The Government Can

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Inflation: Happy Days Ahead?

Check out this 10 minute movie clip from 1933 touting the "Don't worry, be happy" message that inflation is good for you.

Think back...1933...when did the Great Depression actually end? I believe that would be around 1941 or so, when the U.S. entered World War II.

Put this movie in color, add two more stars to the flag, update the automotive plant to be churning out mandated 42 mpg cars, and stick Obama's picture on top of Roosevelt's, and I think you'll here the sales pitch they're trying to give us now.

Enjoy...and remember "Happy Days are Here Again..."

Bombshell May Have Been Averted

Praise God. It sounds like the bureaucrats heard from the people and actually listened. I'm not positive we're all out of the woods yet, but this sounds a lot more promising. From the sound of this I don't think we have to worry about federal agents knocking down our doors in the middle of the night because we sold some used curriculum on eBay. It also seems to let resellers off the hook unless they are trying to sell recalled products.

http://www.cpsc.gov/cpscpub/prerel/prhtml09/09086.html

I'll update if I hear more. I'm still not sure about the specifics regarding the sale of new, home produced products (like baby blankets). If you know, please leave me a comment here.

Small Business Bombshell!

Maybe I've had my head buried in the sand lately, or I've been concentrating on other things, but something just almost completely slipped by my notice. Last week my daughter alerted me to something she was reading on Jennie Chancey's sewing forum, Sense and Sensibility. At Church last Lord's Day, one of the ladies in our fellowship was talking about it. Then just last night I received an email from a friend expressing the same concerns. It seems as though the nanny state has determined to protect all our children from lead poisoning. However, rather than aiming squarely at the main culprit of lead distribution in toys; "Red China," our bureaucratic empire headed by the elite group of legislators decided this would be a great time to take a pot shot at all those small businesses across America.

It turns out that this new law, which I understand has already passed and will go into effect on February 10, 2009, requires that every product that can appear to be targeted for children under 13 years old must pass rigorous lead testing. It doesn't matter if the component parts have already been tested for lead, each end product must be tested also. This also applies to book sellers. This will add a lot of unnecessary expense and will expose small business owners to extremely harsh and unreasonable punishment if they violate this law knowingly or ignorantly. The penalty is $100,000 and two years in prison.

This is an outrage! I don't watch TV, but from what I understand, the media is largely ignoring this. I even wondered if it were for real or not. But after a bit of internet research, it seems to be accurate.

I have not researched this as thoroughly as I need to, but I wanted to get the word out to my readers as soon as possible. Check out the following link:
http://www.handmadetoyalliance.org/

This is an organization that is standing together to fight this. As a disclaimer, I haven't thoroughly examined this website either. But it does not appear to contain objectionable material. There's a link there to "Ideas for Change in America." I did check out that site and found a bunch of left wing liberal causes. I signed up anyway and registered my vote against this one issue.

I have a feeling that we'll be needing to call our legislators pretty regularly starting after say...January 20. The Obamanation is beginning, though this law was passed under the Bush regime.

What's This Worth?

"Something is worth what people will pay for it." This is the sage advice given me by my grandfather when I was a child. I always was curious about the dollar value of an antique or an old coin. So, what happens when the government starts tampering with prices? To a good businessman, this is an opportunity. There is a website that I really enjoy. Each day, it is updated with the price of silver. It gives you a breakdown of the current melt value of U.S. coins based on the price of the metal. This is available both for modern (post 1964) and silver coins (pre-1965). The website is at http://www.coinflation.com. In the not too distant past I would go to this site, find out the melt value of silver, then hop over to Ebay and bid on U.S. 90% silver coins 1964 or earlier. Though I was not always successful, I could often times buy coins at their melt value (even with shipping considered!). I wish I had done that more than I did at the time. In recent months the "price" of silver has fallen. I quote "price" because that's the dollar figure that I see on coinflation.com or any other site that gives you the spot value of silver. The markets haven't opened yet as I bang out this blog entry. But as of last Friday, the "price" of silver was quoted at $9.68/oz. So...I pop over to Ebay all ready to buy some silver dimes close to the 67 cents I see that they are worth at coinflation. But today, that's not happening. You see, as my grandpa always said, things are worth what people are willing to pay. I'm looking at an auction right now with a "buy it now" price of $50 for a roll of silver dimes shipping included, and I think that's a pretty good deal. I read an idea online that I will pass on to you to do with as you see fit. (standard disclaimer applies that I am not a financial advisor, blah, blah, blah...act at your own risk, etc.) It seems as though you could make a lot of money with the following plan.

Play the commodities market by taking out a "mini" contract on silver. This is 1000 oz. With silver hovering just under the $10 mark "on paper" this should cost you approximately $10000 when the delivery occurs. When you take delivery of these 1000 oz of silver, divide them into 1 oz sections. (I'm not sure how delivery is made...it would be nice if they were delivered in 1 oz bars already...but that may just be wishful thinking.) Set up an Ebay store and sell these 1 oz portions for about $18 each. In my book that's about an 80% gross profit. Granted, they'll be other costs involved, especially if you have to melt the silver and get it into smaller forms, but to get $18000 for your investment of $10000, I think it may be worth it. I don't have the $10000 to play with, or I think I'd give it a shot.

Then again, if you can get this mini contract, you may just want to hang on to all that silver. When the government finally realizes that they can't keep artifically holding down the price of silver, it's likely to explode in value. That $10/oz silver that you just purchased could very well skyrocket to $50/oz or more. Everything I'm reading is forecasting silver to go through the roof. I don't doubt it for a second.

