“We do not believe any group of men adequate enough or wise enough to operate without scrutiny or without criticism. We know that the only way to avoid error is to detect it, that the only way to detect it is to be free to inquire. We know that in secrecy error undetected will flourish and subvert.” –J. Robert Oppenheimer
I decided to create a gallery of “King Leionidas post number memes” for others to help me apply them. I will keep this post handy in the sidebar. Each number will have multiple sources, if they exist.
I will add missing numbers and new hostings occasionally.
HERE YOU GO!!!
As of this writing, on Friday, September 11, at about 1:30 in the afternoon Central Daylight Time, the finer details of President Donald Trump’s scheduled rally in Reno, Nevada, are not known, other than there is going to be one. Time and location are not available, so this is going to pop up in the morning and we can all meet here when it really happens.
Ever wonder how close this is to the truth?
So how did this desert gambling oasis pop up? A little history from wiki:
Archaeological finds place the eastern border for the prehistoric Martis people in the Reno area.[7] As early as the mid 1850s, a few pioneers settled in the Truckee Meadows, a relatively fertile valley through which the Truckee River made its way from Lake Tahoe to Pyramid Lake. In addition to subsistence farming, these early residents could pick up business from travelers along the California Trail, which followed the Truckee westward, before branching off towards Donner Lake, where the formidable obstacle of the Sierra Nevada began.
Gold was discovered in the vicinity of Virginia City in 1850, and a modest mining community developed, but the discovery of silver in 1859 at the Comstock Lode led to a mining rush, and thousands of emigrants left their homes, bound for the West, hoping to find a fortune.
To provide the necessary connection between Virginia City and the California Trail, Charles W. Fuller built a log toll bridge across the Truckee River in 1859. A small community that served travelers soon grew near the bridge. After two years, Fuller sold the bridge to Myron C. Lake, who continued to develop the community by adding a grist mill, kiln, and livery stable to the hotel and eating house. He renamed it “Lake’s Crossing”. Most of what is present-day western Nevada was formed as the Nevada Territory from part of Utah Territory in 1861.
By January 1863, the Central Pacific Railroad (CPRR) had begun laying tracks east from Sacramento, California, eventually connecting with the Union Pacific Railroad at Promontory, Utah, to form the First Transcontinental Railroad. Lake deeded land to the CPRR in exchange for its promise to build a depot at Lake’s Crossing. In 1864, Washoe County was consolidated with Roop County, and Lake’s Crossing became the county’s largest town. Lake had earned himself the title “founder of Reno”.[8] Once the railroad station was established, the town of Reno officially came into being on May 9, 1868.[9] CPRR construction superintendent Charles Crocker named the community after Major General Jesse Lee Reno, a Union officer killed in the Civil War at the Battle of South Mountain.
In 1871, Reno became the county seat of the newly expanded Washoe County, replacing the county seat in Washoe City. However, political power in Nevada remained with the mining communities, first Virginia City and later Tonopah and Goldfield.[2][10]
The extension of the Virginia and Truckee Railroad to Reno in 1872 provided a boost to the new city’s economy. In the following decades, Reno continued to grow and prosper as a business and agricultural center and became the principal settlement on the transcontinental railroad between Sacramento and Salt Lake City.[11] As the mining boom waned early in the 20th century, Nevada’s centers of political and business activity shifted to the nonmining communities, especially Reno and Las Vegas, and today, the former mining metropoles stand as little more than ghost towns. Despite this, Nevada is still the third-largest gold producer in the world, after South Africa and Australia; the state yielded 6.9% of the world’s supply in 2005 world gold production.[12]
Gold, huh. No wonder the Democrats are hanging on to Nevada for dear life.
