18 February, 2007

Taming inflation with coins.

It has been recently announced that U.S. Mint is going to produce the presidential $1 coins, so there's going to be even more "special" coins in circulation, in addition to the state quarters. The Presidents are going to have even greater total value, since there were already more Presidents than states and each President is valued four times more than a State.

It's interesting to note that these coins are intended for mass circulation, not a limited release for numismatists. Which means, that these new coins, just as the state quarters, are going to pass through the general publics' hands and, since there's a collector in everyone, many, if not most, of the coins are going to stick to those hands to be then shaken off into a jar.

So, why all this? Consider: the money is being issued, and someone is getting paid with that money, which normally causes inflation -- i.e. there's more money in circulation than goods/services, so the value of the money goes down somewhat. But, if those someones are not buying anything with the money, keeping it in the jar instead, the money never enter the economy, hence there's less inflation!

I wonder how soon are we going to see the special annual $20 bills, one for each year since 1776, depicting some important event of that year. Collect them all!

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