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What is a dollar? Ron Paul questions Thomas Hoenig July 27th, 2011

Seems Ron Paul is aware that a dollar is a silver coin and that a Federal Reserve Note is a promise to pay...

What is a dollar?

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What is a dollar?

Hoenig spoke truth when he said that if people stopped accepting the paper bills as money they would cease to be money. That's when they start being carted around in wheelbarrows and used for wallpaper.

It's happened before, in fact, in every single instance in history of fiat paper currencies. Every one. No exceptions.

This is what is called the fiat currency "seeking its true value," which is, of course, zero.

Money will buy you a fine dog, but only love can make it wag its tail. -Friedman

Take Fed Notes buy silver

Make a run on the banks and convert all our fed notes and bank account balances to silver dollars!

thanks for posting my vid!

Greatly appreciated~!

I was watching the Hoenig hearing (he's really the best guy in that screwed up banker cartel) and when this exchange came on a said CHA CHING!! Another Youtube clip!

He needs to bring up competing currencies to the Bernank at the next Financial Services Committee.

Maybe he could mention how the Treasury still has the right to print US Treasury dollar bill notes, even with no backing at all. A true competing US govt produced debt-free currency. Abe did it. Paid for the war without any debt, at all.
He should watch Secret of Oz by Bill Still.
We could simply pay the Fed back their bank notes, and replace them with US Notes, not backed by anything.

Our debt would be gone, except the new debt to foreign nations. That stuff is real debt.
The debt to the Fed is purely fictitious.
And can be eliminated by giving them their notes back.
We just need to replace them physically and electronically.


Dave Matherly

Your Welcome

Your video was on the front page of Daily Paul here yesterday after Michael took over the thread he stuck it on the homepage for everyone to see

My definition of a dollar

Mr. Hoeing says money is 3 things:

1. a medium of exchange
2. a deferred means of payment
3. something that has stored value

(gold fits all this criteria today and even he said it could be gold but inferred it isn't so I think he assumes a fourth)

4. recognized as legal by the government

This is his response to Dr. Paul's question, "What is a dollar?". I think Dr. Paul should have followed up with "What is a dollar worth?" seeing that is the only significance in using money.

I believe he would have replied something like, " Well it's a market phenomenon related to the health of the economy and the money supply."

This is where Dr. Paul should pounce!!! (I feel like I could lead this bullshitter so I know the doctor could)

Dr. Paul: What is the definition of inflation?
Hoenig: Rising prices.
Dr. Paul: Rising prices are a symptom of inflating the money supply. Wouldn't you say QE1 and QE2 bare this out???
Hoenig: (Non-sensical dodging)
Dr. Paul: Well I'm a little uncertain of what you meant there but please graciously just assume my definition of inflation for a bit. Now money has a certain value today does it not???
Hoenig: Yes
Dr. Paul: Where did it originate if paper money is an abstraction? To be honest we know this country has used gold as money in the past and that it was a market phenomenon that created it's price. So this arbitrary abstraction of the dollar was priced against something in the real world (gold) to give it an initial price. Is this so???
Hoenig: Yes.
Ron Paul: Well let's see. The first devaluation of the dollar ever occurred in 1834 after government reset the ratio of gold to silver. Before this time gold was considered 1.6 g of gold. So let's take that as the first price of american dollars as a historical fact. Is that fair???
Hoenig: Grumble,grumble, cough,cough, hand, over mouth. "UMM, ummm.... ok."
Ron Paul: Now that doesn't seem to be the price today sir.
Hoenig: hahahahahaha well no
Ron Paul: And we have agreed that we will accept inflation defined as increasing the money supply. Now today gold is worth $1600 dollars per troy ounce. Which means $51.4 per g. So just to give us a practical measurement is there any reason not to say because of the relative stability of gold over time that an american dollar is worth 1.6g g of gold plus inflation or deflation since 1834. And doesn't that mean that the inflation and deflation of the money supply over time has given us 51.4 dollars per g today? And doesn't that mean that are money has 3.1 percent of its purchasing power from 1834??? Couldn't we not say that the definition of a dollar in mathematical terms is as follows: Today's dollar is by DEFINITION 1.6 g per dollar plus inflation since 1834 or 51.4 g per dollar. Is that not a reasonable definition???
Hoenig: (Gets up and runs out the door)

