A penny for your thoughts

I think the penny presents way too small an area to adequately portray any historical scene in useful detail. Another example of a failure in materiality.

This is an effect of currency depreciation and metals appreciation. Our monetary policies have made the penny nearly worthless. It can’t be long before the nickel shares the same fate.

I’m in favor of eliminating the penny if that cost could be directly sent back to the taxpayers. Unfortunately that never happens with our government. 🙂

How much does it cost to make a penny? Anyone know?
I know they stopped making them out of copper, because the copper in a penny was worth more than a penny.

In 2006 it cost about 1.4 cents to make a penny. .8 cents of that cost was the cost of Zinc.

http://www.nytimes.com/2006/04/22/business/22charts.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1222178607-8dm7iSxqglG+x+9QN5jTVQ

You know, if we stop lending out hundreds of billions of dollars, inflation MIGHT go down. Once inflation goes down, a penny MIGHT be worth more. If a penny is worth more, it MIGHT cost less to produce than it is worth. If it costs less to produce than it is worth, this whole debate MIGHT go away.

The fact that the penny is still around over 200 years after its inception is a testimony to the overall strength of the US economy over that time period. We have never experienced the economic turmoil that many countries have had, even during times like the great depression of the 1930s.

Someone mentioned precision. Some societies are precise societies. When you purchase something in Germany, of course you get your exact change back, down to the tiny eurocent. Other countries are approximate societies. In Romania, if you are expecting 0.43 lei in your change, you might get 0.50, you might get 0.40, you might get 0.45, or you might get yelled at for not having the right change to pay for the item in the first place.

Along the lines of eliminating the penny: we should eliminate one dollar bills as well. It costs 4 cents to produce a dollar bill, as opposed to the 8 cents it costs to produce a dollar coin, but the paper bill lasts for 12-18 months before needing replacement, as opposed to the coin, which lasts for 30-40 years in circulation.

Ok, the Fed system caused the problem. Reducing inflation wouldn’t bring up the value of the penny, since it would just devalue more slowly unless inflation were kept so low that the value of copper and zinc consistently rose faster – a completely unpredictable thing over the long term.

Basically, unless we completely revamp the entire financial system, almost from the ground up, there’s no way that the penny can a useful thing. Never mind the amount that the govt loses in making the pennies, just based on the hassle of using pennies – get rid of them.

If the US economy goes back to a metal-based backing, then we can revisit the issue, but until then get rid of the penny.

Make them once again of precious metal as required by the Constitution. The same for the rest of coinage. Restore paper dollars to silver certificates.

What would happen if we did that?

Short-term hurt, but I wonder if anyone has somewhat accurate predictions.

Bror, coinage has always said important historical and philosophical things about the countries minting them. Coin hoard can survive for millennia and can tell us a great deal. It makes sense for the mints to do this sort of thing, though I don’t think they have done them sensibly of late.

As to teaching history and geography, since the State isn’t doing it (and never was supposed to) perhaps it is time for our churches to support our families in doing so. Genuine discipleship is going to require sufficient knowledge of ancient and church history to understand the ‘why’s’ of a number of things.

Anon – Article II, Section 8 states in pertinent part:

“To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.”

How does this require precious metals?

Sorry Anon, I thought you were joking about the precious metals being required for money.

Wow, where to start. As Joe quoted the Constitution, there’s no requirement for precious metals. The word “coin” when used as a verb there meant something more along the lines of “create”. It wasn’t, even back then, understood to limit anything to metal coins, much less metal coins made of precious metals.

Joe, you are suggesting then in context of Section 10 of Article 1 (there is no Section 8 of Article II, your citation is erroneous), that the States are allowed to make gold and silver coin, but the federal government can make fiat money?

The Section 8 of article -I- attaching in the same sentence; standards of weights and measures, and set values of coins, both foreign and domestic, indicates that it is the coinage which are to have standard weights and measures, with set values. That is not consistent with fiat money, nor is it consistent with private banks issuing fiat money with the name of the United States upon that paper. At least, it sure seems that way.

Bike, sorry, but that is talking about individual states. That was to keep states from making competing currencies to the Federal money. That has no applicability to the Federal government.

Anon, essentially your #24 first paragraph is correct. States are not allowed to make up their own money – they have to stick to gold and silver.

