LOOK BACK: A frank discussion about China and counterfeits

A regular reader was upset about the appearance of hypocrisy at the World’s Fair of Money. On one hand there was a lot of talk about counterfeit collectibles from China. On the other hand, there was a lot of hoopla over the Panda with special designs and privy marks honoring the World’s Fair of Money. In this episode of “LOOK BACK,” I update what I wrote in February 2014 about China and counterfeits.

Front of a counterfeit 2012-dated American Eagle $50 denomination one-ounce gold bullion coin. (Photo courtesy of Numismatic Guaranty Corporation.)

A persistent question that follows stories about counterfeiting is why do most of the counterfeits come from China and how do they get away with doing this? Unfortunately, the answer lies in differences in our laws, politics, and cultures that may not be as easily resolved as people would like.

Every coin minted by the U.S. Mint is legal tender and are legally an instrument of the government. Although the Trade dollar was demonetized in 1876, it was remonetized as part of the Coinage Act of 1965 making it legal tender (31 U.S.C. § 5103) for trade in the United States. This means that it is legal to spend an 1873 Trade Dollar for $1 of goods and services even though the coin is worth more than its face value.

To protect its currency, the United States has anti-counterfeiting laws that makes it illegal to counterfeit the nation’s money and use in commerce. For collectible coins and currency congress passed and has since updated the the Hobby Protection Act (15 U.S.C. § 2101 et. seq.). These laws protect the money supply when it is a collectible and not an instrument of commerce.

In the United States, laws are cumulative. Once passed, they remain the law until repealed or declared unconstitutional by the courts. This is not the way in many other countries. In many countries, when a new government takes power they are given the authority to rewrite the laws. It is expected to happen within authoritarian governments but it is common in many parliamentary democracies.

The People’s Republic of China has been run by the Communist Party since 1949. Their rules and laws have changed significantly when the Communist Party came into power. One of their first rules was to demonetize the money produced by the Republic of Chin and issued renminbi, the “people’s currency.”

Since then, it has been the practice of the chairman of the Communist Party to demonetize non-current issues of coins and currency as part of their economic control policies. Based on the current Chinese economic system, all coins struck since 1955, the first issued under the current government, are legal tender. Currency printed since 1999, the fifth series is the only legal tender notes. Any other coin or currency note has been demonetized.

Under Chinese anti-counterfeiting laws, it is illegal to duplicate any legal tender coin or currency note for any reason. However, since coinage from previous regimes is no longer legal tender, it is legal to strike coins with those designs. Chinese laws do not recognize the collection of these coins as a market to protect.

An example of a Morgan Dollar cut in half to match a date with a mintmark to have the coin appear something it is not. Coin was in a counterfeit PCGS slab and caught by one of their graders.

Buying and selling coins as an object is a matter of commerce between individuals and not something that requires protection under Chinese law. While the Chinese buyer can use the obsolete coin as an object of barter, bartering does not hold the same legal status as paying with legal tender currency. Basically, once coins are demonetized, just about anything goes.

Chinese law does not recognize the perpetual legal tender status of every coin issued. Chinese law also recognizes that counterfeiting current issues of other countries is also illegal because someone could try to use the coin in commerce where it is legal to use foreign currency. This means that in China, it would be illegal to reproduce a presidential dollar or Washington quarter, but producing Morgan dollars or a set of 1921 Walking Liberty half-dollars is legal in China because these are coins no longer issued in the United States.

When China is asked to assist the United States to stop the counterfeiting of coins, China does not recognize that its people are doing anything wrong. The coins are no longer being made, they are not in circulation, and their laws allow people to make copies of these coins. The only laws that China has regarding collectibles are laws protecting antiquities and cultural properties. This means that you cannot duplicate a Ming Dynasty vase and try to pass it off as real but it is legal to reproduce a Rembrandt masterpiece since he is not Chinese and his work was not made in China.

A trade attorney that was originally consulted for this article confirmed that when it comes to these issues, Chinese law is very protectionist. The claim is that they follow their laws consistently regardless of outside circumstances and they refuse to make exceptions citing the complication with enforcing their laws in a country with a population of more than 1.3 billion people.

PCGS representatives showed Congressmen counterfeit U.S. coins in counterfeit PCGS holders during their recent meetings in Washington, DC. (Photo courtesy of PCGS.)

Making the problem more difficult, copying and counterfeiting of grading service holders are also not covered by Chinese law because they are not made by government entities. The grading services would have to fight the counterfeiters using Chinese patent and copyright law. A patent attorney confirmed that not only would this not stop the problem, but foreign challenges to alleged patent and copyright violations are rarely successful in Chinese courts.

