Depression-Era Coin Proves What Governments Will Do to Your Money

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Finally, we found an artefact of France’s depression-era currency collapse while going through the contents of our father’s old Spanish chest. It’s a small, gold-looking coin. On one side it’s dated 1921 and says “Commerce” and “Industrie”. On the other it has a big “1” surrounded by the words Bon Pour and Franc. “Good for one Franc”. Where did it come from? What did it mean?

Our curiosity piqued, we went to the Google to see what we could find. At one coin site we read this, “This coin is indeed a French franc made of aluminium bronze (Br Al) and minted from 1920-28. It is a form of emergency money as there was a shortage of small value coins during this period of global economic depression. It actually says it is ‘Good for 1 Franc’. Dumard was the coin’s designer. Collector value depends on date, number minted, mint mark (if any), and condition of a coin, including amount of wear, any dents, scratches or cleaning. This one had a mintage of nearly 55 million and may be worth US$1 or less if it has any wear at all.”

If correct, this shows what all governments eventually do to your money. They inflate supply gradually so that each new unit worth less and less. This particular coin isn’t a franc…but it’s good for a franc. It might as well be a bottle cap. The government encourages you to treat it as if it were worth something. The melt value of the metals in the coin were probably more valuable than the coin itself.

Something like this has been happening to American money since 1974, when the quantity of paper money was de-linked with the gold in Ft. Knox. Left to their own devices, governments will print as much money as they can, until the market holds them accountable and the currency approaches its true value. Whether you believe in the ability of Ben Bernanke’s Federal Reserve to save the US dollar reminds us a little of Pascal’s gamble about the existence of God.

Blaise Pascal, the famous French mathematician, famously showed that the value of believing in God outweighed the value of not believing in him. If you believe in God and God is real, you’re saved. If you believe in God and God is not real, no big deal. But if you don’t believe in God and God is real, you’re doomed to hellfire and damnation. The prudent risk-management, Pascal reasoned, is to believe in God.

We would suggest that prudent risk management when it comes to money is to believe that, given enough time, the government will destroy the purchasing power of your savings. The value of believing in the eventual failure of central banking is infinitely greater than the value of believing in the success of central banks.

And really, what are the alternatives?

One the one hand, you can have confidence in the way the government manages your money. To do so, you’d have to ignore all the facts confirming the government’s active mis-management of the money and the money supply. But go ahead if you’d like.

What is the value of believing that paper money schemes always fail? Well, that one is simple. If you believe it, then you’ll take steps to prepare for the eventual collapse of the paper money system and its replacement by something else (probably by some other paper money system.)

What do you really risk by not trusting in the durability of government money? Your risk is that the historically inevitable collapse of fiat money which we here at the Daily Reckoning think you are witnessing…may never come in your lifetime.

Dan Denning
The Daily Reckoning Australia

Would you put your faith in a paper money scheme? Leave a comment below.

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. I watched the “money Masters” on youtube last night. The banks have got the masses in a straight jacket

    Is there any way to break this evil monopoly on money? Even the price of gold is controlled

    William Pix
    July 13, 2007
    Reply
  2. In Canada, the Royal Canadian Mint has replaced all of its formerly nickel, copper, and cupronickel coins with stainless steel. And this year, they have quietly announced a program whereby they recall all the old coins in circulation, remove the ones with valuable alloys, and flood the world with more stainless steel coins.

    Michael Gipp
    July 14, 2007
    Reply
  3. Do you know metals composition of today’s fancy-backed picture US FedBack quarter dollar coins vs the old Geo Washington coins?

    Reply
  4. The State quarters (the fancy-backed picture quarters) are of the same size and composition as the quarters made since 1964 when silver was removed from the currency.

    Reply
  5. “debt as money” is also a great movie for info about fractional reserve, dishonest banking,And whatever happened to the constitution declaring only gold and silver were for money there was good reason to put that in there- we’ve been duped -nobody seems to care.

