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Big Problem of Small Change


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On the recent Topic for "Price Guides", QXSeries wrote:

... Looking at current issues of coins and medals, I think we would need to look at what is wrong with current issues. By the original defination of coins, coins are supposed to be meant as cash transaction and should be left as it is. However in current days, the difference between coins and medals are somewhat thinning down.


Francoise Velde co-authored a book called The Big Problem of Small Change. Besides participating rarely in rec.collecting.coins, Velde was an economist for the Federal Reserve. In his book, Velde points to the modern theory of cash that says that all coins are interchangible with no cost for the transaction. Four 25-cent coins are the same as two 50-cent coins are the same as ten 10-cent coins and so on. The bank does not charge for the transaction. In modern terms, this allows "circulating commemoratives" to pass at face value.


Your point is about Proofs.

... the Soviets were able to mint millions of commemorative Soviet ni-cupro coins, enough for each person in Russia to proudly own one ...

Americans have a different ethos. We expect to be able to make a profit. Therefore, Americans want the Mint to strike enough proof commemorative so that ALMOST everyone can have one.


What I know from the old USSR is their little 1-kopek and 5-kopek space badges. I have about 100 of them. They tout the Soviet space program, were cheap enough so that eveyone could afford one, but were limited edition so that collectors had to trade to get the series (Lunakhod, Venera, Mapc, and so on). So, many needs were met, without giving in to capitalist modes of money speculation.

... government nowadays in most countries will not foot a single penny in the whole mint process even though they are supposely government owned.

Right, but utlimately, the government is "everyone." So, people who have no interest in Proof coins end up paying taxes to subsidize the hobbies of those who do collect Proofs -- just as those who have no interest in aviation pay land taxes to subsidize little county airports so doctors can fly their airplanes to exclusive golf courses on the weekends -- just as those who have no interest in camping.... just as those who have no interest in yacht racing ... just as those who have no interest in whatever lobbying effort has paid off in special legislation.


Back about 1803, some serious Republicans in Congress wanted to close the U.S. Mint on the theory that the government has no business in the coin business.

But to have limit on mintage is absurd - as long as the die and hub are not broken, why can't there be more coins issued from it?

Well, in terms of circulating coinage, there the problem of QUANTITY. The more money that is made, the greater the rate of inflation. Why not make 300 million notes of 1 million dollars each and make every American a millionaire? That will not work, of course, and we all know why.


If you refer to Proof coins, then yes, I agree with you on the "Space Badge Theory." However, it still brings us back to the basic problem of some people paying taxes to pay for the hobbies of other people.

... this could be quite contriversal, but it has been done in the past in terms of novodels or restrikes.

Most of the 1804 Dollars were novodels, just knock-offs and copies, fakes and phonies, but a few articles and one book later, they are worth millions. It is impossible to negate the market. The market is as real as gravity.

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