A stable dollar with no help from the FRN

[Elwar]

I've figured out a way for We The People to have a stable dollar no matter what the Federal Reserve does as far as printing as much money as they want.

No longer accept new money.

Pick a year (maybe 2006 when we changed from our historic green money to adding blue and purple) and do not accept any FRN from that year on. Put signs in stores, "No 2006+ money accepted". Everyone starts dealing only in money that has been printed already.

They're not printing any more <2005 FRNs. There's a stable amount of them, they would even depreciate over time as they are destroyed or lost.

Kuwaitis had a stable currency for years. War broke out and their currency was no longer printed. But they kept using it. It became a stable trading currency used for years. They didn't switch to gold, they just stuck with a currency that's no longer printed.

Once enough shops and businesses started doing it, then the old currency would become more valuable and people would gravitate toward it. Businesses that still accept the new currency would be given only the new currency as people save their old bills for the other businesses. People would deposit their new currency to banks. And when a banker goes to give you new bills, demand pre-2006 bills (you don't have to just be a business to only accept the old currency). You'd have banks that would start dealing only in old currency if their customers demand it.

Who will still use the new currency? The government. Pay all of your government taxes and fees with your worthless new currency, it's legal tender, they have to take it. They can take the new dollar and dump the value into the toilet.

Eventually the currencies would split off. A currency exchange between old dollars and new dollars would have to be set up. You could buy a meal with $10 of the old currency, or $100 of the new currency. The government would inflate the new currency like Zimbabwe and pay off all of their debts. But the debtors would be stuck with worthless new currency. The debt would be fulfilled and the people of America would still be just fine trading in our stable currency.

[erowe1]

I've figured out a way for We The People to have a stable dollar no matter what the Federal Reserve does as far as printing as much money as they want.

No longer accept new money.

Pick a year (maybe 2006 when we changed from our historic green money to adding blue and purple) and do not accept any FRN from that year on. Put signs in stores, "No 2006+ money accepted". Everyone starts dealing only in money that has been printed already.

They're not printing any more <2005 FRNs. There's a stable amount of them, they would even depreciate over time as they are destroyed or lost.

Kuwaitis had a stable currency for years. War broke out and their currency was no longer printed. But they kept using it. It became a stable trading currency used for years. They didn't switch to gold, they just stuck with a currency that's no longer printed.

Once enough shops and businesses started doing it, then the old currency would become more valuable and people would gravitate toward it. Businesses that still accept the new currency would be given only the new currency as people save their old bills for the other businesses. People would deposit their new currency to banks. And when a banker goes to give you new bills, demand pre-2006 bills (you don't have to just be a business to only accept the old currency). You'd have banks that would start dealing only in old currency if their customers demand it.

Who will still use the new currency? The government. Pay all of your government taxes and fees with your worthless new currency, it's legal tender, they have to take it. They can take the new dollar and dump the value into the toilet.

Eventually the currencies would split off. A currency exchange between old dollars and new dollars would have to be set up. You could buy a meal with $10 of the old currency, or $100 of the new currency. The government would inflate the new currency like Zimbabwe and pay off all of their debts. But the debtors would be stuck with worthless new currency. The debt would be fulfilled and the people of America would still be just fine trading in our stable currency.

Unfortunately, they've got that covered. It's illegal.

[Elwar]

It's illegal.

How is this? There's no law stating that a business *must* accept paper currency or coins as payment.

Ever seen a sign saying "We don't accept bills larger than $50"?

From the US Treasury web site
http://www.ustreas.gov/education/faq/currency/legal-tender.html#q1

"The pertinent portion of law that applies to your question is the
Coinage Act of 1965, specifically Section 102. This is now found in
section 392 of Title 31 of the United States Code. The law says that:
"All coins and currencies of the United States, regardless of when
coined or issued, shall be legal-tender for all debts, public and
private, public charges, taxes, duties and dues."
This statute means that all United States money as identified above
are a valid and legal offer of payment for debts when tendered to a
creditor. There is, however, no Federal statute mandating that a
private business, a person or an organization must accept currency or
coins as for payment for goods and/or services. Private businesses are
free to develop their own policies on whether or not to accept cash
unless there is a State law which says otherwise. For example, a bus
line may prohibit payment of fares in pennies or dollar bills. In
addition, movie theaters, convenience stores and gas stations may
refuse to accept large denomination currency (usually notes above $20)
as a matter of policy.
Bottom line: Even though currency is labeled as "legal tender for all
debts, public and private", it is not mandatory that any particular
denomination of currency be accepted as payment of a good or service."
http://tweezersedge.com/archives/2003/08/000077.html

[LibertarianfromGermany]

Even if there's no law against it now; if this got anywhere close to the point of working, they'd just create a new law forcing people to accept it. And didn't the Feds force you to accept greenbacks, too?

[Elwar]

And didn't the Feds force you to accept greenbacks, too?

They used to be legally exchangeable for gold. Then they ended that and made gold illegal.

[LibertarianfromGermany]

They used to be legally exchangeable for gold. Then they ended that and made gold illegal.

