What LBJ said about silver coinage

[gmerkt]

In 1965, when silver metallic content was taken out of US coins, LBJ said:

Our present silver coins won't disappear and they won't even become rarities. We estimate that there are now 12 billion--I repeat, more than 12 billion silver dimes and quarters and half dollars that are now outstanding. We will make another billion before we halt production. And they will be used side-by-side with our new coins.

Since the life of a silver coin is about 25 years, we expect our traditional silver coins to be with us in large numbers for a long, long time.

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.

Thereafter, the US Treasury started clawing back silver coins through the US Federal Reserve banking system. And smart citizens started hoarding 90% silver coins, which is exactly what LBJ said wouldn't happen. Up until 1967, the US Treasury continued to sell bullion silver for the fixed rate of $1.29 per oz, but eventually realized that this attempt to fix a price on silver was unrealistic and discontinued such sales.

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[lucusloc]

In 1965, when silver metallic content was taken out of US coins, LBJ said:

Our present silver coins won't disappear and they won't even become rarities. We estimate that there are now 12 billion--I repeat, more than 12 billion silver dimes and quarters and half dollars that are now outstanding. We will make another billion before we halt production. And they will be used side-by-side with our new coins.

Since the life of a silver coin is about 25 years, we expect our traditional silver coins to be with us in large numbers for a long, long time.

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.

Thereafter, the US Treasury started clawing back silver coins through the US Federal Reserve banking system. And smart citizens started hoarding 90% silver coins, which is exactly what LBJ said wouldn't happen. Up until 1967, the US Treasury continued to sell bullion silver for the fixed rate of $1.29 per oz, but eventually realized that this attempt to fix a price on silver was unrealistic and discontinued such sales.

Which is why we can never go back to a physical standard of value. Value has been decoupled from physical goods, of which silver and other precious metals are just a specific example of. There simply is not enough precious metals to serve as both a medium of exchange in an international economy and serve use as a raw material for goods in that same economy. As much as many people hate to hear it fiat currency is the only currency that can service a massive economy with enough velocity to provide the necessary productivity in trade. Without the flexibility of a fiat currency the economy would grind to a halt.

 

[Knobgoblin]

Which is why we can never go back to a physical standard of value. Value has been decoupled from physical goods, of which silver and other precious metals are just a specific example of. There simply is not enough precious metals to serve as both a medium of exchange in an international economy and serve use as a raw material for goods in that same economy. As much as many people hate to hear it fiat currency is the only currency that can service a massive economy with enough velocity to provide the necessary productivity in trade. Without the flexibility of a fiat currency the economy would grind to a halt.

How that sounded in my head.

 

[Caveman Jim]

I got a few… Come on EMP!!!

 

[VinnieBoomBah]

 

[Dungannon]

1965 bumper sticker, when I lived in Airway Heights. 'We eat Montana beef, not LBJ baloney."

 

[Quirt Evans]

In the early 1870s when the Colt SSA came out you could buy one for one ounce of gold and have enough left over for a few boxes of ammo.
Today that one ounce will still buy a SSA., (todays gold, ~$2,175).
The price of gold has been artificially held down by US policy that has dictated the US dollar be used as the benchmark for transactions in oil, (the Petrodollar).
That policy made gold not very attractive as an investment.
Now we are seeing cracks in the dam, India, China, and Russia have been buying as much gold they can.
They, (and some others,) either know, (or have a strong feeling,) that 33+ trillion. and rising, dollars of debt cannot keep going much longer.
Make no mistake, the Govt. loves inflation, it allows them to pay their debts with "cheaper" money.
The difference between "cheaper" money and "real" money is the value that is removed from the citizens ability to purchase what they want.
After all, in reality, the dollar is only backed by "The Faith and Trust" that the people have in the Govt.
When/if the people lose that "faith and trust" then the dollar won't be worth a plug nickel and gold will skyrocket in price.

 

[gmerkt]

Value has been decoupled from physical goods, of which silver and other precious metals are just a specific example of.

For the moment, this is true. Since first silver and then gold (1971, not 1933) were demonetized by the US government, they have become commodities with floating values. Which isn't good for a medium of money that flourishes with a set value.

Then there is this:

Now we are seeing cracks in the dam, India, China, and Russia have been buying as much gold they can.

If national currencies revert to having a backing by precious metals, the latter may become circulating, regular money again. After all, this was the original basis for "paper" money. It was merely a receipt for precious metals on deposit somewhere (a bank or a government vault). Over time, the basis for the US Dollar got perverted into a fiat currency with no intrinsic value backed by something of actual worth. So long as a paper currency has a solid intrinsic backing, there doesn't need to be a bunch of metal carried around in the pockets of citizens. The silver coinage functioned a fractional system for more valuable gold.

