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Thanks to the bull market in copper, the penny is about to worth more than one cent. Wow! Our money will be worth something. This is actually a serious problem for the government.

Seigniorage—printing money for profit—is a nice little business our government has all for itself. In fact, it’s a felony if you or I try it. This is one the few purely socialized industries in the United States. You know those new “state series” of quarters? They’ve been a huge moneymaker for the Feds.

But it was not always so. From the 1830s to the 1860s, the U.S. practiced “free banking.” Most of the currency in circulation came from privately issued bank notes. The amount of Federal currency wasn’t very significant.

The old idea was that free banking was a disaster because the economy was dominated by lousy currency. But new research has shown that free banking was more effective than previously believed.

Posted by edelfenbein at April 24, 2006 11:55 AM