1812 so who won?

originally posted by: imjack
The notes value changes significantly based on how many notes there are. This is the literal definition of legal tender.

No, that is called the money supply.

A currency with a backed standard doesn't lose value when more money is created.

It most certainly does. There are plenty of historic examples of where a nation produced excessive amounts of precious metal coinage and created inflation due to increasing the money supply beyond demand.

a reply to: AugustusMasonicus

Inflation is when the price of goods increases, lowering the single unit power of the currency.

In a legal tender system inflation is not possible to even avoid when trying to expand the supply. The single unit currency is immediately lowered from the creation of the money itself.

In a backed system, the spending power of the currency is what changes based on demand. Just because there is an instance or two doesn't mean that increasing the supply will always cause inflation.

This is intrinsic and completely unavoidable to the tender system...there will ALWAYS be inflation, and it will never miss.

A backed system can increase in supply without causing inflation. This is just a systematic fact of their definitions...none of those backed coins have value? Are you kidding? Coins are the only things that DO have value.

You can melt them into DIFFERENT coins and metals. It's also illegal to not accept tender notes as payment, where as valued trades are negotiations.


le·gal ten·der
coins or banknotes that must be accepted if offered in payment of a debt

The Americans lost the War of 1812. The fact that Canada isn't pledging allegiance to the stars and stripes is proof of that. Oh, and the fact we don't have Donald Duck running for president or an "enabler:" sums it up just fine.

originally posted by: imjack
A backed system can increase in supply without causing inflation.

Stop making things up.

You can create inflation be minting more precious metal coins that, once introduced into the money supply, slow the velocity of money and thereby create inflation. The Romans demonstrated this quite succinctly.

a reply to: AugustusMasonicus

Making things up? You still fail to even see the critical difference in printing money that's valued respective to all money, and printing money that can be directly traded for something else at a consistent rate.

Just because you can go to the store the same way makes them the same?...no...

Do you understand how to increase a money supply AND cause deflation at the SAME time? It's not possible unless each dollar has a constant rate. It's not possible in a legal tender system. Why even have the word deflation?

Rome making more coins doesn't DEVALUE the coin. It causes INFLATION, raising the price of goods.

America printing more dollars DEVALUE the dollars that WE CURRENTLY HAVE, essentially the opposite of raising the price of goods.


I'm going to just go 6th grader on you. Imagine our dollars are gold coins. Minting more coins doesn't change the price of gold, only a fool thinks that. Mining more gold does.

If everyone had gold coins coming from a magic goose, then the value of gold coins would decrease.

Just my two farthings, since the UK won.

originally posted by: imjack
Making things up? You still fail to even see the critical difference in printing money that's valued respective to all money, and printing money that can be directly traded for something else at a consistent rate.

They are both only worth what someone will agree to give you for them.

Rome making more coins doesn't DEVALUE the coin. It causes INFLATION, raising the price of goods.

Semantics. The money has less purchasing power therefore your aureus is worth less.

I'm going to just go 6th grader on you. Imagine our dollars are gold coins. Minting more coins doesn't change the price of gold, only a fool thinks that. Mining more gold does.

It most certainly does. Consumption of gold for the minting process takes that gold out of the open market for other uses such as in electronics. This is simple supply and demand economics which you, with your 6th grade understanding, should comprehend.

originally posted by: DBCowboy

If everyone had gold coins coming from a magic goose, then the value of gold coins would decrease.

Just my two farthings, since the UK won.

I know you were being humorous but that is exactly the case. The more of something there is the less it is worth.

a reply to: AugustusMasonicus

Yeah but in your limited understanding you keep comparing infinite theoretical money to INFINITE GOLD.

INFINITE GOLD ISN'T REAL.

a reply to: AugustusMasonicus

That's not the case. If you have more diamonds you're more rich, because you create the NEW DEMAND from owning DIAMONDS OTHERS DON'T HAVE.

In a tender system DIAMONDS APPEAR OUT OF THIN AIR.

What an interesting thread, several versions of the same happening has made for interesting reading on my part, I'm still ploughing through middle east history at the moment, got tired of the Romans, but will go back to them, and the Assyrians.

Then, joy of joys, the Han. (two thousands years of them, or three?)

originally posted by: AugustusMasonicus

originally posted by: imjack
A backed system can increase in supply without causing inflation.

Stop making things up.

You can create inflation be minting more precious metal coins that, once introduced into the money supply, slow the velocity of money and thereby create inflation. The Romans demonstrated this quite succinctly.