But, wait! There’s more:
Reno took a leap when the state of Nevada legalized open gambling on March 19, 1931, along with the passage of even more liberal divorce laws than places such as Hot Springs, Arkansas, offered. No other state offered what Nevada had in the 1930s, and casinos such as the Bank Club and Palace were popular.[citation needed] The new Nevada divorce laws, passed around 1927, allowed people to divorce after six weeks of residency instead of six months. People wishing to divorce stayed in hotels, houses, and/or dude ranches. Most divorcees left Nevada when their divorces were finalized, while some stayed.[14]
Within a few years, the Bank Club, owned by George Wingfield, Bill Graham, and Jim McKay, was the state’s largest employer and the largest casino in the world. Wingfield owned most of the buildings in town that housed gaming and took a percentage of the profits, along with his rent.[15]
Ernie Pyle once wrote in one of his columns, “All the people you saw on the streets in Reno were obviously there to get divorces.” In Ayn Rand‘s novel The Fountainhead, published in 1943, the New York-based female protagonist tells a friend, “I am going to Reno,” which is taken as a different way of saying “I am going to divorce my husband.” Among others, Belgian-French writer Georges Simenon, at the time living in the U.S., came to Reno in 1950 to divorce his first wife.[16]
Truthfully, the closest this writer has ever been to Reno is probably Tahoe/State Line, Nevada, which was also the last and only casino she ever patronized. The place gave me a headache.
UPDATE: The rally will be at Minden-Tahoe Airport, about 40 miles away from Reno. So, here’s some Tahoe info:
Lake Tahoe (/ˈtɑːhoʊ/; Washo: dáʔaw, ‘the lake’) is a large freshwater lake in the Sierra Nevada of the United States. Lying at 6,225 ft (1,897 m), it straddles the state line between California and Nevada, west of Carson City. Lake Tahoe is the largest alpine lake in North America,[4] and at 122,160,280 acre⋅ft (150.7 km3) trails only the five Great Lakes as the largest by volume in the United States. Its depth is 1,645 ft (501 m), making it the second deepest in the United States after Crater Lake in Oregon (1,949 ft or 594 m).[1]
The lake was formed about two million years ago as part of the Lake Tahoe Basin, with the modern extent being shaped during the ice ages. It is known for the clarity of its water and the panorama of surrounding mountains on all sides.[5] The area surrounding the lake is also referred to as Lake Tahoe, or simply Tahoe. More than 75% of the lake’s watershed is national forest land, being the Lake Tahoe Basin Management Unit of the United States Forest Service.
Lake Tahoe is a major tourist attraction in both Nevada and California. It is home to winter sports, summer outdoor recreation, and scenery enjoyed throughout the year. Snow and ski resorts are a significant part of the area’s economy and reputation.[6][7] The Nevada side also offers several lakeside casino resorts, with highways providing year-round access to the entire area.
Truly, it is a beautiful area to visit.
I’ll add live links to this post during the late afternoon as they become available.
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In the meantime, please post tweets and videos below of what’s going on in Nevada, and any travel stories you may have of the place.
Note: There’s a fairly lengthy bit below regarding gold / silver standards, thinly disguised as a coin essay. (Or maybe it’s the other way around.)
The famous eight weeks are now at an end…and it seems like little has changed. I can only hope that things have been going on behind the scenes, and it’s just running a couple of weeks late.
I continue to maintain that something has to happen before the elections, particularly with regards to the protesting rioting. Enough people are being harmed by this that some might begin to wonder why President Trump doesn’t do something and then blame him for not doing something. Public perception now is that it’s a Democrat Caused Thing, but quite possibly, that could turn on a dime to a perception of them being a Republican Enabled Thing since little visible has been done by Republicans to stop them. (Note that word “visible,” it’s a key word.)
Yet another component of the Big Issue.
Our movement is about replacing a failed and corrupt political establishment with a new government controlled by you, the American People...Our campaign represents a true existential threat, like they’ve never seen before.
Then-Candidate Donald J. Trump
Needs to happen, soon.
OK now for the fine print.
Please note that our menu has changed, please listen to all of the options.
This is the WQTH Daily Thread. You know the drill. There’s no Political correctness, but civility is a requirement. There are Important Guidelines, here, with an addendum on 20191110.
We have a new board – called The U Tree – where people can take each other to the woodshed without fear of censorship or moderation.
And remember Wheatie’s Rules:
1. No food fights
2. No running with scissors.
3. If you bring snacks, bring enough for everyone.
4. The first rule of gun safety: Don’t let the government take your guns.
5. The gun is always loaded.
5a. If you actually want the gun to be loaded, like because you’re checking out a bump in the night, then it’s empty.
