“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.
My dad told me a story about a man he worked with that, starting in 1965, routinely exchanged all of his spare cash into whatever coin had the best ratio of silver-per-face-value. He did exactly what Pa Wilder did for a few years after the switchover. This guy kept all the coins he accumulated in a safe deposit box, and sold out when the Hunt Brothers ran silver up to $40 per ounce fifteen years later around 1980. According to my dad, this guy cashed out several hundred thousand dollars.
I hope when they finally get around to minting the platinum trillion dollar coin(s)- as they will – that they will put them on display at the National Archives between the Declaration of Independence and the Constitution. That would be the ultimate example of a precious metal driving paper out of circulation.
All we have to do is mint 28 of them and then we’re debt free!
John, back in the day (late 80’s – early 90’s) I worked in a convenience store and followed exactly what Pa Wilder did. At one point, I had a teenager bring in an 1879 Morgan Silver Dollar for a pack of cigarettes. I politely took his money and immediately exchanged it for a paper dollar in my pocket.
The reality that the government is banking on (pun intended, maybe?) is that everyone else in the world that is a holder of our debt is going to be okay with our economic musical number, “The Sky Is The Limit”. Which they will not be, of course; in what universe is watching my investment decrease in value by the millisecond an economically sound idea.
Ah well, On the bright side, if we keep printing all those bills, we will at least have something to keep warm by.
Stolen from his grandparents silver box most likely.
Indeed. They make good insulation, too.
As a follow up, twice in the last decade I have received silver coins in change: a 1964 quarter in change at Grandy’s once, and a 1943 Jefferson war nickel at a convenience store. So it still happens, but it is rare. I never see half dollars at all, except in rake at the Golden Nugget poker table (haven’t been to LV in 2 1/2 years though). I kept checking, but Nugget folks were wise enough to make sure all those Kennedys were 1971 or later.
I’m o-fer. I keep looking, too.
Well, it was the late ’80s, but anyway… me and the gf(now wife) would go shopping at the 24-hour supermarkets. Shelves were fully stocked, no crying children in the checkout line, all good things. I got a one and a five in change that looked odd. Silver certificates. JACKPOT! The guy behind us in line offered me twice face for both bills. I smiled and said no, thanks. The cashier, who was young, didn’t know what the fuss was. He enlightened her.
Sweet! I have some gold certificates. Was offered to “take them off my hands” as well.
Noped out of that one . . .
Throw me a bone and help this incompetent follower figure out how to login.
I think I had the nickname Mettelus, but have not figured out how to login
I think I figured it out
I am slowly coming to the conclusion that WP is a kludged up system that pretty much stinks. 90% of the time the WP login feature doesn’t work on this blog. You do have to create a separate login (even though you already have a WP account, but it is linked to your WP account somehow, sort of. Then when you go back to use it again it rejects your password or says “that username doesn’t exist”. Sometimes. Sometimes it just goes right through but that is rarely. Other blogs I have had no issues at all with the exact same process. I don’t think it’s JW’s fault, I think WP just sort of stinks.
Now I click on the WP logo once. If it says “connecting” for more than about five seconds I click cancel and type in my info.
?
What is the purpose of logging in? Serious, not rhetorical. I had a blog for about 3+ years until the wife made me get rid of it, because she was embarrased about me using it for all things ‘soapbox’. So I deleted it about a month ago. I’m sure I could still use that to log in, but why? I can easily comment and read without it.
I know I have a coin collection stashed somewhere. I started collecting coins in the early 70’s when I was a kid. Had almost a full set of dimes from every mint going back to the early 1900’s I think.
That’s cool. My parents tried to push me in that direction, but I kept making models . . .
John – – Salt is/was money. You know that because somebody once said “Oh that guy John, he’s worth his salt.”
That was a compliment, which I assume you earned in a less that chicanerous way !!
So anything can be money. But first it has to be held in value by those who will use it as a medium of exchange.
Precious and wanted metals: gold, silver, platinum, uranium, copper, and now lead (as in ammo), have always been accepted as valued and thus can be/will be a medium of exchange in all our future.
Heck, even your collection of Pez® dispensers might qualify……but things would have to be really hopelessly sporty for that nadir in monetary exchange history to occur……
Real physical assets will soon control. I heard that in Weimar Germany one person bought bedpans. Why? Worth more than the money.
Coming soon to a country near you.
This is the recycled idea of the guy I call trillion dollar con man. Voted the most admired economist by other dip shits economists. Writes for rags like The NY Times and calls people that disagree with his policies racists. This guy won the Nobel prize. Paul Krugman.
