S. coinage has no precious metals whatsoever.

First, that's wrong. Article one of the US Constitution says "shall not... make any Thing but gold and silver Coin a Tender in Payment of Debts". The original US $ coins WERE gold, and anything else is actually a violation of the constitution. Regardless, even when the US was minting coins of copper for convenience, since gold was too scarce, such as the 50's and 60's, it still was NOT a fiat currency, because 3,500 copper pennies were convertable on demand into 1 oz. of pure 24-carat gold (the 1 oz of gold was pegged at $35). So, in 1970, all coins, no matter what they were made of, could be converted into pure gold. That's representative currency, meaning it represents a commodity, so whoever is issuing it, and whether it's made of paper or some cheap metal, the issuer must exchange it for the commodity that backs it up.

The whole point of a representative currency is one thing: to prevent the issuer from just making more of it. So, all this discussion is really irrelevant until you answer the core question: Should the central bank (in the US, it's owned by the big banks) be able to make as much currency as they want so that if they want money they just print it and devalue the money that's already in circulation (fiat currency)? Or should they be required to convert it into a commodity at a set price to ensure that if they want money, the have to get it from the people transparently (representative currency)?

You still haven't answered. Which is a better system? fiat or representative?

I don't know which is better - maybe one's as good as another.

However, U.S. currency has not always been convertible to gold, and private gold ownership has been limited at various times. Paper notes were once gold certificates, then silver certificates, now neither.

So the U.S. has had de facto fiat currency.

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20-02-2014, 09:47 AM
RE: The Benefits of the Fair Tax
(19-02-2014 11:58 AM)toadaly Wrote:  The moment the 'dollar' was created, we had a fiat currency, even though precious metals used to be involved.

Not really. In the late 19th century, the Greenback was the fiat currency, which like all fiat currencies was (a) failed within 50 years and (b) was created to pay for war. The dollar survived because it was NOT fiat currency--it was representative currency that the treasury would exchange for a commodity at a fixed price.

During the major, unpopular wars the US always switch to a fiat currency to pay for the wars, since that's the only way to confiscate massive amounts of wealth from the taxpayers without having to get their approval for high taxes. BUT, after the war was over and inflation set in because of all the fiat currency printing, the US always switched back to a gold standard to return to stable prices. The big change was in 1971 when Nixon again made the dollar a fiat currency. But he clearly intended this time, he wanted it to stay fiat. He signed the pact with Saudi Arabia to ensure the world's oil could ONLY be sold in dollars, ensuring the dollar the unique status as the world's reserve currency--something that never happens to a fiat currency. And since then, the US has been willing to fit wars non-stop to preserve the currency, and, of course, unlimited fiat currency allows the government to fight unlimited wars. The US has been at almost constant war ever since.

But it is unraveling. The first thing China's new President did was sign a pack with Russia to buy oil in their currency. Every other this time this happened, the US attacked and prevented this. But China and Russia were big enough to give the US the finger. My prediction is this will eventually lead to other countries wanting to buy oil in their currency, leading to a collapse of the dollar. It would be an unprecedented situation if the fiat dollar managed to survive 50 years before collapsing. It's been tried 3,000 times in history, and has a 100% record of collapse in 50 years.
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20-02-2014, 10:14 AM
RE: The Benefits of the Fair Tax
(20-02-2014 09:47 AM)frankksj Wrote:  
(19-02-2014 11:58 AM)toadaly Wrote:  The moment the 'dollar' was created, we had a fiat currency, even though precious metals used to be involved.

Not really. In the late 19th century, the Greenback was the fiat currency, which like all fiat currencies was (a) failed within 50 years and (b) was created to pay for war. The dollar survived because it was NOT fiat currency--it was representative currency that the treasury would exchange for a commodity at a fixed price.