China and many oil-rich Middle Eastern states have long envisioned a gold-backed currency of some sort. The "Gold Dinar" was once seen as a possible gold backed currency in the Middle East. Once the Red Chinese transitioned away from an ideology-based government, an appreciation for gold gradually took over. It's only my opinion, but once a government has a large reserve of gold and a low debt load, they can set a nominal value on their currency that isn't necessary linked kilo for kilo to actual metal reserves. The fact that they are known to have lots of metal and sound fiscal management is sufficient to engender trust in their specie-backed currency. My guess, the Chinese wouldn't have to outright guarantee convertibility of their currency to actual metal.

The US has a large reserve of gold ("Fort Knox") but it's well known that it's no longer convertible, and worse, the fiat money supply is so big and the public debt has grown to such unreasonable levels, that the reserve isn't credible.

Convertibility of fiat currency to PM would be a sporting course in modern commerce. The variable strengths of individual economies would dictate whether it would work long term for X, Y or Z country. Creditor countries could handle it. For debtor countries, it would suck. Because creditors would be constantly raiding treasuries until they were empty. This is what happened to the US in 1971. The unique position of the US Dollar in trade was the only thing that allowed the US to continue on its path as a serious debtor nation. This is the fiscal cinder block wall that the US is on a collision course with.

 

[Quirt Evans]

Convertibility of fiat currency to PM would be a sporting course in modern commerce. The variable strengths of individual economies would dictate whether it would work long term for X, Y or Z country. Creditor countries could handle it. For debtor countries, it would suck. Because creditors would be constantly raiding treasuries until they were empty. This is what happened to the US in 1971. The unique position of the US Dollar in trade was the only thing that allowed the US to continue on its path as a serious debtor nation. This is the fiscal cinder block wall that the US is on a collision course with.

Yeah, if you look at a US debt chart, you'll see that the outstanding debt was quite small and the curve almost flat from ~1940 to ~1970.
There is a lag factor before debt increases faster than the value of production.
We saw this in the period of the Vietnam War, the policies were to have both "Guns and Butter", keep production of consumer products and the wages to buy them high, and just borrow the money to fund the war, (then the chickens came home to roost).
One of the first inklings of that duplicitous policy was the gas crunch of '73, when gas basically doubled in price within a matter of weeks.
Of course, the "official" narrative was that those evil oil companies and the evil Middle East, (OPEC,) countries were in cahoots to gouge every penny out of the US consumer.
In truth, the removal of the dollar from any connection with gold, and the "hidden borrowing" to finance the years of war came together to fleece the citizenry.

 

[arakboss]

In the early 1870s when the Colt SSA came out you could buy one for one ounce of gold and have enough left over for a few boxes of ammo.
Today that one ounce will still buy a SSA., (todays gold, ~$2,175).
The price of gold has been artificially held down by US policy that has dictated the US dollar be used as the benchmark for transactions in oil, (the Petrodollar).
That policy made gold not very attractive as an investment.
Now we are seeing cracks in the dam, India, China, and Russia have been buying as much gold they can.
They, (and some others,) either know, (or have a strong feeling,) that 33+ trillion. and rising, dollars of debt cannot keep going much longer.
Make no mistake, the Govt. loves inflation, it allows them to pay their debts with "cheaper" money.
The difference between "cheaper" money and "real" money is the value that is removed from the citizens ability to purchase what they want.
After all, in reality, the dollar is only backed by "The Faith and Trust" that the people have in the Govt.
When/if the people lose that "faith and trust" then the dollar won't be worth a plug nickel and gold will skyrocket in price.

Imagine what an ounce of one dollar bills will buy 100 years from now. If people choose to hoard gold, silver or guns, I won't blame them. Fiat currency is a joke. It serves as a convenient way to temporarily trade but long term value will not be good and it's value could plummet quickly if people lose faith in it. See hyperinflation examples throughout history.

 

[Knobgoblin]

Steel.


I Y K Y K

 

[monkeybutler]

View attachment 1851747

Steel.


I Y K Y K

 

[Knobgoblin]

View attachment 1851750

The craft pickles are a nice touch.

 

[Willysmb]

View attachment 1851747

Steel.


I Y K Y K

"This you can trust"

 

[TTSX]

History seems to suggest when the government says not to do something, that's precisely what you should be doing. The opposite is also true.

 

[Provincial]

China wants to think it will control the global currency. The problem is that while the CCP has absolute control, they are riddled with the corruption.

The Chinese Yuan is supposedly backed by gold. Not that long ago, many Chinese banks discovered that the gold backing them as actually tungsten bars with gold plating. The CCP made no attempt to fix the problem, and everyone pretended it was OK.

China has not made much progress in replacing the dollar as the global currency. The suggested options all have problems, despite how hard they are pushed. One big problem is that the currencies proposed are controlled by authoritarian governments, which makes users nervous. Their value is too subject to manipulation by the issuing governments.

The Euro remains the most likely option, but has been unable to take a very large share of global transactions. This does not mean that dollar will be king forever, just that conditions will have to change substantially.

