Loudmouth I said mint both a $5 and $10 coin.They could weigh as much a 20cent coin.Ten coins = $100.Enough do do your shopping as well as reducing your taxes and debt.

You seem to be fixated on "hard cash", Arjay. But I'm not sure you understand the way it might work, should you get your wish.

The first thing to consider is this: what do you mean when you say "debt-free money"?

>>...5% is created debt free by our Canberra Mint. If we all use more coins,then our mint will have to respond thus increasing the amount of debt free money in our economy<<

Where did you get the idea that coins are "debt-free"? They are issued under the same legislation governing notes. They are freely convertible, coins to notes and notes to coins.

Even if it were possible to separately identify "debt-free" money from "debt-generated" money, there is no possibility that these can co-exist within the one economy. Think about it for a moment.

Consider for a moment the mechanics of Greece leaving the Eurozone. On Day One, all Euros in circulation within the borders will have to be identified separately as being "Greek" Euros, to give the government time to issue "New Drachmas". Theoretically, the internal exchange rate will be one Greek Euro to one New Drachma, but as we all know (and indeed, the point of the exercise) that the New Drachma will devalue against the Greek Euro.

For a while, Greek Euros and the New Drachma will have to co-exist in the economy, just like your "debt-free" coins and "debt-generated" notes. But because they diverge in value, smart operators will make a rush for the border, with as many Euros as they can carry. Causing even greater financial chaos.

Exactly the same situation would exist in reverse, e.g. if Germany reissued the Deutschmark, to free their economy from the dead weight of the Eurozone, chaos would quickly follow.

This is not a trivial issue. Currency is "created equal" for a reason, a ten-dollar note having the same value as five two-dollar coins, just as the Greek Euro is (presently) equivalent to the German Euro. If you try to break that connection, you will be running a two-level economy with a massive potential for financial disaster.

Not nice.

Arjay,

Are you suggesting that coins should be the only currency, and that they should be worth their face-value, their production-value and no more or less ?

Currently gold is fetching, what? $1600/oz ? So for argument's sake, if the Australian mint made 0.1 oz coins of pure gold, they would be equivalent to $ 160. As long as there is paper money, you could exchange such a coin for $ 160 in paper money. If there was only coin and no paper money, you could exchange it for what ? $ 160 in coins, gold, silver or whatever. Or such-and-such a quantity of bulkier goods.

But as you point out on another thread, the world production of gold is currently about 13 tonnes/yr, only about $ 750 million's worth (in $AUS paper money). If there was a sudden increase in demand for gold, say if a particular country like Australia abolished its paper money and made only gold coins legal tender, say 100 million of them @ $10 each, five per head, (totalling a billion dollars or about sixteen tonnes of gold) then the world demand for gold would go through the roof.

What would happen to the world price for gold, in other people's currencies, i.e. in paper money ? The price - in paper money - would also go through the roof. (After all, if the price of gold goes up or down, could you measure that in gold coins ? Can you measure the value of anything in itself ? The price of cabbages measured in cabbages ?)

What would that do to a national gold-coin-based currency ? Is it possible that a thriving black-market would develop exchanging gold for other countries' paper money ? To paraphrase Pericles, there would be a rush of gold to the border. Suddenly gold would disappear from the national market, shipped overseas and replaced by a 'black' paper currency - creating billionaires and ruining millions of other people overnight, depending on whether you have gold or not.

[TBC]

[contd]

So what if, simultaneously, all countries switched over to a coin-based currency, to try to get around this double-form-currency problem ? What would happen to the world demand for gold ? What would then happen to the 'price' of gold, its rate of exchange with everything else ? And as the mining of gold became more costly - in terms of gold coin to pay the extra production costs - the 'price', exchange value, of gold would rise further. As would the face-value of any other coinage, silver, platinum, nickel, copper, whatever, as well.

Would people hoard gold, forcing the 'price' up further ? Would there be a sort of upward spiral in the exchange value of gold ?

Or would a market develop where goods were exchanged for each other, by-passing gold altogether ? After all, it worked during the Middle Ages when coin was scarce and its value inreliable.

Would some banks start to issue bills or notes in their own name, equivalent to a certain amount of gold, promising to pay for good or services, and would these notes start to have the authority and legitimacy of notes of exchange ?

Hmmmmm, that might get around the problems of a face-value-based, coin-based currency.

as joe points out...gold coins wont work

that is why i say
revalue the face..of the nickle coins

i also..*did not say..do away with notes
just revalue..the face value..back into the debased coin
back to what it would have been..if inflation hadnt debased it

pericules quote..""Consider for a moment..the mechanics of Greece leaving the Eurozone.""

imover it

that option wont happen
they just seek a way..to control
the value..of their own currency

thus it is fixed..like usa dollar
is pegged to the china juan..

thus..the debt is locked in
not defaulted on..only belayed

govt issues a dividend..to the greece people[in euro coin]
then revalues..the coin's face..times 100...

[so the issued euro coin..has its drakma value at 100 eurio/drackma]..which is at par with the euro]

which fixes the pension/payments etc..in euro/drackmas
just as all prices are reset..to the fixed rate ed

As far as I know pericles coins are the only new money created on demand by our Govt.In the USA the Fed creates all their notes but their Govt mint creates coins debt free.

So perhaps you could enlighten us all with the formulae or rules in which our Govt in conjunction with the RBA creates new cash because it it really hard to define what their rules actually are.

Now no obfuscation here,I want to see actual proof of this Govt implementation of coin/paper money policy.

So does the Canberra mint do offsets to the private banks when they create new money or do they create it regardless thus help reduce our taxes.