The Chinese government has no incentive to help the United States or any other country fight counterfeiting in what is perceived by the Chinese as a small market problem. To put the resources necessary into what looks like a petty crime for selling inexpensive, non-circulating duplicate coins that are within Chinese law to manufacture is considered not worth their resources.

While there is anecdotal evidence that the Chinese government knows about the counterfeit trades and some officials informally support the efforts because they get kickbacks, official Chinese policy denies there is a problem.

A lot has been written about the nature of the relationship between the United States and China since President Richard Nixon’s trip to China in 1972. Neither side trusts each other nor does neither side believe each other. Today, the United States decries the Chinese for buying too much of our debt, allegations of spying, industrial espionage, and cyber crimes. The Chinese say that the United States is trying to bully the world and that these naysayers are making up the stories to scare the world into following them. The United States talks about civil rights violations within the Chinese border and the Chinese government tells the United States to mind its own business.

The greater opening of markets between the country and the increase in popularity of bullion coins has made the Chinese Panda a popular coin amongst collectors and investors. Those of us who buy these coins know that even with the production increases since 2010 new issues continue to command a premium greater than other bullion coins.

While the Chinese are happy to sell coins and be the factory to the United States, there remains an underlying tone of political and commercial hostility between the nations. A trade attorney said that the Chinese would rather keep the relationship to business between the countries that the United States should stay out of China’s domestic policy. It was explained that the Chinese central government was upset over how the United States passed judgment over companies in their high tech electronic manufacturing sector because these companies are doing better and are safer than other Chinese manufacturers. To the Chinese government, it is not a problem if a few workers die for whatever reason. There is an ample supply from the population to keep the plants running.

These are the values of the Chinese government. Whether you agree with them or not, Communist Party officials will resent anyone telling them how to manage their domestic affairs. They want advice about how to treat their citizens as much as the United States wants similar advice from China.

There is no incentive for China to stop the manufacture of counterfeit collectible coins.

It is not against Chinese law for these people to manufacture coins that are no longer in production. Chinese people who are manufacturing these coins are working in China and many employ other people. It means there are fewer people relying on assistance the Chinese government provides. Since they now have incomes, it provides revenues for the tax coffers.

When a United States trade representatives negotiate with their Chinese counterparts, it gives the Chinese a chance to lecture the United States how they resolved the counterfeiting issues which leads to a discussion on currency handling and management, which is a sore subject in the United States since the United States questions Chinese monetary policies.

Counterfeit coins ICTA ACTF display

A portion of the exhibit of confiscated counterfeits on special loan from the Department of Homeland Security displayed at the 2018 World’s Fair of Money® by ICTA/ACTF.

Finally, it gives China a measure of moral superiority against the United States. After all, China figured out a way to prevent the impact of counterfeiting of older currency, why can’t the United States do the same?

China has no incentive to help the United States to solve a problem that they perceive does not exist. It is up to the United States to resolve these issues. This is why the industry promoted the Collectible Coin Protection Act (Public Law No: 113-288) so that law enforcement has an additional tool to use to help prosecute handlers of counterfeit coins in the United States.

You can read the original article here.

Call for Artist

On Monday, the U.S. Mint announced that on September 3, they will begin accepting applications for the Artistic Infusion Program. Judging by the last round of artwork submitted to the Citizens Coinage Advisory Committee to review for the new American Innovation $1 Coin, they need the help.

For those who did not read the stories, the U.S. Mint submitted a design for the obverse that is supposed to be “a likeness of the Statue of Liberty extending to the rim of the coin and large enough to provide a dramatic representation of Liberty,” similar to the reverse of the Presidential $1 coins. According to reports, the U.S. Mint claimed that they could not work on a better design because of time constraints.

Time constraints are a legitimate issue. The bill was signed into law on July 20, 2018, leaving the U.S. Mint less than six months until the program begins in 2019. However, that does not mean that the program has to begin on January 2. In fact, the law does not specify at what point during the year that the coins are to be produced.

They also could have anticipated their responsibility. Once the bill was passed by the Senate on June 20, it was only a matter of time that the difference between the House and Senate versions were resolved before being signed by the president. It was not a surprise. They had two months to come up with something prior to the CCAC meeting.

Although U.S. Mint Director David Ryder has not been on the job long, he has to take responsibility for not providing the leadership necessary to impress on the artists and whoever directed them not to try to take the easy way out. If they have not learned by now, most of the CCAC members take their jobs much more seriously than previous committees (this is a good thing) and are very outspoken in a very constructive manner.

One person that should respond to this call for artists is current CCAC member Heidi Wastweet. An accomplished medalist and sculptor, her term with the CCAC is about to expire. She is well qualified since her work is phenomenal! You can see for yourself on her website. Imagine what an artist with her talent and knowing what the CCAC is looking for can add to the U.S. Mint.

