Previously, I linked to the American Open Currency Standard and said that I would look into what they were about. As it turns out, they are an organization that is trying to get people to use “hard currency” in the form of silver coins (or their backed currency I think). They have a variety of coins that have passed muster and carry their official blessing. I assume that any silver coins would work in their system, not sure what the appeal of their currency in particular is. They have over 22,000 merchants lined up that will accept their silver for payment.
The Free Lakota Bank takes it one step further. They actually are trying to make a go of doing a banking system with hard currency. There are no dollars talked about there, it is all ounces of silver. You deposit ounces of silver, you are charged fees in ounces of silver, and interest is paid in ounces of silver. Here’s as close to a mission statement as I can find from them:
“At the Free Lakota Bank, we issue, circulate and accept for deposit only AOCS Approved Silver currencies and other .999 fine silver bullion. Silver is a store of value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Since we deal only in real money, we do not participate in any central bank looting schemes.
Money is made possible only by those who produce. Paper is not money, instead merely a promise to pay. We hope that some day the rest of the world will awaken from the American Dream: the dream that a person can sustain life by consuming more than producing. We call it the American Dream because you must be asleep to believe it. Well, that dream now has a silver lining; as people discover the dream is really a nightmare, the only solution is a return to value: value that comes from production and honest trade.”
They offer a transactional account and an investment account. There is a one ounce per month fee for the transactional account and there is a dividend for the investment account, paid in silver of course.
I like what these folks are trying to do, I am a believer in both hard money and backed currencies, but they are fighting an uphill battle. As of right now, silver and gold meet one of the requirements of something being money, and fail two rather critical ones. The metals are an excellent store of value. Their value in terms of dollars varies over time, but it never goes away. You can compare the metals to any currency and find that they always have value. You can’t say that about every currency though. Gold and silver have an issue with portability. That stuff weighs a lot. Right now, with silver at all time highs (forgetting the Hunt brothers nonsense) a 100 bucks would be more than I would want to carry around coming in at just under 4 ounces. You can get around this with metal backed currency, but then you run into some of the same problems you do with any currency. Specifically, it is very difficult to ascertain if the currency really is backed up by actual metal. Whoever printed it could, you know, just print it up. Kind of defeats the whole point of hard money.
The big problem facing all hard money proponents is the minor issue that most people and businesses will not accept it in exchange for goods and services. Seeing as that is the most basic definition of money, it’s kind of a show stopper. Until I can walk into a 7-11 and pay for stuff with silver (or copper), it isn’t actually money. With bad enough inflation people’s minds might change, but it would have to be pretty bad. I wonder if anyone has tried a tax dodge by using the actual face values of coins? 1 oz. American eagle gold coins have a face value of $50. That’s a laugh of course because the gold in the coin is worth over $1200 at this point. Here’s the potential scenario. What if you buy something big, like a house or a car with gold coins? The value of the thing would be covered by the value of the gold, but you could report a legitimate cash transaction at 1/24th the value! Hmmm, I wonder if that’s legal?
I received my Amero coins the other day and they are gorgeous. These are really little works of art, and they are more of a collector’s thing than a money thing. I will say this, there is something deeply satisfying in holding an ounce of metal in your hand. There is also something very nice about the fact that it has a value intrinsic to it, no matter what is printed on it or where it is from. Paper money seems pretty lame next to it and in the hand. I think the next coin I get will be a Canadian Maple Leaf. They aren’t collectable so I won’t mind carrying one around with me to show to people. Plus, I can get them with my Amazon rewards points:-)
I promise I’ll shut up about this soon, but I’ve got long term money on the brain right now. Silver and gold are going to play a role in my future, especially if the dollar keeps getting devalued…