Jan 17, 2011 | books, commentary, technology
Earlier this month I posted the question, “Where are the Electronic Numismatic Books?” That post garnered the most responses I have seen in quite some time—although many were in the form of personal notes rather than blog comments. Most of the comments were overwhelmingly positive agreeing with my assertion that there should be more electronic numismatic books.
Some of the comments, including Dennis Tucker, Publisher at Whitman Publishing, corrected me in saying that the Whitman Encyclopedia of U.S. Paper Money by Q. David Bowers is available on DVD. Tucker also said that the the Guide Book of United States Coins, Professional Edition was also available on DVD but I did not see it listed on Whitman’s website.
After receiving the note from Tucker, I asked him about Whitman’s e-book plans. He responded as follows:
Whitman Publishing does plan to distribute more books in electronic format. PDFs have certain strengths that our readers find appealing: they can be distributed on DVDs; they’re searchable; they have internal links; they’re PC and Mac compatible. Paper-money collectors love Q. David Bowers’s Whitman Encyclopedia of U.S. Paper Money — a massive 900-page reference book — and they also love having an electronic version available on a conveniently portable DVD.
Retail pricing, distribution models, and other details of future electronic projects aren’t ready to go public yet. But I can say that nothing is off the table as we explore the best ways to bring numismatic content to our readers — PDFs, downloads, apps, online content are all possibilities. Currently we have two web sites, WhitmanReview.com and WhitmanCoinCollecting.com, that aren’t “books” or “magazines” as such, but that broadcast show reports, book reviews, numismatic interviews and commentary, auction news, and other hobby information.
Remember in the early and mid-1990s, when “CONTENT IS KING” became the mantra of every Internet consultant and Web design agency from coast to coast? It’s still a very important concept in numismatic publishing. Whitman is strongly devoted to supporting fresh, ongoing, original numismatic research and authorship. This of course includes updated retail and wholesale pricing (as found in the Red Book and the Blue Book), updated auction records, updated certified coin populations, and the like. Those kinds of market data are very important to collectors, dealers, and investors. But Whitman Publishing has a commitment to the hobby community that goes beyond just reporting on market trends. We’ve nurtured a booming renaissance in numismatic publishing over the past ten years or so in particular. That investment, that energy, that explosion of talent has created the CONTENT; without good content, distribution models (whether ink-on-paper or electronic) are irrelevant to the hobbyist. If the content is factually wrong, or if it’s incomplete or misleading, or if it’s just a stale rehashing of old previously published information, it won’t matter if it’s published in books or online — collectors won’t find it valuable. Neither the publisher nor the consumer will find true, lasting value in that formula.
Whitman Publishing has the best numismatic authors and researchers working today. Kenneth Bressett, Q. David Bowers, Jeff Garrett, Dick Doty, Roger W. Burdette, David W. Lange, Rick Snow, Mike Moran, Bill Fivaz, J.T. Stanton, Katherine Jaeger, Rick Tomaska, Nicholas Brown, David Camire, Fred Weinberg, David Sundman, Harlan J. Berk, Clifford Mishler, Jim Haxby, Art Friedberg, Ron Guth, John Dannreuther, Hugh Shull, George Tremmel, Robert Azpiazu, Ira and Larry Goldberg, Eric P. Newman, Paul Rynearson, David MacDonald, Don Bailey, Scott Schechter, Saul Teichman, Fred Reed, Adam Crum, Selby Ungar, Jeff Oxman, Frank Colletti, Bob Leonard, Len Augsburger, Joel Orosz — that constellation of numismatic stars shows Whitman’s commitment to content. How we deliver that fresh, original content will continue to evolve. And it won’t end with the current generation of numismatic superstars. Last year Whitman teamed up with the American Numismatic Association to revamp and endow three new literary awards for Young Numismatists. They’ll be the ones digging in Treasury archives, unearthing primary documents, analyzing data, making brilliant connections, and writing about their findings after we all retire.
Is the traditional paper book obsolete? No. Are distribution models changing? Yes. Will Whitman Publishing continue to bring its best to collectors and serve their needs? Yes indeed!
Interestingly, I never questioned the quality of the content of Whitman Books. On the contrary, it is because that their content is so worthwhile that I am interested in e-books that Whitman would publish. However, I believe that the those of us who are interested in technology and those who grew up in the 1990s will be more interested in e-books than dead-tree editions. In other words, I think Whitman, Krause, Zyrus Press, and any other numismatic publisher should be entrenched in electronic publishing within the next five years.