Having never met Ms. Wastweet, I am not in a position to try to talk her into applying. However, if you are acquainted with her, please let her know that not only would it be of great service to the U.S. Mint but that she has at least one endorsement—for whatever that is worth!

There are so many great medals on Heidi Wastweet’s site it is difficult to select one to highlight. But I always seem to focus on this one called a Zombuck.

LOOK BACK: Paper v. Coin Dollars

Following the introduction of the Presidential $1 Coin program and the discussion about replacing the Federal Reserve Note with a coin, I wrote an article explaining how the situation will not change. Not much has changed in 10 years!

Whenever a proposal or law that creates a new dollar coin, there is always a discussion as to how to make the program more successful. In the past, the Gallup organization has polled the public on a few occasions asking about the potential acceptance of dollar coins.

Regardless of the questions asked, the only way to increase the circulation of the dollar coin is to stop printing the one-dollar Federal Reserve Note and begin to withhold it from circulation. It is a move that will force the people to use the coin as the population of the paper currency is reduced.

There are many emotional arguments on both sides of the issue. Whether one is for or against the printing of the one-dollar note, the US is one of the extreme few first-world countries issue its unit currency on paper. Looking beyond the emotional arguments, each side has dominant arguments to support their positions.

Those who want to eliminate the one-dollar note use at the cost of is production and the savings to the government as the dominant reasons. According to the Bureau of Engraving and Printing, 95-percent of all Federal Reserve Note printed for circulation are used to replace damaged and worn notes that are being taken out of circulation. Using BEP’s 2017 production report, 2,425,600,000 one-dollar notes were printed. With 95-percent being replacement notes, 2,304,320,000 notes were printed just to maintain circulation levels. With it costing 4.385-cents to produce one note of any denomination, the cost to just replace notes removed from circulation was $100,422,265.60 in 2017.

Rather than printing paper dollars, if the US Mint strikes coins the cost to replace those 2.4 billion notes would cost 21-cents per coin (according to the U.S. Mint’s 2014 Annual Report, the last documenting seigniorage for the dollar coin). The total production cost would be $483,907,200.

But do not let the 381-percent increase in cost fool you. For the real picture, the costs have to be predicted over time. According to the BEP and the Federal Reserve, the lifespan of a one-dollar Federal Reserve Note is 5.8 years. When the U.S. Mint makes plans for circulating coinage, they accept that the lifespan of a coin is 30-years. To help with the calculation, it will be assumed that the price of manufacturing coins and currency s will stay constant. In order to keep the $2.4 billion of one dollar notes in circulation for 30 years, it will cost the BEP $522.6 million dollars.

By comparison, since the U.S. Mint will be striking new coins for circulation and (theoretically) not replacement coins (not including the coins already in storage), the U.S. government would save about $117 million over 30 years. The following table illustrates these costs:

Denomination Production Total Number of Replacement Notes Cost of Production for Replacements Cost of Replacements over 30 years
Paper Dollar (2008) 4,147,200,000 3,939,840,000 $177,292,800 $1,772,928,000
Paper Dollar (2018) 2,425,600,000 2,304,320,000 $101,044,432 $522,643,614
Coin Dollar (2008) N/A 3,939,840,000 $626,434,560 $626,434,560
Coin Dollar (2018) N/A 2,425,600,000 $509,376,000 $509,376,000

While this might be a compelling argument to stop printing one dollar notes, such a move has political ramifications for some powerful members of Congress. With over 1500 people working in the Eastern Currency Facility in downtown Washington, DC, they are represented by several leaders of both parties. When it comes to jobs in their districts, members of Congress will not allow anything that will reduce the production capacity of the Bureau of Engraving and Printing and where constituents could lose jobs.

Before Congress changes the law to stop the printing of the one-dollar note (31 U.S.C. §5115(a)(2)), the BEP will have to supplement production in order to protect jobs. The way this could be done would be to print foreign currency. However, it seems that the BEP is having problems selling their services to foreign governments.

Although the Bureau of Engraving and Printing has experimented with polymer notes and other printing substrates, the Federal Reserve has said that it does not consider these alternatives viable for United States currency. However, the Federal Reserve and Bureau of Engraving and Printing has been testing rag-based paper from companies that can produce new anti-counterfeiting features.

If there was a change to the supplier of currency paper, that would raise concern by the Massachusetts congressional delegation whose constituents include Crane Currency, the subsidiary of Crane & Company. Crane has been the exclusive supplier of currency paper to BEP since 1879. Although BEP has tried to open the competition for purchasing currency paper (see GAO Report GAO-05-368 [PDF]), the cost of entry into the market has prevented other manufacturers from competing for the business. If BEP would stop printing over 2 million one dollar notes without replacing it with similar paper production, the Massachusetts-based company could lose significant business.

