I am not aware if there is a previous thread discussing this topic that I could be linked to, and would appreciate a link if there is, but here goes... Why doesn't the purchase of United States bullion go towards the reduction of our national debt directly? I think this would be a good fiscal policy that would help improve wealth amongst citizens while also strengthening our government. It would also improve feelings of patriotism as well. Am I just a dreamer or what? I'd love to hear any thoughts and opinions particularly since I lack basic knowledge on the subject to formulate an accurate opinion.
Maybe it is because Congress, whether individually or as a whole, doesn't care about the overall picture. Each politician has their own agenda to appease their constituents to ensure re-election and a continued ride on the gravy train. It's not just the politicians either. The entire government adheres to a "use it or lose it" policy when it comes to budget time. God forbid if any department has a savings in their budget because it will most likely be cut the next year and given to someone who can do a better job of wasting the taxpayers' money. Chris
We do reduce the national debt to a small degree by minting money. It is mostly clad coinage that "collectors" keep out of circulation that gains us the most reduction in national debt. The bullion coins make less money for the treasury since they are typically closer to the price of the base metals. We did reduce the size of our debt with the state quarter program as discussed in the first page of the attached report. It was one of the drivers of the program according to the report. http://www.usmint.gov/downloads/mint_programs/50sqReport.pdf
seiginiorage Thank you for the State Quarter link, it was very helpful. I wasn't previously knowledgeable of the concept of seigniorage. Apparently neither is my computer, as it insists it is a spelling error! So as I understand it, because a precious metal tends to increase in value to fiat currency, it is a less desirable tool for tax revenue as opposed to clad fiat currency. This however does not change the fact that the United States does produce bullion products. It would seem that seigniorage must occur at some level with these products, particularly something like the new America the Beautiful series. Perhaps we may be seeing state level commemorative tokens aimed towards this goal as well. Personally I would be interested in such products, with the caveat that my collecting goals are primarily bullion based. While I'll regularly pay higher premiums for "true" collector coins like BU mercs and such, the newer programs need to be closer to spot. Since the silver and gold prices are so volatile, here is an idea: State based collector tokens minted in a sizable bronze or copper planchets. The price is more stable, and copper bullion does have a market where higher premiums are the norm. Does this sound like something you as a collector would support? I would, particularly if they served a higher educational program, like the H.I.P. pocket change program with Statehood quarters. With states like California and Michigan with serious debt problems, this could be a viable part of a larger solution. I like the idea of this as being more of a win/win situation between state and citizen than the lottery programs currently utilized. I'd prefer some intrinsic value over simple gambling when it comes to providing my state with extra revenue. Yes, the budget spending system is not set up to reward frugality. Perhaps if there was a plan for a viable alternative out there in the form of a bill or other legislation we could take the steps towards making the system better instead of just complaining about it. As commodity investors and numismatic enthusiasts we generally share a different outlook towards these issues than the average citizen. I know I don't have all the answers, but sometimes it's more important to ask the right questions.
The most common reasons that all of the proceeds do not go to pay down the debt is: 1. It costs money to mint the coins. 2. The silver and gold has to be purchased on the open market, it is not from the US treasury. 3. There really is no political will to pay down the debt anyway.
Last year, the US Mint sold 42 million (or something like that) ASEs. So at avg. price of $25oz, this was a little over a billion dollars worth of silver. This amount now represents about 4 hours worth of federal spending. i.e. It wouldn't even be noticed. Funny thing about gold however, the US government holds it at a value of $42/oz. Now keep in mind this is the value expressed in lawful US dollars which don't exist now except for the notes that people hold as collector's items. You can see this $42 on the Federal Reserve asset sheet. Of course in Federal Reserve dollars the value is north of $1510 but this is confetti that the actual government doesn't recognize as any meaningful asset when it comes to its own preservation of wealth. (If you don't understand this right off, think about it some.)
What difference does it make? Our country is running a budget deficit - not a surplus. If you divert the money from general funds to debt retirement (so to speak) it'll just increase the deficit by that same amount. Thus replacing the retired debt with new debt equal to the same amount.
