In the US, minting of money is a privilege reserved to the Federal government. Anyone can make a bullion medallion in coin-like form, buy and sell these, but not state that these are money.
This proposal is that the US Mint should make a series of coins out of precious metals. These coins should not have a face-value but rather a published value. At any time that it should become uneconomic to make and distribute the coins at the current published value, a new, higher value can be established.
The technical term for such a coin is token money. Many forms of token money already circulate. Any form of money with a legal value higher than its material cost is a form of token money. One hundred dollar bills circulate just fine even though their material cost is almost nothing.
Previous token money coins made of silver and gold have gone out of circulation. This happens whenever a coin's material cost is greater than the legal value.
The interesting feature of these proposed coins is that there would never be a need to retire them from circulation.
The social value in this proposal it that it provides a means of saving which is outside of the control of banks and which favors ordinary people rather than the rich. This is true because it is not hard to guard a few coins but large accumulations require expensive storage to preserve the holding.
A chance of bettering one's situation requires savings until the savings can be exchanged into an income-producing mechanism. Presently, all savings are being stolen, little by little. This is not a fair system.
Beyond the problem of institutionalized theft, there are some other problems that this proposal will solve. Currently, the market value of precious metals is subject to manipulation. This is possible because in these markets, price is not determined by delivery of actual metal. While the exact reasons for the manipulation are debatable, the effect is to discourage and dishearten those who hold precious metals because they see problems in the present management of the country.
In the present US political system, it is possible for the elected officials to engage in very dubious projects without any form of effective oversight. Normally, the need to raise taxes to fund bad ideas would lead to an eventual discussion with the targets of taxation. That does not happen in the current system. Projects are funded through deficits and other forms of indirect taxation that do not lead to productive discourse about the costs and benefits of the various proposals.
So instead of dealing with the effects of bad decisions in the present, the effort needed to solve difficult problems is pushed into the future. Many people, some very prominent such as Alan Greenspan, believe that this will eventually lead to a reduction of freedom in the US. It may be that the cumulative effect of generations of bad policy will lead to social disruption to the extent that force would required to maintain the stability of the country. The idea of armed gangs of police forces entering people's homes and neighborhoods is not aligned with the social values taught in schools to the children. This discordant reality will affect the voluntary goodwill of the general public and increase the difficulty of the situation even further.
In such a difficult pass, some might even advocate for a return to the mythical gold standard. Mythical because the idea exactly backing of the dollar with some amount of metal was always an approximation to the truth. The amount of money effectively in circulation will vary depending on many factors including that of simple confidence and mood of the public. What always happened in the past was that, when the mood turned dark, the ability to deliver the supposed backing of the dollar would fail. But what would not fail is the ability of the more powerful party to influence the legal process to allow the suspension of contract. So the old gold standard was of great benefit to some people at the expense of the less influential general public.
Proposals to re-establish the gold standard or calls to back the dollar with gold should be viewed with great suspicion. The proposal mentioned below is not that kind of thing at all. In fact, it is the exact opposite. Instead of backing the dollar with gold, it can be thought of as backing gold with the dollar. So long as the melt value of the proposed coins moves below the set price, the coins circulate as money. Suppose the melt value rises due to inflation but the public officials fail for some reason to raise the published monetary value of the proposed coins. In this case, the holder of the coins is no worse off and can simply exchange the coins at their bullion market value as is done at present.
So this proposal has two main values. It immediately would give savers a recourse against the possibility of theft of their savings by negative interest rates or forms of inflation. By allowing this outlet, it would eventually lead to politicians engaging in constructive dialog with the people they supposedly represent. It would accomplish these goals gradually and without force. This would be good. The alternatives to enacting this proposal lead, in my opinion, to much negative use of force and are against the principles essential to the organization of the United States and that outcome would be bad indeed.
A BILL
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To establish a series of precious metal circulating coins
with a published rather than an engraved monetary value
and to provide a means of savings for low income Americans.
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Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
This Act may be cited as the `Quoted Value Coin Act'.
SECTION 2. FINDINGS; PURPOSES.
(a) Findings- The Congress finds the following:
(1) Silver and gold coins have been part of the monetary system
of the United States in the past but these coins no longer
circulate because the face value of the coins is less than
the market value of the metal in the coins.