I haven't taken an economics class in my life. And thanks to Dr. Paul and the internet to check some historical numbers plus a little deductive reasoning have come up with the definition of a dollar. It's 1.6 g of gold per dollar plus inflation since 1834. I think this is the transparent answer he is trying to force Hoenig into. Why doesn't Dr. Paul start actually using a definition like this? I see 2 positive results from this.

1. Anyone who wants to call him a quack for using such a definition will have to explain in clear mathematics why this isn't so. (Which they won't be able to do or he can blow up their bullshit like he normally does when they try to be sophists).

2. It will give people not affiliated with Dr. Paul a concise definition instead of the bullshit rhetoric that confuses them from the liars. (People like my dad and I love him dearly... he just didn't get the education I got).

Anyway, I thank Dr. Paul deeply for enlightening me. If I used some wrong numbers and people see it let me know. This all just came off the top of my head since watching the weasel duck doctor paul's legimate question. I think it would be hilarious though if Dr. Paul supporters started carrying signs with our own definition of a dollar on it. Can you imagine the media asking us to explain what we mean by 1.6 g of gold plus inflation since 1834. And that's exactly what it is (if my math was right but that's not important.. the descrepancy between the 2 prices from past to present is). Wouldn't we look a lot smarter than the opposition and "Change you can believe in". And wouldn't we scare the heck out of the Ben Bernakes of the world when they get that we get the math too and can explain it simply to the people. Anywway my thought for a new sign.. so if you see some guy carrying a ron paul sign with DEFINITION OF A DOLLAR is -- 1.6 g of gold equals 1 american dollar in 1834 plus inflation.... don't call me a quack like everyone else haha.

A dollar is a silver coin

Sorry but your definition of a dollar is wrong. While 1.6 grams of gold was originally officially worth a dollar that does not mean it was a dollar. A dollar is a silver coin plain and simple.

I know what your saying.

But isn't that really just a legal description. Paper money even if it's unconstitutional is legal money as well. In terms of economic law (compared to legal) that's what a dollar was. You can make the entire argument again with silver. (Thought gold was better because it has a larger supply, is more stable, and also given more credence by the majority at large). But either way my point was this. Instead of having an abstract statist definition, why don't we promote a practical economic definition that can clearly show the manipulation of what is going on? Instead of having us on the defensive arguing with their false keyensian definition, allow us to control the language of the debate with an austrian free markets definition.

I guess I was trying to point

I guess I was trying to point out that an abstraction means nothing in the practical world until you tie it to it in some fashion. And isn't weight going to be key. If all silver coins are the same size and you say this is what a dollar is haven't you fixed the price of a dollar. I was trying to say what an actual paper dollar is worth today from a historical view point.

You're right though a silver

You're right though a silver dollar should be what a dollar is. Because if the country had believed that and kept only enough dollar bills to support silver at that price we wouldn't have the problems we have today. But that's what it should be, not what it actually is, I think??? Just getting into sound money thinking so maybe I screwed up somewhere.

A dollar is a silver coin, a dollar bill is an IOU

A dollar is a silver coin and a dollar bill is a promise to pay a specified number of silver coins (but the debt is also payable in gold as per the constitution). The reason that federal reserve notes are worth less than their face value is because they do not redeem them on demand in specie.

It is kind of like if you default on one of your debtors say a credit card, they will more than likely after awhile sell your debt for less than its face value to a collector who will purchase it for pennies on the dollar, if this collector doesn't collect from you it may get sold again for even less. Thus your debt trades in the market at far less than it's face value because you have defaulted. Basically the federal reserve and the treasury have defaulted on their debt and so it trades in the market at less than its face value.

