"Inflation Puts Up a Goose Egg” was the recent headline, middling page one, of the Las Vegas Review-Journal’s business section."
Those straight-shooting egg-headed number crunchers over at the U.S. Labor Department had announced that consumer prices were unchanged in November. Stock market investors loved it, sending the Dow Jones Industrial Average up to all-time highs.
Wall Street watches the CPI number like a hawk, but what good is it? Not much. Chuck Butler from Everbank nailed it the Friday morning before the surprise CPI Goose Egg was announced:
“Right out of the starters blocks this morning we’ll see that stupid, trumped up, massaged, and cooked, Consumer Price Index (CPI) or consumer inflation. It is expected to have ticked up 0.2 percent in November… However, the media likes to pin its colors to the ‘Core CPI’ which excludes food and energy… (As if we don’t use those things on a daily basis!) And here, the annual year-on-year figure of 2.7 percent is expected to remain unchanged.
“Now doesn’t that number of 2.7 percent annual inflation rate illustrate my claims that this is a stupid, trumped up, massaged and cooked report? The government is telling us that we have experienced a 2.7 percent rise in inflation this year… What a crock!”
A crock indeed. “For most Americans,” writes Bill Bonner, “being ‘in cash’ means being in the cash printed up by the Bureau of Printing and Engraving and watched over by the central bank of Ben Bernanke. This year alone, that cash has gone down 10 percent against the cash of the European Central Bank.
“Against the ‘cash’ that comes out of the ground—gold—it has lost 20 percent.
“And in terms of consumer prices, cash is down too—about 3 percent, depending on whose estimate you believe.”
The guys and dolls at the Labor Department can put whatever spin they wish on consumer price levels. The government printing presses continue to work overtime, and the dollar’s value erodes. But just as the government forces us to trade the currency they continue to produce endlessly, constantly trampling upon its value, another arm of the Federal Octopus—the U.S. Mint—is ready to throw you in jail for five years and fine you $10,000 if you melt down, or export, pennies and nickels to cash in on the difference between the value of the metal those coins contain and the currency value.
Once upon a time a dollar was defined as an ounce of silver. But, governments find it inconvenient to expand themselves relying on the overt force of taxation, so they engage the silent taxation tool of inflation to steal from their citizens.
Just as dollars are no longer silver (an ounce of the metal now going for roughly $12), nickels aren’t made of nickel and pennies are no longer made of copper. In fact, pennies haven’t been copper for a long time; they are made of copper-planted zinc. Nickels are composed of 75 percent copper and 25 percent nickel. Even so, the metal value in a nickel is almost 7 cents and the metal in a penny is worth 1.12 cents.
The Director of the U.S. Mint, Edmund Moy, rationalizes this use of government power by appealing to citizens’ pocketbooks.
“Replacing these coins would be an enormous cost to taxpayers,” he says. Mr. Moy’s disingenuous comments offer a clue to why government doesn’t like its currency being made of metal at all. Metal costs more to find, mine and coin. Instead, governments prefer paper currency, or best of all, cyber money — which can be created virtually out of nowhere, with little cost, to be expanded by government at will.
Of course, ours being a government by the people and for the people, the U.S. Mint is accepting comments from the public for the next 30 days, and in 120 days Mintmeister Moy will reportedly take those comments into consideration when he makes his final ruling. However, his mind seems to be made up. After all, the rules are already in place, and Moy warns, “The message is clear, don’t even think about it [melting coins] because penalties are severe.”
Plus, the Mint plans even more monetary debauchery, copying the ugly dime and quarter, using even cheaper metals as well as producing cheapo dollar coins, like the Sacagawea, honoring all the deified presidents, to replace the paper buck.
As Lew Rockwell recently asked, “Can plastic tokens of our Caesars be far behind?” Distrust the government and its currency.
Doug French is executive vice president of a Southern Nevada bank and a policy fellow of the Nevada Policy Research Institute.