Old Coins Taught Me to Never Trust the Government

Mises Institute, July 2, 2020 

How Collecting Old Coins Taught Me to Never Trust the Government

Old coins vaccinated me against trusting politicians long before I grew my first scruffy beard. I began collecting coins when I was eight years old in 1965, the year President Lyndon Johnson began eliminating all the silver in new dimes, quarters, and half dollars. LBJ swore that there would be no profit in “hoarding” earlier coins “for the value of their silver content.” Wrong, dude: silver coins are now worth roughly fifteen times their face value.

History had always enthralled me, and handling old coins was like shaking hands with the pioneers who built this country. I wondered if the double dented 1853 quarter I bought at a coin show was ever involved in Huckleberry Finn–type adventures when “two bits” could buy a zesty time. I had a battered copper two-cent piece from 1864, the same year that Union general Phil Sheridan burned down the Shenandoah Valley where I was raised. Some of the coins I collected might now be banned as hate symbols, such as Indian Head pennies and Buffalo nickels (with an Indian portrait engraved on the front).

In the era of this nation’s birth, currency was often recognized as a character issue—specifically, the contemptible character of politicians. Shortly before the 1787 Constitutional Convention, George Washington warned that unsecured paper money would “ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”

But as time passed, Americans forgot the peril of letting politicians ravage their currency. In 1933, the US had the largest gold reserves of any nation in the world. But fear of devaluation spurred a panic, which President Franklin Roosevelt invoked to justify seizing people’s gold to give himself “freedom of action” to lower the dollar’s value. FDR denounced anyone who refused to turn in their gold as a “hoarder” who faced ten years in prison and a $250,000 fine.

FDR’s prohibition effectively banished from circulation the most glorious coin design in American history—the twenty-dollar Saint-Gaudens Double Eagle gold piece. I was captivated by early American coin designs, especially those featuring idealized female images emblazoned with the word liberty. I was unaware that George Washington refused to allow his own image on the nation’s coins because it would be too “monarchical.” Until 1909, there was an unwritten law that no portrait appear on any American coin in circulation. That changed with the hundredth anniversary of the birth of Abraham Lincoln, whom the Republican Party found profitable to canonize on pennies.

By the mid-twentieth century, American coinage had degenerated into paeans to dead politicians. Portraits of Franklin Roosevelt, John F. Kennedy, and Dwight Eisenhower were slapped onto coins almost as soon as their pulses stopped. This reflected a sea change in values as Americans were encouraged to expect more from their leaders than from their own freedom.

Coin dealing helped me recognize early on that a government promise is not worth a plug nickel. From 1878 onwards, the US Mint printed silver certificates, a form of paper currency. My 1935 silver certificate stated: “This certifies that there is on deposit in the Treasury of the United States of America One Dollar in Silver Payable to the Bearer on Demand.” But in the 1960s, that became inconvenient so the government simply nullified the promise.

On August 15, 1971, President Richard Nixon announced that the US would cease paying gold to redeem the dollars held by foreign central banks. The dollar thus became a fiat currency—something which possessed value solely because politicians said so. Nixon assured Americans that his default would “help us snap out of the self-doubt, the self-disparagement that saps our energy and erodes our confidence in ourselves.” Regrettably, this particular treachery was not included on the list of indictable offenses that the House Judiciary Committee enacted a few years later.

After Nixon’s declaration of economic martial law, I lost my enthusiasm for squirreling away one memento from each mint and each year in the Whitman blue coin folders that permeated many 1960s childhoods. I shifted from collecting to investing, hoping that old coins would be a good defense against Nixon’s “New Economics.” Prices for pristine coin specimens were far higher and more volatile than the value of some of the barely legible slabs of metal I previously amassed. A single blemish could slash the value of a rare coin by 80 percent (same problem I had with some manuscripts I’ve submitted over the years).

Coin values were pump primed by the Federal Reserve’s deluge of paper dollars to create an artificial boom to boost Nixon’s reelection campaign and supplemented by wage and price controls that wreaked havoc. Inflation almost quadrupled between 1972 and 1974, and I soaked up the cynicism and outrage prevailing in coin investment and hard money newsletters. I poured most of the money from the jobs I did during high school into rare coins. Because rare coins were appreciating almost across the board, it was difficult not to be lucky in a rising market. The biggest peril was the endless scam artists seeking to fleece people with false promises of lofty gains or fraudulent grading of rare coins—a pox that continues to this day.

