Understanding Money & Banking, Pt. 6 - Legal Tender

[superfluidity]

Not true in England and Wales, either. You can extinguish a debt with legal tender, even if your creditor doesn't like it, but you can't buy something without the agreement of the seller.

[FortNikitaBullion]

@superfluidity Don't most credit card statements ask you to not mail cash? Could you claim you offered to mail cash but the statement said not to?

[XenovannHellwolf]

Can you explain why people say the dollar is worthless even though other countries use the same type of bank notes? I understand that notes used to be exchanged for gold in banks but since notes are all we use now and we dont have gold whats to come from this? Is a millionaire actually fictitiously rich?

[DragonYearJoji]

Hi Paul - bearing in mind your international audience, you might want to rework this video. According to wikipedia, "The right, in many jurisdictions, of a trader to refuse to do business with any person means a purchaser cannot demand to make a purchase, and so declaring a legal tender in law, as anything other than an offered payment for debts already incurred, would not be effective." Walking off with the note still in your pocket seems far-fetched.

[FortNikitaBullion]

Aren't there restaurants that don't take cash anymore? Can you pull this off at these places?

[heaty007]

@FortNikitaBullion hey he already told you not to try this at home. You might get your ass shot!

[FortNikitaBullion]

What if you paid entirely in pennies, is the merchant required to accept that as well?

[nemnaisa]

Your explanation of legal tender laws is wrong (at least in Canada). This is from RCMP

"There must be mutual consent between the retailer and the consumer as to the particular form of payment in order to conclude a transaction"

Legal tender must be accepted to settle debt. But if I only wants you to give me apples in order to trade with my home,

you cannot force me to accept legal tender as a form of payment as we do not have a mutual consent form of payment

to enter into a transaction.

[jheetman]

awesome video, just a bit over my head...i'll have to watch it again. but i read what was printed on the dollar in my pocket and it really made me think about how im a criminal if i accept LEGAL tender as payment, scary stuff. and i will pass this video and this info along. why would my own country, that i am a war veteran of, penalize me for using its currency?????? think about that one.... America is waking up

[RoySC1]

The US Constitution, Article I, Section 10, requires the gold standard and 100% reserves banking but nine out of ten people don't understand this. Go and read it for your self.

[tubestick00]

so if somebody wants to buy something with legal tender they can? even if it was not for sale? surely thats not possible?

[macdaddylorenzo]

Finally, to make sure I understand the implications of the system you're proposing (no change in money supply), can you please address the implications that your system would have on wages?

For example, you say that prices would naturally deflate as a result of inc. productivity, so that implies that labourers will always have to go 'up' in the skill ladder to obtain higher wages, otherwise the blue collar wages would naturally go down with the deflating price of manufactured goods, right?

[macdaddylorenzo]

I agree with you re: money supply & the fractional reserve system.

But when it comes to legal tender, perhaps you're caught up in details?

If you're selling a good & you don't want fiat money in exchange for that good, then all you have to do is set your sale price in the amount of fiat money that is required to buy the amount of gold that you believe that the good is worth.

Ex: you want an oz of gold for your Rolex? Sell it for $1k then exchange that $1k for an oz of gold. Right?

[bergweg]

So in the case with Canada, where in which Act/Statute does it say about the obligation to accept legal tender?

[THRUTHTHIRSTY]

Understanding money and banking eh. Understand this. If we dont put any money in the banks then banks cannot stay open. Banks are not our friends. Get your own safe and put it in there. Get a gun and protect it. Take your money out of the banks and bring them to their knees tomorrow.

[connecttoyourenergy]

You can buy all the gold in the world, it is going to be worthless! to trade you are going to have to have the chip, get over it!

Rothschild Rule!

[Rickdeckard2020]

Great video series though it sounds like this one is stretching it(or I dont share the same level of interest about LT)

If you realy dont want legal tender, whats preventing you from saying "alright I do accept apple cores, the rent is 45 trillion apple cores, but if you want I also accept 3 watches".

Gold; if theres a famine you might get more people willing to trade your stuff for a steak than gold. And how many people are actually going to say hey I want to smelt a golden tea pot?

[jheetman]

@macdaddylorenzo you just wrote some pure gold right there, i never thought of my skills that way.

[morgandrim]

But suppose the vendor had good reason to believe that the "Legal Tender" was not legal, but a forgery ?

[MikeT2005]

Honestly, I'm indifferent between receiving fiat currency and receiving gold or silver coin. I'm not easily impressed by shiny things and I place only the value which can be attributed to a substances usefulness to an an item. Furthermore, there is nothing stoping the government from legistlating that only it's own print gold coins are legal tender within it's borders. With government discipline, I believe that paper currency is just as effective as any 'valuable' commodity when used as currency

[MikeT2005]

The laws on legal tender and transfer of ownership also differ between countries. In Australia, an item on the shelf is an 'invitation to treat', or 'an invitation to make an offer to buy the item'. It is when the sales clerk (representative of the company) accepts the persons offer to buy that the transaction is made. The opposite is an absurdity. How do you determine which title is transferrred? When you take the item off the shelf? What if you change your mind?