I sometimes think this guy is a ringer for team prepper. If we follow his ideas, shtf is a reality
The problem with the pointy toes like trillion dollar con man is that for all their understanding of the system they forget that the cornerstone to money whether gold or fiat is psychology.
Print that coin and the jig is up because the obvious question is why just one. That obvious question brings the house down.
Krugman is . . . not a serious person. My college-age son brought him up with a derisive sneer. And how often do you get to write “derisive sneer”?
Liberal: “Modern Monetary Theory means there are no negatives to government printing infinite money!”
Me: “So why do we have to pay taxes?”
Liberal: “Because otherwise inflation would happen!”
Me: “So something bad does happen when government prints money.”
Liberal: “NAZI!!”
Hahahaha!
Wait until they see the outcome.
It always ends in tears.
I was in a convenience store, found a copper penny in my change, and showed the clerk how you could tell the difference between a copper penny, and an alloy penny by dropping them both. The copper penny had a clear ring, while the alloy penny only made a thud. I tried explaining how a silver coin was worth more than face value, and how a tremendous amount of wealth was stolen in the early sixties, but their eyes were glazing over, which indicated they weren’t really that interested.
That’s how it works. P.T. Barnum was right, and an entire nation becomes mesmerized.
Unless you’re Humpty Dumpty in a Lewis Carroll story, words mean things.
A dollar is currency.
It is not, and never can be, money.
It is not coined, which is the only thing over which Congress was given power in 1787.
Given that the Constitution was penned some 337 years after the invention of Gutenberg’s printing press, I’m far beyond certain that, had the Founders intended any form of printed paper fiatbux to be considered money, they could and would have used the verb “print”, rather than “coin” when penning the Constitution. Having no shortage of experience with the worthlessness of Continentals, I have no doubt why they did not do so. And as you’ve noted, coin dollars now are nothing but finely engraved toilet tokens, in terms of any store of value, which is one of the three (or four) immutable requirements for anything called “money”.
No amount of gainsaying can change that reality.
QED
Inquire of the central banks in the Continental States, the Confederate States, Weimar, the referenced Zimbabwe, and Venezuela if you’re still convinced otherwise.
A dollar isn’t bad money, it’s worthless currency, with a current value (in constant pre-1933 gold-backed dollars) of about 2¢.
By contrast, a 1963 U.S. quarter is worth $6 of fiatbux, i.e. 12¢ in those same pre-1933 gold-backed dollars, which is a measure of the slippage of silver relative to gold even more than the slippage of a dollar relative to either one.
The point of the lesson remains that fiatbux allowed the government to steal 98% of the value of your money without even asking your permission in just the last 88 years, and now they quibble about how much of the remaining 2% or so you get to keep each annum, as they seek brave new ways (which are really, old, old, tried and true ways) to inflate that other 2% right out of your pocket, savings account, and even out from under your mattress, whether you will or no, unless you divest yourself of the printed toilet paper for any long-term savings plans, then exchange them while you can for real assets, whether precious metals, real estate, commodities, or hammers, wrenches, and fishhooks.
The guy in Weimar with a wheelbarrow?
He didn’t have a wheelbarrow full of money.
He had a wheelbarrow full of papiermarks.
Toilet paper always returns to its base value.
The dollar will be no different.
Ask The Gods Of The Copybook Headings.
Words do mean things . . . so, there is Good Money, and Bad Money.
As usual, we agree. Bad Money is not a store of value, because it erodes. Good Money?
I need more. And soon. And when Good Money drops in value, that is a sign that the end is near. Because people are liquidating their Good Money to pay debt.
Watch for it.
Bad Money is an oxymoron, and a nonsense concept.
Like square circles, jumbo shrimp, or government help.
The words have a linguistic value, but not when slapped together thusly.
Money is money.
It is neither good nor bad, nor ever can be.
The Krugerrands in the Mercedes trunk have no care or concern if their owner is a drug lord, or a spinster who inherited the entire pile. And their owner’s moral guilt or innocence cannot attach nor be imputed to that gold, not even in twenty lifetimes.
Proof of the pudding: When has the government (any government) ever destroyed assets it seized?
Never in recorded history.
Because money is morally neutral.
QED
There is only money that is mine, and money that is not mine (rather exactly like donuts, Pez candy, classic firearms, or swimsuit models), and for money, that difference in possession is the closest it can ever come to a moral standing, because money in my pocket is always better than money in another’s pocket, or a bank vault that isn’t mine. Even then, it never rises to being good nor bad, just better in one state than the other.
Bad currency?
Of course.
Legendarily ubiquitous.
Especially in national banks.
Creating bad currency is what national banks are created for, every single time.