6. Never point the gun at anything you’re not willing to destroy.
7. Keep your finger off the trigger until ready to fire.
8. Be sure of your target and what is behind it.
9. Social Justice Warriors, ANTIFA pukes, BLM hypocrites, and other assorted varieties of Marxists can go copulate with themselves, or if insufficiently limber, may substitute a rusty wire brush suitable for cleaning the bore of a twelve or ten gauge.
(Hmm a few extras seem to have crept in.)
What do those years have in common?
They’re big dates in American monetary history, and they all have to do with the relative values of certain commodities. In particular, gold and silver.
As conservatives, we are usually people who want us to go back on the gold standard, so the Federal Reserve will have to stop inflating our money. We’ve been using a dollar that is essentially backed by nothing since 1933.
To be sure foreign governments could exchange their dollars for gold at $35/troy ounce until the 1970s, but we could not. If we could have, we’d have cleaned out Fort Knox trading dollars for gold that was in fact worth far more than those days’ $35. Which is actually an illustration of the point I am about to make.
The first US Congress under our shiny new Constitution met in 1789, and had a lot on its plate, of course, trying to institute and organize a whole new structure. One of the issues it was discussing was establishing US coinage…which in those days meant the entire monetary system, as no one was going to trust paper money any more after the sad experience with “Continental Currency.” (“Not worth a Continental” came from the Revolutionary War era.) It was common around the world for a piece of paper denominated in some money (for example, dollars or rubles) to be worth less than the physical metal money, so it might take thirty paper (Continental) dollars to buy one dollar in actual silver. Dollar meant two different things, and over in Russia, ruble did too, at the same time.
What were we using at the time? A mish-mosh of coins–English money (pounds, shillings and pence) and Spanish money (sixteen reales to the escudo) too. In fact Spanish money was more common here, because England usually specifically forbade the export of their money to the colonies! (The idea was for us to send money to them, not the other way around.) So we used Spanish silver, weighed it, and figured its value in pounds, shillings, and pence in some colonies, and other colonies just directly called the “piece of eight” a “dollar” and did things in dollars. (In Mexico the same coin was called a peso.)
So in April of 1792, we passed our first mint act, and officially adopted the dollar. Except we decided to divide it into a hundred parts, not eight. And that act specified how much silver was to be in an American dollar. 371 4/16ths grains (the same grain you use at the reloading bench, the same grain used to measure bullets) of silver, combined with enough copper to bring the total weight to 416 grains was by definition a dollar. A quarter dollar would be 92 13/16ths grains of pure silver in a 104 grain coin, a dime (spelled “disme” back then) would be 37 2/16ths grains of pure silver in a 41 2/5ths grain coin.
(Side note: Notice all the fractions, not decimals. They worked in fractions in those days, and the fractions were all expressed as 16ths in this case, because the arithmetic (all done longhand) was easier that way, though they haven’t taught arithmetic that way in a very long time. “New Math” is not a new thing. For example, to figure out the quarter, start with 371 4/16ths. Divide by four: break it down into 368 + 3 + 4/16ths, all of which are easier to divide by four. 368/4 = 92. 3/4 = 12/16ths, 4/16 divided by four is 1/16th, add (easy to do) and get 92 13/16. Similarly for the dime start with 371 4/16ths, break it up into 370 + 1 4/16ths, the first part is easy (37), the second part is equivalent to 20/16ths which readily divides by 10 to give 2/16ths, the time was 37 2/16ths ounces of pure silver. A little forethought made things easy, rather than just plug-and-chucking long division. The arithmetic worked similarly in Russia, which had, if anything even more complicated coinage standards back then.)
(End of side note.) Now this is an awfully peculiar amount. Why not 371? Or 372? Or 370? Well, they had actually assayed a bunch of Spanish coins to figure out what the typical Spanish piece of eight weighed and how pure it was.
Oh, and that purity was 371 4/16 divided by 416…easier expressed as a fraction by multiplying numerator and denominator by 4 to yield 1485/1664ths, or in modern terms 0.892427885… (a decimal which will eventually get around to repeating) fine. (Now you may be able to see why they worked in fractions!)