Jan 10, 2011 | commentary, security
With the news coming from Arizona this past weekend, I was thinking about personal security and the security of our collections. It may seem like a gruesome topic to discuss in the aftermath of the shooting, but as long as our attention is on the situation, we need to take a look at our own security.
Last June, I discussed the Safety and Security Traveling with Coins after the robberies of dealers traveling to and from shows. One the key points I made is the beware of your surrounding, what we call “situation awareness.” It is not typical to think like this, but if you have numismatics that seem to be desirable, you need to consider your environment. Does the area “feel right?” Do you feel comfortable in the area? Are you worried about the strangers around you? What is your gut feeling? If you are not comfortable and just have that feeling that the area is not safe, go with that feeling and take appropriate actions.
We would like to think we live in a safe neighborhood, but at least once per week I see a news report with someone saying, “Nothing like this has happened here. This is such a safe neighborhood.” Unfortunately, there is always a first time, why be the first victim. How secure is your property? Are you coins on display in your home? If they are, do you have a security system?
Whatever you have for security may not be enough. You have to think like a thief and figure out how strengthen your defenses. Sure, strengthening your defenses may stop 95-percent of the thefts, but what about the other five percent? What about the amateur thief who gets lucky?
One of the best resources you have is your home insurance company. After many years of protecting property all over the country, they know what works and where to find the best people to help. Most insurance companies will help you with the risk assessment and share with you what their company knows about the risks in your area. They can also tell you about savings that you could see if you added additional security to your home.
Aside from the security of your personal property, you also need to considered what to do with your collection when you are no longer able to enjoy it. In my post, What Will Your Heirs Do With Your Collection, I discussed the necessity of estate planning with your collection. Remember, “It may be difficult to admit that the niece or grandson that appears to love to see your coins when they visit or is excited to receive a special numismatic gift may be more happy because of their interaction with you rather than your collection.”
Be honest with yourself, does your family really want the coins or what the coins are worth. If you are not going to mind that they will sell your coins, then leave it to them. However, if they are not going to keep the collection and their disposition really matter to you, then you should figure out how to deal with them while you still can make the decision.
While we pray that Rep. Gabrielle Giffords and the others who were injured a complete recovery; and we join with the families of Judge John Roll, 9-year old Christiana Green, Dorothy Morris, Phyllis Schneck, Dorwan Stoddard, and Gabriel Zimmerman in grieving their losses, we should take this opportunity to heighten our own security awareness to protect ourselves, our loved ones, and our collections.
Jan 8, 2011 | books, commentary, technology
Ever since I first put my fingers to the keyboard of a PolyMorphic Systems Polly 88 microcomputer and learned to program it in BASIC, I have been very interested in technology and integrating technology in my life. I have owned computers since the early 1980s and spent a career first as a programmer, architecting systems and networks, and for the last 18 years in information security. Over my 30 year career I have seen the industry grow from million dollar mainframes to being able to put a computer in your pocket that can make telephone calls without wires and play music.
My trip down memory lane comes as the the Consumer Electronics Show (CES) opens in Las Vegas. It is the largest show that features nearly every electronic gadget and gizmo both available and not available. It is where companies announce new products, new features, and show off what they are thinking about the future—which those of us in the industry call vaporware. It is where all of the neat toys are shown off.
Even for those of us in the industry, it is difficult to predict the future, even after seeing this year’s “next big thing.” We can look back at the last CES and see what made it past the announcement and has became hotter a year later. Watching the new product introductions, the hot products are smarter phones and tablets.
Tablets are smallish computers with the functionality to consume media and content and only powered enough to be a limited content creator. Applications run locally to enhance the tablet’s functionality while giving the user access to an entire Internet of resources. This year it is clear that those introducing new products are looking to be the next iPad killer. Weather you like Apple or not, the iPad has set the tone for the tablet market the same way the iPhone has set the tone for the smart phone market.
So why am I talking about CES on a coin collector’s blog? Because this big thing will have an impact on how you consume numismatic information.
The future of content consumption is electronic. E-book readers will support the reading of books, magazines, newspaper, and some online content on a small handheld device conveniently sized for reading. They are designed to do one thing very well: provide you a way to read published content in a more convenient manner and without killing trees. While tablet and smart phones are more general devices, both have the ability for you to read published works when you are not playing the current hot game or social networking. All of these devices have programs that can tap into online bookstores so that you can buy books at a reduced price and have it loaded directly onto your device to read.
