Why Americans throw change away
There probably hasn’t been a civilization since the dawn of mankind that saw people throw away money the way Americans do. Now I don’t mean throwing money away on things like 20″ rims or spending a fortune creating an impressive library of video games. I mean literally throwing money away-in garbage cans.
We’ve all witnessed this happen or have actually done it ourselves. We get a few pennies back in change, maybe even a nickel or two, and instead of pocketing our coins these bad boys usually go right into the trash along with that annoying receipt.
I use to make a point of not doing this, not because I appreciated the coins’ value, but because I thought it was disrespectful to throw American currency away. I have to admit though, if I do find any stray pennies, nickels, or even dimes in my car that display any cup-holder residue, these little grease monkeys usually find their way into the nearest trash receptacle.
It’s obvious our coinage isn’t worth very much, and it is obvious Americans know their coins aren’t worth very much. What may not be so obvious to this generation however is that our coins use to actually be worth something. That all changed during the mid-sixties.
In 1964 Lyndon Johnson discontinued the issuance of silver certificates, or paper notes backed by silver, laying the groundwork for The Coinage Act of 1965. This Coinage Act allowed circulated coins, such as dimes and quarters, to be used as currency without having any silver content in them. This was reminiscent of the Federal Reserve Act that eventually allowed the Fed. to print money backed by nothing.
Prior to this legislation, our coins had 90 percent silver content. That meant our everyday coins were actually valuable-these coins didn’t merely represent real money, these coins were real money. After the Coinage Act, our coins eventually started to cost more to mint than they were actually worth.
And what was the original rationale for eliminating silver content in our coins? It was argued that there was a shortage of silver in the United States and this shortage was dangerous for the economy. But in a bizarre show of what can only be called arrogant contempt for Americans, LBJ shed light on the true intent of the Coinage Act. He warned against those who wanted to hang on to the older silver coins by proclaiming:
“If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.”[i]
This was not the first time in history that coinage had been devalued. The Roman Emperor Nero did a similar thing about 2000 years ago. The denarius, which was the common Roman currency back then, was made up of around 94 percent silver. Due to Nero’s constant building projects to rebuild Rome and his own personal extravagances, the Empire’s money supply started to dwindle. His answer was to water down the silver content of the denarius to around 85 percent in order to literally create more money.
This trick of devaluing currency in order to increase the wealth of the elites with an almost unending supply of watered down currency-something our own Federal Reserve learned to perfect-was further practiced by emperors that followed Nero. The denarius had lost almost half of its silver content by 218 A.D. and by 244 A.D. the silver content was down to .05 percent. By the time Rome was on the verge of collapse, the denarius was down to .02 percent silver. At this point, the denarius was hardly accepted as currency by any one.
What’s so unbelievable is that it took Rome about 200 years to do what LBJ did with one stroke of the pen. The fact that Rome lasted as long as it did after originally debasing the denarius, had to do with the silver content being eliminated very slowly. Once Roman coins were stripped entirely of their silver content, the Empire collapsed soon after.
What was once considered an act punishable by death by our founders was done with almost complete impunity by LBJ. Maybe people were still reeling over President Kennedy’s death; or maybe the population at this point in American history had forgotten or never knew the dangers of devaluing money.
Either way, LBJ helped devalue our coinage to the point where Americans would rather throw coins away instead of trying to find a place to store this nearly useless money.
In the end, LBJ’s Coinage Act of 1965 and the Federal Reserve Act of 1913, helped turn our currency into monopoly money; in other words, our money is hardly worth the paper or metal it’s made with.