The Dollar

The Dollar

All monetary units in the world called "dollar" go back to the large silver coin (416 grains, .89 fine) minted in Mexico from about 1520 for four centuries. The Canadian dollar, in particular, was the same as the U.S. dollar until World War I. After 1914, the whole international monetary system collapsed and by the 1920s the dollars of different governments commanded different purchasing powers. Before about 1850 in the USA, foreign monies were legal tender here by bullion weight.

The issue about the six-letter word becoming only a government trademark has evolved through court cases, beginning with Juilliard v. Greenman, 10 US 421 (1874) and culminating in the Gold Clause Cases, 294 US 240 et seq. (1935).

The experience from the early 20th century is that "money" (specifically the unit of account) is whatever central bank manipulations want it to be, hence Federal Reserve Accounting Unit dollar - F.R.A.U.D. Predict its future value at your financial peril when attempting to calculate rate of return on an investment. Due to the uncertainty, interest rates are higher and more volatile than otherwise might be and special derivatives called "credit default swaps" as well as futures contracts are created to hedge the risk. The fiat money economists of the 19th century used to contemn the "resource costs" of gold mining and bullion storage, but they never suspected the high resource costs of an uncertain monetary unit.

Regards, Joe Cobb
Glendale, Arizona


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