E-book readers can read many different format files, but the type used for the best reading experience is based on the concept of “electronic paper.” Electronic paper allows the reader to resize, bookmark, type notes, highlight, and do anything to an electronic page except fold it while maintaining the integrity of the book. As the read changes size or add their own notes, electronic paper allows the book to reflow, or repaginate, within the device. When a book or document is repaginated, tables of contexts and indices are also adjusted to make the text easy to search.
Currently, the only numismatic book publisher selling electronic versions of their books is Krause Publications. If you visit their online store you can search the Coin CDs/DVDs section to find a number of their publications, including the Standard Catalog series can be purchased on CD. Once you load the CD on your computer and copy the Portable Document Format (PDF) file to your hard disk, you can open the file in a PDF reader (Adobe Acrobat Reader on any system or Preview on a Mac). Once the file is open you can search for any text, zoom in to view any image up to 400 percent, add notes, bookmark pages, and highlight areas. Again, anything you can do with a real book except fold page corners.
Krause also sell sections of the Standard Catalogs and other publications as downloads. For example, if all you are interested in are Obsolete Bank Notes of the District of Columbia, you can just download that section of the Standard Catalog of United States Obsolete Bank Notes for significantly less than the entire four CD set.
Since I purchase the Standard Catalog of World Coins for the 20th century, it has been a wonderful resource to have while sitting at my computer. Searching for country coinage information and making highlights has really enhanced my appreciation for the work without having to lug around that huge volume. I also consider how many trees were saved by buying bits and not pulp.
Using a PDF document on an e-reader does not take advantage of the e-reader’s strength. Since I do not have an e-reader, I downloaded Krause’s U.S. Coin Digest onto my iPhone to use as a portable reference. It is a wonderful portable reference to have without having to carry the book. However, the use of a PDF document shows its limitation on smaller screens. A test on a friend’s Kindle demonstrated the limitation of a PDF file when it was proven difficult to navigate a zoomed PDF document because of screen size limitations. It would help those of us with e-readers if they would publish books in ePub and E Ink formats.
At least Krause has taken the first step into electronic publishing. Whitman Publishing, the other major publisher of numismatic books, only offers “dead tree editions.” I know that some people like the physical book, but they should start embracing the 21st century and offer e-books for those of us who want to read their books in a more portable format that does not kill trees. I am sure Whitman can figure out the economic benefits of replicating bits over importing physical copies from China.
Until Whitman and other numismatic publishers catch up with the e-reader, you can find classic electronic books to download to any device. The best source if Google Books. While Google Books does sell current editions in electronic format, they also have a number of scanned books they have permission to make available or whose copyrights have expired. The best way to find numismatic books is search for “coins” on the Google Books website. Books can be read online or you can download free books through the Google Bookstore. You can file early copies of The Numismatist through Google.
Publishers who have not embraced the e-reader will lose out on the business of younger numismatists and technology-oriented people like myself. CES made it clear that the future is in portable electronic devices and the publishers who cannot or will not provide the appropriate product will be losing out on new business. I hope the numismatic publishers consider this for their current and future publications
Jan 7, 2011 | commentary, economy, Federal Reserve, history
I am not one who looks at our current monetary system and believes that changes must revert back to a standard based on precious metals. I understand that such a standard requires government intervention by controlling the prices of the metals in order to create a monetary standard that does not allow for growth and expansion. History shows that the attempt to control the prices of precious metals while trying to maintain economic growth has not worked. We can look at the Coin Act of 1873, also known as the Crime of 1873, for manipulating silver out of the monetary system and creating a series of recessions and depressions because of the lack of real growth.
On the other end, taking the U.S. off the gold standard in 1933 was the first step in expansion of the U.S. economy. The final step in economic growth was fully breaking the dollar’s tie to gold while allowing the price of gold and the U.S. dollar to trade freely on open markets. Even though the United States experienced a concept call stagflation in the 1970s, the strength of the U.S. dollar was growing around the world. It was during this time that many economies were basing their own currencies on dollars to where some countries use dollars instead of their local currency.