A1S8 is giving a big list of things the Fed govt can do, among which is “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”

Remember, “coin” as a verb meant “create”, not “make physical coins”. The federal govt was able to create money and regulate its value. At the time gold/silver was USUALLY equivalent to paper money, but fiat money wasn’t unknown and did exist both in other countries and in different forms in the American colonies. The power to regulate the value of the money they create gives the federal govt the power of making fiat money and this was realized back then. Some people didn’t like it, but it was recognized back then.

You’re partially right – at the time, gold/silver was money and having accurate weight standards was a foundation of currency and so the weights and measures part was put in so that the govt could regulate the standards for currency. However, that didn’t take away the govts ability to make fiat money which was granted by “To coin Money, regulate the Value thereof”.

Webmonk, if you are right, and the Constitution gives Congress the power to make fiat money, then why was Free Silver such a controversial notion at the turn of the last century? Silver had a more volatile price than gold, and populist politicians such as Williams Jennings Bryan ran on platforms consisting in part of having silver debase the gold in our coinage, so that the debts of farmers (for example) might become less over time. How could there have been such a controversy if the Constitution gave the power to make up fiat money out of thin air right from the beginning?

There was a dispute over the power of the federal government to print money, but it took place in the 1870s and 1880s, with the Supreme Court first ruling against the government and then reversing itself. Ironically, the Chief Justice (Salmon P. Chase) who wrote the decision declaring paper money unconstitutional was the former Secretary of the Treasury who not only was instrumental in printing the money under dispute, but whose portrait appeared on the bills he later ruled unconstitutional.

See more at http://en.wikipedia.org/wiki/Legal_Tender_Cases

Excellent link. I had studied the Julliard case, but had never gone back to study in depth the Hepburn case which it overturn.

One of the interesting things that struck me about Hepburn was its strong base on general principles of the Constitution and what the broad powers of the government ought to be. Ultimately the concrete basis for Hepburn was in the due process clause of the 5th Amendment, and the USSC determined that the bills were equivalent to taking away value because they were worth less than gold specie/coin.

A good argument, but it had very little basis on concrete decisions of past courts. Julliard went back to past decisions of various types for almost every point along their path of reasoning. That’s probably why it’s so frequently used in classes.

Ultimately, Hepburn tended to be the reasoning of Chase divorced from past cases. I think his reasoning was pretty good and I tend to have strong sympathies for his view and that life would be better if the govt operated along the lines he describes. But, Julliard has a strong trail of concrete decisions leading back to Marshall, and so while it might be nice if Hepburn were kept, there’s little question that Julliard came to the correct conclusion based on decisions of the previous 70 years.

Was it the correct decision based on what ‘ought’ to be? Debatable.

Was it the correct decision based on what Constitutional interpretations said since the beginning of USSC history? Definitely.

Bike, unless you have some source for it, “coin” certainly was understood to include “print”. It was used that way several times in different situations at that time, including the Constitutional Convention. Another example is that the “Continental” dollar was fiat money and it was referred to as coined money. That’s just off the top of my head and I am sure there are numerous other examples.

In the creation of the Constitution, they specifically rejected stating the govt could make fiat money, but likewise they specifically rejected stating the govt could NOT make fiat money. They left it up in the air.

So, after that the USSC had to determine whether or not legal tender was constitutional. There was disagreement and obviously Chase and yourself hold that legal tender is not constitutional. However, Marshall, Strong, Gray and other say it is constitutional.

Everyone can take sides, but the official arbiters of what is and isn’t constitutional have decided legal tender is. We may disagree with them, but our disagreement doesn’t change what the constitutionally appointed judges of the constitution have decided.

Bike, you’re missing the entire point of what the cases said – that the power to create fiat money IS granted in A1S8. If the power is granted in A1S8, then the 10th amendment doesn’t affects the topic.

You can disagree with their rulings, but that’s what they’ve ruled. The first major case and the only one to rule legal tender to be unconstitutional, Hepburn, never touched on the 10th amendment. It was focused on whether or not A1S8 granted the power to the federal govt. It decided it didn’t, based mostly on their understanding of big-picture principles of the Constitution, and some on the 5th amendment.

I think Hepburn is accurate in its analysis of the larger principles of the Constitution, but inaccurate in its analysis of the specific words of the Constitution. The Constitution has more than one internal inconsistency between general principles and actual details IMHO, and this is one of them.

