I was putting a book on the shelf this morning and began flipping through another only to find a Zimbabwe 20 dollar bill that I apparently used as a bookmark.
Back and center on the colorful bill are the words:
I promise to pay the bearer on demand twenty dollars for the Reserve Bank of Zimbabwe
Wait. Doesn’t the twenty dollar bill represent 20 dollars? It says on the bill Zimbabwe 20, so how can someone be paid 20 dollars if not by this bill? What happens if you knock on the door of the Treasury and demand your 20 dollars?
With fiat money, a different note promising the exact same thing:
Even the government can’t define money. Some years ago,a Mr. A.F. Davis mailed a ten-dollar Federal Reserve Note to the Treasury Department. In his letter of transmittal, he called attention to the inscription on the bill which said that it was redeemable in "lawful money," and then requested that such money be sent to him. In reply, the Treasury merely sent two five-dollar bills from a different printing series bearing a similar promise to pay. Mr. Davis responded:
Dear Sir:
Receipt is hereby acknowledged of two $5.00 United States notes, which we interpret from your letter are to be considered as lawful money. Are we to infer from this that the Federal Reserve notes are not lawful money?
I am enclosing one of the $5.00 notes which you sent me. I note that it states on the face, "The United States of America will pay to the bearer on demand five dollars." I am hereby demanding five dollars.
One week later, Mr. Davis received the following reply from Acting Treasurer, M.E. Slindee:
Dear Mr. Davis,
Receipt is acknowledged of your letter of December 23rd, transmitting once $5. [sic] United States Note with demand for payment of five dollars. You are advised that the term "lawful money" has not been defined in federal legislation…. The term "lawful currency" no longer has such special significance. The $5. United States Note received with your letter of December 23rd is returned herewith.
At least in the US, we don’t kid ourselves anymore:
The phrases "…will pay the the bearer on demand" and "… is redeemable in lawful money" were deleted from our currency altogether in 1964.
[p136, The Creature from Jekyll Island]