After many years of seeing the dollar take over economies all over the world, the European Union joined to form a common currency in order to offer an alternative to the U.S. dollar. When the Euro was launched in 1999, the two European economic powers went in different directions. Germany, which has a significant manufacturing and technology base, joined the Euro while Great Britain, worrying about its sovereignty because it could not control its currency, kept its currency based on the Pound. Today, the Euro is having problems with the economic programs throughout Europe (Greece, Ireland, and Portugal with Spain not far behind) and Great Britain able to weather their own storm, albeit not without protest. Talk about replacing the Dollar with the Euro as the benchmark currency have subsided.
The issue of sovereignty becomes an interesting question with a joint resolution introduced to the Virginia House of Delegates. House Joint Resolution No. 557, introduced by Del. Bob Marshall (R-Manassas 13th district), to “[Establish] a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System.”
As with many bills on both the federal and state level, the bill begins with paragraphs what begin “Whereas….” For this joint resolution, it claims authority by cherry picking rulings from 19th century rulings made during the height of the Robber Barron era before the introduction of the various Anti-Trust Acts to justify the assumptions. They also cherry pick statements from the United States Code (U.S.C.) that take the statements out of context in order to pervert their meanings.
The “Whereas…” section also claims that “many widely recognized experts predict the inevitable destruction of the Federal Reserve System&rsuqo;s currency through hyperinflation in the foreseeable future.” Who are these experts?
If the resolution passes, it directs that a joint committee will be created to study whether the Treasurer of the Commonwealth of Virginia and the Bureau of Financial Institutions can and should coin its own money for use within the Commonwealth should the Federal Reserve or other sources collapse. The committee is supposed to report its findings by the first day of the 2012 Regular Session of the General Assembly.
After living in the Washington, DC area for almost 20 years and having jobs that worked with the federal government, I have seen my share of wingnuts from both sides of the aisle. But I have come to learn that the extremes on either side is aptly described as extreme. The extreme nature of this resolution ignores Article I, Section 10 of the U.S. Constitution that says “No State shall… coin Money.”
While the Federal Reserve and the U.S. Mint has its issues regarding the policies of the manufacture and distribution of money (remember the Bureau of Engraving and Printing prints the currency), proposing to violate the constitution is unconscionable. Besides, if it ever gets to the point that the Federal Reserve fails, Virginia coining their own money may be the least of our problems.
Dec 21, 2010 | commentary, US Mint
Yesterday, the U.S. Mint issued a press release announcing that Director Edmund C. Moy submitted his resignation effective on January 9, 2011. Moy was appointed as the 38th Director of the U.S. Mint in September 2006 after being appointed by President George W. Bush and being confirmed by the Senate. His five year term was to expire on September 5, 2011.
Moy will join L&L Energy, Inc., a Seattle-based company with coal mining and distribution businesses in China. In a press release issued today, Moy will join the company on January 10, 2011 as Vice President of Corporate Infrastructure. L&L Energy said that Moy’s responsibility will “include corporate development, global logistics, and general administration.”
In his remarks, Moy said, “I’m proud of the progress we’ve made over four and a half years. The Mint is a better place and delivering more value to the American taxpayers.” However, the failures of the public face of the U.S. Mint was very evident during Moy’s tenure. From problems with the U.S. Mint’s website to the debacle over not having enough bullion planchets to meet demands of investor and collectors, there is enough to question how successful Moy’s tenure was at the U.S. Mint.
The U.S. Mint has had missteps in customer server that anecdotal evidence of the comments that appear in my Inbox suggests has not been resolved. In fact, a search of any of the online collector’s forums will show that customer service has not improved in the last two years.
Finally, I have questioned Moy’s leadership ability to manage the U.S. Mint when the Fiscal Year 2009 Annual Report showed that U.S. Mint’s operating costs rose significantly in FY09 even though the demand for its products were reduced. In my analysis I noted that in FY09 it cost the U.S. Mint 1.1-percent more to produce 40-percent fewer coins than in FY08. CEOs have been fired for this type of negative turn around!
It has been recent history that appointed members of an administration resign their posts at the end of the president’s term. Moy did not resign opting to try to fulfill his term. Over time, I have accused Moy of being more of a bureaucrat than a leader. This was a change from his predecessor, Henrietta Holsman Fore, a Bush appointee who had experience with manufacturing in the private sector and a history of successful government service.
With Moy’s resignation, President Barack Obama has the opportunity to appoint a new director with the skills to manage the world’s largest coin manufacturer. In an open letter I wrote when he was President-Elect I suggested that the next Director of the U.S. Mint be a leader whose experience includes manufacturing, supply chain management, and customer service.