Regardless of the measures taken by the US Mint to increase the circulation of the one-dollar coin, public perception is that the one-dollar paper note is easier to use than the coin. Unless key congressional leaders agree that ending the printing of the one-dollar note is in the best interests of everyone, including their political careers, the political reality is that printing of the one-dollar note is here to stay until a significant event causes a change in policy.

The original post can be read here.

Did someone say something about a square con?

NOTE: The title is NOT a typographical error. It is a commentary raised by the discussion, below.

With the flurry of legislative action last month, the only bill that I commented on was the American Innovation $1 Coin Act (Public Law No: 115-197) because it was the only one that is the law. The others were just introduced and may not be passed out of committee.

But that has not prevented speculation and discussion about the potential for these potential commemorative coins. Based on the email buzz, the two bills of interest are the Integration of Baseball Commemorative Coin Act (S. 3283 and H.R. 6469) and the Carson City Mint 150th Anniversary Commemorative Coin Act (H.R. 6221).

Reverse design of the 2014 Baseball Hall of Fame commemorative (Image courtesy of the U.S. Mint)

Regarding the Integration of Baseball Commemorative Coin Act, someone decided that the coins would be square and that has infested the numismatic media. This is not what the bill requires. In fact, the bill says that the “design on the common reverse of the coins minted under this Act shall depict a baseball diamond similar to those used by Major League Baseball.”

For those commentators who cannot read simple English, it says that the design “shall depict a baseball diamond.” Nowhere in that sentence does it say that the coins have to be shaped like the baseball diamond. A depiction and the shape of a coin are two different concepts.

Trying to understand where the idea that the coins would be square, a review of the official statement issued by Sens. Tim Scott (R-SC), Cory Booker (D-NJ), and Rep. Roger Williams (R-TX) as co-sponsors does not mention the shape of the coin.

What might have confused the issue was a report in The Hill that former Montreal Expos and Chicago Cubs legend Andre “The Hawk” Dawson talked about the coin minted in the shape of home plate. While Dawson was a great ballplayer and earned his place in the Baseball Hall of Fame, he is not a member of Congress and, apparently, did not read the bill.

The commentary about the shape does not take into consideration what the bill actually says. Aside from talking about it like it will be the law, it does not take into consideration that the bill is now in committee with less than 90-days to go until the mid-term elections. Without turning this into a political analysis blog post, there will be contention regardless of the outcome of the election. With the late introduction of this bill and the current political environment, the likelihood of this bill passing both chambers before the end of the session is highly unlikely.

Carson City Mint (1866)

A correspondent asked “Wouldn’t it be cool if the Carson City commemorative coins were struck in Carson City?” It does not matter if it is a good idea or not unless Congress changes the law, specifically 31 U.S. Code § 5131 that defines where the branches of the U.S. Mint are located, Carson City is not authorized to strike coins. Unless Carson City is added to that list, even temporarily, the U.S. Mint cannot strike any coins in Carson City. Further, the building that was once a branch mint is no longer owned by the Federal Government. Ownership was transferred to the State of Nevada that runs it as part of the Nevada State Museum.

Even though the first press used in Carson City is located in the museum, it may not meet the specifications that are required of the U.S. Mint to strike modern commemorative coins. And both the press and building are not owned by the United State government, a fact that would make those who provide oversight of the U.S. Mint’s operations a bit nervous.

While these “what if” questions might make good parlour or message board discussions, allegedly responsible industry journalists and pundits should know better.

The United States is not going cashless… oh, look at that butterfly!

With the discovery of every new technology, there are the inevitable predictions that it will make the old ways obsolete. Although the automobile reduced the reliance on horses, the basics of the internal combustion engine have not changed in over 100 years. Take away the electronics around the engine, the technology increasing the air intake, and cleaning up the exhaust, and you still have an engine block with pistons that go up and down in the classic suck-bang-blow rhythm that was used in the Model T.

The latest technology that is being touted as being the doom for physical money, which can also be the end of numismatics, is cryptocurrency.

There are two aspects of cryptocurrency that its fans say are its biggest strength. First, it is not bound by the traditional means of generating wealth. You can think of cryptocurrency as digital gold. It is mined using computers and a lot of complex arithmetic to generate one unit of the currency, sometimes referred to as a bitcoin. Like physical gold, there is some work required to mine for these bitcoins. It lies in the ability to create a computing environment capable of performing these intensive mathematical operations. You may not be panning for gold but you might spend as much on equipment and travel.

For a good basic description of the blockchain technology, see the article on Medium.

The other aspect about cryptocurrency is that the blockchain technology allows for both anonymous and secure transactions. Think of the blockchain as a giant ledger that is copied wherever bitcoin is accepted with regular updates. There is no single source that could control the ledger nor is there a single point of failure.

