The coming currency devaluation

Gold-Eagle.com ^ | Oct 10, 2003 | Cliff Droke

[Starwind]

P.S. Mind you, I'm talking about bills that are now 5-7 years old and I know of no such bills currently introduced.

Understood.

[Fledermaus]

100% correct, this article is total BS.

[Gatún(CraigIsaMangoTreeLawyer)]

The monetary treaty was a separate treaty from the Canal treaties with Panama so it's still valid. I have a copy of it somewhere; but in which box, I don't know.

Yes, okay, I'll ask my brother about this on his return and I will share it with all of you.

Were you ever in the Canal Zone? It was a wonderful place.

[Hank Rearden]

Or it could just be that the reason is the stated one - to deter counterfeiters.

As long as the old design (the one from years ago, not the most recent update) is still valid currency, why not just continue to counterfeit that? It's been done many times.

[Starwind]

The monetary treaty was a separate treaty from the Canal treaties with Panama so it's still valid

Hmmm. That's an interesting wrinkle. Presumably then, by treaty Panama would circulate the new currency, but if as the author contends the new and old currencies are not 'exchangable' that would put additional constraints on Panama to enforce same, as well as your point about the population accepting the new currency.

[Gatún(CraigIsaMangoTreeLawyer)]

Starwind, keep in mind that my brother will verify what nopardans stated.

[Starwind]

Starwind, keep in mind that my brother will verify what nopardans stated.

Independently confirmed facts are always welcomed.

[Fledermaus]

You keep referring back to post #8 like it has merit. It's parnoia bunk.

Do you think all money last forever? Would the writer of this ridiculous article make the same case for the new quarters with each state on the back?

It's obvious a lot of people do not understand how money works. The Federal Reserve, along with setting interest rates, also sets the limits on the money supply. The money supply is also measured in many ways in the form of M-1, M-2 money, etc.

The Treasury knows how much new printed money it sends out and the banks work with them to capture and destory old money. Just look at every bill we have today. Every single one has a year printed on it. They also have the signatures of the Secretary of the Treasury and the U.S. Treasurer. These change every single year.

In no way does the Treasury devalue money based on the year it was printed. If you have a cigar box full of $100 bills with a date of 1968 on them, they are still worth $100 if you deposit them into a bank. The bank will normally take that bill, especially if worn (that's an entirely different criteria) and send it to the Treasury for destruction. I don't know what the date determination the Treasury currently has, even if it's a written rule, but they do this constantly.

You can also send any bill you have that has been destroyed, say, in the wash, burned somewhat, ripped up, etc. and if the Treasury Dept. can conclude enough of the bill still exist, and it's a low percentage in many cases, they'll replace it dollar for dollar. They have ways, even without the serial number, to determine what bill it was.

And that brings up the fact of the serial number. They aren't there only to stop counterfeiting, those numbers are used to track how much cash, or M-1 money, is in circulation.

This process is one reason certain money become collector's items. I have a $2 bill (the ones with Jefferson on them) minted in 1976 that I got on the American Freedom Train that traveled around during the Bi-Centennial. It's also postmarked from the city I got it, in this case Little Rock, as they did this in every city. It's still worth $2 and the currency hasn't collapsed. Actually, I could probably get more for it on e-Bay with the Freedom Train postmark.

I also wonder if the writer of this article got all bent out of shape when, years ago, the government started redesigning all money over the $1 bill.

[Gatún(CraigIsaMangoTreeLawyer)]

I'm hitting the sack. It's almost 3:00 a.m. here in Panama (We don't go by daylight savings time.) I'll catch up later.

[Fledermaus]

P.S. The author is only basing his claims on the fact we are now putting color into the currency. As I just pointed out, they change the currency all the time.

Also, his claim that 2/3rd's of our currency is held overseas means nothing considering we in the U.S. use checks, direct transfers, and credit/debit systems more than cash.

And the fact that others in the world are using our currency isn't going to make a difference. It's still money we know is in the M-1 definiton and even it all eventually comes back to us to be exchanged. Do you think every $100 bill we found in Iraq is going to be handed out? No. That money goes to a bank and will be exchanged for newer currency or credits.

