Seigniorage

[osoab]

Seigniorage (https://www.wordnik.com/words/seigniorage)


I am listening to this Clint Richardson interview with Tammi.

Heck of a discussion. Still listening. Most of the discussion is centered on the origination of the corporation.

Anyhow, Clint brought up something I have never hear before.

He claims that our former 90% coins were made 90% pure because the other 10% was seigniorage for our rulers. Tribute.

Here's the interview/discussion. Clint brings up the topic around 1/3 in.

http://www.youtube.com/watch?v=rZzgAO_f3pM

http://www.youtube.com/watch?v=rZzgAO_f3pM

Anyone ever heard this before?





edit to add.

You may want to download the episode (http://corporationnationradioarchives.files.wordpress.com/2014/03/leaving_the_pfarm_with_tammy_pepperman_guest_clint _richardson_2014_03_01re1.mp3). The youtube vid is acting up.

[palani]

Canadian coins were 80% silver.

Alloys are harder and last longer than soft pure metals.

[osoab]

Canadian coins were 80% silver.

Alloys are harder and last longer than soft pure metals.




n. Something claimed or taken by virtue of sovereign prerogative; specifically, a charge or toll deducted from bullion brought to a mint to be coined; the difference between the cost of a mass of bullion and the value as money of the pieces coined from it.
n. A share of the receipts of a business taken in payment for the use of a right, as a copyright or a patent.



Wouldn't you take care of you money if you knew the risks? What if the hardness angle was just sold for government/corporation profit?

[palani]

Wouldn't you take care of you money if you knew the risks?
A lot of early coins got the clipping treatment. To the point where the diameter of the coin becomes half the original. Does this sound like taking care of your coin?


What if the hardness angle was just sold for government/corporation profit? Possible. Yet if so government now takes 100% as there is nothing precious about any coin intended for circulation. If the coin carries the government 'brand' on it then government owns that coin. Whether it be 100% PM, 50% PM or 0% PM.

[osoab]

A lot of early coins got the clipping treatment. To the point where the diameter of the coin becomes half the original. Does this sound like taking care of your coin?

Depends on ones thought process. Clippers could be trying to keep some extra back and stick it to the man. Would you except a clip coin for change at face value (assuming a pm coin)?




Possible. Yet if so government now takes 100% as there is nothing precious about any coin intended for circulation.

Fiat is a lot easier for them to manufacture and the returns are far greater than hard currency will ever achieve.



If the coin carries the government 'brand' on it then government owns that coin. Whether it be 100% PM, 50% PM or 0% PM.

What if they hadn't perfected the scam at those times? The public perception of loving fiat for this long is a rather new occurrence historically speaking.

[palani]

Would you except a clip coin for change at face value (assuming a pm coin)? If I accepted it then the transaction is complete.


Fiat is a lot easier for them to manufacture and the returns are far greater than hard currency will ever achieve. When you play poker do you use PMs or do you use poker chips?


What if they hadn't perfected the scam at those times? The public perception of loving fiat for this long is a rather new occurrence historically speaking.
The requirement for gold and silver was placed in the constitution. That means the people who framed this document were well aware of the shenanigans of banker and financial types. The also established the requirement for a uniform bankruptcy law as well rather than concentrating on insolvency.

Banking and money laws are established for corporations. Fictions require fiction. Fiat is nothing more than the poker chips used in a large poker game played by corporate entities.

[osoab]

If I accepted it then the transaction is complete.

I would concur.


When you play poker do you use PMs or do you use poker chips?

Haven't played poker in a long while. Wouldn't it depend on the players involved and what was decided at the beginning of the game?




The requirement for gold and silver was placed in the constitution. That means the people who framed this document were well aware of the shenanigans of banker and financial types. The also established the requirement for a uniform bankruptcy law as well rather than concentrating on insolvency.

Banking and money laws are established for corporations. Fictions require fiction. Fiat is nothing more than the poker chips used in a large poker game played by corporate entities.


I don't think this should only be discussed in terms of our county/corporation only. I just used the US 90% coinage as an example. Would they have needed to add hard currency to the constitution in order to sell it to the masses?

...


I am just thinking out loud here. I did a slight amount of digging on the subject last night and couldn't find anyone else proposing the idea.

[singular_me]

since seigniorage is the revenue derived from the face value of a currency net production costs.... will money ever escape tax and inflation and financial sharks? The only difference I see is that it would take longer to bring an economy down with PMs, but it will happen nonetheless, unless masses are getting truly educated and unbiased monetary science taught in high schools. Politics is so corrupt (and has always been) that it cannot change a thing, having congress or the fed in charge, it doesnt matter

money and financial elites are indissociable , see the two articles below.