[MikeT2005]

Although, I will check into that because I know our notes do say "This Australian Note is Legal Tender Throughout Australia And Its Territories". But I'm certain that if a contract specifies that it is only payable with direct debit or credit card, there is no legal right to tender currency and void the right to sue. However, if the contract does not specifically state payment terms, clearly the legal tender laws would apply. I know it hasn't come up in any of my law courses.

[freedombiteback]

The Bank of England has never ever been owned by anyone who is Brit-ish, Fact!(it's just a NAME).The real name should be called, the Bank of*Lord Rothchilds(Bankster)The Evil Enslavers!.Ok,every(98%)countr ies currency is based on gold/Silver,and the Rothchilds owned all the gold mines in the world.Who Controls the money con-trols the worlds economy.You will find the root of ALL Evil(Wars,SlaveTaxes,child poverty) dwells here in the UK,please don't believe me research on youtube:New World Order

[KelferMookie]

Is this the same guy with the beard in the other videos??

[forgetfulpolymath]

Thanks for the videos, Paul. I have just finished watching them all and making notes, etc. This is a new issue for me and this is the first balanced treatment I have encountered. I wonder if you would have some references for a deeper dive with time constraints in mind, please? Also, one question it might be worth asking you (I know it is of secondary importance given private bankers' credit creation but): who, if anyone, owns the Federal Reserve?

[RichardRoy2]

Interesting attempt to explain a legal concept. But the issue you make of "Not trying this at home" in one of your explanations gives rise to how questionable your explanation is. I tend to think, therefore, you're giving legal arguments, and not necessarily legal explanations. Interpretation plays a large role in any legal system. Yes, they can pull out a gun, but you know that a gun is not an argument.

[NauticaTimmy]

Great video, very informative.

[nibelungensohn]

I have always wondered if I can dispute a parking ticket on grounds that I "legally tendered" the parking metre with bills but the metre only takes coins...

[tricky778]

The only effect of legal tender laws is that the different units of currency are equivalent and the government can control how units of a particular abstract money are represented by physical goods and ensure that those goods are accepted as a form of that money.

If I don't offer to sell an item for a number of dollars then nobody can coerce me since they cannot complete a legal tender that I cannot complete in reverse in the very same instant.

[ddoinkie]

funny video

[Phreylan]

Great explaination of legal tender laws. I especially liked the challenge you posed at the end regarding repealing such laws and "see what happens." The answer being quite obvious (Gresham's law).

The banking fraud of fiat currency and credit expansion is the most important issue out there, yet it is always (by necessity for their own self preservation) completely ignored by the politically connected class. People are finally waking up to the issue, and videos like this help. Keep it up.

[drkelven2]

now correct me if im rong but when he talks about taking an item if u dont have gold or credit and not allowed to buy with the dollar i think thats evil as hell, the reason why they do this is so people cant just abbandon the dollar atleast the biusness owners of the stores cant becouse if they do some one will just take what they like.

[PaulMcKeever]

I have no problem with the idea of people trying to compete with a state-issued currency, provided that the quantity of money they offer is limited naturally (e.g., gold coin) or artificially (e.g., a law-backed in ability to increase the number of dollars/pounds/etc. they offer.

The 100% reserve requirement should exist for banks no matter whose money they are lending.

Your last question requires a detailed response (no room here).

[MillionthUsername]

Excellent series, Paul. Thanks!

But if there are no legal tender laws, then why would a gov't be in the money business at all? They couldn't enforce it. Do you support a free market in money with the gov't merely requiring banks use a 100% reserve system?

Please continue the series. There are many arguments over how a transition to sound money would affect the economy. And I wonder about credit - mortgages, for example. What happens with loans when inflated values of assets vanish?

[sirscutter]

Wow, I learned some stuff yet again. I liked this video, very well done.

[funkr77]

Excellent, I love the way that you explain law in layman's terms.

So many people are so unaware that there are so much involved when it comes to money. Look forward to the next part of the series.

[Oppp2]

grear vid!!

[wowdavidp1]

i figured this out a long time ago. Federal reserve notes say "for all payments of debts public and private"..so basically they explicitly say that these notes must be accepted for any payment of debt.

[tricky778]

Any payment of debts measured in abstract dollars. Of course, the seller doesn't have to agree to sell you the goods. If he /does/ agree, and then refuses your payment, well then he's in trouble - he promised you can have the goods for dollars and you hold the ownership property in the goods from that moment and he owns the ownership property in some dollars. Since you have not provided the dollars yet you have a debt to him in dollars and can legally tender dollars to him by offering banknotes.

[jimlick]

Where this gets really alarming is in places that extend legal tender laws to the extent that you are not permitted to trade in anything but the central bank currency. For example, Zimbabwe's inflation has been so extreme that many people started using euros and us dollars for transactions. The government then went out and cracked down on anyone offering goods and services in foreign currencies.

[heaty007]

@jimlick I will be RUNNING FOR President of Zimbabwe in 10 years. This won't happen again.