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Is our current ‘Bit-Dollar’ official ‘Legal Tender’?

June 19, 2015

Since the mid-1990’s our Federal Reserve Banking System has promoted a computer generated financial system. This system started back in the 1960’s but has evolved into today’s global system where computer machines drive almost all finance, trading, investment, and settlements. Today, we could estimate that the entire global GNP…which might be in the area of some $200 trillion bit-units…are stored within our computer screens (and represented by various international bit-currencies). All our debt and savings are now mostly within our computer screens (cyberspace) and all financial instruments are now mostly virtual objects within our computer screens. Computer screens and cyberspace have replaced physical/material reality for most of our monetary transactions. What a dramatic change since my youth in the 1950’s! Has our Congress evaluated, deliberated, and approved this monumental change in our system? What about our ‘legal tender’ laws?

The paper note dollar has been approved as ‘official legal tender’!

Has our Bit-Dollar (now created out of thin air) been approved as ‘legal tender’?

The big question for today is: are all these virtual bit-currencies (like our American bit-dollar) approved as ‘official legal tender’ by the Nation’s system of laws? Has our American Congress (or our court system) officially approved (via a legal/deliberative process) America’s bit-dollar which is now so ubiquitous within all our markets. Has our Congress deliberated and evaluated our bit-dollar (as it is created and used) and then approved this unit as America’s ‘official legal tender’ unit? Doesn’t our Congress have this responsibility? According to the Federal Reserve website…I can discern that since the beginning of this institution in 1913, the paper currency (the physical paper note) appears to be approved as a form of ‘legal tender’ and ‘lawful’ currency. The following words are taken from the FRB website:

In 1933, Congress changed the law so that all U.S. coins and currency (including Federal Reserve notes), regardless of when issued, constitutes “legal tender” for all purposes. Federal and state courts since then have repeatedly held that Federal Reserve notes are also “lawful money.” Milam v. U.S., 524 F.2d 629 (9th Cir. 1974), is typical of the federal and state court cases holding that Federal Reserve notes are “lawful money.” Section 31 U.S.C. 5103, entitled “Legal tender,” states: “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.”

If the above status is still official (as stated above) then it would appear that our current ‘bit-dollar’  (a cyber unit) which our Fed now creates (via computer operations) for their various lending operations may not be approved as our ‘official legal tender’.  And were all the trillions created under Bernanke’s QE operations actually currency units which qualify as ‘official legal tender’ units? Our Congress has not deliberated and/or approved this bit-dollar (also called a digital $) as ‘official legal tender’ for all Americans (it would appear). This, to me, is significant!  What we Americans use for our media of exchange (and store of value) should be approved by our Congress as ‘official legal tender’! Why has this not been done? Is Congress aware of their responsibilities?

If you read my prior missive on our three (3) dollars it is obvious that our historical silver dollar and our fiat paper note dollar were approved by Congress as our ‘official legal tender’. Today, however, some 96% or more of our monetary transactions are accomplished with this new unit called our bit-dollar (a virtual unit). This bit-dollar is much different from a silver coin dollar or a paper note dollar. Our bit-dollar is created by our banking system (their computers) and is circulated within a new type of space which we call Cyberspace. This new system which was created by our Federal Reserve Banks should (one would think) be reviewed, evaluated, and approved by our elected representatives in our Congress! Has this been done?

The Bit-Dollar is much different from a paper note dollar!

What our Congress needs to think about is the ‘nature’ of a bit-dollar when compared to a paper note dollar. The paper note dollar is ‘printed’ from paper and engraved at our Bureau of engraving and printing. Americans have recognized this process and operation as legitimate and they can watch and observe this process of printing and engraving. But our bit-dollar is a completely different ‘animal’. This unit is merely typed into the computer screen by select administrators within the Federal Reserve Banking system. This unit is non-physical and has no physical substance attached to it. It circulates in cyberspace! Select elite banking officials can create this unit from their thinking and typing action. Is this a legitimate form of ‘legal tender’? Should not our Congress review, evaluate, and approve (disapprove) this unit?

The Bit-Dollar (is circulated within Cyberspace and is dissimilar when compared to our paper $)! Also cyberspace is much different from observable space/time!

My personal sense is that our Congress has not deliberated or evaluated this new cyber operation which is now ubiquitous in all our markets. We call these bit-units (images within our computer screen) money and currency but do these words reflect accurately on what is happening today in our markets? Ron Paul and I would suggest that our Fed is creating money ‘out of thin air’. They think up numbers (for a loan or QE) and then increase their own bit-account (within the computer screen) to reflect new units of currency and they call these new bit-units by the ‘name’ Dollar. Is this a process which Americans approve of and which our Congress has reviewed and approved? Do all these trillions of new bit-dollars created ‘out of thin air’ represent ‘official legal tender’? What do others think? Enjoy! I am:

P.S. The word ‘money’ has generally referred to a physical item from Nature (such as silver coins, gold bullion, etc.). The word ‘currency’ has generally referred to a mathematical unit which is officially approved by our Congress. The word ‘dollar’ has generally been defined in some official/objective manner. What is a bit-dollar?

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