Talk:Seigniorage

message: Ecological economists like Herman Daly talk about capturing seigniorage for the treasury while also, and simultaneously, a) removing the economy's spur to unsustainable economic growth and b) ending the process by which banks create money and at the same time debt--a pyramid of debt that creates a systemic need for debt repudiation.  This content should be added to this article.  Seigniorage is not properly a tax at all, and calling that disguises who gets seigniorage: the organization that creates the money supply.  In our systeam, that is mostly private banks.  So, if seigniorage is a tax, why is it given away free to private corporations?  Seignorage is, properly speaking, the difference between the face value of money and the cost of producing that money.  Since cost of production is, for banks, effectively zero (it's just blips in an electronic ledger), the seigniorage is the face value of the money created--which banks collect as interest and principle on the loans they make using money that doesn't belong to them.   —Preceding unsigned comment added by 80.250.7.85 (talk) 15:53, 7 October 2010 (UTC)
thread_title: Untitled

message: Like "senior" or like "say"?
:Jidanni (talk) 00:21, 18 November 2007 (UTC)
thread_title: Pronounced?

message: [The following is written by Pål-André Haugen:]On the wikipedia-page http://en.wikipedia.org/wiki/Seignorage, one can read this under the subheading "Further discussion": 
"Ordinarily seigniorage is only an interest-free loan to the issuer because when the currency is worn out the issuer buys it back at face value thereby negating the revenue earned when it was put into circulation. Currently under the rules governing monetary operations of major central banks, seigniorage on bank notes is simply defined as the interest payments received by central banks on the total amount of currency issued. However if the currency is collected instead of being returned to the issuer the back end of the deal never occurs."
I sent an e-mail to economist Morten Linnemann Bech, Ph.D., who works at the Federal Reserve Bank of New York Research and Statistics Group, and asked him if it is true that "the back end of the deal never occurs"..., ..."if the currency is collected instead of being returned to the issuer? 
In his reply to me, Morten wrote; 
"Hi,I do not completely understand the use of the word "collected". I think the Wikipedia paragraph reads fine if "collected" is replace with "somehow destroyed."
In Morten's reply, he also made it clear, that a government/state issuing currency, which it eventually collects and "somehow destroys", is using a form of tax that is a tax on money holdings.
This form of tax - i.e. a government/state issuing currency, which it eventually collects and "somehow destroys" - seems to have been used with success by the government of the English Channel island Guernsey in 1813.
But what does it mean that "the back end of the deal(=Seigniorage) never occurs", if a government/state issues currency, which it eventually collects and "somehow destroyes"? This does actually read like being the perfect kind of taxation-system for a government/state, i.e., it seems to me to be too uniform, too perfect, too uncomplicated,  and too non-bureaucratic.
In response to Seigniorage being the perfect tax system: a government cannot use this as the perfect tax system because if it is overused like in Zimbabwe then it would cause inflation which would make the money gained from Seigniorage worthless over time. Thus a government can only rely on Seigniorage as a source of revenue until the increase in money supply begins to cause inflation.  — Preceding unsigned comment added by 65.24.191.145 (talk) 22:26, 27 May 2012 (UTC)
thread_title: A comment by an economist

message: The article states: "However, it is important to reiterate that banks or governments relying heavily on seigniorage and fractional reserve as a source of revenue will find it counterproductive." 
The article has no link for the term fractional reserve, which is a key concept in discussing seigniorage. Second: governments? The article should emphasize that in some of the most relevant cases (Federal Reserve, European Central Bank), entities issuing money are not government-owned: they are private, i.e. they are owned by consortia of private bankers. Or is my statement incorrect?
Also, for those of us who do not hold an MBA, and for many who do: When a central bank issues a bill, it receives securities from the government for an amount equal to the face value of the bill, right? The securities produce a yearly yield, say 3%. When the bill is retired from circulation, the central bank sells the securities back to the government and gets the interest, correct? If by that time the bill has circulated for 4 years, the central bank will make a 12.6% profit out of issuing that bill (1.03^4), minus the cost of producing it, or am I wrong? So the issuing of money by central banks contributes substantially to the growth of public deficits. Why should money be issued by organisms other than governmental agencies? This holds many countries under the thumb of bankers and crushes them under the weight of a public debt that they will never manage to pay off.  Am I correct, albeit simple minded? There is so much mythology on this subject that I could use a plainly written explanation. Thank you in advance. Giacomo, 12/26/08  —Preceding unsigned comment added by 85.18.64.74 (talk) 21:26, 26 December 2008 (UTC)
replies: text: This may differ from country to country, but the US Fed does not appear to operate as if owned by its member banks. In particular, when it creates money by acquiring Treasuries it remits the interest earned on those notes to the US Treasury. See the Monthly Treasury Statement (e.g., http://www.fms.treas.gov/mts/mts1009.pdf) Table 4, Miscellaneous Receipts - Deposits of Earnings by Federal Reserve Banks. My interpretation of that report is per http://www.econbrowser.com/archives/2008/12/federal_reserve_1.html, q.v. Let it also be noted that Fed Banknotes can be put in circulation by other means than the purchase of Treasuries. $1.3T will have been created to purchase GSE MBS (mortgage-backed securities created by Fannie Mae, etc.) by the end of March 2010. Andyvphil (talk) 13:07, 14 November 2009 (UTC)
thread_title:  On fractional reserve and governments 