After graduating high school in 1974, I began working a construction job. When I got laid off, I saw it as a sign from God (or at least from the market) to buy gold. Investment newsletters and political debacles convinced me the dollar was heading for a crash. I sold most of my rare coins and plunked all my available cash into gold and also took out a consumer finance loan at 18 percent to purchase even more. That interest rate was the gauge of my blind confidence. Nixon’s resignation in August 1974 did wonders to redeem my gamble.

My coin and gold speculations helped pay for my brief stints in college, with some greenbacks left over to cover living expenses during my first literary strikeouts. I eventually shifted into journalism and migrated to the Washington area.

Two weeks after I moved into a shabby group house in the District of Columbia in 1983, I pawned the last gem of my coin collection—the 1885 five-dollar gold piece that my Irish American grandmother had given me fifteen years earlier. She was a dear sweet lady who would have appreciated that her gift helped cover the rent for a few more weeks until I finally consistently hit solid paydirt later that year. (Thanks, Reader’s Digest!)

Wheeling and dealing with coins inoculated me against Beltway-style agoraphobia—a pathological dread of any unregulated market. The market set the price for 1950 Jefferson nickels coined in Denver based on the relatively small mintage chased by growing legions of young collectors. Nixon boosted the price of milk after the dairy lobby pledged $2 million in illegal contributions. It was nuts to permit politicians to control prices when there was no way to control politicians. Having watched coin values whipsaw over the prior decade, I recognized that value was subjective. The test of a fair price is the voluntary consent of each party to the bargain, “the free will which constitutes fair exchanges,” as Senator John Taylor wrote in 1822. Seven years ago, President Barack Obama, talking about how the government was losing money minting the lowest denomination coin, declared, “The penny, I think, ends up being a good metaphor for some of the larger problems we got.” Actually, the collapse of our currency’s value is a curse, not a metaphor. The dollar has lost 85 percent of its purchasing power since Nixon closed the gold window.

For a century, American coinage and currency policies have veered between “government as a damn rascal” and “government as a village idiot.” I remain mystified how anyone continues trusting their rulers after the government formally repudiates its promises. But I still appreciate old coins with beautiful designs that incarnated the American creed that no man has a right to be enshrined above anyone else.

James Bovard is the author of ten books, including 2012’s Public Policy Hooligan, and 2006’s Attention Deficit Democracy. He has written for the New York Times, Wall Street Journal, Playboy, Washington Post, and many other publications.

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5 Responses to Old Coins Taught Me to Never Trust the Government

  1. Tom Blanton July 6, 2020 at 1:05 am #

    In the late 60’s, I was a paper boy. I delivered the afternoon paper, The News Leader (the afternoon version of the Richmond Times-Dispatch). In those days, the paper boy collected once a week, door to door. The subscription price was around 50 cents per week and was typically paid in cash. My take was about half and I turned over the rest to the district manager of the news paper company.

    This was during a time when there was a large number of pre-1965 silver halves, quarters and dimes still in circulation. I always grabbed the silver coins to keep and I also bought silver coins from other paper boys. I would sell them to coin shops either at the mall or downtown. It was sort of my secret, but it really increased my total earnings by a significant amount.

    Apparently, the people on my paper route didn’t hoard the silver coins. I don’t think they even paid any attention to the coins. I even bought rolls of quarters and dimes from the bank to have change and I would often find silver coins in the rolls. It was easy to spot the coins that didn’t have the copper in the center. Without the extra silver money, I dodn’t think it would have been worthwhile delivering the paper.

    • Jim July 6, 2020 at 7:53 am #

      I remember the News Leader – it was the ‘conservative’ alternative, right? Or maybe both papers in Richmond were fairly conservative in the 1960s.

      Neat that your savvy on coins helped make that paper delivery job worthwhile. The Ben Franklin half was not my favorite design but it was better than what followed.

      • Tom Blanton July 10, 2020 at 9:48 pm #

        Both papers were owned by Media General, and printed on the same presses. They were essentially the same
        but the evening paper may have been slightly more conservative than the conservative morning paper.

        It seems strange that a news company could survive publishing two papers a day. Now, most lose money
        publishing just one a day.

        • Jim July 10, 2020 at 10:02 pm #

          Did the Justice Dept. approve a ‘Joint Operating Agreement’ for the papers in the 1980s or ?? Those were supposed to save the newspaper industry but I think they sped its decline. Newspapers got less distinctive & less prone to hell-raising.

          Admittedly, I’m biased on that last issue. In the 1980s, plenty of newspapers appreciated articles that raised a ruckus. Nowadays, some papers seem to dread even a single angry letter to the editor. But not all papers have gone tepid.