The thing is, even when there was a gold standard, they were free to change how much gold could be exchanged for a 'dollar', or how much silver, etc. This is still fiat, even if there is backing of some kind, because there is no guarantee of how much gold/silver you will get in the future. If you have any old silver certificates, take a look at them. They can be redeemed for "silver dollars", but the amount of silver in a dollar is not specified on them, and even before Nixon, the amount of silver in a silver dollar had dropped from one ounce to about 0.9 ounces.

What Nixon did, is change the amount to zero. But it was always fiat. Of course, fiat backed by something is still better than fiat backed by nothing, but as you mentioned, they were free to change the amounts to their convenience for financing wars, etc. If a silver certificate were exchangeable for X ounces of silver rather than "a dollar's worth", then it would not be fiat.

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20-02-2014, 10:36 AM
RE: The Benefits of the Fair Tax
(19-02-2014 12:17 PM)Revenant77x Wrote:  Huh lets see we cut out the part that makes your statement a lie. It is forbidding states from making currency not the federal government.

Uh, no. Back then currency was made at the state level. Jefferson in particular was very strongly (rightly) opposed to a central bank. So, the constitution says just what I said it did--mandated that only gold and silver be used as money.
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20-02-2014, 10:58 AM
RE: The Benefits of the Fair Tax
(20-02-2014 10:14 AM)toadaly Wrote:  The thing is, even when there was a gold standard, they were free to change how much gold could be exchanged for a 'dollar', or how much silver, etc. This is still fiat, even if there is backing of some kind, because there is no guarantee of how much gold/silver you will get in the future.

Not true. Gold was fixed at $35/oz. Look up historic gold prices. You'll note that whenever the country was on a gold standard, the gold price never fluctuates by even one penny. Nobody will sell gold for $34.99/oz since the treasure does for $35, and nobody will buy it for $35.01 since the treasury does at $35. However, don't think of it as fixing the price of gold. It's the other way around. It's fixing the value of that piece of paper. Paper currency, as well as non-precious metal coins, were nothing more than claim checks for gold.

Just like when you go to the dry-cleaner and hand in your clothes for a claim check. You'd never say that you've "fixed the value of your clothes based on that claim check". It's the other way around. The clothes are worth what they are, and the piece of paper is a claim check indicating how much clothing you will get back when you hand it in.

(20-02-2014 10:14 AM)toadaly Wrote:  What Nixon did, is change the amount to zero. But it was always fiat. Of course, fiat backed by something is still better than fiat backed by nothing...

No, before the Nixon shock every $1bill was a claim check for 1/35oz of gold. You can't be 'partial' fiat or have 'fiat backed by something'. Fiat by it's very definition means backed by nothing. They are 2 distinct systems.

Now, it IS true that on a gold standard they will sometimes change the exchange rate. But, when they do, it IS a default. For example, say there is $100b in representative currency in circulation convertible at $35/oz, and therefore the treasure is holding 2.8b oz of gold. Now, the government wants to spend $50b on a war. It has 3 choices:

1) raise it through taxation, so the people give up half what they have. This is the only honest way that is not a default, where you honor the promise.

2) Default and change the conversion rate so it's now $70/oz so the government can print the extra $100b (which actually is $50b at the old value). That means everybody just half their wealth. It's the same result as option 1, but it was done without having to get voter approval, and politicians can pretend that they didn't know what was happening. But if you had $1b, you previously had 1% of the wealth, but now, after this default, you only have 0.5% of the wealth--you DID give up half your wealth. So #1 and #2 are identical in what they accomplish, the ONLY difference is with #1 voters know what's happening, they have to write the checks, and they may second guess if it's really worth it. With #2, politicians can just around the voters and take half their money without them knowing it. I favor #1, because it respects free choice. Voters should have informed consent and willingly give up half their wealth--not have it taken in some secret backroom deal.

3) End the convertibility indefinitely. This is the same as #2, just permanent. It means now any time the government, or the big banks, want your wealth, they can take as much as they want any day without you knowing it.
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20-02-2014, 11:05 AM
RE: The Benefits of the Fair Tax
(19-02-2014 02:05 PM)Chas Wrote:  However, U.S. currency has not always been convertible to gold... Paper notes were once gold certificates, then silver certificates, now neither. So the U.S. has had de facto fiat currency.

