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Constitution Lecture Extra: Coining Money and Legal Tender

Shane Killian 2 views

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Money is not a "thing" - money things are monetary instruments which have three requirements: an issuer, a denominated value, and a guarantee to accept it in payment brThe "legal tender" notice on a Federal Reserve Note (a dollar bill) says "all debts public and private" The public part is you can only discharge your liabilities to the government with the government's own monetary instruments, and you can only enforce through the legal means of the court system the settlement of private debts with the government's monetary instruments
Comment from : @elsiegel84

Unfortunately most people don't know what money is or at least what it's supposed to be You could make banknotes backed by ice cream and it is considered money Granted your commodity isn't long lasting but it is tangiblebrbrTake crytocurrencies for example While some may argue that they're not backed by anything, I haven't looked into every form of it yet, but there is one example that does have tangible worth beyond a medium of exchange brbrEthereum is backed by the miners providing secure cloud based computing While not strictly a commodity, more of a labor, cloud based computing will never be worthless in the right hands Or at least that's what I understand it's backed by from watching a few videos explaining the difference between it and Bitcoin to say that it wasn't competing with Bitcoin
Comment from : @brainstormsurge154

You should do a lecture talking about allodial title property ownership and how to exercise it by getting a land patent
Comment from : @Me-fj5vv

So, what's your take on Social Credit Shane
Comment from : @Lobsterwithinternet

Yeah, except they blew it They made the American dollar a smaller mass than the Spanish dollar, so all people had to do was take their dollars down to Florida and exchange them for Spanish dollars since Congress had fixed the exchange rate at 1:1 Capital flight, Gresham's Law, and all that
Comment from : @shanedk

Hmm, did not know that I need to study this document in a serious in-depth fashion I'm tired of being confused by its provisions
Comment from : @regelemihai

It was It gave the Federal government the power to coin money; it didn't give them the power to stop private individuals from doing the same thing As long as the coin was genuinely gold or silver, and contained the proper amount, it wasn't counterfeit
Comment from : @shanedk

"In that case, why does it matter if the gov't or the states set legal tender?" Separation of powers The Feds coin the money, the states make it legal tender
Comment from : @shanedk

"How is that giving them the liberty to set legal tender?" The Constitution doesn't enumerate state powers, like it does with Federal powers The states have a power unless it's specifically restricted by the Constitution The states have the power of legal tender because they've always had the power of legal tender; the Constitution restricted the states to just making gold or silver coin legal tender, not paper money or whatever
Comment from : @shanedk

"They HAVE that power, they can only just use gold or silver coin to do that" But that's my pointHow is that giving them the liberty to set legal tender?It's like saying, you have the right to choose the topic of your research paper,but it has to be the topic that your professor gives youIt strikes me as being contradictory Not that I'm against the Gold Standard, or sound money, mind you I'm very much an Austrian It's just taht the language of the constitution sometimes baffles me
Comment from : @regelemihai

"why is it significant that the Federal government doesn't have a right to establish legal tender?" Because it's not a Federal power under the Constitution "even if that power is reserved to states( and not to the federal gov't), in what way is it imporatant if the states themselves do not have that liberty either?" They HAVE that power, they can only just use gold or silver coin to do that And the founders knew very much the importance of sound money
Comment from : @shanedk

You mean the "funds effective rate" There's no such thing as the "effective funds rate" That's just a weighted average based on domestic securities Look at the ACTUAL funds rate, taking ALL loans between banks into account Also look at the prime rate
Comment from : @shanedk

I don't know what rate they're using, but it's neither the prime rate nor the funds rate Are you sure that isn't the TARGET funds rate?
Comment from : @shanedk

Why the hell would businesses take out loans to expand their production and hire new people if no one is buying their products? "Paul Volker proved that in no uncertain terms" What? No he didn't, he proved that you can cut down inflation by raising the federal funds rate and bringing unemployment to 108, I doubt anyone would argue with that We only recovered once the fed started to lower rates again coupled with massive deficit spending by Reagan
Comment from : @newdimensionfilms

@shchpendrop You've just made the case for the gold standard Congratulations
Comment from : @TrippingTheTube

@shchpendrop "The problem with a gold standard is that it makes it too difficult for the government to finance its expenditure" That's a feature, not a bug "and tax revenues tend to be low in times when high spending is necessary" BULLSHIT EVERYONE needs to cut back in a recession, ESPECIALLY government!
Comment from : @shanedk

@christo930 Correct
Comment from : @shanedk

@shanedk Raising interest rates would encourage savings and investment If the printing press could create capital, all countries would be wealthy All printing money does is distort the market and causes bubbles and inflation
Comment from : @christo930

@christo930 But they do that by keeping interest rates low Printing money increases the Supply of Loanable Funds, lowering interest rates Raising interest rates would reverse that
Comment from : @shanedk

