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Why keep Pre-1933 Gold Monetized?

14 posts in this topic

 

Why does the government keep pre-1933 gold coins monetized? What's the benefit for them? Is there a benefit for them?

 

Is there a benefit for them to demonetize the coins?

 

 

....not political reasons. looking for practical reasons for continued monetization.

 

 

 

 

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Why does the government keep pre-1933 gold coins monetized? What's the benefit for them? Is there a benefit for them?

 

Is there a benefit for them to demonetize the coins?

 

 

....not political reasons. looking for practical reasons for continued monetization.

 

 

 

 

Why doesn't the government circulate circulate gold coins at face value?

Why doesn't the government circulate silver coins at face value?

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"Why does the government keep pre-1933 gold coins monetized?"

 

Can you explain your question a little more? What do you mean by "monetized?" Do you mean "pre-1934?"

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Why go to the effort to demonitize it? And the fact they have never demonitized any of their coins or currency (other than the trade dollar, and it was later restored) gives gives some measure of international confidence in the US dollar.

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If pre 1933 gold coins were to be demonetized, it might make them subject in sales tax in states like Florida where U.S. coins are exempt. The pre 1933 gold coins would still have that, of couse, but if they were no longer "coins" and were just "gold rounds" there could be a legal challenge.

 

A coin is defined as a piece with a stated face value. That's why the mint places a face value on commemorative and bullion coins. The mint has issued medals in gold and silver in the past, and they have not been popular with collectors. There is so little market for them that they are not mentioned in The Red Book or the Coin Dealer Newsletter (Gray Sheet). Do any of you remember the Ben Franklin firefighter's medal in silver, or the three piece set of space medals in gold and silver? I didn't think so.

 

Do you really want to pay more taxes because of your idea? I don't think so.

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OK. I think what the OP means is "Why are pre-1934 gold coins still legal tender for their face value?" Bill explained that just fine. The US is the only nation where all coins and currency issued by the national government remain negotiable - Treasury will even give you 3-cents for your Three Cents fractional currency notes.

 

It also allows prosecution of counterfeiters - eventually.

 

PS: the ONLY semi-official meaning for "monetize" relates to 1935 when Congress allowed Treasury to value silver bars at their coinage or monetary value rather than having to use it to make silver dollars. The term was used in Treasury memoranda, and never again until the Fenton/Farouk 1933 DE mess. (Note also, the the 1933 DE were legal tender the instant the Coiner approved them and the Superintendent accepted them. Nothing else was required.)

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If pre 1933 gold coins were to be demonetized, it might make them subject in sales tax in states like Florida where U.S. coins are exempt.....

 

....Do you really want to pay more taxes because of your idea?.....

 

No, I absolutely do not want to pay any more in taxes. I live in MD where there was a rain tax; no kidding. Basically, residents and businesses were charged a tax on any kind of impervious surface; a roof, driveway, parking lots, etc. Thankfully, that's gone now.

 

But I asked the questions about the pre-1933 U.S. gold wondering what is in the government's best interests. Not what's in the citizens best interests.

 

So it's not a suggestion. It's not something that I want to see happen. But I'm wondering, basically, if demonetizing pre-1933 U.S. gold has a benefit for the government at all, or if that benefit is worth whatever negative impacts demonetization would have.

 

I thought of the tax implications of demonetizing pre-1933 U.S. gold too. If the government demonetized pre-1933 gold coins, then you're probably right, "it might make them subject in sales tax in states like Florida where U.S. coins are exempt".

 

Soooo, why wouldn't they want to do that? More state tax revenue would mean less money needed from the Federal government; albeit probably a small amount.

 

Perhaps that tax benefit wouldn't be worth the risk of the potential negative impacts of demonetizing the coins?

 

Perhaps they've never just thought of it?

 

Or maybe it's as Condor suggested, "the fact they have never demonitized any of their coins or currency (other than the trade dollar, and it was later restored) gives gives some measure of international confidence in the US dollar."

 

Again, I'm not trying to get anyone to pay more in taxes. I'm just curious as to why it's never been brought up. Maybe it has? Maybe because whatever benefit to the Federal Government is negligible or non-existent?

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How would there be any benefit to the Government from demonetizing the coins?

 

As long as gold coins remain "money", they're covered by counterfeiting laws - if they weren't, there wouldn't be any way to go after the counterfeiters like those in the Middle East back in the 1950s, who made fake gold dollars out of the correct amount of gold and sold them for the premium above bullion value that gold dollars fetched (and still fetch).

 

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The pre 1933 gold coins would still have that, of course, but if they were no longer "coins" and were just "gold rounds" there could be a legal challenge.

 

I think Bill hits the nail on the head right here. If they did that then they would have no control over it anymore, or could be challenged legally. If the coins were demonized, think of how that could potentially impact the 1933 double eagle cases. Unless you specifically used the Pre-1933 to leave them out of the discussion or because they are not suppose to exist.

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There would be no real benefit in demonetizing the coins. If your concern is the supply of money, the effect of the gold coins is trivial. I agree with Condor as for reasons it may be harmful to demonetize them. The sales tax angle would matter to the states but not the federal government; only the latter has the constitutional power to demonetize money.

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The pre 1933 gold coins would still have that, of course, but if they were no longer "coins" and were just "gold rounds" there could be a legal challenge.

 

I think Bill hits the nail on the head right hear. If they did that then they would have no control over it anymore, or could be challenged legally. If the coins were demonized, think of how that could potentially impact the 1933 double eagle cases. Unless you specifically used the Pre-1933 to leave them out of the discussion or because they are not suppose to exist.

 

Yeah, I'd leave out anything that wasn't officially issued.

 

It seems like the consensus is that demonetizing pre-1933 gold just isn't worth whatever benefits the government might realize.

 

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Can't think of any benefit to removing the legal tender status of pre-1934 gold. The status of the monetary system does not involve the taxing interests of any state.

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