However, both its strengths are its greatest weaknesses.

While the value of money is regulated by their respective government there are no blockchain regulations. There is no regulation on the number of generated bitcoins but is arbitrarily set by the creator of the cryptocurrency. There is no guarantee of value as a state-sponsored currency. Bitcoin investors are betting on the value of electronics and math, something many of these investors does not fully understand.

The blockchain also provides its own problems. In order to use the cryptocurrency, you have to have your own copy of the ledger and be able to pass the information to the party you want to pay. Think about having a checkbook with everyone’s information. You cannot read the information because it is encrypted but you have to have a copy. Then you need to pay someone. You hand over the checkbook in order to complete the transaction.

Think about the amount of data that would be if the blockchain supported 1,000 people. What would it take to support 1 million people? What if the government decided that everyone would do their business in bitcoin and everyone would have to have a way to deal with the blockchain in order to facilitate payments. How cumbersome will that ledger be if all 325.7 million people in the United States had to carry that around?

Each blockchain is its own entity. While you can trade in bitcoins on the same blockchain, you may have to participate in more than one blockchain if you want to accept bitcoins from several different people. It is like different currencies today. I can go anywhere in the United States and use dollars. But if I wanted to go to Canada, I can either arrange an exchange or find someone who will trade.

Cryptocurrency that has to operate across different blockchains is just like going to Europe and having to change your dollars for euros.

1881 Tracy’s Counterfeit Detector and Bank Note Reporter (Image courtesy of the Numismatic Bibliomania Society)

As with anything that is computer-based and managed, there is always the security issues. Blockchains have been hacked. Although most of the hacks are based on compromised passwords, each hack yields millions of dollars in stolen cryptocurrency to the hackers and everyone who then does business with them on the same blockchain.

Eventually, this will lead to a cryptocurrency version of a Bank Note Reporter and Counterfeit Detector as was popular during the broken banknote period. Then it will be followed by a Cryptocurrency Act similar to the Currency Act that ended the broken banknote period proving George Santayana right as we repeat history.

Cryptocurrency is the darling of the technology industry and those in the financial industry that trade in high-risk investments. Even traditional financial services companies are spending a limited amount of risk capital on cryptocurrency investments. However, by all statistics, the number of consumers using cryptocurrency for transactions is less than 1-percent.

If Not Cryptocurrency The What About Credit Cards

Credit and debit cards remain the primary target that proponents of a cashless society use to promote their agenda. However, when faced with the realities of life in the United States, there are three statistics that work against their arguments:

  1. The Bureau of Engraving and Printing, the printer of United States currency, reports a year-over-year increase in production of just over 4-percent.
  2. The U.S. Mint, the manufacturer of United States coinage, is reporting a year-over-year increase of 6-percent striking circulating coinage.
  3. According to CreditCards.com, “In 2013, 20 percent of whites did not have access to a credit card compared with 47 percent of African-Americans and 30 percent of Latinos.”

The primary customer for the Bureau of Engraving and Printing and U.S. Mint is the Federal Reserve. If the Federal Reserve needs the money for its operations, they buy it from these government bureaus. The Federal Reserve only orders what it needs. If it does not need the money, then it is not produced.

Aside from the over 50-percent of the population without access to credit cards, there continues to be a demand for physical currency. Whether the currency is used in a vending machine or to buy other items, cash is still king and shows no sign of slowing.

While there continues to be a demand for the products from the U.S. Mint and Bureau of Engraving and Printing, these bureaus will continue to produce coins and currency giving us more opportunity to collect their products.

Missing an opportunity with changing coin design programs

Since the introduction of the 50 State Quarters Program, there have been several changing design series on circulating coinage. All of the programs have been created to honor and celebrate the nation’s history in some way. It started in 1999 with the issuance of the quarter honoring Delaware, the first state to ratify the Constitution granting it the designation of being the first state to enter the Union.

Since 1999, there has been the following coin series issued by the U.S. Mint:

  • 2009 Lincoln Bicentennial One Cent Program
  • Westward Journey Nickel Series™
  • 50 State Quarters Program
  • 2009 District of Columbia and U.S. Territories Quarters Program
  • America the Beautiful Quarters® Program
  • Native American $1 Coin
  • Presidential $1 Coins

Although none of these series produced rare coins with the exception of errors and varieties, such as the 2004 Wisconsin extra leaf quarter and the 2005 Minnesota quarter with an extra tree, the only excitement was the novelty generated in 1999 with the new series.

Soon, the American Innovation $1 Coin will join this list. When the American Innovation $1 Coin Act (H.R. 770) finishes its procedural trek through Congress, it will be sent to the other end of Pennsylvania Avenue for the President’s signature. There is no indication that the President will veto this bill.

