I mean sure, there is a handful of people who have money to burn, shred and feed to the family pet goat, but as far as I know, most don’t. And even if people did decide to toss the contents of their bill fold into the fire, who would they be hurting except themselves?
Why do we need a law prohibiting us from destroying our own hard earned cash?
It is NOT illegal to destroy currency. The actual law in Title 18, Section 331 of the US CODE says that it is illegal to deface or alter currency with the intent to defraud. For example, altering a $1 bill to look like a $10 is an act of forgery. However, it is not illegal to draw a mustache on the original G.W. 
At tourist destinations, there are sometimes machines that will press a coin, typically a penny, into a new shape bearing an imprint. If you look carefully, these machines sometimes bear a metal placard which describes 18.331.
The law was written primarily to discourage counterfitting of bills. As written Title 18, Part 1, Cahapter 17
Destruction is not mentioned but could be inferred by “any other thing”
The SDStaff discusses it in http://www.straightdope.com/mailbag/mhole.html
Don’t feel bad, QuickSilver, even our elected officials don’t know this:
http://dailynews.yahoo.com/h/nm/20010718/pl/congress_flag_dc.html
There was some discussion about this in my college newsroom many years back so we called the Secret Service to get an answer.
IIRC, the agent’s response was basically: “It’s your money. Live it up.”
[fun way to destroy Canadian currency] Take a looney and put it in the freezer. Then take the coin outside and throw it on the sidewalk as hard as you can. Hopefully the two pieces will separate and the coin will be worthless. I have never been able to reattach the two. [/FWTDCC]
Sorry to spoil your fun, but loonies do not have two pieces. It is not possible to “separate” them. The whole coin is a single piece of metal.
I believe wishbone may be thinking of toonies, which did just as stated when they were first minted. I don’t know if they still will–at least for me, the novelty wore off long ago. Besides, an entire toonie gets me a morning coffee and change; a two-piece toonie does not.
The Secret Service has come to the bank that I work at several times and they said their rule of thumb is that you can do anything you want to a bill, you just can’t pass it on afterwards. Currency with religious quotes, “write this message on ten more bills to receive good luck”, or the “Where’s George” on them are not supposed to be circulated. So yes you can do anything you want to your money, just don’t expect to get the value of your lost buck back.
Perhaps I don’t understand the legal mumbo jumbo fully,
but doesn’t the law cited by barker make it illegal to
destroy US currency? If so, why is everyone claiming it is
legal? I get the feeling I am missing something obvious,
but I’ll take the chance and ask anyway.
You have to throw it at the sidewalk really hard. 
Thank you for correcting me, Spoons.
Well, I must be missing it too. The cite from Section 333 seems pretty unambiguous…that it is, in fact, illegal w.r.t. bills.
Section 331 includes the term “fraudulently” in its verbage w.r.t. coins, but I don’t see that in Section 333.
I think it has more to do with what they’re willing to bother with investigating and prosecuting rather that what is technically illegal. Where would they draw the line for currency being mutilated? If it is just a couple of bills why would they bother but if it is due to someone trying to pass a low denomination bill as a higher one then yes, they would be interested in prosecuting.
If people tood to destroying bills the US would actually benefit. If you work 5 hours to earn $100 and now you take the $100 and burn them, you have just worked $100 worth for free and passed the value to the rest of the country.
If a guy in Russia sends a load of chickens to the US and gets money in exchange and then he (accidentally, one would think) destroys the money, the US just got the chickens in exchange for the small cost of printing some bills. Those bills represented the right of the bearer to claim goods or services but now he has lost that right so he has made the rest of us a bit richer.
Section 331, cited by Evilhanz deals with currency. Section 333 refers only to the mutilation of bonds, not currency. Coins and cash are not evidence of a debt. “Bill” as used in 333 is a technical term for a specific debt instrument (a bond) issued by the Treasury Dept.