Seigniorage, where does the money go?

I am just curious how much the government actually makes off of the difference in manufacturing the coins versus the face value.

It shouldnt cost much more than whatever it costs to make a penny, to make a quarter, right? and yet the quarter is 25 times the face value of a one cent piece. In other words, I cant see our government making pennies and nickels at a loss, and if they arent, there isnt that much difference in manufacturing a dime from a quarter, from a half dollar, and there should be HUGE profits from this process. I mean like the government shouldnt ever be broke if for every piece of coin the make, there is a profit, and even by a factor of 25, 50, 100.

The other thing no one ever mentions with this is the paper currency. Again, I dont see the government (or whoever) manufacturing a $1 dollar bill at a loss. So for instance, say it costs $.60 to make a $1 bill. Well that same cost should apply to the $100 bill (minus design costs and plates, etc). So where is the other $99.40 going? I never hear seigniorage mentioned with paper money, but the same principle applies as if it were a coin.

Some one, some where manufactures our dollars and cents. They take raw materials and either print or press the needed money. I just want to know why we are broke, if there is already profit, and from my eyes an exponential one, on every piece of money that we make.

Can anyone explain this to me? How can our government be $17 Trillion in debt, when they controlled the manufacturing process. What is the true value of the cost of manufacturing $17 Trillion dollars worth of money, and where is the very real difference in the manufacturing cost versus the face value?

 

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To even add further to this. We dont have $17 trillion worth of bills in existence. So where does the profit go when they dont even print the money, but just add a number on a computer? Whats the cost of manufacturing 'that' dollar when it is just a bit on a computer screen?

 

And when Doug means tiny fraction, he means we make like $100 million a year in seignorage and we overspend our income by like a trillion. The real money comes from the Fed. They deposit profits each year like $300 billion dollars into the Treasury. Coins are really a non-factor budgetarily.

 

The thing is, I want to look at more than the annual numbers themselves. I want to delve into the process of calculating that number.

For instance, my mind immediately says, 'go find the exact amount of $100 dollar bills that were printed so I can sort of figure out just how much money I think the government makes off of the printing process'.

I am also curious of the process of 'digital money', and by that I mean when enormous sums are added to balances that dont have a corresponding printed bill or coin to physically hold its place. If it costs $.60 to manufacture a single $1 bill, what does it cost for that single $1 bill to be manufactured onto a balance sheet as a simple bit on a computer screen? How much manufacturing went into that? Who realized the profit on it? Where did it come from?

The other problem is, I dont have any idea where to even begin to find my answers.

(I am using the blanket term 'government' to encompass any entity that is physically creating the money and backing its face value, I understand that is not what we have in the Federal Reserve, but for simplicity I want to focus on the numbers, not who is getting it privately, or exactly which group touched it first)

 

This is a total bummer. I hate that they take my money and then spend it irresponsibly and then have the audacity to ask me for more, and I should be grateful to give it.

Its like someone asking to be rewarded for doing wrong. Like paying a terrible CEO higher bonuses as he runs the company straight into the ground.

 

But the one piece of all of this, and this is what I am hinging on is that WE, collectively, are the employees of this very idea of a government. That idea has NO power without us the people who have faith in the system. So with that being said, for inquiring minds, and as tax paying members of this society I feel we should have EVERY right to know what our government spends money on, where it goes, who touches, who makes it, who profits from it, and a say so in exactly how it gets spent.

We the people made the government, not the other way around, and I am sorry, I just believe that if there is a question I want to know about my government, then I have the absolute RIGHT to know. And not some fudged up answer, but the truth, the whole truth, and nothing but the truth, so help them god. I dont expect the information to be simply placed on a completely open source, but for those seeking this type of information, it should be as easy as asking and it being provided, completely broke down, line by line.

How can I hold some one accountable if I dont even know what all they are doing? And in the same vein, how can I be taxed, and have no representation of the facts I am seeking to allow for my being taxed for something I know nothing about? I dont feel adequately represented when I cant even see the full scope of what is supposed to be representing me.

In other words, we built this country on the idea of being able to know and have a part in our government, not being milked of all of our money without having a say in how its spent, where it goes, and who it benefits.