The 14-year program will honor “American innovation and significant innovation and pioneering efforts of individuals or groups from each of the 50 States, the District of Columbia, and the United States territories.” Four one-dollar coins will be issued each year and issued alongside the Native American Dollar.

Although there is a bias in the numismatic industry against modern coinage, there is a fun aspect of the changing coin designs. Aside from breaking up the monotony, there is an educational aspect that people should take advantage of, even if you have college degrees.

2015-W Native American Dollar Enhanced Uncirculated Reverse celebrating the Mohawk Iron Workers

For example, why did the 2015 Native American $1 Coin feature the Mohawk Ironworkers? In short, the Mohawks were literally the backbones for which heavy ironwork relied upon in both Canada and the United States. Amongst their accomplishments are some of the famous landmarks of New York City including the Empire State Building, the Chrysler Building, and work above the 80th floor on the World Trade Center twin towers.

Mohawk ironworkers were there following the attacks of September 11, 2001, to help clean up and rebuild the World Trade Center site. This is something I would not have known had they not appeared on the coin and asking why.

Regardless of the historical significance of these coins and the underappreciated beauty of the designs, the numismatic industry has not taken the opportunity to promote coin collecting using these changing programs. There is only one reason for the lack of interest from the community: ECONOMICS!

The American Numismatic Association is largely run by dealers who make their living by buying and selling rare coins and bullion. The trade in modern coinage, many items that anyone could find in pocket change, does not have a high rate of return. Therefore, most dealers are not interested.

Although dealers do have the right to earn a living the way they see fit, as part of the overall hobby, they tend to steer away from the modern coins and even downplay their significance to the hobby. This tends to perpetuate a myth that you cannot be a legitimate collector if you collect modern coins.

This attitude is a wasted opportunity for the industry. Aside from being an opportunity to promote the hobby but give people an outlet to learn something more than what they see on the cable news channels.

One of the problems with this program can also make it a positive is what will each of the states choose to represent innovation in their state or territory? Promoting numismatics as “history in your hand” can also be a lesson in history to help each state decide what to chose to best represent them on a coin. This is the best opportunity to use numismatics to promote the hobby and history by providing a conduit for discussion in each state.

What would constitute a state’s great innovation or innovator? Will New Jersey choose Thomas Edison? Will Alexander Graham Bell be Massachusetts’ choice? And what about Pennsylvania? There could be an interesting discussion about honoring Benjamin Franklin, George Westinghouse, or even Andrew Carnegie especially since neither of these men were born in the United States.

There will be a lot of innovation to chose from because there has been a lot of innovation during the country’s 242 years of existence. If you missed the announcement by the United States Patent and Trademark Office (USPTO), they issued the 10 millionth patent on Tuesday, June 19, 2018. And that does not count the patents issued before 1836 when the numbering system was reset by the Patent Act of 1836.

However, the most significant problem with the Innovation $1 Coin is that it is a one-dollar coin. As long as Congress continues to not listen to reason and stops issuing the paper dollar, it does not matter what they do with the coin, it is not going to generate enough interest because the coin will not circulate.

Regardless of how many Government Accountability Office (GAO) reports are issued (GAO-13-164T) or the number of experts that endorse the elimination of the paper dollar for the coin, Congress refuses to address the issue. They point to surveys that show that most of the people older than 50 are against removing the paper dollar. Since this population constitutes the majority of the voters and, more significantly, campaign donors, the politicians are not about to make those people upset.

In many cases, the Innovation $1 Coin will be a repeat of history. Its potential popularity will fail as Congress hopes to socially engineer excitement in the way they tried to do for the Presidential dollar coins. That was deemed a failure that forced then-Treasury Secretary Tim Geithner to order the U.S. Mint to reduce the production of these coins. This was after certain members of Congress showed its collective stupidy by introducing a bill to prematurely end the program.

There is so much potential for the Innovation $1 Coin to be a great program and to generate publicity for the hobby. But as long as the coin does not circulate and Congress refuses to deal with the situation appropriately, it will be a coin that only existing collectors will take interest in and become a lost opportunity for everyone.

Weekly World Numismatic News for June 24, 2018

Two dollar coins on the way to be stamped at the Royal Australian Mint
(Image courtesy of ABC Canberra: Louise Maher)

On June 20, 1988, the Royal Australian Mint replaced its two dollar currency note with a coin. This year, they are celebrating the coin’s 30th anniversary. It was introduced four years after replacing the dollar paper note with a coin (1984).

Similarly, the Royal Mint introduced the one-pound coin in 1983 and the Bank of England stopped issuing one-pound currency in 1984.

The Royal Canadian Mint introduced the dollar coin, nicknamed the Loonie, in 1987 while the Bank of Canda ceased issuing the paper dollar.

