You are absolutely correct when you say the money is not given to the government, but to third-party entities.<p>The government can dictate terms to those entities, however, and they will comply.<p>For example, when the government made the ownership of gold illegal, they instructed the banks that it was illegal to open a customer&#x27;s safe deposit box unless a federal officer was present. When the box was opened, any gold (save for certain kinds of coins) was confiscated and the owner of the gold was reimbursed for a fraction of its value.