 

[gmerkt]

Yeah, if you look at a US debt chart, you'll see that the outstanding debt was quite small and the curve almost flat from ~1940 to ~1970.
There is a lag factor before debt increases faster than the value of production.
We saw this in the period of the Vietnam War, the policies were to have both "Guns and Butter", keep production of consumer products and the wages to buy them high, and just borrow the money to fund the war, (then the chickens came home to roost).
One of the first inklings of that duplicitous policy was the gas crunch of '73, when gas basically doubled in price within a matter of weeks.
Of course, the "official" narrative was that those evil oil companies and the evil Middle East, (OPEC,) countries were in cahoots to gouge every penny out of the US consumer.
In truth, the removal of the dollar from any connection with gold, and the "hidden borrowing" to finance the years of war came together to fleece the citizenry.

The worst part, out of $28 Trillon in debt, about $23 T has come within the past 24 years. Which is not only due to an acceleration in spending, but also a reflection of an inflated USD.

The simple truth is the US is living way beyond its means, as a society and as a nation.

 

[arakboss]

US debt 34.6 Trillion and climbing quickly.

https://www.usdebtclock.org/#

 

[billdeserthills]

In the early 1870s when the Colt SSA came out you could buy one for one ounce of gold and have enough left over for a few boxes of ammo.
Today that one ounce will still buy a SSA., (todays gold, ~$2,175).
The price of gold has been artificially held down by US policy that has dictated the US dollar be used as the benchmark for transactions in oil, (the Petrodollar).
That policy made gold not very attractive as an investment.
Now we are seeing cracks in the dam, India, China, and Russia have been buying as much gold they can.
They, (and some others,) either know, (or have a strong feeling,) that 33+ trillion. and rising, dollars of debt cannot keep going much longer.
Make no mistake, the Govt. loves inflation, it allows them to pay their debts with "cheaper" money.
The difference between "cheaper" money and "real" money is the value that is removed from the citizens ability to purchase what they want.
After all, in reality, the dollar is only backed by "The Faith and Trust" that the people have in the Govt.
When/if the people lose that "faith and trust" then the dollar won't be worth a plug nickel and gold will skyrocket in price.

US ECONOMY
The U.S. national debt is rising by $1 trillion about every 100 days

The U.S. national debt is rising by $1 trillion about every 100 days

The nation's debt now stands at nearly $34.4 trillion.

www.cnbc.com

 

[gmerkt]

The Chinese Yuan is supposedly backed by gold.

I don't believe the Chinese currencies (Renminbi for internal circulation, and Yuan for international transactions) have a general convertibility provision for their gold. I've read that in international transactions in the oil business (Saudi Arabia, Russia) the Yuan has a gold backing. Which is probably more of a formal assurance to sovereign players.

many Chinese banks discovered that the gold backing them as actually tungsten bars with gold plating.

Yeah, that was a big one that got by. Actually, it involved one huge single scam of fakery concerning gold that was pledged to back loans in several banks. So it wasn't widespread. But it was a Big Gulp. It was investigated, but I don't think they came to any firm conclusions or if the gold actually ever existed. One lead in the investigation suggested it was sold below market in Hong Kong.

BUT: There is fake gold everywhere, as I've mentioned in other threads. Plenty of it here in the US.

China has not made much progress in replacing the dollar as the global currency.

They have patience. They were a "civilized" society when some of our ancestors were still wearing bear skins in northern Europe.

One big problem is that the currencies proposed are controlled by authoritarian governments, which makes users nervous.

I'm sure this is true. But at some point, there could be an international shift like, "If you can't fight 'em, join 'em."

Their value is too subject to manipulation by the issuing governments.

This is surely a possibility but doesn't square with their bulking up in gold bullion. Bait and switch is always possible later.

The Euro remains the most likely option, but has been unable to take a very large share of global transactions. This does not mean that dollar will be king forever, just that conditions will have to change substantially.

Well, I don't know. They carry a lot of debt. They have a split of haves and have nots in their member state arrangement. They are a stagnant economic region, with some bright spots. On the plus side, they seem to have a bit more fiscal restraint than the US out of necessity.

The USD will not be King indefinitely and many people thinking ahead wonder if the situation is reversible. We cannot clearly know what is in the future; we can follow trends and make predictions. Absent some major "thing" we can't now foresee, the demise of the USD seems to be not emergent. Current trends suggest it's inevitable and probable.

US debt 34.6 Trillion and climbing quickly.

Yes, that's the total gross, nominal debt. But $34.6 T includes intragovernmental debt; public debt is $28T plus. In that intragovernmental debt is a big one, that is money that the US Government has borrowed form the Social Security Trust Fund. A form of hidden debt. Not including a huge non-funded entitlements load of people who will have claims on future government monies.

year 2000, gross debt $8T
year 2024, gross debt $35T
% increase 78% in 24 years

year 2000 public debt $5T
year 2024 public debt $28T
% increase 82% increase in 24 years

2000 % of debt against gdp 33%
2023 % of debt against gdp 123%

In round numbers