With collecting coins, I first learned about the term seigniorage, and ever since I have had this gnawing thought of where is all the money. Especially after 1964 and silver was pulled. At that moment, it cost significantly less to mint our coins, and at it also completely changed how much profit was in coinage. They chose two cheap materials, copper and nickel. Both were cheap enough to make our smallest coinage, and then all we did was add the two together to make our 4 larger denominations. edited? That has to be an exponential amount of profit hidden in that number. We are talking BILLIONS of coins minted from 1964 to the present. Magnitudes above what was made prior to that date from the inception of our coinage. The thing with our coins in our early history is that people demanded the actual coins act as a value for the face number printed on it. In other words a gold dollar in 1850 had a dollars worth of gold in it. Now we have a few cents in our higher denominations. They have no value now, and someone has found the secret to capturing that value that was there before. We have faith in an 'idea' while someone else is capturing the true profit from how we make money and it gets transferred to the governments coffers.

All of that is just in coins, I cant see how we are broke when the same principle should apply to every single dollar printed as well.

I understand that government spends more than it has, so some one should be holding this system accountable and figuring out where all the money is going, of its correct, and who is profiting from any of this. Although, you just told me it would be impossible to even find this information.

So how do you stop the bleeding of this country's finances?

 

I think you are wrong a little bit Doug, I think the people of this nation do NOT want an exorbitant amount of debt, but the government entity is one that its sole purpose above anything else is its own survival.

I think the government and the real people who make the decisions (someone knows those secrets you talked about right?), are sucking out all of the 'real' money to keep them going and happy, and whats left is what we get to use on social programs and highways and police departments.

The government gets their cut first before anyone else and out of all the people in this country paying in, we are still short.

So I cant hold the people accountable who make the decisions, I cant even have truthful numbers, and yet somehow this is supposed to be ok? I am supposed to be grateful for being raped of my hard earned money for the rest of my life?

I dont believe I want to be a part of a system that i have to trust to do the right thing (which the government has NEVER done), while not being able to even spot check on certain aspects that are critical to how this country operates. I also dont want to be part of system that has an underground group running it. You even said yourself that the President and members of Congress arent privvy to all the information, so who is running the truly critical stuff?

So my question is, how are we supposed to trust something we cant even see? That we didnt even put into power? How am I supposed to have faith that the underlying folks who DO know the secret info are going to do the right thing. I dont even know who they are.

This whole system sucks if thats the case.

 

So when does this become considered non coin political discussion?

 

I don't understand. I mean I get what you are saying and I am following that for the most part. I just don't get how you can say the people don't want the alternative, but then tell me that people can't access the information that could help us actually form an alternative that we can live with.

It's this simple. How can we fix a problem, which many of the normal people want to do, when we don't even know how much information is hidden from us. And to further that, we don't even know who is really in control of what.

Like you said, and I realize, The president doesn't know everything, can't know everything, and that's just wise time management and I agree somewhat necessary, but how our government is truly run shouldn't be hidden from the people who give that system power.

It's funny to me that a simple thought on seigniorage and where the money goes could open this door for this discussion and it's amazing how interconnected things are that I am a coin collector having these thoughts through an area of collecting, but it's something I truly have questions about.

I wake up everyday feeling as if this world is wrong, as if everything is backwards from how it should be, and when I get glimpses of it even more through questions that stemmed from a passionate hobby of mine, it pisses me off tremendously when I realize how screwed up everything is through something I love.

I just don't get how it's acceptable for our nation as citizens to put up with so much lying and deception, even down to our accounting methods and where money goes from the process of minting coins or printing dollar bills. I guess most people are just happy with how things are.

 

I also apologize if this topic swerved too far into the political spectrum, it's a touchy subject in that regard, and hopefully we have managed to stay somewhat on point with seigniorage and where the excess money goes.

I can say I do feel it's these little, tiny issues that will reveal how we need to proceed as a country. It's simply unacceptable that the numbers I want aren't freely available, and that as a tax paying member who gives this society the very structure it needs to exist, can't have access to the information necessary to keep the people in charge accountable for their very real actions that effect me every day.

 

It doesn't bother me in the least it just seemed to me that a discussion on the ethics of government debt was a bit far off from coins.

 

You want to know what your gov't is doing with your tax money? Military spendings?
http://newsjunkiepost.com/2011/04/1...your-tax-money-is-spent-on-wars-and-security/