    Reply
  6. Dan,
    Just discovered your website and enjoying reading the articles…..I agree with the article above excepting that to me it is the Federal Reserve(s) that controls inflation of money…..Governments and people generally dont understand these issues and while Government may be the focus of peoples ire, it is in reality financeers who are responsible……having said that Governments SHOULD TAKE RESPONSIBILTY TO ENSURE SOUND MONEY BUT THEY DONT…..I wish we had a Ron Paul in Australia…………!
    Excellent site Dan!

    nic meredith
    July 14, 2007
    Reply
  7. as an example, one can place a $20 (1) gold piece on a table next to it’s
    equivalent value in “$20” u.s. fed.
    notes (33) .
    can a reasonable patriotic citizen
    gain some insight from this ?
    bill

    Reply
  8. To answer Pier johnson’s question about modern quarter dollar and old george washington quarters I’m assuming he’s refering to the pre 1965 silver coin standard we were one. From the founding of this nation until 1965 coins were made of silver or gold whose value was based on weight and their purity (coins were 90% gold or silver with the remaing 10% copper or nickel to aid in coin life by extending coin wear). A dollar coin had close to a dollar worth of silver. A $20 gold coin had nearly an ounce of gold as its value. Gold was removed from coinage in 1933 and silver met the same fate at the end of 1964. Since then coinage with the same declared face value are copper nickel composition and worth only a fraction of their stated value. This gives the government the freedom to mint any quantity they deem necessary to fund their pet projects without any accountability. This current monetary system backed by the `Faith and trust of the government’ is called a fiat system and is prone to rapid deappreciation into worthless junk as broken promises by a run away political system. Gold and silver, being limited in their supply mean that as true wealth, they are required for economic growth and, therefore, more money placed in ciruculation. This hinders political fun money since coinage cannot be manufactored without them; meaning that phoney wealth created from nothing cannot happen. Gold and silver coinage represent the wealth of the people since it circulates in the everyday transactions whereas fiat currency is the controls set by political groups to steal wealth from the public thru inflation to benefit their own greed. The best way to protect yourself is to convert fiat money to gold or silver–in otherwords, return wealth to where it belongs–the working public. If you think that govenments are interested in portecting your purchasing power consider this: The dollar has deflated more than 1,000 percent since 1964–that’s if you tag it to silver; against the gold standard it’s dropped 6500 percent considering that an ounce of gold was worth $20 and now takes about $650 to buy the same amount. Still need further convincing? read any financial history of any country since the middles ages.

    Dresen Liam Moss
    July 14, 2007
    Reply
  9. Pascal’s wager doesn’t work and neither does this. What if God (or some other entity) didn’t want worship but wanted skeptics, well then Pascal’s wager backfires. And why pick one god at a risk of offending all the other possible gods.
    In this case you have a bar of gold sitting there, it can’t collect interest and can lose value.

    Reply
  10. I’m quite happy to put my faith in fiat paper money … for two of the functions of money, but not the third. That is to say: a) as a measure of value and b) as a means to transfer value.

    In nearly every circumstance imaginable the roo, kiwi, loon, or greenback will hold its value quite well enough for the purposes of everyday commerce.

    Since my barber doesn’t want 50 lbs of potatoes each time I ask him for a haircut — I farm for a living — we each happily agree on USD 9.00, plus a tip.

    It does not matter that my grandfather in 1907 paid 50 cents for a haircut; I have his account books, so I know that for a fact. He and his barber were happy with 50 cents. Should I care? No.

    However, for the third function of money — storage of value — fiat currencies are absolutely useless beyond a time-frame of more than a couple of years.

    In 1911 he plunked down a $20 gold piece for a “very nice suit”. An ounce of gold today will still buy a “very nice suit”.

    Two or three ounces of gold is the current price of a good cow, just as it was nearly a thousand years before Christ.

    Backed out into gold, a bushel of barley (22 kg) from the old testament was trading at about USD $3 or $3.50, just as it does today.

    Historically the most fascinating shift of value has not been that of paper fiat currencies, but that of the persistent loss of value suffered by silver (priced in gold) over the last 150 years or so.

    If you chose to store value in silver, rather than gold, you’ve lost 70% of the value in the last 130 years. That’s better than the 95% that paper has lost in the same period, but I wouldn’t bet the farm on it … either way.

    Bart Hall (Kansas, USA)
    July 15, 2007
    Reply
  11. we are entering hyperinflation and we will see the effects filtering through the economys…

    depression is real…

    and we are only comenting on the daily death of a economy.. think foward and i belive you will see the collapse is eventuating …

    a new system is needed but will it be better from the old..

    there must be a death so we can morn our losses. a few years later as we come out of a mental deppression . and then a few years more when greed overwhelms poverty . say about 10 years plus things should get back on track from a much lower foundation of wealth and ownership….

    Reply
  12. Global denial

    Today in the world we are at the point of financial demise, our dollar in Australia is now at 88 cents. That means exports will be slowing causing job loses and effecting tourism as it will cost more for other countries to spend in Australia.