@shanedk I think it will take the global economy down with it, that is, if the fed raises interest rates If the dollar starts to collapse, if they keep printing money (though it has slowed down a great deal), it will collapse the dollar and by extension, the world's banking system
Comment from : @christo930

@christo930 That's inevitable anyway The question is, do we take the rest of the economy down with them?
Comment from : @shanedk

@shanedk I agree with you that we need higher interest rates and greater savings, but right now, the gov is doing everything they can to stifle savings and keep interest rates artificially low Unfortunately, if the Fed defends the dollar and raises interest rates substantially, the banks we just bailed out will all be insolvent because they are loaded up with low interest bearing bonds (private and gov) as well as mortgages and those low interest bonds will collapse in price
Comment from : @christo930

@andrewhirsch Except that the only way you can do that is to misconstrue the clause in a way that cannot be defended logically
Comment from : @shanedk

@andrewhirsch "Some may argue that your logic is false, saying that A1S10 means "the States may make gold and silver legal tender"" And that argument would be wrong The Constitution does not grant powers to the states; it only restricts state powers The only way to get there would be to grossly misquote the Constitution "May make gold and silver legal tender" from a logical POV is VERY different from "make no thing other than gold and silver legal tender"
Comment from : @shanedk

@andrewhirsch This is only true to a degree Congress was calling for Paul Volker's head on a platter when he raised the fed target rate to over 20, but they were unable to stop him (he did have the support of Reagan though, the ONLY good thing Reagan did while in office) This was necessary to restore confidence in the USD and get inflation under control after the 60's and 70's inflation and led to high savings which financed the boom of the mid 80's
Comment from : @christo930

@johnrainrules No I was conceding his point but explaining my actual position I'm also not taking this that seriously
Comment from : @sharperguy

@sharperguy So the law is a fallacious appeal to authority when you don't like the implication, but a valid appeal to authority when you do
Comment from : @johnrainrules

@shanedk Technically yes, although a valid one You're right - in some contexts it's relevant I'm just plainly not that interested in it It's like debating the intricacies of copyright law when really I just want it abolished
Comment from : @sharperguy

@sharperguy The Constitution is THE LAW If someone robs a store, and a policeman arrests him for breaking the law, is it appeal to authority?
Comment from : @shanedk

@andrewhirsch I don't really think the constitution is relevant It's simply an appeal to authority
Comment from : @sharperguy

@andrewhirsch "Therefore, to coin money and to make gold and silver legal tender are two distinct powers, but that is not to say that to coin money and to make other things legal tender are distinct powers" That's a COMPLETE perversion of the clause! "make no thing but gold and silver coin a tender" is a RESTRICTION Meaning they HAVE the power to make a tender (DESPITE the prohibition on coining money), hence the NEED for that power to be restricted!
Comment from : @shanedk

@andrewhirsch They already do that in a manner of speaking Except the taxing is in the form of money and the buying back is in the form of commodities payed for by the taxes
Comment from : @sharperguy

@andrewhirsch "This simplistic argument" It's NOT a "simplistic argument"--it's a FOUNDATIONAL PRINCIPLE OF THE DOCUMENT! Enumerated powers means that the Constitution MUST grant a power to the Federal government in order for the Feds to be able to do it Section 10 shows QUITE CLEARLY that the clause YOU are using about gold and silver coin IS SEPARATE FROM the power to coin money Your logic DOES NOT FOLLOW
Comment from : @shanedk

@andrewhirsch "Only gold and silver can be used as legal tender BY THE STATES, but that does not directly implicate the US" The US IS NOT GIVEN THE POWER TO DO IT AT ALL! It's NOT THERE! It DOESN'T EXIST! Remember that the claim is that the US has the power to establish a legal tender because it's included in the power to coin money As I DEFINITIVELY showed, IT ISN'T! And if it's not in the Constitution, the Federal government CAN'T DO IT! Why is this so difficult for some people to grasp?
Comment from : @shanedk

@andrewhirsch The Constitution is based on enumerated Federal powers If it's not an enumerated power, the Feds can't do it End of story
Comment from : @shanedk

@andrewhirsch Since only gold and silver could be used as legal tender, that's the only kind of money the Federal government could create
Comment from : @shanedk

@andrewhirsch Preferably nothing
Comment from : @sharperguy

@TrippingTheTube Coining money is taking a round piece of metal and stamping an image on it Making legal tender is passing a law requiring people to use a certain money to pay off debts
Comment from : @shanedk

@shanedk Great explanation Do you mind elaborating a bit on the difference between "coining" money and "making legal tender"? It's a little confusing to figure out how that would work and the difference between the two
Comment from : @TrippingTheTube

@Desertphile See what I mean? Petty and childish
Comment from : @Virgil0211

@Virgil0211 ; Yes, I have only one problem with much of what Shandk says: a lot of it is silly, asinine pseudo-libertarian crap
Comment from : @Desertphile