Solving the debt-ceiling issue via proof platinum coin seigniorage—an idea that began and was nurtured within the MMT ranks, mostly by Joe Firestone and Beowulf (see Joe’s post here and the numerous links therein)—has gone viral in the blogs and news sources as a viable option to end the debt ceiling crisis. The one thing that naysayers, and even some supporters, instinctively claim, however, is that coin seigniorage would be inflationary or even hyperinflationary. But this is not true!

So, why won’t coin seigniorage, using very large face value coins, be inflationary? Here are the reasons:
The coin(s) would never circulate among the public. It (they) would always remain on the asset side of the Fed’s balance sheet, and would always rest in a vault at the Fed. Since the platinum coin(s) never circulate(s), minting and depositing the coins at the Fed cannot possibly be inflationary.
Depositing the coin into the Treasury’s account at the Fed will provide the Treasury with an account balance nearly equal to the stamped value of the coin(s), but this is not inflationary, either, for the following reasons.
http://neweconomicperspectives.org/2011/08/coin-seignorage-and-inflation.html

------------
Per the U.S. Constitution (Article I, section 9, clause 7) states that “[n]o money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law …” Ultimately, money is drawn from the Treasury’s account at the Federal Reserve via the checks that the Treasury issues to settle the government’s accounts payable. Note, however, that an appropriation is permission to withdraw money from the Treasury’s account; it does not put money into that account. Rather, the Treasury deposits U.S. taxes into that account and makes up any shortfall by borrowing, i.e., selling bonds at auction and depositing the receipts into that account.

There is a myth among economists that the Treasury or the Fed has a (possibly virtual) printing press that can generate an unlimited number of large-denomination bills and deposit them into the Treasury’s account at the Fed. In such a case, the Treasury could avoid the printing and sale of bonds, the expense of paying interest on them, and most importantly (now) the debt limit. But, unfortunately, (1) the amount of currency in circulation is limited by law to $300B, and (2) so far as I can tell, the Fed does not have authority to gratuitously credit the Treasury’s account. .

The Treasury does, however, own the Mint and, as Mark explained, it can mint arbitrarily large coins and deposit them into its account to make up for taxation shortfalls. Yes, we need to worry about inflation but that’s a longer term and very concrete problem, not a bullshit problem like “We need to get our fiscal house in order.” It’s a measurable problem, whose consequences are very easy to predict and explain. It’s a real problem, not a phony one.
http://my.firedoglake.com/wigwam/2011/07/23/mark-kleiman-calls-coin-seigniorage-a-phony-solution-to-a-phony-problem/

[palani]

Would they have needed to add hard currency to the constitution in order to sell it to the masses?


The painful experience of the runaway inflation and collapse of the Continental dollar prompted[citation needed] the delegates to the Constitutional Convention to include the gold and silver clause into the United States Constitution so that the individual states could not issue bills of credit or "make any Thing but gold and silver Coin a Tender in Payment of Debts."[56] This restriction of bills of credit was extended to the Federal government, as the power to "emit bills" from the Articles of Confederation was abolished, leaving Congress with the power "to borrow money on credit.".

http://en.wikipedia.org/wiki/Early_American_currency

[Danubian]

On-line dictionary definition

1. profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs. The Crown's right to a percentage on bullion brought to a mint for coining.

2. historical a thing claimed by a sovereign or feudal superior as a prerogative.


"Seigniorage and the Plight of Old Coppernose
Let us return for a moment to times when the king counted it among his powers to dilute the purity of the coin of the realm unilaterally. The king wouldn't even bother telling his subjects what he was doing to their money. The longer they could be kept in ignorance about the matter, the greater was the tribute the king could extract from them. Contemporary scholars theorized that this power of the king was of divine origin. They invented the word "seigniorage" to apply to the cut which the sovereign took of gold delivered to the Mint for coinage. For example, if the Mint exchanged one ounce of pure gold for a coin containing only nine-tenth of an ounce, then seigniorage was said to be 10 percent. The beauty of it was that seigniorage could be increased at the pleasure of the sovereign, at least in the beginning, surreptitiously. The new lighter coins were given an identical appearance to that of the old. Then the king could pass on the light coins as if they were full-bodied, defrauding his subjects and his creditors. However, this new source of revenue which the king's scientists have worked so hard to generate turned out to be ephemeral. The people got wise to the fraud and made all light coins subject to an appropriate discount. Still later, they expected the fraud to be repeated even before the newly crowned king had a chance to try his hands at it. So much for the divine right of the sovereign to cheat his subjects and his creditors.


