Thursday, December 14, 2006

You Don't Own Your Money

As you might have heard, nickels and pennies are more valuable now for the metal they're made of than for their face value. With pennies it's been that way for over a decade- each penny currently contains $0.016 in metal value. With nickels, it's been more recent.

This is a crisis, especially since the minting of money has traditionally been a minor income source for governments. Buy the metal at a lesser value, stamp the coin out, put it in circulation for a value slightly higher than its metal's cost. Granted, the mint still prints treasury notes at a massive profit and other coins at a lesser one, but it shouldn't take a loss on ANY currency.

So, what does it do? Does it phase out the penny and nickel? Does it revalue the dollar and put out new currency? Does it change the metal content of the coins?

No. It enacts a law making it illegal to melt them down for scrap metal.

Now, the thing is, currency is, by definition, the substitution of an abstract mode of exchange in the place of barter. Rather than trading twenty apples for a goat, you say that two apples are worth a dollar and a goat is worth ten dollars and use dollars to make the exchange. In this example, the apples are your property. The goat is the other guy's property. When you sell the apples for dollars, the dollars should be your property, right? And when you pay the other guy for the goat, the dollars should be his, right? And if he wants, say, to light a cigar with a dollar bill, that's his business and nobody else's, right?

Not according to the Treasury Department. According to Mint director Ed Moy, your money does NOT belong to you; it belongs to the government. All of it. All the time. You are merely allowed to hold on to it in order to promote the economy, but the government has not merely the power but the right to determine what you can and can't do with the currency in your possession.

And since that currency is merely a means of exchange for other forms of wealth, it's an extremely short step to saying that anything you BUY with that money belongs to the government, and anything you sell to GET that money belongs to the government, because since X goods = Y dollars, and Z services = W dollars, then all goods and all services are equivalent to dollars... and, thus, belong to the government.

Not only will this law be unenforcable for the most part, it utterly fails to address the root problem: that the American dollar has declined vastly in value since the last time the currency was significantly changed. Instead of fixing the problem, they're at best addressing the symptoms... and in so doing violating the property rights of every man, woman and child with a penny in their loafer.

(Oh, one other thing: don't go into Canada with more than five bucks in loose change. This new law makes that illegal, too.)

3 comments:

Anonymous said...

Kris, this is nothing new, and your argument doesn't hold water. As you yourself point out, dollars are a medium of exchange -- a symbol. It has NEVER been the case that you own the symbol itself; ALL money, printed or coined, remains the property of the US government. What you do own is the value represented by those symbols. This is why, for example, if you have the two torn halves of a dollar bill, you can present them to any bank and get a whole dollar bill in trade. If you owned the dollar bill itself rather than the value of it, you'd just be SOL if it got too damaged to use.

It is also nothing new that it's illegal to deface or damage US currency, printed or coined. This law is just a more specific refinement of that general principle, which has been in effect since the establishment of the Federal Reserve Bank.

But the fact remains that the coins themselves do NOT belong to you, they belong to the government, and in melting them down you are destroying someone else's property. If you want to get on your high horse about something here, complain instead about the waste involved in the government continuing to mint coins that are worth more as metal than their face value.

Kris Overstreet said...

Well, let's see.

We've had the argument about owning "value" before, sp. property values. You CAN'T have a right to own a value, because value is set by an ever-fluid marketplace. Value is entirely determined by what people are willing to exchange for what you have. It's not an absolute, measurable quantity, and it can't be guaranteed without destroying the free market.

Now, there are a lot of Corn Flakes I know who believe that currency not backed by a commodity is worthless. Many of these are members of NORFED, a precious-metals based currency intended to displace the Federal Reserve Note. A couple months ago the Treasury Department finally got around to prosecuting the NORFED chief for counterfeiting. I'm not one such- especially since, quite frankly, the fiat money we've had since the 1930s has held its value better than gold or silver over the same period.

Unfortunately- as I've mentioned- that value has still declined drastically since the last adjustment in the metal content of our coinage, in the 1960s. Most other nations, when this happens, issue a new currency to revalue it- five old pesos equalling one new, or somesuch. It's long since time this was done with the American dollar.

I also mentioned adjusting the content of the coins again or just abolishing the coins as sensible things to do which the mint did NOT do. Instead they instituted a solution which doesn't work, has never worked, and never will work- because it just can't be enforced.

But when they attempt to enforce it- unevenly, erratically, at best- they will take away both symbol AND value from those they prosecute.

Finally, in the case of currency, you can separate value from symbol only through a contract with a banking institution. Otherwise you need the symbol- even in deteriorated form- to get another one. No symbol, no value- except, of course, the inherent value of the paper or the metal.

Anonymous said...

You CAN'T have a right to own a value, because value is set by an ever-fluid marketplace. Value is entirely determined by what people are willing to exchange for what you have. It's not an absolute, measurable quantity, and it can't be guaranteed without destroying the free market.

You're conflating two usages of the word "value" here. The value of a coin or bill is in fact an absolute, measurable quantity as defined by law. What's fluid is the amount of goods or services that someone is willing to exchange with you for that absolute value -- hence inflation and depression.

But you keep trying to claim that you own the actual, physical bills and coins rather than the legal value they represent, and that has NEVER been the case since the establishment of the current banking system.

I repeat: ALL currency, printed or coined, is the property of the US government; this is nothing new, and completely unrelated to the law you're upset about. I learned about that in 9th grade Social Studies. Your outrage is both dated and pointed in the wrong direction.