I realize that this may not be a top priority for the president. In the current political climate, it is possible that the appointment will not be made until after the holidays. Even if the president was to announce the appointment tomorrow, the lame duck session is about to end meaning that the confirmation will be taken up by the Senate of the 112th Congress. In the mean time, Deputy Director Andrew D. Brunhart will become acting U.S. Mint Director. Brunhart, the former General Manager of the community-owned water and sewer company in the Maryland suburbs, may not be up to the job based on his performance at the water and sewer company. The business infrastructure at the water and sewer company has continued to under perform based on the policies and structure he left leaving questions as to whether Brunhart could manage the U.S. Mint for an extended period of time.
I wish Ed Moy success in his new endeavor and enjoy the coffee out in Seattle. Even though it is more of a tourist destination, the Pike Place Market is still one of my favorite destinations and hope you enjoy it as much as I do. Just watch for the flying fish!
Portrait of Ed Moy courtesy of the U.S. Mint.
Nov 22, 2010 | advice, coins, commentary
The reports of my demise have been greatly exaggerated.
While that line in many forms have been credited to Mark Twain, I appreciate those who have written during my absence from writing. Thank you for your concern and I am glad that some here missed me!
My absence was because of a health scare that required my convalescence in a local hospital for the last 10 days. For those who have not yet experienced the recovery from a long illness, hospitals can be painful, frustrating, and frightening. Although my recovery was not in doubt, my wife and I had the discussion as to what to do if the next incident ended more tragically.
Those of us who are collectors may be the only one in our family who enjoy numismatics. We spend years collecting, accumulating, and appreciating the coins, notes, and other collectibles but when our time comes, we would like for those we love to carry on our passion. But seriously, if your family has not shown a real passion for your collection of has not started their own collection, it is likely that they will not be interested in anything other than selling your collection and moving on. It may be difficult to admit that the niece or grandson that appears to love to see your coins when they visit or is excited to receive a special numismatic gift may be more happy because of their interaction with you rather than your collection.
“I found your blog by searching for help,” opened one note. “My husband inherited coins from his grandfather and we would like to sell them.” The note goes on to explain how they know nothing about collecting coins and would just rather sell them. While I explain some of their options, one is always to save them and become a collector themselves. Few take that option.
This has become such an issue that there is now a book about selling the coins that you may have received from your late grandfather’s estate.
Be honest with yourself, does your family really want the coins or what the coins are worth. If you are not going to mind that they will sell your coins, then leave it to them. However, if they are not going to keep the collection and their disposition really matter to you, then you should figure out how to deal with them while you still can make the decision.
When my wife and I discussed estate planning, we talked about my rather large coin collection. I decided that as part of my estate plan, I am going to document how my collection will be disposed of when I can no longer enjoy it. While I will include gifts to some relatives, I will also include instructions as to what to do if the relatives are not planning on keeping the coins. I have counseled too many confused people to leave this up to chance. At least I know that if the coins are sold my heirs will receive proper value.
While I wish everyone a long, happy, and healthy life, we have to understand that life will end at some point. It is our responsibility to make sure that our heirs remember us fondly and not for the painstaking task of disposing of our collection.
Nov 6, 2010 | commentary, policy, US Mint
Now that the dust has settled from the November 2 mid-term elections, there is a consequence for collectors of United States coins: Rep. Ron Paul (R-TX) will be the chairman of the Subcommittee on Domestic Monetary Policy and Technology, the subcommittee with oversight authority over the U.S. Mint.
Prior to the election, Rep. Melvin Watt (D-NC) was chairman of the subcommittee and Rep. Mike Castle (R-DE) was the ranking member. With the 60-seat gain by the Republican party, they will change the makeup of committees. Since Castle lost his primary race, the Republican leadership in the 112th congress will likely elevate Rep. Paul to be the chairman of the committee. It is likely Rep. Watt will become the Ranking Member.
While there will be other changes in the governing structure in the various committees that provide oversight to the U.S. Mint, this subcommittee provides the direct oversight where bills on coins, commemoratives, and medals are first assigned. Considering the legislative history of its new potential chairman, it is likely that it will be an interesting session.