So we had our dollar. But the act of April 4, 1792 also authorized gold coinage. In this case, at least, we went with 22 karat gold, a nice clean 22/24ths or 11/12ths pure. We didn’t have a gold coin worth a dollar (not until 1849!) but we invented a denomination called the “eagle” equal to ten dollars. And we did start making eagles, 247 4/8 grains pure, add copper to get it to 270 grains. (And you can check to see that 247 4/8ths equals 11/12ths of 270, if you are so inclined. I did, using old methods, and it works.)
How much gold, then, in a gold dollar, if we had decided to make one? Dividing (I won’t show my work this time) you get 24 6/8ths grains of pure gold.
So by law 371 4/16ths grains of silver equaled 24 6/8ths grains of gold.
This implies a legal value ratio between gold and silver. And it turns out that 24 6/8 is 1/15th of 371 4/16. So gold and silver were defined by law to be in a 15:1 ratio, value wise. Fifteen ounces of silver had equal value to one ounce of gold.
People were allowed to bring their gold and silver to the mint, where it would be assayed, melted down, impurities removed and then alloyed to the proper fineness, and minted into coins, which would then be returned to the depositor. The government did this as a public service. (If you wanted your coins immediately, you had to pay a small fee, because you were then being given someone else’s silver from last week.) In fact the very first silver coins struck after the act was passed were, for a long time, believed to be made from Martha Washington’s silverware. It turns out it was most likely made from seventy dollars’ worth of silver Thomas Jefferson withdrew from a bank, for which he received, a few days later, 1400 half dimes. But it’s possible a second batch of half dimes came from Washington’s forks and spoons.
[No matter whose silver it was, I want one of those coins (just think, Washington or Jefferson spent that coin) and yes, they do turn up on the market occasionally–but still far more often than lottery prizes happen to me.]
Anyhow, back on the main train of thought:
Things were reasonably tidy, and would stay that way as long as the market value of gold and silver remained in a 15:1 ratio. I could bring in an ounce of gold or fifteen ounces of silver, and what came out would be of equal value either way…and they would be labeled as being of equal value. (Welllllll, they often didn’t put denomination inscriptions on the coins back then…people just knew what they were based on size and whether it was gold or silver. But hopefully you get my point.)
But gold had been slowly getting more valuable relative to silver. Around about 1700 the market value ratio was 14:1. Then it was 14.5:1. Now it was 15:1…and the trend continued!
By the 1830s, ten silver dollars could still buy a gold eagle, at places that had to conform to the 15:1 ratio…but the gold in that gold eagle was worth more than the ten silver dollars were worth. And the dollar was mostly thought of in silver terms then, so, in essence a ten dollar coin was worth more than ten dollars.
You can guess what happened: A number of people bought those gold eagles and melted them because they were worth more melted into bars than they were as coins. This is why early US gold is so dang expensive in the collector’s market now: It’s rare. Only in a few cases is a date common, generally representing “hoards” that escaped the melt down. Someone in 1813, for example, had some half eagles made and put them away. Those are now on the market so 1813 half eagles (95,428 made total) are considerably cheaper than 1829 half eagles (263,806 made), and even more so with other dates, some of which there are literally 3 or 4 surviving pieces. An 1822 half eagle (one of three survivors known out of 17,796 produced) sold for over six hundred thousand dollars in 1982 and the best guess is it would fetch around eight million dollars today.
The gold disappeared from circulation, in many cases going into a melting pot. And certainly no one was going to take their freshly-mined gold and devalue it by having eagles made from it.
The shift had happened fairly quickly. In fact, in 1799 the market ratio had already slipped to 15 3/4 to 1.
Something had to be done, and something was done. By the act of June 28, 1834:
Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled, that the gold coins of the United States shall contain the following quantities of metal that is to say; each eagle shall contain two hundred and thirty two grains of pure gold, and two hundred and fifty eight grains of standard gold;…
Act of June 28, 1834
232/258 = 0.89224806… fine.