  2. jim carter July 9, 2020 at 2:55 pm #

    Is the following of interest ?
    Jim Carter
    [email protected]
    **********************************
    THE
    FEDERAL RESERVE
    FOR DUMMIES
     
    “What difference does an increase in the National Debt make? We owe it to ourselves.” virtually every congress-critter has declared. Such a paraphrased program gives the federal government/ congress purchasing power not previously available—to buy votes from home. Unfortunately, the inflation created dilutes the purchasing power and value of assets owned by individuals. The system also conceals the immense transfer of value to bankers, which has justified the intense subterfuge and arm-twisting necessary for the Fed’s creation—that this paper exposes. The inherent destructive forces, evidenced by historic Rothschild banking1 and mathematical analysis, are also identified.

    The medieval Rothschild banks established a line of credit for the King provided he pledged collateral with a written promise to pay gold with interest to the bearer at a time in the future. The book-entry Rothschild credit was used to satisfy obligations incurred by the king. The credit continued to be circulated in the kingdom between merchants. The bankers sold the king’s promise to investors for hoarded gold. The promise (security) was renewed by the bank on its maturing date and became perpetually rolled-over. 2
     
    VOILA !!! The king made the suppliers of services happy with Rothschild credit; the bankers had the gold from investors; the investors gained interest on their assets and a promise the king would eventually return their gold—which would never happen.3 Everything went smoothly as long as the bankers could sell the promise and the investors, or merchants, did not demand the gold.4 The king would pay the interest with more credit from the bank so the credit cost nothing. The schemes stole the wealth from the people with its book-entry fiat money5 until the people brought a catastrophic climax.6

    The Federal Reserve system does the same thing with the U.S. government’s deficit spending. The banking wizard is hiding behind Frank Baum’s curtain of the government image Federal Reserve marquee7 as obscurant to any public inquiry.8

    The Federal Reserve Bank of New York will grant credit (not “create money”) in an account of the U.S. government in an amount that the government will pledge. 9 The government will expend the book-entry-credit account (deficit spending) to pay for goods and services consumed by the government. The suppliers are content. Evidence that the supplier has received a credit voucher is obvious. The heading of the currency given to the supplier by a local commercial bank is Federal Reserve Note; i.e., a debt obligation of the Federal Reserve. Historically, it was identified to be redeemable for gold, silver, or lawful money. It is now identified as a “tender” (substitute) required by law to be accepted for an imprinted number of dollars. What you have is what you get. [It is touted to the public as a loan.] 10

    To sell the promise from the government at the highest price, the Federal Reserve (as fiscal agent for the government) will hold an auction but will imply it is an auction by the government.11 Acceptance of bids, determining the interest rate, and the amount of deficit spending permitted is controlled by the BOG.12 Government regulations establish the funds from the auctions are controlled exclusively by the FRBNY; i.e., a franchisee of the BOG13. 14

    The roll-over of approximately $12 trillion debt from prior years (publicly held maturing) is annually auctioned and disbursed by the FRBNY. The approximate $1 trillion auctioned for deficit spending is evidenced by TreasuryDirect as “new cash.” 15 [Currently new cash can be 100% to a negative (input) of the issue.] Since all values are determined by the Fed, they must be given to TD.

    The difference in handling of the two accounts is the supreme camouflage. Funds for roll-over securities are credited by the FRBNY to a government account. The FRBNY then pays the Primary Dealers among others (from the government account) for their task in collecting the maturing securities from the public. There is no increase in the National Debt nor is there any inflation as a result from these transactions.

    If the funds from deficit spending securities (new cash) were to be used in redeeming Treasury securities in the market (i.e., paid by the FRBNY for government expenses), it would eliminate any increase in the National Debt. It would, in effect, buy back the securities that created the debt. It would also eliminate any increase in money in circulation (inflation). That clearly does not occur. Request for documentation from TreasuryDirect as to the destination of the funds are ignored.

    WHERE DO FUNDS FROM THE AUCTIONS OF
    DEFICIT SPENDING SECURITIES GO ??

    The Primary Dealers receive the bulk of auction funds for their task in redeeming maturing securities. If the Primary Dealers include shareholders of a privately held incorporated Board of Governors of the Federal Reserve, they would not have to reveal corporate records.16 The commingling of new cash funds could be completely hidden from view. 17 The deficit spending amount 18 would be clear profit for the owners of the BOG.19 No other destination of the funds appears viable.

    The statutory charter of the Federal Reserve stipulates profit of the operation belongs to the government. 20 No consideration appears to be received by the government for the funds. Consideration for commercial bank loans involve a risk; such a condition does not appear applicable to the instant action.