To say that Ron Paul has an economic agenda that differs from current policies and similar policies that have existed since 1964 would be an understatement. Paul wants to go back to a precious metals-based standard specifically using gold and silver. While it is recognized that a precious metals standard would make it difficult to manipulate currency markets, it has its limitations to be able to supply a demand for money.
Although Paul’s policy preferences are something to be debated, policies dealing with the operation and production of the U.S. Mint is not the place for that discussion. During the hearing of “The State of U.S. Coins and Currency” held on July 20, 2010, Paul’s opening statement was more about not about his view of monetary policy. In his opening statement, Paul commented on the prosecution of Bernard von NotHaus by saying, “the federal government insists on printing trillions of dollars out of thin air, and prosecuting individuals who attempt to create precious metal currencies to compete with the devalued US dollar.”
Later during the same hearing there was a discussion regarding the U.S. Mint not issuing the 2009 American Silver Eagle Proof coins. Paul asked U.S. Mint Director Ed Moy why the U.S. Mint could not just strike 2009 Proof American Silver Eagles. Moy rightfully pointed out that doing so was not legal (see 31 U.S.C. § 5112(d)(1)).
In fact, during the questioning of Director Moy, it was as if Paul did not understand that the “Mint Does What It’s Told by Law to Do.” Although Paul said, “It is a shame that Congress has already unconstitutionally delegated its coinage authority to the Treasury Department,” he underestimates congress’s role as outlined in Title 31 of the United States Code.
I am not encouraged by Ron Paul’s potential elevation as chair of this subcommittee. Rather than provide oversight to an already over-regulated agency, Paul will use his position as a platform for his policy preferences. Oversight of the U.S. Mint is not the place to promote these policies. If Rep. Paul wants to promote his policy preference, I suggest he chooses another committee for which to serve or learn what the U.S. Mint actually does before accepting the role as chairman of its oversight committee.
Sep 11, 2010 | BEP, cents, commentary, Federal Reserve, legal, US Mint
It looks like the pundits have run wild with the malarky that gins up crowds for an issue that should not be an issue. This one was started by John Green, someone with the credibility of a camera who posts videos for something he and his partner calls Vlog Brothers. Apparently, the vlog (video blog) is about whatever comes to their minds whether it is right or not.
In Green’s latest screed posted on YouTube he ruminates about how the “penny” is worthless and the U.S. Mint should not be producing them. In the comments to the video, he claims that he read two articles, one from The Washington Post and another from Consumer Affairs, about the alleged opportunity costs of the coin. In fact, The Washington Post article is an opinion piece and has limited value in the argument. What Green did not say is that both articles are over four years old. Apparently, he could not find anything more recent or factual.
I found the video on the The New York Times block of Stephen J. Dubner, a co-author of the Freakonomics books and journalist who like some of his other The New York Times brethren has issues with facts (e.g., Duke lacrosse case).
Starting with the grossly obvious: The United States Mint does not strike “pennies.” The coin is one cent and not a penny. The penny is the lowest denomination of the current British monetary system. Back when Alexander Hamilton devised the U.S. monetary system, the lowest British denomination was the Farthing, ¼ penny. Rather, Hamilton called the coins “cents” to distinguish the United States coins from the British coins.
But the name of the coin is a basic issue. The real measure of the alleged journalist’s muster is if he could look beyond the salacious drivel to discover the truth that may actually cause real thought and consideration from the public. If Green and Dubner would do their homework they will know that:
NO TAX DOLLARS ARE USED IN THE MANUFACTURE OF COINS AND FEDERAL RESERVE NOTES IN THE UNITED STATES!
“Wait,” you might interrupt. “Aren’t these government agencies that are funded by congress?”
Yes, both the U.S. Mint and the Bureau of Engraving and Printing are bureaus under the Department of the Treasury whose budgets are approved by congress. However, the money that congress allocates to these bureaus are NOT taken from the general fund.
Both the U.S. Mint and the BEP are profit making bureaus. After manufacturing the money, it is sold at face value to the Federal Reserve for distribution to member banks and then to the public. The difference between the face value of the money and the cost to manufacture the money is the profit—called seigniorage. Even though the one cent and five cent coins cost more to manufacture than their face value, the U.S. Mint continues to generate profit from the sale of all coins sold to the Federal Reserve in addition to the sales of bullion and collectible coins.
According to the 2009 U.S. Mint Annual Report (covering Fiscal Year 2009: October 2008–September 2009), they earned $98.1 million in seigniorage. That is a profit of $98.1 million in a down economy!
