Andrew Jackson: Tea Party President (Hmmm... maybe)

Well, when you say "Reductions in silver mining do not force bankers to stop creating money" it shows you have no idea how antebellum banking worked. ALL banking was tied to specie reserves, and absolutely, when you had less specie in the vault, you restricted your note issues.

You do understand, don't you, that in the antebellum period ANY bank could print its own money? There was no regulation whatsoever except by the specie standard.

As an aside, today, I’m sure more than 95% of Americans have no idea that what they carry around in their wallets and purses are just bank notes, a US savings bond is nothing more than something based on bank notes and even a Certificate of Deposit is based on bank notes. God help us if more Americans come to realize this.

The numbers I've seen are that of M2, only 7% are represented by physical paper dollars and coin; and that there is typically only enough gold to cover, at most (if we were on the gold standard, which we are not), only .01% of that 7%.

Fifteen years ago, I went to a conservative seminar sponsored by the Liberty Fund about Leland Yeager's book, "The Fluttering Veil," a book about the gold standard. Yeager, a conservative-libertarian, was convinced the GS wouldn't work, and that it was way too inflexible, and that what was needed was a more appropriate market basket of commodities to serve as the standard. Anyway, there were perhaps 10 economists there---most of them phenomenally bright, and all but one or two conservative and/or libertarian.

At the end, they not only couldn't come up with a commodity that would work, but they couldn't even agree on what actually constituted money. In the end, it's always---ALWAYS---faith, no matter what you're using, because some societies don't value gold, and gold is extremely difficult to transport, subdivide, and so on. As happened in the Middle Ages, you quickly get to "Bills of Exchange" to make up for the inconvenience and danger of carrying/using gold, then you get to paper money.


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