The change, midway through the year, was marked by a change in the design of the gold coins, so if you saw an 1834 “capped head” gold piece, you knew it was an old (overloaded) one, if you saw the “classic head,” it had the right amount of gold in it; also the E PLURIBUS UNUM motto was omitted to make the difference even more obvious. (These are the modern collector’s names for the designs.)
(And if you do see an 1834 capped head half eagle (no full eagles had been made since 1804) it’s worth over 50 thousand dollars in “About Uncirculated-55” grade. An 1834 classic head, on the other hand, is worth $1,750 in the same grade. When you consider it has roughly $500 worth of gold in it and is therefore worth that much even if you beat it to death with a hammer, that’s not ridiculously expensive for a high-grade collectible.)
This works out, by the way, to being almost exactly a 16:1 ratio between silver and gold; 23.2 is 1/16th of 371 1/5th, which is almost the same (off by 1/20) as 371 4/16ths.
Also according to the act, the old coins could be weighed and treated as equaling 94 8/10 cents per pennyweight (24 grains). That, at least, stopped people melting them down. In essence a completely unworn old eagle weighing 5 5/32 pennyweights was now worth (5 5/32 x 98 4/5) = 508 7/16ths cents, so basically it was worth almost two percent over its face value.
Apparently this was appropriate, because gold began to circulate alongside silver once again. And effectively, we were now on the gold standard at this point, from now on, we didn’t think of the gold price going up, but rather of the silver price going down, which had been the historical trend.
You could still bring your gold or silver to the US mint and have it made into money, as much as you wanted to.Well, it would be made into coins. Gold and silver were money, whether or not it was in coin form. Since the coins were worth what the metal in them was worth, it had no inflationary effect.
A very slight adjustment was made in 1837, keeping the coin the same total weight but making it .900 fine, so now there were 232.2 grains of gold in an eagle. It was far easier for the mint workers to deal with 9/10ths than it was to deal with 232/258ths when mixing a batch of standard gold. (Similarly the notional dollar had copper removed from it, retaining the same amount of pure silver but being .900 fine, resulting in 412.5 grains total weight, with all the other denominations adjusted in line with this. This would end up having an unintended effect down the road.)
16 gold dollars now had 371.52 grains of pure gold in them compared to 371.25 grains of pure silver in one silver dollar, so we were still very close to a 16:1 ratio. Close enough it wasn’t worth melting the coins.
Anyhow, let me just stop right here to make my point:
Trying to tie two different commodities together and fix their value relative to each other creates a mess. It creates a royal mess when you’re trying to use those commodities as the basis for your money.
Let me repeat that:
Trying to tie two different commodities together and fix their value relative to each other creates a mess. It creates a royal mess when you’re trying to use those commodities as the basis for your money.
But this is precisely what we were doing, by defining a certain amount of silver to be a dollar, and a certain amount of gold to be a dollar, and insisting that those two dollars were equivalent by law.
If all of this detail has given you a headache, then you should agree with this point. This is precisely the sort of detail we had to deal with, when our money was based on something “hard” like metal. You had money that wasn’t worth the same as the same amount of money in a different form, all over the place, and worse: coins were often weighed and discounted if they were worn.
To give you a man-on-the-street example of what was going on, a storekeeper could agree to sell you that suit for twenty dollars–and give you a discount if you paid in gold instead of silver, or charge you extra if you used paper money issued by some bank, the more disreputable, the higher the nominal price. That was daily life in America before 1853, and in many respects continued like that until 1876. But the US government could not play those games, not without changing the law. Gold eagles were to be treated as equal to ten silver dollars, period.
It’s worth the effort to have “hard money,” but it has to be done right…or you get a mess and even more headaches. And “right” means not having two different commodities tied together by law.
Anyhow, 16:1 seemed pretty stable. Well, until something unexpected happened.
We conquered Mexico.
But rather than keeping the whole thing, we settled for half, and paid them for it.
Part of that half of Mexico was California.
The war ended on February 2, 1848, with the signing of a treaty.
Nine days before this, on January 24, 1848, gold was found at Sutter’s Mill in California.
A lot of gold. A shitload of gold, as it would turn out.
