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Should Gold and Silver Be "Illegal" Tender?

By J.J. Jackson, published Dec 01, 2007
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Years ago, if you wanted to buy something you paid in coins minted from, or at least backed by, precious metals. United States currency, for example, was backed by gold held by the government - hence the term "gold standard". You're dollar was backed by a dollars worth of gold which in theory you should have been able to get by simply turning in your dollar.

Since that time however a lot has changed. The dollar is no longer primarily backed by the tangible, but rather the intangible. It is basically backed by itself on the condition of the stability of the United States government, the productivity of the citizens of the United States and the willingness of foreign countries to use it as a guarantee of their own currency.

This, of course, is problematic because of a pesky little thing called the United States Constitution which states, "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts ". So if no State can do this, then how can they allow a currency issued by the federal government to be used by their citizens?

A quick scan of all the amendments made to date shows no repeal of that clause was ever made. Which means that it is still valid and "the law".

To me, at least, it seems we have a bit of a problem even though to me it doesn't really matter what the dollar is backed by. Although there are many that are indignant at anything other than what they want used as a basis for value being used. My opinion is that as long as whatever backs the dollar is valued, it doesn't matter what that something is.
Everything that could be proposed to back the dollar has periods of highs and lows. I don't care what you come up with. Even the value of gold fluctuates with supplies, new sources being mined, old sources drying up and even plain old demand just as the value of the perceived stability of the American government and its promises to back its own currency do.

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Very interesting article!

Posted on 12/26/2007 at 11:12:24 PM

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