Not true. The US has ALTERNATED between representative and fiat currency 7 times since the founding in 1776. According to the constitution the US is supposed to not have a fiat currency. Remember, fiat currency had already been tried thousands of times for centuries before the founders wrote the constitution. They knew well it was always a disaster every time.

BUT, the allure of being able to confiscate people's wealth without them knowing about it is VERY strong--especially when you want to spend it on unpopular things like war. And it's very popular with voters who don't realize they're still paying for your spending and think they're getting something for free. Remember, Nixon was mired in scandal and after the pentagon papers the fury over Vietnam was red-hot. BUT, then he dropped the gold standard so he could pay for the war by printing money, and lavishly spend on popular social programs, all without raising taxes. Voters lapped it up and he was re-elected by a landslide. Of course, throughout the 70's voters saw their buying power diminish with high inflation, their standard of living kept dropping, inequality was growing. But voters didn't realize that they were effectively paying "taxes" to cover Nixon's spending. They weren't thinking "Hey, we got scammed by Nixon. We actually DID pay for Vietnam and all those programs after all, there was no free lunch". No, voters just blamed Carter and greedy businessmen.

So, the US has several times DEFAULTED, and reverted to a fiat currency or changed the conversion rate, so it could confiscate wealth without having to get voters to approve higher taxes.
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20-02-2014, 12:53 PM (This post was last modified: 20-02-2014 01:23 PM by Chas.)
RE: The Benefits of the Fair Tax
(20-02-2014 11:05 AM)frankksj Wrote:  
(19-02-2014 02:05 PM)Chas Wrote:  However, U.S. currency has not always been convertible to gold... Paper notes were once gold certificates, then silver certificates, now neither. So the U.S. has had de facto fiat currency.

Not true.

What's not true? I said that it has had a fiat currency and that is true.

Quote:The US has ALTERNATED between representative and fiat currency 7 times since the founding in 1776. According to the constitution the US is supposed to not have a fiat currency. Remember, fiat currency had already been tried thousands of times for centuries before the founders wrote the constitution. They knew well it was always a disaster every time.

The Constitution nowhere says that. In fact, it says quite the opposite:

Section. 8.
...
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
...

The federal government is given the power to regulate the value of the currency - that is the very essence of a fiat currency.

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20-02-2014, 04:25 PM
RE: The Benefits of the Fair Tax
(20-02-2014 12:53 PM)Chas Wrote:  What's not true? I said that it has had a fiat currency and that is true.

Sorry, your facts are confused. Read the Coinage act of 1792. The Federal government could ONLY use gold and silver as money, and it actually carried the DEATH PENALTY for anyone who tried to devalue the currency. The founders saw the unbroken record of failure in fiat currencies and went on the record that they would EXECUTE anybody who tried to bring it back.

(20-02-2014 12:53 PM)Chas Wrote:  The federal government is given the power to regulate the value of the currency - that is the very essence of a fiat currency.

You're confusing currency and money. YES, they can issue WHATEVER paper notes (currencies) they wanted, like they did with the: dollar, greenback, continental, etc. And they could set the value: 1 dollar is worth 1oz of gold. BUT, the paper currency was just claim checks for the money--and the money was gold and silver. So, you can issue a paper currency that is convertible for gold and silver at a given rate what you want. BUT..... if you later change the rate or cancel the convertibility, IT IS A DEFAULT.

What if you gave your car to the parking valet and he gives you a claim check. And when you come back, he says "sorry, we're no longer redeeming claim checks for cars, we'll keep the car, but you're free to keep the claim check" ...or... "We've revalued the claim check and you no longer get your whole car back--just the wheels". What would you do? Would you call that 'theft' or at least a breach of contract? That's precisely what happened every time the US switched to fiat currency. According to the original law from the Founders this was so severe, and they knew it was such a grave risk to the economy, that doing this carried the death penalty.
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