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Pennies, Melting, and 1965

According to http://www.coinflation.com/, pennies minted prior to 1982 are worth over 2 cents each in their copper content alone. In response to this fact, the Federal Government, ever the “freedom loving” organization, has implemented a new law. It is illegal to melt coins for their metal content. It is also illegal to transport over $5 worth of coinage outside of the United States. Punishment is five years in prison and/or a $10,000 fine. Welkome to Amerika!

Regardless of these tyrannical restrictions, I have begun to hang on to my pre-1982 pennies. (I’m also keeping nickels, currently valued at about 6-7 cents in metal content.) My reasoning is that the government will surely not continue this madness for long before they decide to make the switch to cheaper metals. Bills have already been proposed to do just that.

Some of my friends and family are making fun of me. They taunt, “So Mike, are you really going to risk prison time or steep fines in order to double your money by melting pennies?” My answer is simply this. Any FBI/CIA/Secret Service agents who happen to be reading this please note this important response. I HAVE NO INTENTION OF MELTING ANY U.S. COINAGE. There. That should clear things up. I have stated on the record that I am not planning on doing anything illegal. Yet, I still want to save them.

Here’s my logic. If someone in 1965 or 1966 had taken this same approach with U.S. dimes, quarters, and half dollars, they would be doing very well today financially without ever having to melt a single coin. 1964 was the last year that U.S. Coinage was minted in 90% silver. If you manage to find one of these coins in circulation, you can sell it to a coin shop for quite a profit. Today, a 1964 dime is worth about 90 cents in its silver value alone. A 1964 quarter is worth about $2.26. A 1964 half dollar is worth about $4.53. These values represent an increase of 906.40% over their face value. A 1981 and earlier penny is currently worth 2.26 cents or 226.22% of its face value. The difference is that it is still pretty easy to find pre-1982 pennies in circulation, though they are getting less common than they used to be. Secondly, it doesn’t hurt anything to hang on to pennies. You have to save 2500 of them just to get 25 bucks in face value, so it gets impractical to store them if you accumulate too many. The worst risk you take is the lost interest if you had that money in the bank. Big deal! What are savings accounts paying now, 1.5%? If you get in a bind and need the money, you can always spend pennies, as they continue to be legal U.S. currency. Copper and Nickel are the last holdouts to the “hard money” this country was established on. A copper penny is “real money” as compared to a bank note. As copper continues to rise, I believe there will be a very real market for copper pennies even if they are never melted. After all, silver coins have value as “silver” though they aren’t melted down for industrial use. I believe the same will be said of pennies in the short term.

Coins, Metal, and Tyranny

When I was in high school a friend of mine visited East Germany (the fact they have dissolved, similar to the Soviet Union seems to be an important fact to keep in mind). Anyway, I’m a very amateur coin collector with a little shoe box half full of interesting finds from across the world. My friend brought me an “East German Mark.” He told me he had to smuggle it out of there because it was illegal for that money to leave the country. I remember thinking, “Wow. I’m glad I don’t live under such an oppressive regime.” That was somewhere around 1983. Fast forward now to 2007. Americans know, if they remember or if they were told, that U.S. coins (half dollars, quarters, and dimes) prior to 1965 were minted in 90% silver. At some point silver rose in value and the dollar dropped in value such that the metal content in these coins began to be worth more than the face value of the coin. Now back in the “good old days” before the establishment of the Federal Reserve (1913), this concept wouldn’t even make sense. After all, a dollar was defined to be 1 oz of silver. A “half-dollar” was 1/2 oz of silver. A “quarter-dollar” was 1/4 oz of silver. A dime was 1/10 oz of silver. Back then, even gold coins were minted, and the face value really was the value of the coin. So, anyway, silver coins are now a commodity and our dollar is now nothing more than a promise from a government who hasn’t exactly proven their moral character lately. Lurking in the background is the lowly penny. Its composition prior to 1982 was mostly copper. As copper prices began to rise, it also succumbed to the same fate of its superior brothers. The metal content was changed to only a little copper with mostly zinc. Well, throughout 2006 copper and zinc continued a steady rise in price, so that at the end of 2006, both the penny and the nickel were worth slightly more in metal content than their face value. Better yet, though, is that pre-1982 pennies were worth about two cents each! That means one could get a 100% rate of return just by hanging on to old pennies and spending the newer ones. I was in the middle of thinking through a business plan on how to capitalize on this concept when I caught wind that the feds have passed new legislation making it illegal to either melt down pennies and nickels or to take more than $5 (face value) out of the country. The penalty is up to five years in prison and/or a fine of up to $10,000. Suddenly 1983 flashed back to my remembrance. It seems as though I do now live under “such a regime.” When coins are obtained lawfully, by working, selling goods, investing, etc. don’t we actually “own” these coins? It’s not like a Microsoft Licensing Agreement where you are just authorized to “use” software. I’ve always thought “mine” meant “mine.” If I have a copper penny, no one should be able to tell me I can’t melt the thing down or sell it to a Chinese man. The government complains that those who do such things are “taking advantage of the American taxpayer.” Excuse me? How do I, by doing things with my own property, take advantage of the American taxpayer? If waste is happening like this, the fault lies squarely on the idiotic institute that would continue to produce a product that costs more to manufacture than its end value represents. I’ve got several suggestions for the government:

1) Stop making pennies. It’s insane to keep on producing things that cost more to make than they’re worth.
2) Make pennies out of a different material. You’ve done it once in 1982. What’s the big deal if you start generating them out of aluminum?
3) But the best suggestion I have is…return our money supply to a gold/silver/copper? standard where the value of our money actually reflects the value of the underlying metal.

Only then will we be able to stop trading in “slugs and rags” and actually possess real money that has actual value. If they did this, then I wouldn’t want to sell my U.S. copper coins or my 90% silver coins either for that matter.