HI, I wasn’t sure whether to post this under political theory or economics. It has elements of both. Under normal circumstances I store valuables like AU and AG in a safety deposit box in a bank. However, someone told me in another forum that under some circumstances the Federal government can freeze the safety deposit boxes in a bank. I have a three part question regarding this. First, is this true? Second if this is true, under what circumstances could the federal government legally do this? Third, would now be a good time to clean out my bank safety deposit box of AU and AG?
Thanks,
Ryan
I am an eklektarchist not an anarchist.
Educational Pamphlet Mises Group
I don't know the law as it currently stands, but as far as I know:
I'm not exactly an authority on these matters, but that's about what it looks like to me. I hope those with more expertise can expand on this and correct any flaws and inconsistencies in my arguments.
Robert C. R.
I think that the government searching everyone's safety deposit boxes would cause an enormous backlash - first off, I think only a small percentage of safety deposit boxes have gold in them. They would all need to be searched since nobody but the holder knows what is inside.
Second, a warrant would be required to search each one, millions nationwide, and bypassing this would cause an enormous public outcry.
And lastly, the reason for siezing gold in the 30s was to shore up the government's gold standard dollar. I don't think there's really a chance of the government wanting to go back to a gold standard again.
When the government has the power to print money and the power to force people to use it, why would they care one whit about gold?
Harksaw:Second, a warrant would be required to search each one, millions nationwide, and bypassing this would cause an enormous public outcry.
Not if they were going after drug traffickers, pedophiles and terrorists. Anyone who rejects the legal tender *must* have something to hide after all.
Harksaw:When the government has the power to print money and the power to force people to use it, why would they care one whit about gold?
Every other historic failed fiat currency might offer an answer to that question.
They really only have the power to force people to use their fiat currency because people accept that they have that power. If it starts to get a little too wonky they will soon find that power isn't as real as they imagined or hoped.
But they seem to care a lot about gold judging from the whole Liberty Dollars raid, can't have a competing currency out there if you want to ensure your monopoly.
Anonymous Coward:Not if they were going after drug traffickers, pedophiles and terrorists. Anyone who rejects the legal tender *must* have something to hide after all.
Anonymous Coward:They really only have the power to force people to use their fiat currency because people accept that they have that power. If it starts to get a little too wonky they will soon find that power isn't as real as they imagined or hoped.But they seem to care a lot about gold judging from the whole Liberty Dollars raid, can't have a competing currency out there if you want to ensure your monopoly.
It's not an imagined power - if you try to use other currencies, people will come to your house with guns and stop you. I don't see the Liberty Dollar raid affecting bullion - I think they would have avoided all government attention if they didn't have "USA $10" on them, and didn't so closely resemble government money.
And correct me if I'm wrong, but isn't there a difference between currently used government fiat money, and previous historical versions of such? In the past, there was at least an implied connection between printed dollars and gold. It might have been only available to foreign governments to exchange, and there wasn't enough gold to back up the paper, but the people were at least promised some metal backing. Now we're completely disconnected from any connection whatsoever with gold, and 99% of the public doesn't care.
Additionally, the current system is different from past fiat currencies in that metal backing of currency isn't used anywhere in the world, so there isn't any other country's gold-backed currency that is going to compete with fiat currencies.
I believe we're in a very different situation than monies in the past.
Here's a simple answer to why the government might seize gold. Of course as was said I'm sure they'll find some sort of politically correct reason for it. The real reasons would likely be the realisation by those in power (+ special interests) that their own dollars are becoming worthless. They might want to secure their own wealth with gold, and since banks all over the world have sold almost all their reserves, it may be necessary to confiscate gold once again - although I doubt there's many people wise enough to hold it.
I wonder if there are any vaults that are exempt from government authority? Some sort of private security company maybe?
Fred Furash:I wonder if there are any vaults that are exempt from government authority?
A non-metallic container (glass jar?) buried under metal junk in your back yard--know only to one person.
Harksaw: And correct me if I'm wrong, but isn't there a difference between currently used government fiat money, and previous historical versions of such? In the past, there was at least an implied connection between printed dollars and gold. It might have been only available to foreign governments to exchange, and there wasn't enough gold to back up the paper, but the people were at least promised some metal backing. Now we're completely disconnected from any connection whatsoever with gold, and 99% of the public doesn't care. Additionally, the current system is different from past fiat currencies in that metal backing of currency isn't used anywhere in the world, so there isn't any other country's gold-backed currency that is going to compete with fiat currencies.
There were several historical attemps at completely unbacked fiat curencies: the former currencies of the soviet bloc, war time currencies among most belligerents in both WWII and WWI, French Assignat during their turmoil . . . all the way back to the very first one: the Mongol imperial notes printed on mulbury bark fiber sheets. At least the last one was a universal currency, in the Mongol universe, which was quite large :-)
There are currently at least a dozen precious metal legal tenders in existence today: the US gold and silver Eagles, Canadian Maples, Australian Kangroos, etc. etc., all have legal tender value coined on them. Also, there is South African Krugerand, which has a legal tender value of "one Troy Ounce of Fine Gold." Yes, "Troy Ounce of Fine Gold" is a currency unit.
JimS:There are currently at least a dozen precious metal legal tenders in existence today: the US gold and silver Eagles, Canadian Maples, Australian Kangroos, etc. etc., all have legal tender value coined on them. Also, there is South African Krugerand, which has a legal tender value of "one Troy Ounce of Fine Gold." Yes, "Troy Ounce of Fine Gold" is a currency unit.
Oh, come on. They're legal tender at far, far below their market value - $50 face value for a coin that sells for $950 or so. So the law effectively keeps them from being used as money, since debtors cannot insist on being paid in gold American Eagles. (Also note the court case coming up where an employer paid his employees in face value $50 American Eagles, and the IRS is giving him a load of trouble for reporting their face value and not market value)
Does South Africa allow people to pay taxes at the going exchange rate with Krugerrands? Can merchants list their prices in ounces of gold, and accept ounces of gold at free-market exchange rates?
If this is so, why does anyone in South Africa use the Rand? A free market on money would lead to people using gold, for sure, over fiat Rands.
Is there any country in the world today where the money is completely made up of metal?