I doubt I'm smarter than you, but any time I was ever in debt (and it's been a while) I stopped spending money on stuff I wanted but could live without and used the excess to pay off debt. If I had to borrow for something, I just did without. Pretty simple.
If they cost signficantly more to make than their value in commerce then they will be melted down for the copper (and other metal content). Yes, I know it is illegal (and I wouldn't do it), but given enough profit - somebody will.Rant not aimed at you, rembrandt.
I simply never understood the issue that a penny costs more than a penny to make. A penny is not a store of wealth like a gold or silver coin. It's made to transfer wealth physically - unlike using zeros and ones as in much of today's transfer of wealth.
Pennies, for all intents and purposes are indescribable. 100 year old pennies are still mostly useable. Their per use cost must be infinitesimally small. So if they cost 50 cents to make, the only argument is whether they are useful or not. A case can be made that they are no longer useful. (I don't buy that, but I understand the argument).
Sorry. End of rant.
Inflated dollars pay off nominal debt with "money" that is worth less than the borrowed money. We do it all the time with our mortgages. That's why we have to pay interest - the money we pay back isn't worth as much so the bank charges enough interest to make it worth their while.
Ironically, a dollar bill costs as much as a penny to make - and it only lasts a few years before it has to be burned and replaced. Currency and coins are just a cost (to gummint) of doing business.
Why isn't that obvious? Am I missing something here?
The difference is that the gummint loans the money to itself, in effect. It prints money backed by "air" to pay some of its debts. The gummint does pay interest to those it borrows from and the FED does charge interest to banks, of course. But for all the money the gummint takes in, it still spends more. So, paying off its debt with cheaper (less valuable dollars) w*rks well for gummint. Unfortunately, it means the dollars WE get are also worth less. So the only way we can come out is to (wait for it) borrow "good dollars" and pay off with inflated dollars and hope the interest rates don't to go too high. Around and around we go. It's the only game in town and the best you can hope for is to be a winner at a losers game.Right, the government charges interest too. So to say that the only way to pay it is with inflation just means to pay off the debt (with interest)
And that would suggest that you start to reduce the annual deficits, each of which add to the national debt. I'm skeptical that will happen. We'll have an idea of how serious Washington is about deficit reduction in a few weeks.
We'll see if anyone even really WANTS to cut spending. I doubt it, judging by the current clatter on TV.
Probably true, but I'd like to START with spending less and THEN see where we end up. YMMV
Yeah, and the pre'82 pennies are disappearing too - just like the pre '59 already have.
I guess I'm still learning the lingo around here... I'm certainly in the camp that "inflating our way out of the debt" is not a viable solution... this sounds more like just spinning the wheels with one trillion in interest payments each year.
By the way, I don't LIKE inflating away the debt either. It's just "the way it's done" in gummint.
Let's not do that. We have enough problems with tweakers stealing copper wire and AC condensers. A few years back, they cost (IIRC) millions of dollars damage on our third Freeway lighting system for a few hundred dollars of copper wire. Couldn't stop it until some guy fried himself stealing wire. I shouldn't say this, but it seemed sorta poetic justice. (No, not really.)
I would agree that first is to stop digging that hole.
+1 but it should be a decision made by society as a whole through our representatives and not dictated by a single person who didn't get over 50% of the popular vote. So suspend production of pennies temporarily, tee it up to Congress and have them decide and then proceed as decided by Congress. It doesn't need to be a partisan issue.
That's not really the way it works. Congress appropriates money to be spent on certain programs pretty specifically. I think the most vexing current problem is that right, wrong or indifferent, Congress has appropriated what shall be spent on certain programs and the administration is saying that it doesn't like what Congress decided and therefore will fail to execute what Congress decided, effectively trying to create a line item veto through inaction.