So the definition of a dollar has never changed it is just that the federal reserve and treasury defaulted on their debt and so their bills are worth less than their face value which is still expressed in terms of dollars which are silver coins.

Yeah, I think were arguing

Yeah, I think were arguing semantics. You are arguing what a true american dollar is worth. I am arguing what the IOU is worth,which most people including the guy arguing doctor paul in this video, think is an actual dollar. I was using what most people think an american dollar is -- a piece of paper --. Sorry if I was using common vernacular instead of definition. I want a clear definition of the fiat piece of paper, which everybody thinks is an american dollar. Because in the video this is what the guy assume money is.

A dollar is a silver coin. Has been for nearly 500 years now.

We didn't invent the dollar.

Congress DID establish a fractional coinage system in decimal fashion based upon the dollar.

Congress DID adopt the dollar as our unit of account.

Congress DID "regulate" the value of the dollar by fixing it to be 371.25 grains of pure silver, the same as the Spanish Milled Dollar, then in current circulation.

But Congress did not "define" or "create" an abstraction.

They tied our unit of account to a specific amount of a physical commodity.

Printing the word "dollar" on a piece of cotton does not magically transform that piece of cotton into a piece of silver. (transmutation is not possible, and certainly not by merely painting something with ink)

Nor does doing so magically imbue that cotton with the purchasing power of the silver it claims to be.

This is not semantics. (well, technically it is, since "semantic" is "meaning" but my guess is you were referring to nitpicking - which this isn't - it is the whole crux of understanding the issue)

A dollar is a standard of weight and measure of silver.

One can no more define a dollar to be a piece of cotton or anything else other than a silver coin of 371.25 grains pure, than one can define a "mile" to constitute a "cup of sugar."

It is absurd on its face.

Clear Definition of the fiat piece of paper

Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.


The constitution, i.e. the supreme law of the land, states that no state shall make any thing but gold and silver coin a tender in payment of debts. So clearly nothing but gold and silver coin can be "lawful money". Remember congress has the power to coin money, because money is coined not printed. This is the crux of the issue.

sorry went to bed thinking of this for hours

A minted silver coin (from 1986)is a troy ounce (480 grains)and guranteed to be over 99% silver. The nominal face value (or legal value) is one dollar. If you melt it down today the silver inside is worth $39.74 (economic value). No matter what's stamped on it I'm saying if you can get $39.74 dollars for it, that's what its worth.

A silver liberty dollar from 1794 has roughly 371.25 grains of silver which equals 77.34% of a troy ounce or $30.76 dollars of actual silver inside.

Sorry I didn't know specifically what silver dollar you were talking about but either way the legal definitions don't seem to be what the actual economic values are for the metal on the open market. I guess it depends on how you want to define price.

Silver Eagles are not dollars. They bear the inscription

"ONE DOLLAR" but they are not dollars.

This is because the word "dollar(s)" is used in the Constitution.

Due to rules of construction, that word, in a legal sense, as part of the Supreme Law of the Land, can only, and forever, barring an amendment, mean what it meant to the People at the time that language was adopted. And at that time, a "dollar" was a silver coin containing 371.25 grains pure silver. Thus, barring a constitutional amendment, a "dollar" is forever fixed at that weight and measure.

Congress COULD adopt a different unit of account if it so chose. But they cannot redefine a dollar. They can make a one ounce silver coin and call it something else. But they can't make a dollar equal 480 grains pure silver.

Thus they note in the law authorizing the Silver Eagle, that it is to have the "nominal" denomination indicated by the inscription "ONE DOLLAR."

In reality, by law, the Government does NOT value any of these coins at that face value. It values all silver at $1.2929 per ounce, which is the actual value, in dollars, of a Silver Eagle.

