Guest Post from John Wilder at Wilder, Wealthy, and Wise
“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.
Pa had a most enviable position.
And suddenly, seemingly as if out of nowhere and for no logical reason, the German people elected Adolf Hitler to clean up their country….
Somehow, I’m thinking our future Adolf is going to be a fair mix of Joe Stalin, Mao Tse Tung, Genghis Khan, and Vlad the Impaler. And that’s probably not too good the (((usual suspects))), but what, eh, it’ll just be 110 countries they’re run out of then, right?
My uncle would go to the police station. He would then buy rolls of coins the cops had collected from parking meters, bring them home and sort through them. Saved the cops from having to lug the coins down to the bank for deposit. Everyone was happy…
I was in the vending business in the 70’s and literally tons of coin passed through my hands, and much time was spent gathering the silver coins. Kept at it until the market was no longer yielding silver. Made a few bucks for my efforts and some of my employees did as well.
Used to do that when I was a teller for a private resort back in the 90s.
We had a wishing well that people actually tossed money in. Once I came across a bunch of subway tolens, for non us coins all we had to do was substitute a penny, I road the subway for free for a couple of weeks. A co worker grabbed a bunch of Polish Zloty coins, that were the same dimension as a Quarter, he used them for the toll road. One guy even came across a 5 dollar gold piece, and swapped ot out for a five dollar bill.
Metal knockouts from electrical boxes used to work in the quarter car wash.
After you filed the rough edges…been there, done that too
Slugs
How long before those slugs are actually worth more than 25 cents?
The Federal Reserve bought 57%* of treasury notes last year along with debt from major corporations. The government also buys its own debt with money borrowed from the Fed. That is what monetizing the debt really looks like.
*I cannot find this exact number but it was thrown out many times of business channels this past week when discussing inflation.
Of course its true, the states at this point are dependent on free money, we need to shut the federal reserve down and have states use the constitutional money system, but hey when 70% of the population is dependent on government spending, what to do, and you wonder why people are sheep. you don’t have to look past their wallet, that is why they follow with masks on and believe any lie.
One day the government that is big enough to give it will take it away.
I remember in 2000 when we had hundreds of companies worth a billion dollars with a server in a room as big as a bathroom in your house of course they were only worth a used server price say $50,000, not $1,000,000,000, now the same with with cryptos, but worth $1,000,000,000,000, this younger crowd getting rich off of printing money one day will be wiped out.
The Fed has replaced the shell game at the carnival.
Somewhere in there is a readable article…maybe
The government once again attacking its people
Period the end.
When we were kids we’d go pick pop bottles out of the ditches and turn them in at the grocery for a few coins. Would use a nickle at the Coke machine and another nickle to buy a Hershey bar. Then on to the baseball game or movies. Weekends were worthwhile in those days.
We did the same..Pepsi bottles, a penny apiece at the bar on King street in Malvern(Pa.)..
It seems that actually good money drives out bad, since people want to keep the good money and dump the bad money on anyone gullible enough to take it…
In 1964 the “minimum wage” was $1.25 [ five silver quarters ].
You can sell those 5 quarters now for over 25 bucks, if you are silly.
I remember those days back in the last half of the 70’s. My dad owned pool tables, juke boxes, pinball machines, and eventually video games that he would service and place in bars, pool halls, and juke joints. He had the only cash drawer key. When a unit was serviced weekly the take would be weighed and the total weight would be checked against a scale that listed what it was worth. Dad would then pay the business where they got that amount in paper money rounded up at anything above a quarter. We had a coin wrapper that I would help run back at the office. In the 5 year period that he owned the business I swapped out enough quarters to fill 11 quart size Mason jars with 90% silver quarters. I am waiting for silver to hit in the $35+ range with them.
Love it! what a brilliant idea! Just a shame he didn’t work for a bigger bank he could have made quite the fortune