What is "Legal Tender"

Posted by $ MikeMarotta 7 years, 3 months ago to Government
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In truth, objective investigation demonstrates that the government has the right, the need, and the obligation to define and create legal tender.

All governments create a plethora of medals, medallions, certificates, promises, and warrants that may be valuable, negotiable, even fungible, but are not recognized in courts of law as legal tender.

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All Comments

  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    It's true that if you goto a government court, you accept the government's rules. But this is as true in Soviet-era Russia as it would be in a free society. That statement says nothing about what proper government rules would be and should be in an Objectivist court. And it does not make the case that "legal tender" should be defined by law in the first place, except in the restricted sense of what the government is willing to pay out and accept for its own transactions with the public.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    But it was not necessary for the government to create coins in order to conduct business. It could simply have used whatever monetary instruments the public had chosen as its preferred medium of exchange in a free market.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    What the dollar will buy at any given instant is public knowledge and is objective. The dollar itself is not, unless you accept as objective the definition that “the dollar is something the government can create in any quantity it chooses and force the public to accept as money.” In many cases the dollar is not even suitable for legal proceedings, which is why inflation adjustments are often included in contracts. A lawsuit can take years to resolve, by which time the dollar will likely have a very different purchasing power than it had when the lawsuit commenced.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    I agree, and the government can do these things without the imposition of "legal tender" laws, except for defining what the government itself is willing to accept in payment.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    There is no Objectivist principle that government must create the medium of exchange that it accepts for its legitimate transactions. In a free economy there would likely be one or a few types of readily accepted private monetary instruments, and the government could simply use these.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    As Ayn Rand pointed out, the government is the servant of the people, but it is not the unpaid servant. ("Government Financing in a Free Society", Virtue of Selfishness, first edition, hard cover, page 161.) So, which of the medals and papers issued by the government will it accept back in payment for protection and adjudication? Your military medals and Congressional awards might be gold and silver, but the government need not accept them back -- unless of course, you are trying to say something else entirely.

    Once "legal tender" is defined in law, the government courts will adhere to that definition. You can pick some other court, even today. (It is a bone of contention among progressives that you can sign away your right to a government court in a civil suit.) But if you goto a government court, you accept the government's rules.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    The word "objective" has objective meaning. The fact that the value of the dollar is public information from several sources makes its value objective. The best analogy that I can give is Ayn Rand's explanation that Roman Law was objective. (It was not Objectivist.) Roman Law was not concerned with individual rights as we understand them, but Roman Law was publicly posted for all to know, and it was uniformly enforced. Thus, it was objective.

    You can look up the Treasury debt, the cross-currency index futures, the price of Brent Crude Oil, or anything else you want. We know what a dollar is worth, even as the value changes with market conditions in many markets all the time.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    You have a strong point there and one that radical Republicans of the Senate in 1800 and 1802 attempted to carry forward. However, the fact is that like any economic actor - you, me, Disney World - the government can create its own monetary media for paying its own employees, buying materials, etc. And when the government borrows money, it can create promissory notes that it will accept back in payment for taxes and duties and other goods and services.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    The government must define which of its medals and papers it will accept for taxes, duties, etc. Andrew Jackson's "Specie Circular" required gold and silver coin for the purchase of federal land. You could not hand back a military medal. ... because if you did, that would mean something totally different.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    You are right about the edge inscriptions. Thanks. I forgot about that. Those were for silver coins, though. The coppers were not legal tender (above small amounts) but were only a token for silver. And it remains that the gold coins did not have those edge inscriptions until 1838.

    Thus, the government needed to define which of its medals it would accept back for taxes, duties, etc.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    In order for the "expert" to be acceptable to the court, the testimony must be "scientific" by the Daubert Test. Central to that is that the work must be reproducible and statistically significant.
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  • Posted by $ Thoritsu 7 years, 3 months ago in reply to this comment.
    Ok, this is getting pedantic. Let's use an example. Two persons go to court to argue rent was not paid. The contract says one person must provide 20 four leafed clovers a month in exchange for a heated apartment. Where where is a definition of legal tender needed?

    The Daubert Test does not define science. It sets expectations for expert testimony.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    Each early U.S. silver dollar did have a mark of value on its edge, not that this fact has anything to do with whether defining "legal tender" is a legitimate function of government.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    In a free society government would not define "legal tender" at all, and government courts would not uphold such a concept.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    The first U.S. half cents, cents, half dollars and silver dollars all had marks of value. The half cents and cents were denominated on the reverse, the half dollar and the silver dollar on the edge. The principles and practices of existing government courts have no bearing on what their principles and practices would be in an Objectivist society.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    Re: "Nonetheless, if "legal tender" is defined in law, then everyone can rely on an objective standard." The U.S. dollar is legal tender by law. However, it is anything but an objective standard.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    Why should I know or care what the government defines as "legal tender", unless they impose their definition on me by forcing me to accept it? The whole concept of legal tender is unnecessary in a free economy. Governments should not be minting coins or issuing paper money at all.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    See my reply below https://www.galtsgulchonline.com/post...
    What is your point? The fact that there are legal tender laws doesn't demonstrate that such laws are morally legitimate, any more than the existence of government schools proves that education is a proper function of government.
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  • Posted by $ CBJ 7 years, 3 months ago in reply to this comment.
    Actually, U.S. silver dollars bore the denomination "One Dollar" beginning with the first ones struck in 1794. Check the edge.

    And this has nothing to do with whether defining "legal tender" is a proper function of government.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    You are wrong about that, as I noted below
    https://www.galtsgulchonline.com/post...
    The US Eagle ten dollar coin and the US silver Dollar itself had no mark of value. Their value was defined in law as legal tender, as were several foreign coins, principally the Spanish Milled Dollar. That "dollar" of course said 8R, eight reales, not one dollar. Its value was defined in law as legal tender for one dollar.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    Actually, the government has defined "science" for the courts. It is called the Daubert Test.

    As we have noted, you can arrange for any private contractual terms you want. But, ultimately, when you come to a government court, you accept the government definitions. As I pointed out below https://www.galtsgulchonline.com/post...
    the first coins of the United States had no mark of value. Technically, they were indistinguishable from honorary medals. The difference, of course, is that the Eagle and the Dollar were defined in law as being legal tender, as were several foreign coins, in fact.
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  • Posted by $ 7 years, 3 months ago in reply to this comment.
    Do you know that the first coins of the United States had no mark of value?
    https://www.galtsgulchonline.com/post...
    The problem with a mark of value - known as early as from French coins of the 1500s - that the coin can be debased, but carry the same mark of value. Without any mark of value, though, how do you know legal tender, except by legal definition?
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