Liberty Maven

Today’s article at the Ludwig von Mises Institute points out one of the few mistakes the founding fathers made when penning the Constitution: giving the federal government monopoly over making coins.  The basic idea is the government can’t do anything well, and this is a perfect example…

Coin dealers and collectors are still reeling from the US Mint’s announcement that it had run out of American Eagle gold coins. But what ought to surprise every American isn’t that a government agency came up short. It’s that the US government should be making little metal discs at all.

Coin shortages are nothing new. A few months before running out of gold Eagles, the US Mint had to ration silver Eagles. Not long before that, pennies were in very short supply. Nor are other government mints any better. Back in 2007, for instance, Argentina had such a severe change shortage that its panhandlers nearly starved to death, while in southern China, 100-yuan coins commanded a whopping 25 percent premium.

Why are coin shortages so common? Governments typically blame unexpected changes in demand. But suppliers of all sorts of other goods manage to avoid running out, despite even more dramatic demand changes. So what’s special about coins? An old chestnut says that if the government were put in charge of the desert, pretty soon there’d be a sand shortage. Recall the plight of consumers under socialism: socialist governments tried to make everything and eventually ran out of everything.

Now socialism is dead, but not when it comes to coining. So coin shortages keep breaking out, as they have ever since governments first monopolized coin making in ancient times.

Continue reading the article here.