We had struck gold in the mountains of Georgia and North Carolina previously, and had even created branch mints in Charlotte NC, and Dahlonega, GA in the 1830s to handle this gold. But, though it was nice to have domestic sources rather than relying on foreign payments made in gold, there wasn’t enough gold there to make much of a dent in the market.
But the amount of gold coming out of what is today properly known as the People’s Respublik of Kalifornia was enormous.
(Mexico has been mad ever since about having to give up that territory. Since it turned out to be so dang valuable just at the time they signed it over.)
The mint adapted by introducing $20 gold pieces, double eagles. As gold coins go, these pieces are gigantic. And as I highlighted recently, we also had $1 pieces. These were introduced in 1850 and 1849 respectively. The gold had to get from California to the Philadelphia mint, and that was either overland (very hazardous and expensive) or by ship (also hazardous). A mint was established in San Francisco fairly quickly, but even then, the coins were often shipped east by boat, all the way around the tip of South America. Some of those ships sank, in fact one particularly famous example is the SS Central America, which went down in deep water in September 1857 thanks to a hurricane. On board were 30,000 pounds of gold. Since by this time gold = money, the literal loss of this much money contributed to a financial panic, somewhat (but only somewhat) like 2008.
Much of this gold has been retrieved, and as it happens 1857-S double eagles are far and away the cheapest double eagles from that time, because so many of them went down with that boat and were preserved.
But I have gotten ahead of myself by four years. I am supposed to be talking about 1853.
Refer to basic economics: what happens when there’s suddenly more of something? Its price will go down because the demand won’t otherwise balance supply. There was more gold. But gold was money, so if there’s more of it, and by definition it’s the yardstick of price…well, it looked like everything else went up.
Yes, you can have inflation on a gold standard. But at least governments just can’t stoke it for deficit spending. It’s an “act of God” not a human-caused thing.
One of the things that went up was silver. Yep, for once the gold:silver ratio was decreasing. And doing so fairly quickly, too.
So in the late 1840s and early 1850s, the silver in our silver coins was suddenly worth more than the value stamped on the coins.
You can guess what happened. The silver coins disappeared, they mostly got sent to Europe where they could laugh at our silly laws that said that quarter could only be worth 1/16th of its weight in gold. And to this day silver coins from before 1853 are generally more expensive than ones after 1853.
What did we do? Congress passed the Act of February 21, 1853. This drastically cut the weight of the half dollar, quarter, dime, and half dime, and made a smaller adjustment to the short-lived three cent silver piece (tiny!), but left the silver dollar alone. A dollar’s worth of these coins now contained 384 grams of metal, 90 percent pure, so 345.6 grains. Compare to the previous 371 4/16ths grains; it’s a seven percent reduction!
(And just incidentally, 384 grains is 8/10ths of a troy ounce, which made mint accounting very easy from that point forward; 16,000 ounces of .900 fine silver, for instance, became $20,000 in silver coins; I’ve even seen a copy of a receipt showing that is exactly what happened on April 1, 1871. Or…if you have two silver half dollars, 1964 or earlier, together they weigh 0.8 troy ounces, and since they are .900 fine, they contain .72 troy ounces of silver.)
[Edit to add. No, not quite. There was a minor adjustment in 1873 to make the coins come out to round weights in metric. Those two half dollars weighed 25 grams, total, and contained 20 grams of pure silver. It was a small adjustment but nevertheless it’s just a bit off from what I said.]
The silver coins (other than the dollar) were now worth less than their face value. This was deliberate. Congress was officially done dicking around with bi-metallic coinage standards trying to make them anything other than dysfunctional.
In order to mark the new coins, arrowheads were placed either side of the date in 1853, 1854, and 1855. On the quarter and half dollar, in 1853 only, a sunburst of rays was added to the background on the reverse.
Gold was left alone. You could still bring gold to the mint and have it made into coins. You could not do so with silver, not any more. Instead the government would buy the raw silver from you at market value, and then mint a strictly limited amount of silver coins. By artificially constraining the supply, they wouldn’t glut the market relative to gold. They could promise to always trade twenty silver half dollars (with less than 20 dollars worth of silver in them) for a twenty dollar gold piece, because the supply was strictly controlled. If too many people made that trade, they knew they had to make fewer silver coins to tighten the supply again.