It’s what they do.
If it’s bad, it’s not money.
If it’s money, it’s not bad.
“Oh, woe is me! All I have to spend are thousands and thousands of pure gold and silver coins!” – said no man ever.
The man hustling to the corner to buy a bratwurst with his wheelbarrow full of papiermarks before the price jumps again sings an entirely different tune.
The problem comes when a man needs money, and finds he has only currency.
As 330M of our friends and neighbors are going to discover to their chagrin, and far too soon.
As usual, we differ only in semantics on this one. I’ll even grant you the strict definitions, because the dollar is self-destructing, and slowly going to zero.
Well, slowly, and then quickly.
Yet I can trade 18 pieces of paper for an ounce of gold . . . Hey . . . I need to do that, a lot more. Probably some silver, too . . .
I’m betting my progeny will like the metals more than the paper when it comes time to leave the mortal coil and make them go on a hunt . . . .
Zimbabwe? Yes we can!
We’ll all be equal and the same in the egalitarian poop emoji empire of winning winnarz!
Just print about 30 of the trillion dollar coins and solve the debt for the duh…winning moment.
Been saving up the pre-1964 coins from the Pik-N-Pak and I’d buy that for a dollar store.
Have half a roll of wheat pennies and some 1940’s nickels.
Saw a wayciss (!) coin the other day dated 2021, it had George Washington crossing the Delware on the back!
I’m calling 1-888-COM-MIES to report this crime against the unwoke. (sarc)
“all just by leafing through someone else’s drawers” please don’t say something like this about your father again. It makes him sound like bidet the poopy pants.
Yet many go through life having no clue how bad the year 1913 was. Income tax, Woodrow Wilson and the last creation of the Federal Reserve, BY BANKERS. The book Creature from Jekyl Island is a heck of a read. Andrew Jackson use to be on my hated list for the trail of tears till I found out he abolished the previous federal reserve bank.
Yep were in deep doo doo no stopping the train, oops, I mean printer because it goes brrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr like the Warthog except it has infinite ammo.
It is a real testament to the Wilder will power that he managed to write a post with so many references to drawers without taking advantage of the opportunities they offered.
Hats off to you, sir!
Well, that was entirely intentional. He actually owned a chunk of the bank at that point, so, they were partially his drawers.
Read an interesting article on the Trillion Dollar Coin. Said it wasn’t legal because while Treasury does indeed have authority to set a platinum coin face value to anything they want, it has to be either a BULLION a PROOF coon. Supposedly, the former would have to have a trillion dollars woth of platinum in it; and the latter is only a commemorative and cannot be considered money in circulation.
Given the current level of crazy, I don’t think such considerations would matter even if upheld as law. Sigh.
Since when does value matter? Not since 1965.
Well just to show my age, when I was a kid a regular candy bar was 5 cents, a king size was 10 cents, and a 10 oz. soda pop was 10 cents. I could get a regular candy bar and a pop for 15 cents and still have a dime left (no shoplifting required). Used to pick up glass pop and beer bottles and cash them in for the deposit (before the disposable bottles). Helped keep the roadside clean as a side effect.
And we reused them. A Coke bottle would be reused for ages.
Your Irish mechanic would have blown up your “tyres “ not your tires
And it would have mattered if I chose a Protestant mechanic or a Catholic mechanic.
— …the fact that everyone will go along with the deal means that the dollar really is money. —
Ah, Renfield, you disappoint me so!
Please, let’s preserve the distinction between money and currency. The Federal Reserve Notes you were using in that example constitute currency: a medium of exchange that acts as a proxy for money. Those banknotes have been designated “legal tender,” which makes it a federal offense to refuse them in payment of a debt. But as has been proved over a century of deliberate inflation, those Federal Reserve Notes cannot store value, one of the essential properties of a money. Indeed, you noted this yourself in your anecdote about the quarters.
The old definition of a money — “a medium of exchange and a store of value” — remains critically important to advancing the understanding of what has been done to us…and is being done to us today.
First, Renfield! Ha! Love it.
I actually agree. Yet . . . would one person out of 1,000 be able to parse that? And how many would take a Hershey bar instead of a silver bar? (If you haven’t seen the Mark Dice video, I’ll send it your way.)
“The Republicans are resisting spending money because that’s what they pretend to do whenever a Republican isn’t president.”
And here is a significant part of the problem. Had there been an active resistance the people might have noticed all the good things that happened when that resistance was in power. Since the same thing happened no matter what, albeit at different speeds, most people no longer understand what the options might have been.
Actually, as far as I can see the same things happen at the same speeds . . . still a doubling every 8 years.