Would you accept a Silver Amero? Silver American Eagle?Submitted by skw on Fri, 09/26/2008 - 15:23
The Constitution requires that only gold and silver be legal tender. (Meaning, you can only be *required* to accept gold and silver, and you can probably only be *required* to accept U.S. minted coins that have been defined by Congress.) Of course, through our history, people have sometimes been willing to accept various forms of (now failed) paper money, and they have often been willing to accept foreign minted gold and silver coins. And of course, for right now, we are required (illegally) to accept the now failed Federal Reserve Note. What will happen when this plays out the rest of the way?
People are concerned about the adoption of the "Amero". If it is "yet another fiat currency", we should be concerned. It doesn't matter what they call it, and it doesn't matter which group of bankers is nominally in charge of it. (My gut tells me that they won't call it an Amero, and there will be some attempt at first to cover up the fact that it is a multi-national currency.)
But what if it was the 1 troy ounce silver coin? All 3 countries (U.S.A., Canada, and Mexico) currently produce a 1 troy ounce silver bullion coin. (Bullion just means that it is sold primarily for the metal value, it is not particularly collectible.) If I had a business, I would love to accept U.S. minted silver coins, but I would also be willing to accept Canadian "Silver Maples", and Mexican "Silver Libertads". Why not? The silver content is the same, the coins are valued based on the same metal content, and all 3 mints are capable of producing an honest coin.
Our businesses would benefit from the freer exchange of trade, without the foreign exchange risk of fluctuating currency levels. Trade "imbalances" would be automatically settled through offsetting movement of precious metals.
Could this really happen? Sure. Mexico has a huge incentive to move towards a monetized silver currency. Of all of the in-ground silver in the world, Mexico has a big share, so their economy would benefit from the increased mining that would accompany the monetization of silver. The U.S. could find itself playing catchup as Americans start voluntarily accepting silver Mexican coins in larger and larger numbers. Remember that the legal tender laws don't prohibit me from accepting a different currency, they only prohibit me from refusing the FRNs.
So I come back to my original question... would you accept a currency called the Amero, if it were an honest silver coin? The question becomes moot, because if we move to an honest silver coin, then it doesn't matter much what you call it.
As soon as this bailout is killed, once and for all, let's ask Congress for the right to transact business based on weights of silver and weights of gold, if agreed to by buyer and seller at the time that an obligation is incurred. At that point, I don't much care WHO mints the coin I receive, so long as it is an honest silver coin. It could be Wal*mart, and stamped "1 troy ounce .999 silver - Always Accepted at Wal*mart!"