When silver coinage is done like this, it’s described as subsidiary. It’s partially a token, not backed by the silver in the coin, but by gold somewhere else. So yes, now our silver coins were backed by gold.
But now silver miners were at the mercy of market forces. After this spike due to the gold rush, silver resumed its downward trend. And the government would only pay the market price so it could produce money for its own account (and literally make a profit, this is known as seignorage).
For reasons I’m not going to go into here, we briefly produced a heavy, 420 grain silver dollar in the 1870s and 1880s for trade with China–in essence our 412.5 grain silver dollar was too lightweight for the Chinese to appreciate. When we stopped producing those coins, we demonetized them, declaring they were no longer legal money. By then the silver to gold ratio had slipped so far that the silver in the coins was worth less than fifty cents. Their value dropped. Collectors a hundred years ago could actually buy these dollars for less than a dollar, because they could not be traded for dollars any more. (This is no longer true; of course!) They were eventually made legal tender again, but you’d be a sucker to spend one today.
Many people didn’t like this change, especially (as I alluded to) silver miners. They would receive less and less money for their product as time went on. This became a big issue, one wrangled over as much as abortion and gun control are argued over today. There were constant attempts (some successful) to pass legislation requiring the government to produce more silver coinage. Which, to repeat myself, was supposed to be backed by something else, but could not be if it were produced in such quantities.
There was a financial “panic” in 1893, a severe one, and many became convinced that returning to “free coinage of silver” (i.e., the way it was in the old days, where the mint would just turn your silver into coins, gratis) and going back to bimetallism, would solve the issue.
They were wrong.
They were led by William Jennings Bryan (D), at 36 years of age the nominee for President and embarking on a long career of being dead wrong about everything. In 1896 the market gold/silver ratio was something like 30:1 (I’m looking at a very low-res graph). If people were allowed to bring as much silver to the mint as they wanted, to be coined into more face value in coins than it was worth, that would have been inflationary. On the other hand, maybe he anticipated John Maynard Keynes’ theories of fiscal “stimulus.” Maybe the stimulus would have pulled us out, but it would have caused more problems further down the road. So, he was still, basically, dead wrong.
Jennings lost the election. A very good thing, IMHO.
But Woodrow Wilson (also D), gave us the Federal Reserve, and Franklin Delano Roosevelt (also D) devalued the dollar relative to gold (and confiscated the gold). Silver was safe, it was worth less than the value stamped on it, quite a bit less. In 1930 the gold silver ratio was eighty to one. Inflation was allowed to take place, and the ratio went back to being (typically) forty to one, so eventually we couldn’t sustain making silver coins, and in 1965, we got our new clad quarter and dime. (The half dollar had a reduced amount of silver in it until 1970, when it too went clad crap.) This happened under Johnson (also D…hmm, there seems to be a pattern here). Finally Nixon (R but RINO when it came to fiscal policy) closed the gold window that sold gold for $35 per ounce, and since then our money has been backed by nothing, other than the fact that the government will let you pay your taxes with it.
I saw a well-intentioned post on yesterday’s open thread, suggesting that our dollar henceforth be backed by both gold (yellow) and oil (black gold). There would be gold certificates and oil certificates, backed by yellow and black gold, respectively. (I guess it could be called the bumblebee gold standard?)
This simply can’t work, at least not as the poster probably imagines. The old silver and gold certificates entitled you to exchange those certificates for a certain specified amount of silver or gold. The silver, of course was subsidiary, worth less than face value, but since it was in coin form (until very late) it was legally exchangeable for gold at par.
Would these proposed certificates also correspond to fixed amounts of yellow and black gold? OK…if so, how much? Let’s say the yellow gold dollar certificate entitled you to 1/2000th of an ounce of gold (that’s close to the market price) [Actually they probably wouldn’t issue gold certificates in that small a denomination; even in the old days I think ten dollars or about half an ounce of gold was the lower limit.] Oil is about $37.50 a barrel right now (which is 3/8ths of a hundred bucks), so a black gold certificate should get you (very roughly) a bit more than a gallon of crude oil. (42 gallons to the oil barrel.) So that gallon+ of crude and the speck of gold weighing 1/2000 of an ounce are equivalent.
