Old Coins Taught Me To Never Trust The Government
The comments below are an edited and abridged synopsis of an article by Jim Bovard
“Old coins vaccinated me against trusting politicians long before I grew my first scruffy beard,” writes Bovard. “I began collecting coins when I was eight years old in 1965, the year President 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.”
Time passed, and Americans forgot the peril of letting politicians ravage their currency. In 1933, the US had the largest gold reserves in the world. But fear of devaluation spurred a panic, which President Roosevelt invoked to justify seizing people’s gold to give him the power to lower the dollar’s value.
On August 15, 1971, President 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.
Coin values were primed by the Fed’s deluge of paper dollars to create an artificial boom to boost Nixon’s re-election campaign and supplemented by wage and price controls that wreaked havoc. Inflation almost quadrupled between 1972 and 1974.
Bovard recognized that value was subjective. The test of a fair price is the voluntary consent of each party to the bargain. President Obama, talking about how the government was losing money minting cents, declared, “The penny, I think, ends up being a good metaphor for some of the larger problems we got.” Actually, the collapse of the dollar’s value is a curse, not a metaphor. The dollar has lost 85% 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.”