Re:Upside-Down World of Negative Rates Is Coming for U.S. Sa...
by kragen on Tuesday March 17, 2020 @03:19PM
(#22609051)
Also, I'd like to point out that historically speaking it's quite common for mints to substitute cheaper metals in new issues of the same coins; this has happened since at least the Roman empire. The most conspicuous case of this in the US was when in 1965 the mint replaced the silver quarter and dime with silver-plated copper and the copper penny with copper-plated zinc; of course silver-plated copper quarters had existed in the US since at least the 1800s, but at that time they were called "counterfeit quarters". You can read about them in Huckleberry Finn.
Of course coin collectors and anyone dealing in bullion will not treat the coins as equivalent, and historically speaking this is one of the reasons for stamping the year and mint mark on the coins, but this is entirely at the discretion of the mint; there's nothing stopping them from issuing new "gold" coins with a lower percentage of gold and the same year mark, except for the same kind of social pressures that prevent the government from simply expropriating the contents of your bank account (as they did here in Argentina in 2001) or refusing to pay its bonds (as is happening here in Argentina right now.)
You might object that the United States isn't Argentina. But until just before 2001 Argentina wasn't Argentina either, not as we know it today; its troubles were behind it and it was the model country the IMF would show off to demonstrate how effective its economic recovery plans could be, even as the economy was gradually hollowed out. People living in the US, a country whose stock market just fell by 30% in a month and which didn't manage to produce or allow the importation of a reasonable number of COVID-19 tests until this weekend (although Korea, Japan, Germany, Taiwan, and China had no trouble with this) may find this sounds familiar.
If someone is concerned about the banking system expropriating their savings, it is not a reasonable response to offer them an alternative that makes it easy for banks, stockbrokers, or the government to expropriate their savings. That's precisely the kind of threat they want to defend against.
Of course coin collectors and anyone dealing in bullion will not treat the coins as equivalent, and historically speaking this is one of the reasons for stamping the year and mint mark on the coins, but this is entirely at the discretion of the mint; there's nothing stopping them from issuing new "gold" coins with a lower percentage of gold and the same year mark, except for the same kind of social pressures that prevent the government from simply expropriating the contents of your bank account (as they did here in Argentina in 2001) or refusing to pay its bonds (as is happening here in Argentina right now.)
You might object that the United States isn't Argentina. But until just before 2001 Argentina wasn't Argentina either, not as we know it today; its troubles were behind it and it was the model country the IMF would show off to demonstrate how effective its economic recovery plans could be, even as the economy was gradually hollowed out. People living in the US, a country whose stock market just fell by 30% in a month and which didn't manage to produce or allow the importation of a reasonable number of COVID-19 tests until this weekend (although Korea, Japan, Germany, Taiwan, and China had no trouble with this) may find this sounds familiar.
If someone is concerned about the banking system expropriating their savings, it is not a reasonable response to offer them an alternative that makes it easy for banks, stockbrokers, or the government to expropriate their savings. That's precisely the kind of threat they want to defend against.