Comment: Part 2 - the solution

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Part 2 - the solution

Read my comment below first: http://www.dailypaul.com/270735#comment-2912932

Repeal legal tender laws.

If possible, repeal Congress' power to coin money, or at least, don't make it exclusive. Extend that power to the States and the People as well.

Bar the issuance of "notes of indebtedness" or "bills of credit" by Congress and the States. (no paper currency based on debt)

Then, Congress and the States can get the ball rolling with early coinage, and private interests will most likely get up to speed and take over, of fill the gaps.

Here's what they should mint:

Coins
Silver, Gold, Copper, and perhaps Nickel, Palladium, and Platinum

1 gram
2 grams
5 grams
10 grams
20 grams

Bars
Silver, Gold, Copper, and perhaps Nickel, Palladium, and Platinum

50 grams
100 grams
200 grams
500 grams

Bricks
Silver, Gold, Copper, and perhaps Nickel, Palladium, and Platinum

1000 grams (1 kilo)
2000 grams (2 kilos)
5000 grams (5 kilos)
10000 grams (10 kilos)

Various shapes for the coins can be used:

Round
Square
Triangle
Hexagon
Octagon

As well, reeded edges can be used on PM's and smooth edges on base metals if the same shape is used, or regardless to preclude "clipping and shaving."

Now, I don't mean to say this system needs to be dictated, but that it would be the most optimal and the one the market will likely settle on all by itself. But we can certainly give it a boost initially.

Alternatively, we could settle on this system:

Coins

1/20 ounce
1/10 ounce
1/5 ounce
1/2 ounce
1 ounce

Bars

2 ounces
5 ounces
10 ounces
20 ounces
50 ounces

Bricks

100 ounces
200 ounces
500 ounces
1000 ounces

All in the same metals. Note, these are Troy Ounces which we used today for coinage.

NONE of these items should be stamped with ANY monetary unit. NONE.

They should be stamped and designed so as to be easily distinguishable by quick sight or feel as to their metal content and purity.

Thus a 1/10 ounce silver coin should not have "ONE DIME" stamped on it, but simply 1/10 or "ONE TENTH" oz. .999 silver. (Ag and similar symbols can be used for space considerations)

This will break us of the problem of abstracting monetary units and instead focus pricing in terms of what it always really has been - the relative value to another quantity of some commodity.

Prices will be in terms of grams or ozt. of silver, gold etc.

Merchants will have conversion charts or software to easily handle payment in multiple forms.

The ratio of 1:2:5 are used instead of 10:4:2:1 because 1:2:5 is the optimal ratio for making change or making up any amount using the least number of coins. This is an important consideration when using a coinage system since people will not want piles of nearly useless coins weighing down their pockets. (their higher value will help with that as well of course) This ratio will cause all coins to be used in the same proportion relative to one another and no single denomination or size should find itself collecting for lack of need or use.

Again, this system doesn't have to be dictated, but if it is minted and circulated, it will spread like wildfire.

Also, using grams is more convenient for international trade and will likely place America back at the forefront of world monetary leader for real, rather than at the point of a nuke.

And we already use grams and have been for over 100 years to define our coinage. We haven't used the Troy system except as a throwback for many many moons.

The reason for including Nickel and Copper is the same as the Framers included Copper - you need subsidiary coinage for change and most purchases. Since some sizes overlap in value, you may or may not see them circulate together, but they will all circulate somewhere. Also, since Nickel and Copper trade places in relative value, you may see one or the other circulate at different times.

Adding Palladium and Platinum are for the same reasons on the mid and upper scale - flexibility of the monetary system to respond to shocks in relative value. By having a system with six possible metals, two each in three tiers of relative value, then you set yourself up for not having any major inflations of deflations which can shock the economy and cause disruptions.

The Framers didn't see a need to include Copper in their Article 1 § 10 limitation on State legal tender laws. But perhaps we can specifically include the other metals if we desire.