The euro entered began circulating as a continental currency beginning in January 2002. When it was introduced, they issued one- and two-euro coins and the lowest denomination paper currency was the 5 euro note.

According to the International Monetary Fund, after the United States, the European Union has the world’s second largest economy even though it is not ranked as a country. When considering countries, the second largest economy is China followed by Japan, Germany, and the United Kingdom. Canada is the world’s tenth largest economy.

Of the Top Ten, only the United States and China issue their unit currency as paper. However, because of economic controls and exchange rate, most of the Chinese economy is based on the Renminbi (the People’s Money). Small change is popular in urban areas and paper is more common in rural areas.

But the Chinese economy is heavily regulated within the country. Of the Top 20 economies identified by the International Monetary Fund, only the United States and China issues its unit currency as paper notes. Most countries issue a note of two of their base units and many are considering replacing their five unit note with a coin.

Yet the United States, the country with the largest economy on earth, the one that people say should be the leader lags behind every country except China by producing a one dollar paper note.

The lack of paper currency has not hurt these other economies. In fact, it helps because coins last longer than paper currency. Also, it is better for the government because, for every one-dollar coin produced, the government makes 68-cents in seignorage (with the dollar coins costing an estimated 32-cents each to produce).

Replacing paper mone with the coin does not seem to have hurt other economies, yet the issue raises the ire of some who wants to call this a conspiracy against the people. It makes economic sense to move in this direction and should we not be all in favor of doing things in our own economic benefit?

And now the news…

 June 19, 2018

The durability of the $2 coin means it could be around for decades to come, despite Australia’s shift towards a cashless society. → Read more at abc.net.au


 June 20, 2018

Sofia. 34,000 fake coins were found in the home of the main member of a criminal group involved in counterfeit money making and distribution, prosecutor Nikolay Dimitrov said during a briefing. → Read more at focus-fen.net


 June 20, 2018

A sterling effort in more ways than one. → Read more at breakingnews.ie


 June 21, 2018

A graduate of Glenwood High School in Chatham designed Illinois’ bicentennial coin, which is available for preorder for $45 on the state treasurer’s website. → Read more at ilnews.org


 June 21, 2018

Residents in Puerto Rico were left without power for months after Hurricane Maria pummeled Puerto Rico, and experts estimate that around 4,640 people died. But the Environmental Protection Agency thinks it did an A-plus job responding to the disaster. → Read more at thehill.com


 June 23, 2018

On this day in 1775, the Second Continental Congress issued $2 million in bills of credit. → Read more at politico.com


 June 23, 2018

The National Bank of Ukraine (NBU) and Crane Currency on June 22 signed the Agreement of Cooperation in the field of currency production, the central bank’s press service reports. → Read more at ukrinform.net


 June 24, 2018

Under President Trump, once stately medallions have gotten glitzier, and at least one featured a Trump property. Ethics watchdogs are worried. → Read more at nytimes.com

Coin Collectors News
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Why I will not attend Whitman Expo this weekend

Usually, I would have a bit of excitement as the Whitman Baltimore Expo is to be held this weekend. After my previous experiences, not only am I not excited, I am not going.

When Whitman bought the Baltimore Coin and Currency Expo, they did a good job making a destination show on the east coast. It looked like they added some resources and injected new ideas that make a good show better.

But it seems to have plateaued.

For the last few years, if you did not go to this show on Thursday or Friday, the number of dealers staying around has diminished to the point of not being worth attending over the weekend.

If you work or have other conflicts then you might want to consider not wasting your time.

In my case, I have a lot of work to do in setting up a new business. I will be in the shop all morning and will be waiting for someone to deliver some display items in the afternoon. I have to finish setting up by Monday so that the final occupancy inspection can take place—the county wants to ensure that the place is accessible according to the Americans with Disabilities Act (ADA). I cannot open the shop without this inspection completed.

I could take the time to go up on Sunday, but the last time I did that I counted less than 25 dealers. It is not worth the 42-mile one-way trip with the cost of gas going up and the tolls.

And it does not seem that Whitman is trying to improve the situation.

Sure, they added “**Limited Dealers**” to their schedule but that does not warn the visitor that in two or three convention center halls there will be less than 25 dealers.

If I wait until next Saturday I can go to a local show and see more than 25 dealers. It will be a shorter drive, no tolls, and the dealers are closer together so that I will not waste my time crossing empty aisles.

This is really sad because I have always considered this “my show.” My show is dying and I do not know if Whitman really cares!

#ALLCAPS

Congratulations to the
Washington Capitals

2017-18 STANLEY CUP CHAMPIONS!
First Stanley Cup Championship in the franchise’s 44 year history.