Yes, I know, but that is exactly my point. When they had a problem, they just changed the laws and made gold illegal. If you just refuse to accept dollar notes printed after a certain year and as a consequence thereof all notes printed after that would be devalued, the government would just outlaw that practice and put you in prison for it.

[Elwar]

the government would just outlaw that practice and put you in prison for it.

Well, then what's the point of fighting for any freedom if the government is just going to outlaw that freedom down the road?

[LibertarianfromGermany]

Well, then what's the point of fighting for any freedom if the government is just going to outlaw that freedom down the road?

I'm not saying you shouldn't fight for freedom, but I think there are way better ways to do it. If you want sound money, you should try to opt out of the government system completely, using PMs, etc. Because when the government then makes a law saying that you have to accept all dollars, the people that lose will be the ones that didn't accept the newly printed dollars for they will be equal after the government intervention. What you want to do is store your wealth in something other than USD that is not subject to complete control by the government and which you can hide and trust in its future value.

[Icymudpuppy]

Most "Printed Money" isn't actually printed anymore. It's all electronic. Cash is a very minor player in today's economy.

[sevin]

It wouldn't work because most money is digital anyway.

[Krugerrand]

I like the idea. I agree w/ the German that the risk/reward is out of whack. Efforts would be better spent to get a state to nullify legal tender laws that are counter the constitution.

Congress gets to coin Money, regulate the Value thereof, and of foreign Coin. No state shall coin Money or make any Thing but gold and silver Coin a Tender in Payment of Debts.

States can nullify taxes on PM gains. States can clear the path for private sector coining of gold and silver that can be used as legal tender. The state that does this first will be ahead when Uncle Sam prints his way out of his current debt obligations.

[Elwar]

It wouldn't work because most money is digital anyway.

I've been running into an ever increasing amount of people that deal only in cash. I've never seen this before. Obama's changing quite a bit.

[erowe1]

How is this? There's no law stating that a business *must* accept paper currency or coins as payment.

Ever seen a sign saying "We don't accept bills larger than $50"?

From the US Treasury web site
http://www.ustreas.gov/education/faq/currency/legal-tender.html#q1

"The pertinent portion of law that applies to your question is the
Coinage Act of 1965, specifically Section 102. This is now found in
section 392 of Title 31 of the United States Code. The law says that:
"All coins and currencies of the United States, regardless of when
coined or issued, shall be legal-tender for all debts, public and
private, public charges, taxes, duties and dues."
This statute means that all United States money as identified above
are a valid and legal offer of payment for debts when tendered to a
creditor. There is, however, no Federal statute mandating that a
private business, a person or an organization must accept currency or
coins as for payment for goods and/or services. Private businesses are
free to develop their own policies on whether or not to accept cash
unless there is a State law which says otherwise. For example, a bus
line may prohibit payment of fares in pennies or dollar bills. In
addition, movie theaters, convenience stores and gas stations may
refuse to accept large denomination currency (usually notes above $20)
as a matter of policy.
Bottom line: Even though currency is labeled as "legal tender for all
debts, public and private", it is not mandatory that any particular
denomination of currency be accepted as payment of a good or service."
http://tweezersedge.com/archives/2003/08/000077.html

Good points.

But as I think about it more, I still don't think it works.

First of all, your plan says "everyone," as though there's some way just to institute this plan and "everyone" just voluntarily goes along with it. And it would have to be everyone too. But that's really just a fantasy that there's no way of getting "everyone" to go along with, short of a law telling them what they can or must accept as legal tender, which is the very thing you're trying to counteract.

If some businesses decided to band together and refuse post-2005 (or whatever year) FRN's, while otehr businesses accepted them, then people with post-2005 FRN's would shop where they can spend those, and the shops participating in boycotting that money would lose business. Meanwhile, the government would still accept all FRN's at their face value for taxes. Also, I think that, while a business could refuse them for goods and services, it would still be illegal to refuse them in payment of actual debts. So pre-2005 and post-2005 FRN's would still be of equal value in paying of all debts.

If the plan really did work, and the pre-2005 FRN's came to be in less supply and simultaneously in greater demand than post-2005 FRN's, then Gresham's law would result in the pre-2005 ones getting hoarded while people would spend the less valuable post-2005 ones instead. This suggests to me that the businesses participating in such a scheme would be compelled by their own interests to give up on it eventually.

[Elwar]

Good points.

But as I think about it more, I still don't think it works.

First of all, your plan says "everyone," as though there's some way just to institute this plan and "everyone" just voluntarily goes along with it.


I was figuring that it were to start and people saw old dollars as better than new ones they would start getting rid of their new dollars and want to accept only old ones.

You could even put up in your store an "inflation tax" on all new bills, and peg a 5% per year tax on each newer year. You'd start to demand old bills when going to the bank knowing that they're giving you less valueable money.

There would be hoarding...but as that occurs the shift in mindset would see the new bills as worth less. And thus it would become more common for people to put a surcharge on accepting them.