Poor Old Coppernose, King Henry VIII of England, was so nicknamed by his subjects after the success of royal scientists in figuring out a way how to increase seigniorage to 90 percent. No doubt, his predecessors would have done it if they had known how. But there was a problem. Gold diluted by the addition of 90 percent base alloy no longer looked like gold at all. It was the scientists working in the king's pay who invented "clad coinage" (anticipating the American Mint replacing the Kennedy half-dollar, an immensely popular silver coin, with a clad version in 1968). The coins of Old Coppernose were gold-plated copper coins. But as the plating was rather thin, after a few years of circulation the gold wore off at the most protruding part of the obverse, which was the king's nose, revealing the true nature of the core.


Old Coppernose would have loved to increase seigniorage to 100 percent, but the royal scientists failed to figure out how it could be done. For this breakthrough the world had to wait awhile longer, when the bloody overthrow of the monarchy in France opened the way to irredeemable currencies called assignat and mandat - and to the guillotine. But this is another story.

From Fekete's paper called the Tale of the Fourth Lie (http://www.safehaven.com/article-603.htm)

[singular_me]

money cant bear an interest nor be monopolized to have a positive effect on societies

perhaps the best way is to have people buying they own PMs from the mines and pay a goldsmith to coin, so the debasement would be one's responsibility, which is in no one's interest for obvious reasons. it only takes a few seconds to test PM's purity these days.

or debt free local currencies involving the community's donations to be printed (it has to be benevolent)

the focus has to remain "decentralization", regardless of how it may appear more complex to achieve it. It is laziness in thinking that gave rise to cartels. The more imagination/creativity, the more freedom.


On-line dictionary definition

1. profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs. The Crown's right to a percentage on bullion brought to a mint for coining.

2. historical a thing claimed by a sovereign or feudal superior as a prerogative.

[Danubian]

money cant bear an interest ............ to have a positive effect on societies


Not how I see it now. Fekete has convinced me that interest is not a bad thing but a positive and even a necessary thing. His theory of hoarding & interest is fascinating.

[quote]From the point of view of mortal man wealth and income are distinct categories independent of one another. When accumulating wealth, man merely obeys the law of the biosphere according to which the demands of survival force one to save one's substance, in order to provide for the seven lean years ahead while the seven fat years last. In particular, the economizing individual wants to provide for his and his spouse's old age, knowing full-well that the time is coming when reward for his efforts will fail to cover his needs, and he will need wealth to convert it into income in order to maintain his consumption. Another typical activity is accumulating wealth that the economizing individual will need at the time his offspring comes of age. Whether he wants to give part of this wealth to his daughter as a dowry, or whether he wants to convert it into income to defray the cost of higher education of his children, his family responsibilities will prompt him to save.....[quote]

He has it very well explained here http://www.professorfekete.com/articles/AEFMonEcon102Lecture2.pdf

[singular_me]

I used to like him a lot and entire the von mises' clique... the problem is that it is a darwinian theory in essence.

very often I have experienced on my road trip that every time, I thought I wouldnt make it, synchronicity set in and took over, in fact that there was no fear to have. Accumulating/hoarding wealth (fear based habit) will always cause cycles... it is their root cause.

Interesting thing with the 7 year cycles... numerology in action, 7 being that of spirtuality/God, hence not a good number for $$... thats maybe why the 7 years of struggle: the punishment?

Fekete ... another freemason subverting sacred knowledge?

Not how I see it now. Fekete has convinced me that interest is not a bad thing but a positive and even a necessary thing. His theory of hoarding & interest is fascinating.

From the point of view of mortal man wealth and income are distinct categories independent of one another. When accumulating wealth, man merely obeys the law of the biosphere according to which the demands of survival force one to save one's substance, in order to provide for the seven lean years ahead while the seven fat years last. In particular, the economizing individual wants to provide for his and his spouse's old age, knowing full-well that the time is coming when reward for his efforts will fail to cover his needs, and he will need wealth to convert it into income in order to maintain his consumption. Another typical activity is accumulating wealth that the economizing individual will need at the time his offspring comes of age. Whether he wants to give part of this wealth to his daughter as a dowry, or whether he wants to convert it into income to defray the cost of higher education of his children, his family responsibilities will prompt him to save

He has it very well explained here http://www.professorfekete.com/articles/AEFMonEcon102Lecture2.pdf

[Danubian]

I used to like him a lot and entire the von mises' clique... the problem is that it is a darwinian theory in essence.

very often I have experienced on my road trip that every time, I thought I wouldnt make it, synchronicity set in and took over, in fact that there was no fear to have. Accumulating/hoarding wealth (fear based habit) will always cause cycles... it is their root cause.