message: The example section says seignorage is the carry on gold. Yet the carry article notes that in many cases the carry on commodities is negative. What makes gold so different? Gold has been a volatile investment. And how does the government 'profit' off the holding of gold if it rarely sells the gold? I'm under the impression that the US rarely sells its gold. 
I was under the impression that seignorage arose more from accepting a certain amount of gold for currency, and then coining the currency using less gold than that, or something. II | (t - c) 17:07, 13 December 2008 (UTC)
thread_title:  Example and seignorage as the carry on gold 

message: Speaking of the U.S. mint's state-quarter series, the article says, "Approximately 147 million people are collecting the coins." That number seems high. It would mean, for example, that over half of all the adults in the United States are collecting the quarters. Seems like quite a high estimate. (I realize that not all the collectors need be Americans, but 147 million people? Even worldwide?) The article provides a citation to back up the claim, but when I click on it, it leads to a blank page.
In the context of the example, the precise number of people collecting the coins is not relevant -- the example of seigniorage will work fine whether it's 147 million people, or some other number.  —Preceding unsigned comment added by Salon Essahj (talk • contribs) 18:31, 3 July 2009 (UTC)
thread_title:  Probable factual error 

message: Hi all -- I stumbled on this article today, and it's generally well-put together, but toward the end, it encounters a lot of problems.
The section on overseas circulation, in particular, suffers from the worst problems. An example:
"With €274 billion (roughly US$400 billion) of €500 banknotes circulating, a successful counterfeit operation would not only be extremely profitable, but it's eventual discovery would have profound consequences for the economy of Europe. The risk of this happening must be balanced against the advantages of seignorage."
This is both unsourced and opinion. Perhaps the original author would be willing to source some of this material? I've heard many of the assertions here repeated elsewhere, so it shouldn't be too hard to clean up. Arteros (talk) 16:34, 6 October 2009 (UTC)
thread_title: Sourcing and NPOV problems

message: It seems like the whole entry and discussion assumes that we are talking about issuing currency that has a cost component of the underlying commodity that the currency is based on (i.e. usually gold).
Do the same comments apply when governments or central banks issue additional money with no change in the supporting commodity base?
We have been off the gold standard for some time now; this doesn't seem relevant?  Shouldn't this aspect at least warrant a mention?  It appears to me the actual seignorage is the amount of paper currency printed in this manner; the only cost to the issuer (government or central bank) is the printing cost.
I'm not an economist, but I have some grasp of the concepts, and it doesn't really seem to hold together.
71.10.247.36 (talk) 15:25, 19 February 2010 (UTC)
replies: text: Agreed, I understood Seigniorage to be any benefit gained from being the party that is supplying the currency. Jonpatterns (talk) 20:27, 17 February 2014 (UTC)
thread_title:  What about issuance of fiat currency? 

message: In the third paragraph of the section Overseas Circulation, the sentence, "As of the end of 2008, roughly twenty $100 banknotes and twenty $20 banknotes per person were in circulation, but the overwhelming majority of $100 bills circulate overseas." is imprecise.
Does it mean 20 x $100 banknotes + 20 x $20 banknotes per head of the population of the USA or per person worldwide?
Hedles (talk) 09:56, 6 March 2010 (UTC)
thread_title:  Overseas Circulation - ambiguous sentence 

message: So what is the relationship of this economic term with "seignorialism"? Both obviously come from the same Romance word, yet this term refers to the profit (or loss) of physically creating currency, while the other refers to the economic mode of production better known as manorialism -- that an individual owns a piece of land & the labor of its attached inhabitants as real property that can be bought, sold, leased or mortgaged. Without proper sourcing, a reader with a non-economist background might conclude that this is simply jargon used only by certain schools of thought with libertarian leanings. -- llywrch (talk) 21:42, 26 June 2010 (UTC)
thread_title:  Question of etymology 

message: Substituted at 05:43, 30 April 2016 (UTC)
thread_title: Assessment comment