Yep, when Gious Julius Caesar took over Egypt, and found the mountain of gold coin in the Egyptian treasury, the interest rate on loans in Rome fell from 12% down to 4% overnight...

originally posted by: imjack
Yeah but in your limited understanding you keep comparing infinite theoretical money to INFINITE GOLD.

INFINITE GOLD ISN'T REAL.

The quantity theory of money began in the 18th century as a direct result of a huge influx of silver and gold from the New World being minted into coinage.

You do not need an infinite theoretical supply of money or precious metals to produce inflation, you simply need more than what the market is demanding.

originally posted by: pikestaff
Yep, when Gious Julius Caesar took over Egypt, and found the mountain of gold coin in the Egyptian treasury, the interest rate on loans in Rome fell from 12% down to 4% overnight...

Excellent point. It appears supply and demand is not lost on you as it is with others.

originally posted by: AugustusMasonicus

originally posted by: DBCowboy

If everyone had gold coins coming from a magic goose, then the value of gold coins would decrease.

Just my two farthings, since the UK won.

I know you were being humorous but that is exactly the case. The more of something there is the less it is worth.

Let's open 2 banks Aug. My bank will be legal tender, yours can be based off gold.

We will each make two dollars, and trade one.

Now, if I want, whenever I want, I can create more money and your dollar will lose value. If I make two more dollars, I've doubled my money supply and your dollar is worth 50% of its original value.

My dollar from you however is minted in gold. The only way you can print more money is to respectively back each dollar with that same amount of gold. You need more gold. Once you have more gold, all the dollars stay worth, THAT MUCH GOLD. Now their price respective to being used as MONEY might change, but you will always have that gold. The 50% value I'm able to take from you at a distance has no bearing on me needing INFINITE GOLD to cause the inflation in the first place.

At some point you will not be able to print money because there will be no gold left. There is no issue with me creating more dollars if each is only its own demand.

originally posted by: pteridine

originally posted by: crazyewok

originally posted by: DJW001
a reply to: crazyewok

Not because of the war of 1812 though. Only because the war in France ended in a UK victory and we didnt need the manpower anymore.

Then why didn't they resume the practice during the Crimean War? Ha, gotcha!

No need too.

The UK did not need to blockade all of Europe like in the Napoleonic war and nor were they facing much in the way of credible naval strength. Not only that but we had the French Navy (stop laughing it does exist) as allies.

Plus conditions on Royal navy ships were improving at the time so more volunteers.

Didn't the Brits have the French Navy as allies at Yorktown? I thought Cornwallis was laughing at them as the World Turned Upside Down.

Erm no quite the opposite.

At that time we (britain) were bitter enemies with France.
The whole reason the USA is the United States of America and not the United Kingdom of America is because the french turned up and tipped the balance.

a reply to: eriktheawful

Ok everybody was a winner for taking part

originally posted by: imjack
Let's open 2 banks Aug. My bank will be legal tender, yours can be based off gold.

Gold is a legal tender. Hell, colored rocks can be a 'legal tender' if the parties mutually agree on it.

My dollar from you however is minted in gold. The only way you can print more money is to respectively back each dollar with that same amount of gold. You need more gold. Once you have more gold, all the dollars stay worth, THAT MUCH GOLD.

If gold remains static in value why is it traded? Gold is worth what the market dictates, whether it is in coin, bullion or wire form. If you tighten or increase the supply of gold it will affect the price of all of those forms.

a reply to: AugustusMasonicus

Ya ikr it was only called the GOLD STANDARD, gee idk maybe it was supposed to stay FIXED.

Moonrocks could be the standard for all I care, you still can't have an INFINITE FIXED STANDARD. Eventually if you keep printing money, you will have enough used it 'all' and we would have no moon.

If they money is based of its own circulation, making more only EVER makes it worthless.

You seem to think this doesn't happen just because it's possible to have a fixed dollar still cause inflation?

Legal tender - 100% chance inflation
Standardized - simply not a #ing 100% chance.

originally posted by: imjack
Ya ikr it was only called the GOLD STANDARD, gee idk maybe it was supposed to stay FIXED.

Guess what? It was not permanently fixed throughout our history.

You keep getting hung up with the term 'legal tender'. It can be any medium agreed upon and that medium can be introduced into the money supply to the point where it causes inflation. You do not need to approach an infinite supply situation as been demonstrated by numerous examples in history.

You keep ignoring the actual anecdotes where a physical gold money supply has been involved with a highly inflationary economy.