Sometimes people don’t think much about their money unless they are in a desperate situation. If you lost a relatively small amount, you’ll probably ignore it and go on with your day. It still begs the question why anyone would burn money. Yet here we are!
So, is it okay to burn some of it just for fun? Well, the answer to that may be a little complicated.
Macroeconomic Effects of Money Burning
Burning money is the same as hiding it forever so that no one may ever use it, leading to a decrease in the overall money circulating in your economy. If the economy is full of employment, you’ll cause deflation or at least decrease the inflation rate. And the real value of the money left in circulation will increase.
If the money you burn has negligible intrinsic value, nothing bad will happen to the economy. But you will make everyone slightly richer.
It may surprise you, but central banks will also destroy money. Just not the way you think they do. They collect old and worn-out money to destroy them. So a healthy amount of usable currency is maintained in their respective economy. Such an incident raises an interesting possibility. If you can collect money before the Central Bank destroys them, the value of your money will increase at the expense of the rest of society. And that same idea came to the Loughton incinerator thefts.
The thieves were four employees of the Bank of England incinerator plant at Debden in Loughton, Essex who stole more than GB£600,000 between 1988 and 1992. One of them got prosecuted for a criminal case. And the rest had to repay the bank half a million pounds.
Why Would Anyone Burn Money?
Everyone would agree that burning money is a negative act. But there are some situations where burning your money would be somewhat reasonable. A good example is the story of the Greek philosopher Aristippus. When pirates threatened him while he was at sea, he counted all his money and threw it all in the ocean. Because to him, it would be better for the money to disappear because of him than for him to do so because of the money. In that sense, you can rationalize that getting rid of his money is not a useless act.
There is also some symbolism to burning money.
To protest against heavy taxation, Serge Gainsbourg appeared on national television and burned 500 French francs.
New York City courts in the early 18th century would publicly burn counterfeit money to show its worthlessness.
In China and Vietnam, people would burn imitation money called joss paper during their ancestor veneration so the dead may have more money to live a comfortable afterlife.
Swedish feminist Gudrun Schyman burned SEK 100,000 when she gave a speech on inequal wages between men and women in 2010.
In 2018, Distributed Gallery created the Chaos Machine, which burns banknotes and transforms them into cryptocurrency while playing music.
For Commodity Value
There are occasions when the commodity form of money becomes more valuable than its intrinsic value, especially during inflation. It happened in India in 2007, where Rupee coins disappeared from the market because stainless steel was more valuable than the actual coin.
In 1965, the US government had to change its silver coins to copper-nickel clad because silver exceeded the face value of the coins. And people had begun to melt it for profit. The same happened to Switzerland’s 5 franc coin, which the government minted with a silver alloy until 1969.
The Legality of Burning Money
The legality of money will vary in different countries.
Burning money in the United States is illegal and can land you in prison for ten years, including fines. You cannot also tear a dollar bill or flatten a penny under the weight of a locomotive on railroad tracks. But there have been instances when the media captured people burning money without any consequence.
Money burning also follows the same laws governing personal property destruction. For example, you cannot empower anyone to burn your money after you die.
The legality of burning money in the UK can be slightly confusing. The Currency and Bank Notes Act 1928 has made it clear that defacing a bank note is illegal, which means you can’t write or print on them. But it does not say anything about destroying, so it’s okay for you to burn money.
You can say the same thing to the Coinage Act of 1971. Since it only prohibits people without authority from breaking or melting coins, it’s legal for you to press your coins. So, you don’t have to have to worry if you are bringing flatten pennies for souvenirs.
The Currency Act in Canada only covers coins, which you can’t destroy, melt, break or deface. So it remains legal for you to burn money there.
Member states can’t prohibit or punish you if you destroy small amounts of coins or notes when you do it in private. They can only intervene if you do so in large amounts and if you have no authority.
Member states also cannot encourage people to mutilate money, even for artistic purposes. But they must tolerate it. And any mutilated money is unfit for circulation.
It is unlawful to destroy and damage Australian money without any permit, according to Section 16 of the Crimes (Currency) Act 1981. It covers both current and historical money. Even writing words on bank notes is illegal.
Intentional damage to notes and coins can get you a fine of up to 5 times the nominal value of said coins or notes.
According to Singapore’s Currency Act, anyone who destroys, mutilates, defaces, or causes changes to diminish the value of coins or notes will have to pay up to $2000 in fines.
It’s baffling for most people why anyone would burn money. But everyone has their reasons. The only thing you need to worry about is the law. So, if you plan to burn some, it would be best for you to research the legality in your country
About The Author: Michael is an aspiring lawyer who likes to spend his free time researching different topics of law, especially about what is legal and what is not. He enjoys reading articles, watching documentaries, and attending lectures to become more informed about the law. He hopes that one day he will be able to use this knowledge to help people in need. Michael also has a passion for writing which led him to pursue journalism as his minor in college.
Through his studies, he has learned how to write professionally with clarity and precision. He is currently writing a novel about the life of a young lawyer who fights for justice in a world that is filled with corruption. Michael hopes to use his skills in writing and researching to pursue a career as an attorney one day. In addition, he also volunteers at legal aid clinics to gain more experience. From this volunteering experience, he has been able to help people better understand their rights and the legal system.
Michael is a dedicated individual with a passion for law and writing, and these qualities make him an excellent candidate for any legal field. He is eager to use his skillset to prove himself as a lawyer in order to contribute in making the world a better place.