Ol’ Remus has a question about silver

Here is a question to ponder from the journal of Ol’ Remus, otherwise know as the Woodpile Report, The question has to do with real money, in this case silver, whether history might repeat itself should the worse that could happen, happens.

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Silver, a question.

Please note—this question concerns silver specifically. The reader is asked to mentally insert an “including” or “excluding” gold, where and as applicable, rather than have the article encumbered with tedious asides.

Woodpile Report readers are generally familiar with the notion of money versus currency, but before Remus asks his question it may be good to recount the sorry yet fascinating misadventure of how we got where we are.

In 1933, President Roosevelt devalued the dollar by repricing gold while simultaneously outlawing private ownership of gold. For the citizen, already hard-pressed by the ever-deepening Depression, Roosevelt’s decree meant he had to exchange gold money for paper currency at a discount. For international purposes the dollar was still officially valued in terms of gold, but gold money itself could no longer circulate from hand to hand, it was melted into ingots and disappeared into government storage—at a handsome profit to the Treasury.

For the citizen, paper dollars were backed by silver, they were in fact Silver Certificates, certifying that a dollar in silver was on deposit and readily available in exchange. Incidentally, this is the reason for serial numbers, the certificate and the silver it claimed weren’t—theoretically—supposed to be in circulation at the same time, the silver was stated to be on deposit until redeemed. In other words, a Silver Certificate could be thought of as a check. Remus supposes serial numbers today are a sort of maintenance device, every billion or so the printing press gets its scheduled maintenance.

Circulating alongside Silver Certificates were the otherwise identical Federal Reserve Notes, true fiat money, it was money because the Treasury said it was money, This note is legal tender for all debts, public and private, a declaration—or threat—still printed on every bill. They are redeemable only for different Reserve Notes or, should the Treasury decide to print the same declaration on cow chips, redeemable for different Reserve Notes or cow chips.

As a youthful capitalist Remus needed change once a week so he routinely tested the Silver Certificate claim by exchanging bills for silver at a local bank, Silver Certificates and Federal Reserve Notes. All were exchanged without comment or hesitation but only because there wasnothing other than silver coins to be given as change, even for a Reserve Note dollar bill. And so it was that fiat money was insinuated into the system, it acted the same as real money so any who questioned it were thought to be eccentrics nursing some harebrain grudge.

Then came the ol’ switcheroo. Silver Certificates were withdrawn from circulation in 1965 when silver as such exceeded its nominal value as coinage. However, unlike gold, silver coins were allowed to circulate alongside the government’s counterfeits. The era of fiat money, and only fiat money, truly began when the dollar was decoupled from gold altogether, when President Nixon closed the “gold window”, the final step to end what had been a de facto dual system: silver for domestic transactions, gold for international transactions.

Alert citizens began culling silver coins as soon as the bogus ones were issued, and so began the stockpiling of junk silver—coins whose intrinsic value exceeded their collector’s value. Intrinsic value means the melt value of the silver, silver coins being 90% silver. Dealers in junk silver use its fluctuating value in fiat money to make their profit—in fiat money. Survivalists, preppers and the merely prudent consider silver’s value to be the constant about which the putative value of fiat money fluctuates. By fits and starts, silver, especially junk silver, is emerging as the shadow currency for a nascent parallel economy. Finally, junk silver is the default currency in doomsday scenarios.

So, the question. Should a catastrophic economic collapse actually occur, wouldn’t a forced redemption of all silver coinage be decreed, at a discount if not outright confiscation? Consider: if the value of silver rose to the heights imagined by many, it could constitute one of the the last stores of ready liquidity available to a desperate central government. It seems unlikely that a government willing to confiscate retirement accounts would overlook billions in privately held silver coins.

For instance, an Obama-like regime may declare that silver coinage is government property, and is marked as such, that the well being of the nation—meaning the regime natch—supersedes any conceivable private interest, including survival, that mere possession of silver coins is proof of veryregrettable civics and evidence of worse, perhaps that hoarding or trafficking in the last reserve of our common wealth amounts to sedition or terrorism, and so forth.

It’s not different in kind than the ongoing highway robberies by law enforcement, called Civil Forfeiture. SWAT teams working with NSA surveillance records would make targeted home invasions feasible and profitable. As Ayn Rand said, “I know what is to come by the principle on which it is built.” Criminalization of ownership and confiscation by force is the principle.

This is a question, not a declaration. Remus relies on the good judgement of the reader to contemplate its implications, that the otherwise sound reasoning behind accumulating junk silver may contain the impetus for its undoing, and be grounds for a substantial threat to the prudent on behalf of the improvident. Just asking.