5 ms·
The smallest possible money unit When money crashes into the laws of physics
- wcoenen 6y agoFrom the introduction: > For example, if the smallest coin unit is one cent, then one cannot use a money unit below one cent. This can be enforced by law because only legal tender can be used. I think the author misunderstood what "legal tender" means. All it means is this: when there is a conflict about a debt and two parties end up using the legal system to resolve it, then the creditor must accept settlement in legal tender. For example, if I sue you because we had an agreement for you to deliver some gold to me and you failed to deliver, then I may have to accept settlement in euro or dollar or whatever is recognized as legal tender by the court. In many jurisdictions, people are generally free to use different means of payments or even refuse legal tender when no debt had been established yet. The concept only comes into play in court.
- anonunivgrad 6y agoI don’t think that’s right exactly. My understanding is that any debt can be settled by legal tender. A court does not have to get involved.
- wcoenen 6y agoThis is only a consequence of what happens in court. Suppose someone owns you a certain amount of gold according to an agreement, but it turns out they can't actually deliver the gold. Then there's no point in refusing a settlement in legal tender and taking that person to court, because the court will then value the debt in legal tender and force you to accept the legal tender anyway.
- anonunivgrad 6y agoSorry to be pedantic, but I don’t think that’s right. 31 U.S.C. 5103 https://www.law.cornell.edu/uscode/text/31/5103 https://www.law.cornell.edu/uscode/text/31/5103) says “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. Foreign gold or silver coins are not legal tender for debts.” It’s not legal tender for just court judgments, but all debts, public charges, taxes, and dues.
- wcoenen 6y agoI don't see how the paragraph you quote is contradicting what I said. It is saying that the US dollar can be used as "legal tender" for certain things, but it doesn't define what it means precisely for something to be "legal tender". And that precise meaning was the point I was arguing. Reference for the definition of legal tender by the UK royal mint: https://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines/ https://www.royalmint.com/aboutus/policies-and-guidelines/le...?
- anonunivgrad 6y agohttps://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx https://www.treasury.gov/resource-center/faqs/currency/pages... “This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor.”
- wcoenen 6y agoNote note how the word "legal" comes back again there. It doesn't mean "legal" as opposed to illegal. It means "for the purpose of settling things within the legal system". Anyway, that treasury.gov link is actually a good reference for the original point I was trying to make about the introduction section of the paper: it explains that companies are not obliged to accept legal tender for normal payments.
- anonunivgrad 6y agoNormal payments are not debt. If you want to buy a tv at a store, they can decline cash as a form of payment. You don’t owe them. The tv in your cart at the checkout aisle is still theirs. There is no debt. But if you bought that same tv on an installment plan, they would have to accept payments in cash. The first one does not involve debt, the second does. That’s the difference.
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- nightcracker 6y ago> The minimum money unit for 100% gold-based money is a gold atom. If we start being this technical, you could set up a box with two sides with a gold atom in superposition. The chance of finding the gold atom on either side is 50%. Suppose the contents of both sides are owned by different people. Now it's possible to own (in expectation) 50% of the minimum money unit.