We attended, recently, a large stadium event of several dozen thousand.
Signs everywhere informed us that cash was worthless within its walls.
Vendors would not take it aboard.
If you wished to purchase a frankfurter or any other edible, you could only acquire it through digital means.
The stern, dour visage of Abraham Lincoln and the $5 bill he adorns the frankfurter-peddler would not accept.
Nor would he accept the portrait of Andy Jackson and his $20 bill for the preposterously overvalued beer to wash the thing down.
Yet is the cash shun legal?
Lift a Federal Reserve note from your wallet.
In its center you will find Messieurs Lincoln, Jackson, Washington, Hamilton, Grant or Franklin... depending upon its denomination.
Now fix your gaze above any's right shoulder.
There you will find these words, inscribed:
"This note is legal tender for all debts, public and private."
A frankfurter's purchase represents a debt satisfied as does a beer can's purchase.
How then can a vendor of the frankfurter or the beer can refuse cash settlement?
Again: The note is legal tender for all debts, public and private.
Here we speak strictly by the book.
Reads United States Code 5103, Section 31 Legal Tender:
United States coins and currency [including Federal Reserve notes and circulating notes of Federal Reserve banks and national banks] are legal tender for all debts, public charges, taxes and dues.
There it is in black letters.
We acknowledge a man from the internet for reminding us of this cardinal fact.
We would cite him personally yet his identity has slipped from memory.
We are nonetheless in his debt.
Alas, if he sold things at Metropolitan Life Stadium, we could not satisfy that debt with cash.
The Federal Reserve itself appears to betray United States Code. It claims that:
There is no federal statute mandating that a private business, a person or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.
Yet the "Code of Laws of the United States of America" informs us that:
The United States Code is the official codification of the general and permanent federal statutes of the United States.
United States Code 5103, Section 31 declares Federal Reserve notes legal tender for all debts, public and private.
United States Code 5103, Section 31 is a statute.
Upon what legal rock then does the Federal Reserve stand?
Upon what legal rock does Metropolitan Life Stadium stand?
In retrospect we wish we had wielded Mr. Jackson's note for the beer can.
If the vendor refused it we would have slammed it upon the table, seized the extortionately priced aluminum... and screamed the contents of United States Code 5103, Section 31.
If the fellow protested he would have directed him to the judge.
He could just tell it to her.
Above we cited the Federal Reserve.
As Jim Rickards notes often, the Federal Reserve is preparing to hatch a purely digital dollar a central bank digital currency or in Jim's telling, "Biden Bucks."
Under that arrangement all cash undergoes extinction. Only the digital dollar enjoys legal status.
We wonder if the Federal Reserve would be so... cavalier... about the central bank digital currency's legal status... as it is of cash's legal status.
We hazard, very strongly, that it would not be so cavalier about its legal status.
Can you imagine the Federal Reserve claiming that:
There is no federal statute mandating that a private business, a person or an organization must accept central bank digital currency as payment for goods or services. Private businesses are free to develop their own policies on whether to accept central bank digital currency unless there is a state law that says otherwise.
For if a private business, a person or an organization enjoyed the freedom to decline the central bank digital currency, it would defeat the thing's very purpose.
What if such entities demanded payment in gold, silver or cryptocurrency?
The federal government would lack the means to track your every purchase.
It would lack the means to impose negative interest rates upon you.
It would lack the means to goon you.
And what government would not goon you if afforded half one chance?
We have yet to encounter one. Nor do we expect to.
That is because all government runs naturally to tyranny all of it.
Every government would strip you of your sole remaining cent if it could get away with it.
Below, we republish the evolution of a mighty swindle government's seizure of our money.
That swindle represents government's greatest raid upon our prosperity.
Read on....
By Brian Maher
Please observe this $10 banknote, dated 1928:
The 1928 $10 note bears this inscription:
"Redeemable in gold on demand at the United States Treasury, or in gold or lawful money at any Federal Reserve Bank."
In those antique days, a fellow could march into a bank. He could hand the clerk a slip of paper, as illustrated above...
