Re: two currencies and Korean war

["Alan G. Isaac" <aisaac@xxxxxxxxxxxx>]

On Thu, 3 Jan 2002, William B. Ryan wrote:
> Answer: United States coinage.  It is the only true fiat money in
> the American system.  Moreover, it retains its value and circulates
> dispite the fact that Internal Revenue REFUSES to accept it it
> payment of taxes.  It is also NOT legal tender.

I think it is legal tender:
Section 102 of the Coinage Act of 1965
(Title 31 United States Code, Section 392) provides in part:
" All coins and currencies of the United States, regardless of when coined or issued, shall be legal tender for all debts, public and private, public charges, taxes, duties and dues."

It is a reasonable response to WH's query.  Of course, in my opinion
PD's example is also excellent.  I take it WH would rather dismiss it
as ``local'' than discuss it seriously.  I do not think I have
understood Henry's question, since commodity standards and legal
tender laws seem obvious responses even if a variety of other
possibilities are ignored.

WH misunderstands me as saying chartalism is weak because it depends
on expectations.  I said chartalism is weak because it does not
explicitly acknowledge the role of expectations, which are
fundamental.  Expectations drive asset holding of all kinds, including
cash.  Chartalism discusses one way in which expectations supporting
the holding of money can be institutionally supported.  It is a *good
thing* to discuss this; it is a *bad thing* to treat it as
fundamental.  I hope that is clearer.  I expected that my originally
proposed ``thought experiment'' about the two currencies would have
made all the relevant points, but of course expectations are not
always fulfilled.

Cheers,
Alan Isaac