Now the government is really showing its teeth. In this USA Today report we learn that the metal inside a nickel is worth about 7 cents, while the metal insidea penny is worth about 1.12 cents. In response, you might expect consumers to collect these coins and melt them down and sell the underlying metals at a profit. True free currencies do not have values stamped on them, and thus avoid this problem. But there is a good reason for government to not use a free currency – it’s the best way to tax its citizens without them ever knowing about it.
My favorite quote from the director of the US Mint has to be this:
“The nation needs its coinage for commerce,” U.S. Mint director Ed Moy said in a statement. “We don’t want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers.”
It should perhaps be rephrased as this:
“American taxpayers don’t want to see their dollars devalued so a few power hungry individuals in government can take advantage of the American taxpayer. Replacing fiat currency with sound currency would be an enormous restraint on government.”
Consider also that:
- The Mint produced $78,612,000 worth of pennies at a cost of $135,998,760 thereby wasting $57,386,760 of taxpayer money through November of 2006.
- Twice in our nation’s history, gold coins were melted by the government.
- The first melting occurred in 1834 when the gold content of U.S. coins was reduced and nearly all gold coins minted from the period 1795 to 1834 were melted because their intrinsic value exceeded their face value.
- The second melting resulted from the great Gold Confiscation of 1933, when 90% to 95% of all U.S. gold coins held by individuals, banks, and the Treasury were recalled, thrown into huge melting pots, and poured into lifeless 100-ounce and 400-ounce gold bars. Franklin Roosevelt’s gold confiscation order of 1933 saw the end of regular issue, legal tender U.S. gold coinage.