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Originally Posted by bill_mchale
In both cases you are talking about obligations that were incurred in money in the first place.
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Debts can incurred with no money transferred at all. At that point the debt can be extinguished by legal tender even if the creditor would prefer payment in gold and views dollars as worthless.
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When I am talking about belief is required for the dollar to be worth the dollar, I am not talking about the greenback, but rather that a dollar has any real worth at all. If tomorrow every store keeper in America decided the dollar was worthless, it would be. That is not likely to happen even in this economy, but if you look at what happened to the Confederate Dollar during the American Civil War, you might get a better idea of what I mean. Its reasons like this that in times of trouble, people often turn to Gold... Gold's worth is still really only based on belief (being that Gold has only limited industrial usefulness), but that belief goes back a lot further in our culture than the U.S. Dollar.
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Bill
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I see your point and yes the value of the dollar goes up and down against other currencies and precious metals, etc. depending on people's collective faith in the dollar. Still at the end of the day if the IRS can put you in jail for not extinguishing your tax obligations with legal tender, you're going to value the dollar to the extent that you value your freedom.