(2) The Constitution of the United States requires that the Federal
government provide gold and silver coins as part of the circulating
money of the United States.
(3) Given the history of inflation over the period of the last 100
years and the likelihood of continuing inflation, any engraved
dollar amount on a coin is likely to render the coin obsolete
and cause it to not circulate as described in Item 1 above.
(4) A coin with published value where the value could increase with the effects
of inflation would render the coin immune to the effects of inflation
and the coin could continue to circulate despite the effects of
inflation.
(5) The current rate of return provided by banks to savings account
holders is less than the rate of inflation and savers therefore
lose purchasing power by holding their money in bank accounts.
(6) Holding money in the form of cash also results in a loss of
purchasing power over time as a result of inflation.
(7) Other options for investing such as stocks and bonds require
more knowledge, sophistication and accumulated funds than
may be possessed by low income persons and such people risk
loss of their saved money should they choose to so invest.
(8) A precious metal coin could provide a means for low-income citizens to save
money in a form that would maintain purchasing power over time.
(b) Purposes- The purpose of Section 3 of this Act is to establish precious metal
coins as circulating money of the United States of America.
SECTION 3. QUOTED VALUE COIN ACT
(a) The US Treasury shall cause the US Mint to issue coins of gold, silver, and
other precious metals.
(1) The series of coins may be referenced as the "Quoted Value Coin" series.
(2) The coins shall be offered in metals, sizes, and weights as the public
demands except that once offered, the metallic composition, size, and
weight of the coin may not be altered.
(3) The metallic composition of the coins in the series shall be consistent
with the requirements for circulating money.
(i) Each coin must be recognizable by the public.
(ii) Each coin must be recognizable by mechanical devices.
(iii) No individual coin may be uniquely identified so as to result
in a loss of anonymity in commerce.
(iv) Each coin must have characteristics of durability and resistance
to counterfeiting.
(4) The initial coin in the series shall contain one troy ounce of silver
to be followed immediately by a coin containing one troy ounce of gold.
(5) The artistic design of the coins shall be the responsibility of the
US Mint subject to the following requirements.
(i) The coins must be recognizable by the public as legal money of
the United States and as part of the "Quoted Value Coin" series.
(ii) The coins must state the predominate metal contained in the coin,
the weight in grams of the predominate metal contained in the coin,
and the total weight of the coin in grams with precision sufficient
to aid in the detection of counterfeits.
(iii) The coins must contain words or markings to indicate the following,
"This coin has a quoted legal tender value published by US Treasury".
(6) The coins shall be produced and distributed by the US Mint in quantities
and qualities sufficient to meet public demand.
(7) The coins may be sold in bulk by the US Mint at a discount from the legal
tender monetary value.
(8) Collectable versions of these coins may be produced and sold by the US Mint
at a higher price than the legal tender monetary value of the coins.
(9) Worn coins which are still recognizable as coins in this series shall
be replaced with new coins by the US Mint so as to maintain the
integrity of the circulating coins of this series as money
counted by tale.
(b) The US Treasury shall establish a legal tender monetary value and publish the
current legal tender monetary value of the coins of the "Quoted Value Coin" series.
(1) The legal tender monetary value of a coin shall be established by the market
value of the precious metal plus the other costs of coin production which may
include materials, equipment, labor, management and distribution costs plus a
two percent markup with the total amount being rounded up to an even dollar
amount.
(2) The legal tender monetary value of a coin shall be increased from time to time
as needed to maintain the legal tender monetary value above the costs of the
precious metal content and the other costs of coin production.
(3) An increase of the legal tender monetary value shall apply both to newly minted
coins and to all existing or circulating instances of a coin and all coins of the
same composition and weight shall have the same legal tender monetary value.
(4) The legal tender monetary value of the coins shall never be decreased.
(c) Excess profits from the sale of the coins shall be applied.
(1) to the reduction of the debts of the United States of America.
(d) Possession of these coins shall never be prohibited.
(e) The confiscation of these coins by any government agency shall never be allowed
except as a result of conviction of a criminal act.
(f) Possession of these coins shall never be the basis of suspicion of a criminal act.
(g) An increase of legal tender monetary value of these coins shall not be considered
a taxable gain to the holders of the coins.
SECTION 4. TIME FOR COMPLIANCE
(a) Coins meeting the requirements of this Act must be made available to the public
within six months of the passage of the Act.
