Posted on 10/09/2003 10:49:33 PM PDT by Starwind
After repeated warnings from currency analysts and market advisors (including yours truly) that the U.S. currency system is on the verge of becoming a blocked, two-tier system we now have confirmation that the country is one step closer to realizing this. When fully implemented, the new U.S. dollar will mean a "banana republic" type currency and across-the-board devaluation.
According to a CNN/Money news wire report of Oct. 7, the new U.S. $20 bills will be released this week at banks across the country. Meanwhile, the Fed and its Bureau of Engraving and Printing (BEP) will hold a nationwide series of publicity events as part of a $33 million campaign to let the world know of the new bills and to acclimate the public to their strange new appearance.
The new $20s are peach-toned with the presence of blue ink, making it the first time in almost 100 years that a mass-circulation U.S. note has prominently contained a color besides green and black. They also contain an embedded vertical plastic strip and color-shifting ink, whose appearance changes from copper to green as the bill is tilted against the light. Below is what the front of the new $20 bill looks like (from the BEP website).
So what is the significance of this change of color in the U.S. $20 note? Well according to the Feds it is designed as a deterrent to stop counterfeiters. But accordingly to currency analyst Lawrence Patterson, who authored the 1994 monograph titled "Currency Recall", which accurately forecast the new multi-colored notes, the new colored money is part of a two-tiered currency system that will have drastic implications for investors and non-investors alike here in the U.S.
Patterson calls the new notes "crayola currency" and claims they will circulate domestically while the normal green currency that we've grown accustomed to will circulate offshore all over the globe. According to commentator Terry Savage, "Two-thirds of the U.S. paper currency is circulating in foreign countries." With the coming two-tiered currency system, foreigners will continue to be allowed to use the greenback while U.S. citizens will be stuck with the "crayola currency" which cannot be exchanged.
Patterson forecasts the coming use of foreign exchange controls for the U.S. dollar domestically, which would prohibit Americans from transferring capital to any other world currency. Again, this is discussed in Patterson's now-classic monograph "Currency Recall" (which I've read and highly recommend to students of currency policy and investors seeking to retain the value of their investments).
Patterson states, "I want every one...to think carefully about this...because we are coming very, very close to the end of the freely convertible domestic dollar. They cut in value could be as much as 50%...I believe those holding gold bullion bars offshore and bullion coins domestically will be very surprised to find that special regulations will prohibit them from profiting."
He further maintains that coin dealers are under a strict Treasury regulation and must report your sales of some coins but not others. The rule is as follows: Coins with a premium above 15% do not have to be reported. In addition to the 1099 report, filed by the coin dealer, you have to declare any capital gains as well."
He continues, "The existence of this rule, I believe, indicates an intent to outlaw the ownership of bullion coins altogether! However, the rule will not remain at 15% necessarily and could be changed to a higher percentage, which is unknown at this time. Obviously, you do not want to own any investment coins with a premium of 15% or less and better stay at the 25% or 30% level to be safe." Patterson points out that complications for the government would clearly arise should numismatic collectibles be forcibly confiscated since the bullion coins' value can be determined by the London gold fix, but not so for collectibles. "The price of the collectible coin may or may not be easily determined as numismatic valuables are routinely auctioned off at prices of not only tens of thousands of dollars, but hundreds of thousands of dollars per item," he observes. "It is difficult to imagine just how this would all be sorted out by the bureaucracy to come up with a calculation of compensation that would relate to the market value." He advises staying in the "safe zone" and exchanging bullion coins not needed for emergencies (such as food or gasoline shortages, et al) for numismatic coins with higher premiums.
Obviously, the introduction of the new peach-colored $20 bill is a test on the American public to see how they respond to the drastic new changes. The CNN/Money article states that the BEP has launched a multi-million dollar promotional campaign aimed at gaining public acceptance of the new currency. For example, the twenties are being featured on game shows, including "Wheel of Fortune" and "Jeopardy," sporting events, like ESPN's college football telecasts. The bills are also part of some consumer product tie-ins, according to CNN/Money, and pictures of the bills will be on the side of bags of Pepperidge Farm Goldfish. If the government succeeds in getting the American public to accept the bills, the other remaining denominations will obviously follow and plans will proceed for the blocked domestic dollar.
Understood.
Yes, okay, I'll ask my brother about this on his return and I will share it with all of you.
Were you ever in the Canal Zone? It was a wonderful place.
As long as the old design (the one from years ago, not the most recent update) is still valid currency, why not just continue to counterfeit that? It's been done many times.
Hmmm. That's an interesting wrinkle. Presumably then, by treaty Panama would circulate the new currency, but if as the author contends the new and old currencies are not 'exchangable' that would put additional constraints on Panama to enforce same, as well as your point about the population accepting the new currency.
Independently confirmed facts are always welcomed.
I refer to it only as a possibiliity that a two currency system may have been considered before, and hence what is being discussed is not novel. That post also introduces the point about different exchange rates, assuming such dual currency came to pass.
In no way does the Treasury devalue money based on the year it was printed
I don't believe anyone claimed that. However the article 'claims' two sets of currency will circulate, domestic and international and they won't be exchangeable except perhaps at customs and banks and with paperwork to foil money laundering (ostensibly).
If that is true (the point being questioned in this thread) the two currencies would circulate in different economies (domestic and international) and could conceivably be assigned different values by their respective markets. That mechansim - two different markets, not different years, - could devalue the domestic currency.
And that brings up the fact of the serial number. They aren't there only to stop counterfeiting, those numbers are used to track how much cash, or M-1 money, is in circulation.
Two currencies with two sets of serial numbers would not impair the ability to monitor M1, etc.
The author is only basing his claims on the fact we are now putting color into the currency. As I just pointed out, they change the currency all the time.
The author based the dual currency point on a comments from a different individual (Terry Savage) from Lawrence Patterson, not merely a color re-design. Whether that point is valid or not and its consequences (different market values, reporting requirements to exchange at borders, etc) is what I wanted to discuss on this thread.
This just came out in the local newspapers this a.m., and I’m translating it into English. I thought it would interest you. (For a little background, the National Bank of Panama is used as Panama’s central bank.)
New $20 dollar bills:
The National Bank of Panama will be distributing today throughout the entire Republic the new $20 bills issued by the Federal Reserve of the United States. The new bills are categorized as being the most secure bills in the history of the United States.
The General Manager of the National Bank (of Panama), Bolivar Parient, explained, “The old bills will be replace little by little.” The biggest difference in the new bills are found in the subtle colors of the green, peach, and blue background. (La Estrella de Panama)
Nuevo billete de 20 dólares
El Banco Nacional de Panamá distribuirá a partir de hoy en todo el país el nuevo billete de 20 dólares emitido por el Banco de la Reserva Federal de los Estados Unidos.
El nuevo billete es catalogado como la moneda más segura de la historia estadounidense. El gerente general del Banco Nacional, Bolívar Pariente, explicó que “los billetes viejos serán reemplazados poco a poco”. La diferencia más notable del nuevo billete lo constituyen los sutiles colores de fondo verde, durazno y azul. (La Estrella de Panamá)
But very appropriate for many FR folks. :~)
This is simple absurdity to anyone of economic knowledge. New design does not mean new currency. Are there two quarter systems? Old quarters circulate overseas and 50 state quarters circulate only in America? Of course not. The sky is not falling, not on America, not on Israel, not on anybody.
But very appropriate for many FR folks. :~)
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