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It was Sunday June 25th. The president’s addressed the nation. On Friday, oil was trading at 7,750 gold dinars per barrel. Gold was selling at $160,000 per ounce. The dollar had traded Friday the new low of a hundred thousand dollars to the gold dinar. He looked grim.
Here is a transcription of his speech:
My fellow Americans, in the light of the world markets, in consultation with leaders of Congress, and with the approval of the Supreme Court, we have been decided no longer to recognize the Federal Reserve Banknote, the FRBie, as legal tender.
Be not afraid!
Your Federal Government and make good on its obligations. We have decided to join the world with using the new Golden Dinar as our new national currency. I am declaring a Bank and Stock Market holiday to allow for an orderly market transition. Because of the Independence Day holiday, banking and markets will resume on the Fifth of July
Effective on the fourth of July, the Federal Reserve Bank will liquidate its operations. Each citizen may redeem up to 10,000 FRBies in cash for ONE of our new gold dinar receipts. Citizens may engage in market transactions for the balance of their cash FRBie holdings. FDIC insured deposits will be converted at the current market rate from FRBies to gold. While I don’t know what the rate will be on the fifth, but today it was 160,000 FRBies to the ounce. Non-FDIC entities will establish their own policies.
Also, effective also on the fourth of July, all taxes and fees to your government must be paid in gold dinar receipts.
Stay calm. All is well. God bless you. And God bless America.
End of Transcription.
There was wide spread panicking and rioting. Many were killed and injured. Banks were surrounded with troops trying to hold off, in some cases unsuccessfully, masses of depositors. Eventually, some stores were protected like banks. Eventually, the powers-that-be recognized the futility, and sent the troops and police home. At least, those that hadn’t deserted yet.
That night, stores were besieged with shoppers buy literally anything they could with their FRBies. Most stores were caught unaware. Only WalMart had new gold based prices at the end of the President’s speech. Several car dealers, unaware of the speech, sold cars for FRBies before they heard about the President’s speech. Stores quickly closed but not before doing a brisk business in high ticket items. Also hit by panic buying, were grocery stores, drug stores, gas stations, convenience stores. People drove around seeking anything to buy with their soon to be worthless currency.
Gangs began to line up drunks and derelicts for the currency conversion. Holding them hostage, they were “selling” them for use when the currency exchange window opened. Informal black markets started trading FRBies for things of value. Currency markets around the world traded FRBies as low as 450,000 to the ounce before being suspended by their local regulators.
On the Fifth of July, when the US markets opened, FRBies began trading at 1.7 Million to the ounce and kept dropping. By the sixth, there were no buyers at any price.
The United States government was in high level talks with almost every nation and their respective central banks about FRBie held as a reserve currency. The talks were termed “interesting” by all involved. Leaks from the various different sources seem to sum up the US Government’s attitude as “tough luck”. Only the US military keeps the “debt collectors” away.
In the end, as in Argentina, the far East when currency collapsed, the pre WW2 Wiemar Republic, the middle class was destroyed! Savings were wiped out. A life’s work gone in an instant. The rich took a slight haircut. And, the poor were plunged into abject poverty. Some groups were completely unaffected: the Amish, the Mormons, the survivalists, the Gold Bugs, the underground economy, and families with small farms.
And, everyone in the free State of New Hampshire. The New Hampshire people had been using the Liberty Dollars for a long time, and had weened themselves off of the FRBie. It was interesting in New Hampshire, the FRBie had always been discounted and discouraged. Tourists were routinely warned to get rid of that “FEE YAT” currency and get some “good money”. In New Hampshire, there was plenty in circulation: bullion — silver, gold, platinum and palladium — coins; NORFED silver and gold certificates; New Hampshire bank depository receipts; something called the “free state script” issued by the New Hampshire state government; as well as Japanese yen, Chinese yuan, British Pounds, Euros, Swiss francs; and of course gold dinars and silver shekels. No currency was as universally hated as the FRBie.
There had been thriving black markets in New Hampshire for years where the FRBies were routinely smuggled across the border into Vermont, Massachusetts, and New York where FRBies were the only legal tender. The Socialist Protectionist gubamints in those states had instituted currency controls to “protect” the people from these predators. Even though they couldn’t keep drugs illegal drugs out, they thought they could keep out “illegal” untaxed currency.
If a smuggler could avoid the Border Patrol and the Currency Police, then he could earn huge amounts. One enterprising fellow they caught would drive a junk car over in the morning and bring back a new car in the evening. He was caught when several tourists and citizens in Massachusetts reported seeing a horse on the side of the Interstate. It turns out that this fellow’s wife would ride across the White Mountains with an Indian squaw sledge loaded with FRBies and meet him by the Interstate. He’d traded in the old car for a new one paying the difference in FRBies. When he brought the new one home that night, they’d sell it. The currency police estimated he was earning hundred thousand ounces every year. When asked he just smiled. Our estimate is that, since FRBies in New Hampshire trade at about 300,000 to the ounce, each car trade netted him much much more than the estimate. Maybe a hundred times as much. The currency police were never able to prove more than the car scheme. There case was weakened by car dealers in the NY, Vermont, and Massachusetts denying ever dealing with him. However, they did have the border crossing records and video tape. The bail was set at thousand gold ounces to try to keep him in the jurisdiction, but it was guaranteed by his local NH bank in about 30 minutes. NH banks, protected by strict bank secrecy laws, are believed to have deposits in excess of a trillion ounces in reserve. Their word is truly as good as gold. The villain went home to Hampshire never come back across again. After that, the currency police formed a cavalry unit to patrol the New Hampshire border. It was rumored that the fellow was building a tunnel from Keane to Albany to accommodate the demand.
Remember: Gresham’s law says bad money drives out good! But eventually the chicken come home to roost.
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