Today.
But we have seen the price of oil whipsaw a lot. It even went negative for a while this year! Gold has jumped around too, but not as much–though it has often jumped in the opposite direction!
What would a graph of the yellow:black gold price ratio look like? Why, after reviewing all that history up above, would anyone even think of tying the two together?
We would instantly have to talk about black dollars and yellow dollars, and be spending our time monitoring the ratio between the two. Have black dollars in your wallet, but the price of crude just took a major dump? Suddenly that cheeseburger sold by the guy who prefers yellow dollars has jumped up in price for you, because he wants however many of those black dollars make up his price in yellow dollars. Yet they’d both be called “dollars” and our government would presumably have to treat them the same.
(And lets not even go into the fact that oil comes in all sorts of different compositions and qualities; a barrel of light sweet crude is worth more than a barrel of oil so thick it verges on being tar, by a ratio that itself varies depending on which users are looking to buy right now and what kind of goop they want to extract from it–whereas at least all gold is the same once you account for its purity.)
Nope, the only way to make this work is to allow the yellow and the black gold dollars to float relative to each other. And allow the government to recognize this. But at that point you might as well stop calling them both “dollars” since at that point absolutely no one is pretending they are the same thing.
If you don’t insist on having them be separate but tied together, though, you have another option: Combine them. Create a bumblebee gold certificate, which entitles you to 1/4000 th of an ounce of gold AND a bit more than half a gallon of crude oil. Total value at today’s prices, about a dollar. It might even be a bit more stable than a yellow gold or black gold certificate would be, depending; I don’t know how often yellow gold and black gold move in the same direction vs different directions, if the latter is common, it would tend to damp out commodity price fluctuations.
I still like (yellow) gold as a monetary standard, over (black) oil. Gold is not something that gets consumed (at least not much), most that is used industrially ultimately gets recycled, so the available supply isn’t at the mercy of people literally burning it like with oil. If gold production drops (and it is dropping), we still have all the above-ground gold, a cube 60 feet or so on a side in total mined over all of human history. If oil production stops…we will soon have no oil to back our money with since it will have gone out peoples’ tailpipes or been turned into milk jugs and saran wrap.
There are rumors (and that’s all they are, no matter how much a certain few vloggers flog them) that Trump is planning to return us to some sort of gold (presumably the yellow kind) standard. Knowing something about the history of such things, I’d love to know the details…and I also know we won’t be made privy to them in advance.
But we must get our fiscal house in order. We have a crushing federal debt. Even if that went *poof!* and disappeared (which apparently some people imagine to be the case), we’re spending much more than we take in, and that can’t entirely be blamed on the ChiComCrud, so we’d just have a big debt again a few years down the road.
A true gold standard (or silver standard, or oil standard or mango standard) would force discipline on our government. Discipline it simply won’t tolerate. Trump is just as much a part of the forces driving deficit spending as any other person in DC. Which is why I can’t believe he’s willing to do this, unless he’s willing to go cold turkey on finances. No more new spending, no more bigass tax cuts. Money becomes a real, scarce thing and you can no longer just fire up the printing presses to cover deficit spending.
Standard Disclaimer: No coin, paper money, postage stamp, dust bunnies, dust rhinoceros or anything else other than bearded dragons, that I show here at Q Tree is one I own. I may own something similar, I may not.
Another Standard Disclaimer: Prospective burglars will be interested to know that gold and silver are not the only heavy metals I own, and that I keep some of those other heavy metals a lot closer to me than the gold and silver.
Just one more thing, my standard Public Service Announcement. We don’t want to forget this!!!
Remember Hong Kong!!! And remember the tens of millions who died under the “Great Helmsman” Chairman Mao.
中国是个混蛋 !!!
Zhōngguò shì gè hùndàn !!!
China is asshoe !!!
For my money the Great Helmsman is Hikaru Sulu (even if the actor is a dingbat).