    In America there housing market is collapsing as is ours soon to be.
    The government in America is devaluating there dollar to about 30% less as to increase globally demand for there exports and tourism to there country as it will be cheaper to travel there than else where. The problem is in Australia will have to adjust dramatically to a higher dollar and its consequences that will ripple through our economy.

    Things will only get worse as we will see devaluation globally as the carry trade begins to unwind…

    What does this all mean? . It means the good times are over and our friends are becoming our enemies as they try and keep there economy afloat whilst they sink others.

    America has resurrected bin laden from the dead off media… and that means war… before the collapse of Americas desperate attempt for there economy to stay afloat. War will be waged!

    When is the question! And why?

    Fear is needed in the people of the world to allow the invasion of Iraq and the continued control of oil, the oil is one major key to economic management for America!
    As demand for oil must be maintained in US$ currency as sad am Hussein started selling oil for euros. And we know what happened to him. Iran wanted to do the same but with one difference and that was on the stock exchange to create cheaper oil for the world. The only problem to that the global monopoly that was formed in 1971 when Richard Nixon changed the gold based system and derailed gold from there dollar and attached black gold {oil }to the currency and then money was demanded globally in dollars to transacted for oil… then born was the American dollar monopoly … example .. Does your country want oil? Take our American dollars that we print for nothing billions of it… then you can buy oil. But for our dollars you took we want goods and services for your demand of our dollars… 36 years this has been going on … john f Kennedy was assassinated because of his policies that interfered with drugs and gun running in America! what if we messed with the oil and dollar marriage and decided to go with the Euro what would happen then, we would need someone with the courage to start to sell its oil for another currency to stop the monopoly that has a new age Hitler type smell to it !. Well saddam did. Iran wants too …. !

    At the moment all global currencies are valued against the American dollar as America is devaluating there currency the global backlash is yet too come and come it will! Revaluation of assets based on the American dollar .what does this imply,
    I will leave this to the imagination of the reader?

    Hyperinflation will be a side affect as nations try and control the sinking of there economies. Terrorist laws will control the world. Not from terrorism but from social breakdown and desperation.
    At the moment bin laden has been resurrected and a lot of fear has been placed into the minds of the population to drive support for the policies and support needed for the acting bush government. If support becomes diminished then one can presume that support will be won back by an event constructed to gain support in that country.

    We are looking at a global economic depression and the attempts to minimize its affects or an attempt to divert such a readjustment of global proportions.

    I sit here typing as I have for 5 years and I laugh as it’s obvious that I will be ignored as a credible person. And the denial will continue and the world will unwind to the point of destruction, I am not a gambler but I believe we have a 2 % chance of avoiding a catastrophic economic change… detrimental to all. On this point war will start as one part of a desperate attempt to swim!

    Global food supplies are diminishing and are imported from other countries that have different quality controls…sickness and disease will become more prominent. Lawlessness and killings will increase due to drug abuse and stresses from all areas of life.
    Police and other intervention authorities will be under threat as people lash out as they
    Cannot afford fines and living expenses. As taxes direct or indirect eat into any hope of financial peace for the majority… crime will increase and what’s left of morality erode even more!

    As we become numb to the changes and slowly get used to them.

    Respect is a word that most don’t understand the meaning anymore.
    Humble is another word lost in the race for greed.
    And denial is the word that all have remembered and practiced to this very day, and is the word to be remembered as the reason for the demise of global stability in the early 21st century

    If you look and see, the word terrorism is the key for America to imply to help to enter countries otherwise out of bounds… Hitler did it obviously and upset the world , today new age Hitler does it like business ,, trying to steel support for its plunder at the expense of the truth and innocent people driven to desperate attempts to survive ..

    Question: what came first the invasion or the terrorist?

    And the definition of terrorist: creating fear for gain … so who is the terrorist! The people with the most too gain: and who are the victim’s .the people that can’t defend themselves once targeted as a scapegoat!

    in Australia we are facing a government change , blame will be directed to the new government who will have to take control of a mess left behind , in the game of politics the truth will not be forwarded to the people but changes will be implemented to rescue as best can be the degrading mess that has been left behind ?

    Giving an excuse to the government that left to accuse the new government of poor management.

    It’s all a game but what must be done takes responsibility not ego!

    My posts of past explain the devaluation of the us currency and its affects on the Australian dollar and economy that is now materialized

    Samuraidave

    samuraidave
    August 3, 2007
    Reply

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