In an Association of Mature American Citizens (AMAC) article, Mike Fuljenz writes about how "Uncle Sam is losing big money on two of the coins he mints, the cent and nickel." He then refers to the movie, "Dave," which I thought at the time it came out that it was a shameless rip-off of Robert A Heinlein's novel, Double Star. At any rate, Fuljenz continues about how the replacement president, Dave, to find financing for his pet project, "would have killed the cent and paper dollar, changed the composition of the nickel and pushed very hard for dollar coins. That would have gone a long way toward giving him what he needed to pay for those homeless shelters."
The problem with this seemingly fond wish on Fuljenz's part is that the Mint is a Constitutional power of Congress, but there is no Constitutional provision for providing homeless shelters through any branch of the federal government. "Dave" promotes the leftist ideal of the government as the nanny caring for us all whether we want it or not.
As it happens, pennies, nickels, all of our coins and paper money are virtually worthless except that they're accepted in trade due to the legal tender laws. They have little intrinsic value except what the government says and what people obeying the government agree to accept. Stating something with the force of law even if it defies reason or good sense is known as a fiat statement and it can only be done with the promise of force as a consequence of violation. Forcing intrinsically worthless coin and paper as something that has value on the people is what makes those worthless metals and papers fiat money.
In the past, people trusted our coin because it had intrinsic value, being made of gold or silver. Paper money was composed of receipts for deposit, making claims on objects of value, such as gold or silver. Now, neither the receipts nor the coins have little consequential intrinsic value, except as a side-effect of technological developments and economics. Fiat coins and paper are not tokens and receipts asserting a claim on value. Receipts and tokens are not supposed to be valuable except in their exchange for something of actual value.
Fuljenz complains that the Mint has a problem because it is losing money because the coins it produces are worth more than the cost to make them. In other words, he complains that those two coins suddenly have more intrinsic value than the Mint wants to foist on us. What a horror that our money used for daily exchange is actually valuable!
Maybe the Mint wouldn't lose money on its operation if it left the manufacture of money to those who know how to create something of value that people will want to save or exchange as they prefer. He goes into figures identifying how much more than a penny it costs to make a penny, all the while using the same term for value that he's trying to define. Remember how your early school teachers told you that you can't use a word to define itself? Such a definition is unenlightening and uninformative.
If the coin representing the value of one-hundredth of a dollar has a value 83% higher than that value, maybe it should be renamed a two-penny and suddenly they'd make a profit. According to the numbers Fuljenz cites, 10,000 pennies don't make $100, they make $183.
Anyone buying a one-ounce silver or gold coin expects there to be one ounce of silver or gold in that coin to the degree of fineness advertised. The agency selling it charges a transfer fee for the transaction and delivery costs of the coin. That's how they make their money, not by the fraud of claiming one value and delivering another. To know what they've got, buyers can look up the momentary meaning (spot price) of one ounce in gold or silver in trade for a particular currency.
If the coin's intrinsic value is greater than its ascribed value -- the value written on it -- then that intrinsic value is what should be accepted for it, the value it should have when used. Because it doesn't, people have the reason why our money isn't worth what the government says it is. If the penny or nickel gets restruck with different materials those new pennies and nickels will be intrinsically worth less and the old pennies and nickels will be held from use: Gresham's Law.
The Constitution provides for Congress "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures" in Article I, Section 8, paragraph 5, and to punish for counterfeiting in paragraph 6. The Mint can ascribe a value that's about half its worth to the coin identified with one-hundredth of a dollar but that doesn't mean that people will keep such a coin. They'll get rid of it -- spend it -- and keep the older coin -- save it. As inflation goes on even the worth-less will become worth more and the dance will continue. Mr Fuljenz doesn't get it.
The problem with this seemingly fond wish on Fuljenz's part is that the Mint is a Constitutional power of Congress, but there is no Constitutional provision for providing homeless shelters through any branch of the federal government. "Dave" promotes the leftist ideal of the government as the nanny caring for us all whether we want it or not.
As it happens, pennies, nickels, all of our coins and paper money are virtually worthless except that they're accepted in trade due to the legal tender laws. They have little intrinsic value except what the government says and what people obeying the government agree to accept. Stating something with the force of law even if it defies reason or good sense is known as a fiat statement and it can only be done with the promise of force as a consequence of violation. Forcing intrinsically worthless coin and paper as something that has value on the people is what makes those worthless metals and papers fiat money.
In the past, people trusted our coin because it had intrinsic value, being made of gold or silver. Paper money was composed of receipts for deposit, making claims on objects of value, such as gold or silver. Now, neither the receipts nor the coins have little consequential intrinsic value, except as a side-effect of technological developments and economics. Fiat coins and paper are not tokens and receipts asserting a claim on value. Receipts and tokens are not supposed to be valuable except in their exchange for something of actual value.
Fuljenz complains that the Mint has a problem because it is losing money because the coins it produces are worth more than the cost to make them. In other words, he complains that those two coins suddenly have more intrinsic value than the Mint wants to foist on us. What a horror that our money used for daily exchange is actually valuable!
Maybe the Mint wouldn't lose money on its operation if it left the manufacture of money to those who know how to create something of value that people will want to save or exchange as they prefer. He goes into figures identifying how much more than a penny it costs to make a penny, all the while using the same term for value that he's trying to define. Remember how your early school teachers told you that you can't use a word to define itself? Such a definition is unenlightening and uninformative.
If the coin representing the value of one-hundredth of a dollar has a value 83% higher than that value, maybe it should be renamed a two-penny and suddenly they'd make a profit. According to the numbers Fuljenz cites, 10,000 pennies don't make $100, they make $183.
Anyone buying a one-ounce silver or gold coin expects there to be one ounce of silver or gold in that coin to the degree of fineness advertised. The agency selling it charges a transfer fee for the transaction and delivery costs of the coin. That's how they make their money, not by the fraud of claiming one value and delivering another. To know what they've got, buyers can look up the momentary meaning (spot price) of one ounce in gold or silver in trade for a particular currency.
If the coin's intrinsic value is greater than its ascribed value -- the value written on it -- then that intrinsic value is what should be accepted for it, the value it should have when used. Because it doesn't, people have the reason why our money isn't worth what the government says it is. If the penny or nickel gets restruck with different materials those new pennies and nickels will be intrinsically worth less and the old pennies and nickels will be held from use: Gresham's Law.
The Constitution provides for Congress "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures" in Article I, Section 8, paragraph 5, and to punish for counterfeiting in paragraph 6. The Mint can ascribe a value that's about half its worth to the coin identified with one-hundredth of a dollar but that doesn't mean that people will keep such a coin. They'll get rid of it -- spend it -- and keep the older coin -- save it. As inflation goes on even the worth-less will become worth more and the dance will continue. Mr Fuljenz doesn't get it.