@aggrajag2813 yeah
Comment from : @sharperguy

@Desertphile Do you have a problem with what Shanedk says in his videos? If so, why not make video responses Frankly, off-hand remarks such as this seem a bit petty
Comment from : @Virgil0211

@sharperguy It's not about what people will use; it was about preventing the government from running a fiat money
Comment from : @shanedk

@aggrajag2813 Yeah I get how they are good monies, I just don't see why it should be prescribed by any law If it makes a good money people will use it
Comment from : @sharperguy

@sharperguy Traditionally gold and silver are used as legal tender because they're pretty scarce and have little application in other uses You could also use something like platinum, I suppose, but you'd have a REALLY limited money supply Really anything can be used as currency (some early colonies used tobacco, which worked pretty terribly, but it illustrates the point), but gold and silver work exceptionally well
Comment from : @Islayallday1582

@evensgrey I agree that wars are expensive and that printing money helps Wars are not fought with $, but guns and tanks Guns and tanks are a factor of production not money We could, and probably would, make the same amount of guns and tanks with out fiat currency The government is like a drunk, and fiat currency is like an ABC store that delivers The deliveries from the ABC store enable the drunk and make it easier, but by stopping deliveries will not stop the drunk from drinking
Comment from : @SpamSpamNEggs

@PanzerDivisionBOM I will agree that I am not sure Congress ever had the authority to create the system in first place While it isn't exactly a private bank, it isn't exactly a national state bank either, it's a quasi-public institution I agree with Shane that it was created in this way to get around the constitution, but obviously it was effective
Comment from : @christo930

@evensgrey It also made it easier to phase them out after the war and return to sound money, which was done The Confederacy had no sound money, only fiat money The Confederate government exchanged dollars for the Confederate money but didn't get the gold or silver backing them up HUGE mistake!
Comment from : @shanedk

@Desertphile No one should accept everything ANYONE says We weigh everything we hear and try to be objective Shane knows what he's talking about even if he's not infallible
Comment from : @regelemihai

@wakeangel2001 Gold and silver are actually not particularly good conductors They're used in electronic components usually as a means to prevent corrosion There are plenty of substitutes for their use there
Comment from : @Islayallday1582

@Desertphile And I agree 100 That's why I base everything in these videos on logic and reasoning, and not any kind of assertive authority (because I ain't one)
Comment from : @shanedk

@wakeangel2001 I think silver has enough uses nowadays to make this a good point, but in the case of gold it's still primarily used as a monetary metal, and only incidentally as an industrial metal
Comment from : @shanedk

@teapotstrikesback Um, no, not in ANY WAY
Comment from : @shanedk

@sharperguy Our founders understood very well the importance of sound money and how ruinous fiat currency can be They had just gone through it, after all
Comment from : @shanedk

@regelemihai ; Nobody should accept everything Shanedk says in his videos
Comment from : @Desertphile

@Altimadark For the same reason the Catholic church doesn't want people to read the Bible: they want to be able to TELL you what it says instead of you thinking for yourself
Comment from : @shanedk

@Altimadark No, they have you do useless things like memorize the preamble
Comment from : @shanedk

I love your constitutional lecture series They've helped me quite a bit!
Comment from : @regelemihai

@Altimadark Actually, that got me wondering; why doesn't the government-run public school system put more focus on the constitution, the very document which is supposed to define that government?
Comment from : @Redmond17

Very eye-opening I _almost_ wonder why constitutional studies aren't a bigger part of the public school system; they certainly weren't that important when I went through it
Comment from : @Redmond17

@christo930 It's not owned by them in any practical sense; it only is on paper because they were doing an end-run around the Constitution
Comment from : @shanedk

@shanedk No it isn't It is only quasi public since it has to turn over it's profits to the treasury It is owned by it's member banks and is not subject to federal oversight While the president and congress appoint the chairman, they can't simply remove him at will or install a new one at will
Comment from : @christo930

Great video! Thank you
Comment from : @RakishTilt

What if there was a state that didn't consider gold or silver a viable tender, would it be OK for them to reject any "money" based on gold and/or silver? Just curious
Comment from : @squirreljester2

@OtherGonzo The way they did in the Coinage Act
Comment from : @shanedk

How would the federal government have the power to regulate the value of coin if they did not have the power to create legal tender?
Comment from : @OtherGonzo

@baryonyx550 The Fed mints the coins and the states make the tender Separation of powers
Comment from : @shanedk

@christo930 The Federal Reserve is part of the Federal government Congress chartered it and appoints the board members and the Chairman And the government pulls that kind of crap all the time Just look at Social Security
Comment from : @shanedk

As much as I would like to agree with this, the federal gov is not creating any fiat money, the federal reserve, a private/public bank issues the fiat currency To further illustrate this, the federal gov has to pay interest on any money the fed creates to buy bonds If the fed gov were issuing dollars, it wouldn't make any sense to pay interest to itself
Comment from : @christo930