Just a small gathering in Downtown Washington

Image of the 2017 125th Anniversary of the Stanley Cup® 3-ounce silver Commemorative Coin courtesy of the Royal Canadian Mint.

Weekly World Numismatic News for June 3, 2018

Zimbabwe’s 2009 $100 trillion hyperinflation note

For those of you who do not like where politics and policy cross the line into numismatics, this post is not for you. Skip past the beginning into the news section below.

In the news this week was a story about the Reserve Bank of Zimbabwe touting the adoption of Chinese currency for general use in the country as circulating currency.

Zimbabwe’s economy has seen wild swings between massive inflation and significant economic stagnation that has caused currency fluctuations so bad that the country has given up managing its own currency. The economic problems have created a hyperinflation currency with notes printed with denominations as high as 100 Trillion Zimbabwean Dollars. So many of these notes were printed that any collector can buy them for $5-10 each.

Because of trade restrictions, Zimbabweans turned to United States currency smuggled from outside of the country. The supply of United States currency was so limited that some had begun the practice of cleaning the paper because people were carrying their currency in their underwear and new notes were difficult to come by.

Following negotiations with the United States, the RBZ was able to obtain new currency notes and offered an exchange to its residents. But that is where the negotiations ended. Upon the change of administrations, the current Department of the Treasury stopped negotiating with Zimbabwe and other African nations to introduce additional trade in United States dollars.

As the United States began to abandon these countries, the Chinese stepped in. The Chinese government has been negotiating with these countries and have made several inroads, especially in Africa. Zimbabwe is just the latest to announce that they could adopt the Yuan as their currency.

Although Zimbabwe is not an influential economy, it expands the Chinese economic base in Africa. By chipping away at the United States economic influence, it reduces the impact of the dollar on the continent that could have an effect on numismatics.

Africa continues to have the largest deposits of precious metals. Southern African regions have the world’s most active gold, silver, and platinum mines that if the United States loses influence in the region could have a negative effect on worldwide precious metals prices.

It is not a matter of the golden rule, “He who has the gold rules,” it is a matter of who controls the flow of gold from those mines. If the Chinese control the economic engine that runs those mines, they can use that influence to make or break the markets as they see fit. The ripple effect could not only bring higher precious metals prices but worldwide economic instability.

History has taught us that market manipulating does not work except if the manipulators have a backup plan. In this case, the Chinese are using their treasury as the backup plan. They are amassing economic power that could manipulate markets to the point that would cause prices to rise.

Currently, precious metals prices are set by arrangement with the London Bullion Market Association (LBMA) based on the daily auction prices in London. This is known as the London Fix Price. The market uses United States dollars for its pricing. However, if the dollar loses its economic power because the Chinese are controlling the markets where the metals are mined, it will affect the cost of everything.

In the short term, economic factors will affect the price of bullion being produced by the U.S. Mint since those prices are based on LBMA price averages. Collectors and investors will be hit first. After that, it would be a short time before economic instability hits everyone else.

And now the news…

 May 27, 2018

If you visit Stones River National Battlefield and Cemetery, you'll likely see coins on the top of many tombstones. According to park workers, the small mementos are a way some choose to pay their respects to the fallen soldier, and each kind of coin has a different meaning. → Read more at newschannel5.com


 May 27, 2018

In this edition of East Idaho Newsmakers, Nate Eaton speaks with Randy’L Teton. Teton is a Fort Hall native and is featured on the US Sacagawea dollar gold coin. She is the only living person to currently appear on a United States coin. During their conversation, Teton shares the fascinating story of how she ended … → Read more at eastidahonews.com


 May 28, 2018

TOKYO (Jiji Press) — The Finance Ministry said Friday that it will issue a silver coin to commemorate the 150th anniversary of the 1868 start of the country’s Meiji period, which ended in 1912. → Read more at the-japan-news.com


 May 29, 2018

Ahmed Mohamed Fahmy Yousef has spent the last academic year at the University of Colorado conducting research on learning technologies and instructional design in computer science education. → Read more at dailycamera.com


 May 29, 2018

Tawanda Musarurwa, Harare Bureau The adoption of Renmimbi/Yuan as a reserve currency, will help the country repay loans and grants from China, the Reserve Bank of Zimbabwe has said. → Read more at chronicle.co.zw


 June 1, 2018

Archaeologists in Egypt have unearthed a 2,200-year-old gold coin depicting the ancient King Ptolemy III, an ancestor of the famed Cleopatra. → Read more at foxnews.com


 June 1, 2018

An ancient Egyptian coin discovered in far north Queensland has researchers questioning how it got there. → Read more at abc.net.au


 June 3, 2018

The Royal Canadian Mint unveiled their first-ever panda-themed coin at the Calgary Zoo. → Read more at thestar.com

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