Face Value vs. Real Value

The silver comprising your coin is worth $39.74 in federal reserve notes. Those federal reserve notes are NOT worth their face value. The value of a federal reserve note is denominated in dollars which are silver coins. The coin you have on the other hand is actually worth more than its face value, as a dollar is 371.25 grains of silver.

I disagree that a dollar contains "$30.76 dollars of actual silver inside". A dollar may at this moment be worth $30.76 in Federal Reserve Notes but that does not mean that it contains more than a dollar's worth of actual silver inside. All that means is that the federal reserve note is not worth its face value.

Hope you realize my intent by

Hope you realize my intent by pointing out that a federal reserve note is worth 1.6 g of gold plus inflation since 1834. It is to point out clearly in a mathematical way the hoax that a federal reserve note is a dollar and that this abstraction (the note) has to be based in the real world and managed properly to keep its value. Increasing the money supply should be regulated to the market (finding a new mine would be inflation or a sunken ship carrying gold would be deflation).

I realize your intent

And I applaud your efforts to educate people on the fact that the federal reserve note is not worth it's face value. It would not exactly be correct to say that a federal reserve note is worth 1.6 g of gold plus inflation since 1834 since the federal reserve was only established in 1913. Back in the 19th century at different times in different places there were National Bank Notes, State Bank Notes, private bank notes, or a combination of all three circulating. There is a lot of history I am skipping for brevity but to make a long story short I will just agree with you that the market should regulate the money supply and the supply of money substitutes such as notes. In fact I would argue that anyone any institution should be able to issue notes intended for circulation the government should not legally enforce a monopoly on note issue, this concept is known as free-banking. These notes would be valued in the market and if the note issuer was unable to meet its obligations then of course the government would have a role to play in enforcing the contracts and governing the bankruptcy process.

So instead of the government

So instead of the government making the IOU based contracts, individual people take that responsibility on themselves. My god, why isn't that the way we do it??? The agreement is between the 2 individuals. Thanks now I won't be able to sleep tonight either haha. Wow. The more I think about this stuff, the more I realize how uninformed I have been and how I just slept walked most of my life. Thanks.


Anyone can make an IOU and it doesn't necessarily have to even be denominated in dollars it could be denominated in anything at all.

Until or unless a court gets involved, in which case it is

only lawful to determine a settlement in dollars since that is our unit of account.

yeaeh, i get that hope

you read what i read above. sometimes i can get caught using vernacular instead of definition. I want a clear definition on the IOU because the people don't understand what money is. If we get 1.6 g plus inflation since 1834 as a definition of a feedral reserve note that is more accurate. just don't want to confuse the people who don't know what sound money is. But in my own personal life I should stop calling the IOU's money. But maybe we should go a little slower with people we are trying to introduce... anyway take care.

Sorry if I am going too fast

I have read extensively on this subject and there is a lot of very interesting history, sometimes to the point that it is hard to encapsulate it all in short so I just try to skip a lot of history in favor of simplifying the issue down to the brass tacks so to speak.

No it's great to see someone

No it's great to see someone as interested in this as me. I'm getting obessive with it myself. I know you meant well. And I think we have both come to the same conclusion. Paper money would be hilarious if it weren't so sad. Take care.

And want you to know you were

And want you to know you were right. I should say that an american dollar is a silver dollar. But on what a fiat dollar is I don't give a fart in the wind how the statists want to define it in the tax code. I want it defined in terms of something real. But I'm going to read up for interest sakes, thanks.

reading material

I collected some good reading material in a blog I put together the other day, check it out http://www.whatisadollar.blogspot.com I think it is a good place to start.

Thanks Graham

will do!!!

Your Welcome

Feel free to share that blog I tried to put together as many articles on the subject I could find by google searching.

That's entertainment!

My personal utopia will be the day when America finally wakes up to this massive fraud known as the Federal Reserve and begins placing these crooks behind bars.

If men are good, you don't need government; if men are evil or ambivalent, you don't dare have one.

I agree

If they refuse to pay their debts and they are absconding debtors they should be thrown in prison.