“The money in your account. It didn’t do too well, it’s gone.” – South Park
You can always tell if a coin is fresh: it smells like the mint.
As I’ve mentioned before, Pa Wilder was a banker. There are certain advantages to being a banker, and back in the late 1970s, he took advantage of one of them. It’s nice that being a banker has some advantages, because so many of them are loaners.
What Pa did was go through the change that came into the bank drawers. Pa would then take a quarter and replace it with another quarter. Okay, that just makes him sound crazy. Isn’t one 25₵ piece just like another?
Well, no, not in the 1970s.
In this case, Pa was taking a 90% silver quarter and replacing it with a 0% silver quarter. Prior to 1965, dimes, quarters, half-dollars, and dollar coins had been made from 90% silver. Eventually after details, blah, blah, (this isn’t a coin collecting blog) the value of silver in the coins went to zero. It’s virtually certain that all of the coins you receive as change in 2021 are of the 0% silver variety.
Why? Well, people like Pa.
Pa had the coin flow for an entire small farm bank, so he could pick and choose. He replaced 90% silver quarters with 0% silver quarters. On the balance sheet, there was no change, so he wasn’t stealing from the bank. The bank had a quarter, and then after Pa swapped it out, the bank still had a quarter.
It wasn’t the same quarter, mind you, but the cost to the bank was zero. If you’re looking for a perfect heist, this is it.
Pa walked away with hundreds of dollars in 90% silver quarters, all just by leafing through someone else’s drawers.
I saw a werewolf at work. Or maybe it was a hairy guy. Regardless, the silver bullets worked.
We’ve had some discussions where I’ve referred to our current money system (fiatbux?) as money. More than one person in the comments has said, “No, that’s not money.”
Well, it is. I can take a $100 bill and go and buy some beer and cigars and PEZ®. I could also do that with a gun, but the fact that everyone will go along with the deal means that the dollar really is money.
But it isn’t good money. I’d gladly swap out that $100 fiatbux for $100 in 1965 silver quarters. The $100 in 1965 silver quarters (checks Internet) could be bought on the open market for $2100 or so. That shows that the silver coins are 21 times better money than our current fiatbux.
This little story is an example of Gresham’s Law. Sir Thomas Gresham is an old, dead English dude who made massive amounts of money back when the style of the day was to wear fluffy black pancakes on your head while hoping that Queen Elizabeth didn’t have a bad day and order your execution because (spins wheel) “she was not amused and really wanted pudding for dessert.”
Okay, it’s really Sir Thomas Gresham on the left, and George R.R. Martin on the right. Notice I didn’t say write, because I don’t think George remembers how to do that.
Stated simply, Gresham’s Law is: “Bad money drives out good.” In my example, the bad money was the 0% silver quarters, the good money was the 90% silver quarters.
Why would I take bad money when I could get good money?
You wouldn’t. No one does.
During the Zimbabwe hyperinflation, people would take United States dollars as payment, but they’d give you never-ending stacks of Zimbabwe cash as change. The bad money (Zimbabwebux) was driving out the good. The dollar, though not “good money” was still better than the wrapping paper that the Zimbabweans scrawled zeros across like an eight-year-old with a pen.
The brain is the most important organ in the body. According to the brain.
Why is that important? Because in 2021, the government of the United States has fully embraced the Zimbabwean concept of “we’ll just print more money.” The reasoning is simple: if a football game can’t run out of points, well, why could a government run out of money? We can just print more.
That’s the sign that the Left half of the bell curve has finally taken the reins of power. The short-bus pity graduates have decided that the phrase “we don’t have enough money” will cease to be an impediment to their wishes.
This year we’ll spend more money than ever in the history of our country. It’s bad. How bad? In order to avoid a debt default because the Democrats are insisting that they have Republican assistance since they don’t want to go solo. The Republicans are resisting spending money because that’s what they pretend to do whenever a Republican isn’t president.
I went to an Irish mechanic the other day. He couldn’t fix my engine, but he could blow up my tires.
The current idea of the Washington set is to make a coin that says “one trillion dollars” on it and deposit it with the treasury. I’m not making this up. This is their actual plan.
This is the plan of people who are not serious. They’re looking for pretend loopholes to evade the law. The bright side is that they are at least pretending that the law exists. Regardless, the goal is to take a chunk of metal, write $1,000,000,000,000 on the side, and keep the spending party going.
Woo! More sangria!
The one thing that is sacrosanct in the world of 2021 is this: thou shalt keep thy government debt whole and multiply it.
Strangely, this is exactly (really, exactly) the same thinking that the leader of Zimbabwe had: “Dude, we have more paper, so we can totally print more money.” We laughed when Zimbabwe printed trillion-dollar notes. People in the government of the United States are ready and willing to create a trillion-dollar coin.
At least this one is (according to the news) platinum.
If this keeps up, JCPenny® will have to change its name to JCTrillion©. And the smell? It’s nearly certain the coin didn’t poop its pants.
The excuse to pull the silver out of money was that “it is costing too much money” to make the coins. A quarter (last article I read) now costs over 12₵ to make – but that article was nearly a decade old. Given inflation, I’d bet that it costs nearly 20₵ to make 25₵, and probably costs at least 3₵ to make a penny.
Looks like over time, the value of bad money begins to match what it cost to make. Beware: it only costs about 14₵ to make a $100 note. That trillion-dollar coin? It will probably cost $1000 or so to make.
Wonder what Pa Wilder would have done if he would have stumbled across a trillion-dollar coin in the bank’s drawers?
Probably, he would have thought it was a fake.
Which, of course, it is. I guess the government is going through our drawers, driving out good money with bad.