Interesting thing with the 7 year cycles... numerology in action, 7 being that of spirtuality/God, hence not a good number for $$... thats maybe why the 7 years of struggle: the punishment?

Fekete ... another freemason subverting sacred knowledge?

The number of years is not the significant part of the message. It's that there are good times - we make hay while the sun shines - and bad times - we live off our labours in winter. We don't control the weather or the future.

The hoarding instinct is part of every organism. In the natural world it allows the 'fruit of our labours' to be passed onto the next generation to give them a start. If artificial shortages are effected by government & bank actions and the hoarding instinct becomes acute then there are those cycles of destruction you mention. Incidentally, banks and governments are in the business of creating those artificial events to further their agenda.

Perhaps the synchronicity is nothing more than the fact that you are living within a society. Social benefits exist as humans live together and cooperate, this may be an accidental by-product of the cooperation, or baked into the cake.

Some competitive relationship exists between all organisms but so does symbiosis and cooperation. If you've missed the cooperative aspect of Fekete's theory of hoarding and interest and his hexagonal model of the capital markets you may want to re-think his work. His theories have plenty of depth and density, sometimes missed without several readings.

Cheers

[palani]

The invention of the steam engine predated the invention of the science of thermodynamics. In a similar manner money was invented before all these theories were invented to explain it.

[osoab]

From Websters 1828 online version.

http://webstersdictionary1828.com/Home?word=Seigniorage


SEIGNIORAGE, noun A royal right or prerogative of the king of England, by which he claims an allowance of gold and silver brought in the mass to be exchanged for coin.

I do like this word.

http://webstersdictionary1828.com/Home?word=Seigniorial

SEIGNEURIAL, adjective

1. Pertaining to the lord of a manor; manorial.
2. Vested with large powers; independent.



MANO'RIAL

MANE'RIAL, adjective Pertaining to a manor.
They have no civil liberty; their children belong not to them, but to their manorial lord.

[osoab]

Definition of seigniorage (http://lexicon.ft.com/Term?term=seigniorage)


The profit made by a government from the printing of money, literally the face value of the money minus the cost of physically making it. [1]

Seigniorage is the revenue governments derive because the cost of minting coins or printing paper money is less than the market value of the money. [2]

The basic idea of seigniorage is that whenever the cost of producing the money used in circulation is more than the intrinsic value of the money the government loses money on seigniorage, while if the market value is higher than the cost of producing the money the government makes money on seigniorage.

Essentially, it is the value the government generates by adding its stamp to an ordinary piece of paper, piece of metal or nowadays an electronic bank entry.

Paper/ electronic fiat money (http://lexicon.ft.com/Search?searchText=fiat-money) generally has high seigniorage because you do not have to source physical metal to create it, while coins have lower seigniorage because it costs something to create the coins and source the metal. [3]

Today, seigniorage is associated with central banks and issuance of notes.

Example

In 1290, King Philip IV of France did not have enough money to pay for his wars, so he began to debase (http://lexicon.ft.com/Term?term=debasement-of-coinage) the currency by increasing the seigniorage he extracted from melting new coins.

This policy produced a devaluation of the French currency, inflation and the disappearance of gold and silver from the kingdom.

This is exactly the same as printing money, an increased monetary base with less intrinsic value creates inflation, as defined by Irving Fisher’s theory. As the level of goods available for sale are exactly the same, more money in circulation results in higher inflation as these goods will be sold at higher prices to compensate.

To secure cash the King had to arrest the Lombards (1292), then the Jews (1306) and finally the Templar Knights (1307), and confiscated their assets to issue new coins.

From the Financial Times.

[Bigjon]

Seigniorage (https://www.wordnik.com/words/seigniorage)


I am listening to this Clint Richardson interview with Tammi.

Heck of a discussion. Still listening. Most of the discussion is centered on the origination of the corporation.

Anyhow, Clint brought up something I have never hear before.

He claims that our former 90% coins were made 90% pure because the other 10% was seigniorage for our rulers. Tribute.

Here's the interview/discussion. Clint brings up the topic around 1/3 in.

http://www.youtube.com/watch?v=rZzgAO_f3pM

http://www.youtube.com/watch?v=rZzgAO_f3pM

Anyone ever heard this before?





edit to add.

You may want to download the episode (http://corporationnationradioarchives.files.wordpress.com/2014/03/leaving_the_pfarm_with_tammy_pepperman_guest_clint _richardson_2014_03_01re1.mp3). The youtube vid is acting up.

At the time we had Silver and Gold as money, the mint was open to anyone bringing in bullion to be turned into coins. So anyone would be collecting the seigniorage attached to the gain from the difference in cost of the metal plus cost of coinage and it's face value.