But, like in third world countries that drive older American cars, they use older American currency to really run their economies. You can go practically anywhere in the world and pay with our dollars without exchanging them for local currency. Because those people know our dollars have real value. But they to will sooner or later put them into a financial system that will lead them back to us to be exchanged with newer bills.

The way this article was written, you'd think we all are still using bills and coins from 1780.

[Starwind]

You keep referring back to post #8 like it has merit. It's parnoia bunk.

I refer to it only as a possibiliity that a two currency system may have been considered before, and hence what is being discussed is not novel. That post also introduces the point about different exchange rates, assuming such dual currency came to pass.

In no way does the Treasury devalue money based on the year it was printed

I don't believe anyone claimed that. However the article 'claims' two sets of currency will circulate, domestic and international and they won't be exchangeable except perhaps at customs and banks and with paperwork to foil money laundering (ostensibly).

If that is true (the point being questioned in this thread) the two currencies would circulate in different economies (domestic and international) and could conceivably be assigned different values by their respective markets. That mechansim - two different markets, not different years, - could devalue the domestic currency.

And that brings up the fact of the serial number. They aren't there only to stop counterfeiting, those numbers are used to track how much cash, or M-1 money, is in circulation.

Two currencies with two sets of serial numbers would not impair the ability to monitor M1, etc.

The author is only basing his claims on the fact we are now putting color into the currency. As I just pointed out, they change the currency all the time.

The author based the dual currency point on a comments from a different individual (Terry Savage) from Lawrence Patterson, not merely a color re-design. Whether that point is valid or not and its consequences (different market values, reporting requirements to exchange at borders, etc) is what I wanted to discuss on this thread.

[sarcasm]

I recall reading that the United States used a two-tiered currency system during the occupation of Germany after World War II. I believe that the occupation dollars had a different colored seal than the currency used domestically and could not be used here.

[Charlotte Corday]

If I offered the author thirty of these new worthless slips of peach colored paper in exchange for one of his precious ounces of eternal gold, you think he'd turn me down???

[Gatún(CraigIsaMangoTreeLawyer)]

If anybody is still out there:

This just came out in the local newspapers this a.m., and I’m translating it into English. I thought it would interest you. (For a little background, the National Bank of Panama is used as Panama’s central bank.)

New $20 dollar bills:

The National Bank of Panama will be distributing today throughout the entire Republic the new $20 bills issued by the Federal Reserve of the United States. The new bills are categorized as being the most secure bills in the history of the United States.

The General Manager of the National Bank (of Panama), Bolivar Parient, explained, “The old bills will be replace little by little.” The biggest difference in the new bills are found in the subtle colors of the green, peach, and blue background. (La Estrella de Panama)

Nuevo billete de 20 dólares

El Banco Nacional de Panamá distribuirá a partir de hoy en todo el país el nuevo billete de 20 dólares emitido por el Banco de la Reserva Federal de los Estados Unidos.

El nuevo billete es catalogado como la moneda más segura de la historia estadounidense. El gerente general del Banco Nacional, Bolívar Pariente, explicó que “los billetes viejos serán reemplazados poco a poco”. La diferencia más notable del nuevo billete lo constituyen los sutiles colores de fondo verde, durazno y azul. (La Estrella de Panamá)

[verity]

Wow, the depth of paranoia in this article is amazing

But very appropriate for many FR folks. :~)

[truthandlife]

Consider the source ("gold-eagle"). Look at their website. They will say anything for people to buy their gold coins.

[Phaedrus]

Tinfoil Hat time. Does the guy really think the U.S. can control currency in circulation here and overseas by passing a law? Where do these people come from?

[GOPJ]

BINGO:

This is simple absurdity to anyone of economic knowledge. New design does not mean new currency. Are there two quarter systems? Old quarters circulate overseas and 50 state quarters circulate only in America? Of course not. The sky is not falling, not on America, not on Israel, not on anybody.

[GOPJ]

NO, it's "liberal think". Silly. Lacking in facts. Totally liberal. It's NOT appropriate for FreeRepublic. Look at all the people who are poo pooing this garbage.

But very appropriate for many FR folks. :~)