Understanding Money & Banking, Pt. 6 - Legal Tender

Consent, Coercion and Legal Tender. Part 6 of a multi-part series by lawyer Paul McKeever that explains the nature of money and banking as it has never been explained to you before.

In this Part, Paul explains the nature of legal tender, and its relation to paper currency.

Category:

News & Politics

Tags:

• central
• bank
• notes
• money
• banking
• gold
• silver
• legal
• tender

[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).

[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.

[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...

[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?

[heaty007]

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

[heaty007]

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

[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.

[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?

[FortNikitaBullion]

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