And he could demand the denominated amount in gold coin payable on the nail.
The system imposed a reasonable discipline upon banks... and held inflation in checkmate.
Federal Reserve banks were required to keep a 35% reserve of "gold or lawful money" on hand, lest they make a liar of the United States Treasury secretary in this case, the Hon. Andrew William Mellon.
In effect, the private citizen locked the banking system behind golden bars.
But one Great Depression, one New Deal and one world war later... we come now to a $10 banknote, dated 1950:
In appearance, it is nearly a perfect twin to the 1928 model with one infinitely telling exception.
Can you sniff it out?
Recall, the 1928 note claims it is:
"Redeemable in gold on demand at the United States Treasury, or in gold or lawful money at any Federal Reserve Bank."
But here reads the 1950 version:
"This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank."
The fine print disguises a vast mischief: The gold provision was stricken from the record.
The bankers had broken free from their golden prison... and no longer could a private citizen bring them to honest account.
But what about "lawful money"? What is it?
In 1947, a certain gentleman A.F. Davis by name dispatched the following note to the United States Treasury, accompanied by a $10 note:
I am sending you herewith via registered mail one $10 Federal Reserve note. On this note is inscribed the following:
"This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve bank."
In accordance with this statement, will you send me $10.00 in lawful money?
The acting treasurer, M.E. Slindee, responded after this fashion:
Dear Mr. Davis,
Receipt is acknowledged of your letter of Dec. 9 with enclosure of one ten-dollar ($10.) Federal Reserve note.
In compliance with your request, two five-dollar United States notes are transmitted herewith.
And so, Mr. Slindee began chasing his tail what the philosophical men call circular reasoning.
In exchange for his $10 note, Mr. Davis received by mail two $5 bills bearing the same pledge to redeem in lawful money.
But this Davis fellow would not be so easily shooed off.
He returned one of the $5 bills, once again demanding lawful money in exchange:
Finally, Mr. Slindee threw up the sponge:
Dear Mr. Davis:
... You are advised that the term "lawful money" has not been defined in federal legislation. It first came to use prior to 1933 when some United States currency was not legal tender but could be held by national banking associations as lawful money reserves.
Since the act of May 12, 1933, as amended by the Joint Resolution of June 5, 1933, makes all coins and currency of the United States legal tender and the Joint Resolution of Aug. 27, 1935, provides for the exchange of United States coin or currency for other types of such coin or currency, the term "lawful money" no longer has such special significance.
The $5 United States note received with your letter of Dec. 23 is returned herewith.
In 1963, all promises to redeem notes in lawful money were stricken from United States currency.
Here, in graphic detail, the devolution of American money:
Say what you will of paper money. But in one sense, it is redeemable if you'll forgive the expression in the present context.
Like gold and silver, paper money files a claim upon Earth's resources. It is woven from cotton and fashioned into linen.
A paper dollar is tangible. A fellow can hold it in his hand, in his wallet, in his mattress.
It cannot be erased at the stroke of a key.
The paper dollar is also anonymous. Once out of your hands, it washes its hands of you.
None of these happy virtues apply to digital money.
If paper money invites abuse... what about digital money?
Digital money removes all natural checks on monetary production. It has no tangible existence. It is limited only by the discretion of men.
Wispy as fog, slippery as oil, it is conjured into existence... as if by the magician's wand.
Digital money is therefore the type of money bound to get itself into trouble.
And it gets around the world at electronic speeds.
It is the ideal money for ambitious government swollen to ghastly dimensions its issue being unlimited in theory.
Digital money can also disappear at a keystroke. The bank can freeze you out of it. Every transaction goes on your permanent record.
And if the electricity is out, if the power grid is ungridded, how do you purchase your needs with digital money? You cannot.
Yet paper money can see you through.
We cannot transact in lawful money as originally defined by statute gold and silver.
In its absence, we will settle for paper money.
Thus we raise a half-throated defense of paper money today.
That is, a money we can at least keep our hands on... and our eyes on...
The Daily Reckoning