The next three USSC rulings over the next 14 years all overturned Hepburn. All three of them stated that A1S8 did grant fiat money power to the federal govt even while A1S10 denied it to individual states. All of them, and especially Juilliard, based their decisions less on overarching principles of the Constitution, but on past decisions in various cases stretching back to Chief Justice Marshall. They didn’t make up their support; their support came from past cases and wording analysis.

The 10th amendment wasn’t an issue.

“If the states can’t recognize anything but coin as legal tender, neither can the federal government”

If you say so, but the Constitution states otherwise. At least multiple justices ruled it does so in A1S8, and they used a lot of supporting decisions from previous rulings on different but related topics from the previous 70 or so years.

If you really want to disagree with their decisions, you need to at least engage them. They based the decisions on the premise that A1S8 does give the power, and then also give a couple other ways in which other powers that aren’t directly tied to legal tender also suggest legal tender power is allowable.

Go read the decisions and start picking them apart about how they may have mis-interpreted A1S8 and the previous applicable decisions that had been made.

Nemo, that actually got mentioned in one of the decisions. I can’t remember which one since they’re blurring together a bit at the moment, but they did mention it sort of in the same way you’re using it if I remember correctly.

“Coin” isn’t just limited to metal chunks, though that is its root history. Back then, as now, it can refer to more than just metal coins or the making of metal coins.

Webmonk, are you saying that fiat money is unConstitutional, but because the judiciary has abandoned its oaths, and goes by precedent rather than by covenantal text and amendation, it is ok after all? Is that an accurate summary of your argument?

Webmonk,
But only those powers expressly delegated to the federal government by the Constitution are lawful powers usable by the federal government. The powers granted are limited and explicit, the powers denied are numerous and unmentioned. Any powers beyond that are not lawfully exercised. That is why some opposed the Bill of Rights – fearing that some might imagine that the government, and not God, granted rights, and that those not granted in the Bill of Right, were reserved to the government.

And the existence of a long chain of abuses and usurpation does not make them right, lawful, or tolerable.

Thank you for improving my understanding of what you were meaning.

WebMonk @ 41: And if you think that link talks about the usage of the word “coin”, I’m going to have to paraphrase a certain swordsman, “I do not think that link means what you think it means.”

You got to it before I did. I read the link. It asserted. It didn’t argue. I’m not convinced.

Bike @ 39: Guys, what the core of your argument is is that “coin” doesn’t mean “coin.”

No, the core of our argument is that “coin” the verb doesn’t mean exclusively what you think it means.

Webster’s 1828 dictionary gives three definitions for “coin” (the verb)

1. To stamp a metal, and convert it into money; to mint.
2. To make; as, to coin words.
3. To make; to forge; to fabricate; in an ill sense; as, to coin a lie; to coin a fable.

I think that we can rule out 3 right away, as it has nothing to do with this context. That means that both definitions 1 and 2 are legitimate. Now, which one is proper? I suggested above that limiting “coin” to definition 1 leads to nonsense when considering regulating foreign coin. Besides, as Joe noted @ 33, limiting “coin” to metals doesn’t solve the problem of the devaluing penny, as Congress still has power to “regulate the Value thereof.”

Anon @ 42: But only those powers expressly delegated to the federal government by the Constitution are lawful powers usable by the federal government. The powers granted are limited and explicit, the powers denied are numerous and unmentioned. Any powers beyond that are not lawfully exercised.

Yup yup. Now, where does the authority to restrict immigration come from again (hint, immigration does not equal naturalization; they are two separate processes, so don’t point me there)? And yes, the Supreme Court has also addressed this, but you would probably consider that a usurpation of power on their part.

Absolutely, there are chains of abuses of the Constitution that have essentially become law though they conflict with both the express statements of the Constitution and with its general spirit. The legal tender issue isn’t one of them.

Absolutely, all powers not expressly granted are reserved. Legal tender is expressly granted.

Legal tender is a less than crystal clear issue, as I’ve said before, but it’s certainly clear enough that it can’t be characterized as an “abuse”. Some do hold it to a bad set of rulings, but even they have to admit that there’s a very reasonable basis for making the false rulings.

Adios.

Webmonk,
Thanks!