    Each annual trillion dollars of deficit spending transfers $3 billion DAILY for an entire year to the unidentified owners of the Board of Governors. The recent trillion dollars of deficit spending in one month transfers $34 billion daily for four weeks. The source of wealth inequality becomes obvious.

    An abundance of such covert funds would go a long way to advance David Rockefeller’s utopian world government identified in his autobiography MEMOIRS. The project was mentioned decades earlier by Carroll Quigley in TRAGEDY AND HOPE. Funds from Wall Street could be used to dominate foreign nations as documented by John Perkins in CONFESSIONS OF ECONOMIC HIT MAN and William Blum in KILLING HOPE; CIA AND U.S. MILITARY INTERVENTIONS. Unused funds could be laundered in the stock or bond market. 21

    The proposed Goldman Sach’s government budget (whoops, Trump’s budget) includes huge deficit spending increases (increased military spending with cuts in social programs) with unrealistic increases in national productive/tax base.22 This is the same scheme Wall Street and the CIA have used to bankrupt other nations for four decades. 23 The psychopathic Wall Street warmongers demand a humongous deficit busting military expenditure, but this statement may reverse cause and effect. 24 Douglas Valentine identifies chaos by U.S. elements in foreign nations is being duplicated in the 50 states.25 Whether this involves the development of the United Nations, NATO, drugs, or a virus depends on the observer.

    Bankruptcy of the Nation is inherent. The FR Ponzi scheme creates an expanding National Debt with no possible way to pay it off. The principle of a ‘loan’ is created by deficit spending. [Notice that the ‘loan’ (sic, credit that is never negated) is from the Federal Reserve system but the taxpayers have become responsible for it.] The required interest to pay it off is never created. Only more debt, with the new principal being used to pay the prior interest, delays the Ponzi’s collapse. The growth required to perpetuate such a scheme, of interest upon interest upon interest, is exponential as evidenced in any graph of the National Debt. A contract that cannot be culminated is an act of fraud and is void from its inception.

    Academic centers, MSM, and publishers fear retribution for exposure.

    Unrelated use of the Fed’s new Special Purpose Vehicles (SPV) program to sell Wall Street’s trash to the Treasury Department (read Stephen Mnuchin of Goldman Sachs) at inflated prices to procrastinate bankruptcy of Wall Street banks will additionally balloon the national debt but will be used to avoid bankruptcy of Wall Street banks. 26 Blackrock, allegedly owned by insiders, is central to the scam. 27

    If the scheme is not altered, Wall Street internal memos identify the “ultimate goal” is to collect on the $24 trillion National Debt. 28 During national bankruptcy, the FRBNY will handle redemption of the PD’s tendered securities they have purchased in the market for pennies. They will demand face value from the U.S. Treasury; i.e., a financial rape of the nation. They are all one clan. Hello Greece and a U.S. troika controlled by financial entities.29

    National bankruptcy would duplicate the Greek chaos within the United States.30 The financiers’ objective in Greece 31 is not to exploit, but is to destroy the nation. 32 Indeed, national sovereignty has been acquiesced by Greece to the Troika (financiers) as the terminal end of Goldman Sach’s “shitty” three billion Euro debt. 33

    Get ready to kiss your 401(k), your government benefits, your pension, and your bank accounts goodbye, with strikes prohibited, health care costs escalated, perpetual war, mass layoffs (including government personnel), and economic chaos—among other dire occurrences. The economic chaos initiated by the virus, which has served to destroy the tax base and make the budget unsustainable, may be only the prelude.

    The U.S. has three options:
    The entire situation can be ignored with the public meekly submitting to Wall Street’s collection of the fraudulent $24 trillion National Debt and accept the fate of Greece [Greece has surrendered national sovereignty control to Goldman Sachs/Troika. Approval by Troika (financiers) is required for all government actions.] The New World Order will become established.
    or
    They can assert public pressure on congress-critters to audit relevant accounts and investigate Wall Street. The GAO has authority to audit the handling of government funds by any entity. 34 It has made at least two reviews of the FRBNY’s handling of funds [but not audits] from auctions of Treasury securities. The FRBNY has exclusive handing of such funds. Ref. 31 CFR 375.3. All that is required for the GAO to review the handling of government funds is a request by a Congressional committee. Unfortunately, it is rumored that votes can be purchased as cheaply as $50,000.
    or
    Citizens can use the FOIA35 to demand relevant official Fed documents for analysis as affirmed by the Second Circuit Federal appellate court.36
    or
    Pitchforks.

    It all depends on how submissive the American people have become.

    This essay is not copyrighted. Feel free to distribute.

    Footnotes:

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