When the U.S. Mint is paid by the Federal Reserve for the coins, a collector purchases collectibles directly from the U.S. Mint, or a bullion dealer buys bullion coins, the seigniorage is deposited into a special account called the United States Mint Public Enterprise Fund (PEF) as required by law (see 31 U.S.C. §5136). As sales are deposited in the PEF, the law requires that the U.S. Mint use the money in the PEF for budgetary reasons like to manufacture coins, maintain facilities, pay employees, etc. No tax money is deposited in the Public Enterprise Fund and the PEF is managed like all general accounts by the Treasury Department. In fact, excess profit is required to be deposited in the Treasury general fund.
There is a similar fund for the Bureau of Engraving and Printing (see 31 U.S.C. §5142).
If the money that the U.S. Mint uses for all its operations is withdrawn from the PEF and if the PEF does not contain any tax receipts, then how does it hurt taxpayers if the U.S. Mint continues to manufacture one and five cent coins?
More philosophically, it is “[the] primary mission of the United States Mint is to produce an adequate volume of circulating coinage for the nation to conduct its trade and commerce.” This is done by striking coins that are ordered by the Federal Reserve System for placing into commerce. If the Federal Reserve only orders coins they need to sell to member banks, then why is does Federal Reserve Currency and Coin Services order so many one cent coins? If they are useless and cannot buy much, why do they keep ordering more cents?
It is unfortunate that a journalist chose to support his fact deprived argument using an editorially questionable YouTube video.
Aug 30, 2010 | commentary, education, gold, investment
At least once every month a reader will send an email note asking about the worth of coins they bought from a television shopping channel or from a company that advertises on cable television. Last week, someone asked specifically about coins bought from a company that sells gold on the show of a nationally known cable television personality.
I was surprised to learn what was being sold as investment quality coins. The person who I was corresponding with was sold Swiss and French gold coins whose values are a few percentage points over the melt value of the coin. My correspondent paid much more than the coins value. Unfortunately, the spot price of gold would have to climb over $1,500 per ounce for this person to break even on these coins.
Another email asked about the worth of State Quarter sets purchased from a television shopping channel. This person bought these sets as part of a subscription and paid three-to-five times the numismatic value for these coins. Even though the coins had nice presentation packaging, I was able to show the user online auctions where the coins are not selling for a premium that would allow him to break even.
Over a month ago, someone wrote to ask about a coin set sold by a large mail order coin dealer. As with other coins sold by this dealer, they were quality coins but were overpriced when compared to other dealers and price guides. Although the coins were in special packaging creating the illusion of a set, the price of the coins was 15-25 percent above the retail prices published in price guides.
The common denominator in these stories is that these people bought the sizzle and not the stake. They bought the special packaging or the promise of value trust the person on television, the other end of the telephone, or the pretty advertisement in a magazine. It breaks my heart to tell these people they overpaid!
Each of these people would not have made these mistakes if they had done a little research. Research is not that difficult. It starts with some basic questions: What is this coin really worth? Is this a good investment item? Who is this person I am buying from?
Over the last 10 years, there has been a surge in the publication of numismatic resources, whether it is in print or on the web. Books are being published by traditional hobby publishers and other general purpose publishers that can teach you about any coin type, how to invest in coins, and now there is a book that discusses how to sell the coin collection your grandfather left for you.
Other resources include online price guides, hobby magazines, and various websites that can help you in almost any topic in numismatics.
If that is not enough, ask questions. No question is too basic. When I taught college courses, I would remind my students that there is no such thing as a stupid questions—the only stupid question is the one not asked! Ask your favorite blogger. Ask your favorite dealer. Ask your question in a public forum that caters to coin people. Just ask!
The axiom that if the deal sounds too good to be true, it probably is not true. If you talk with someone about purchasing coins and they try to pressure you into buying immediately, do not give in to the pressure. It is your hard earned money and it is your prerogative to understand everything about how you spend that money.
Before I make any significant purchase, I will analyze the cost of the item before attempting the purchase. I select specific vendors to negotiate with and then contact them to open the conversation. When I negotiate I remember that I have the power. I may want the item, but it is my money the vendor wants. If the vendor wants my money then that person has to work with me. Otherwise, I am prepared to walk out.
If the vendor cannot answer my questions, I walk out unless they say they will find the answer. If the vendor will not answer my questions, I will walk out. If they negotiate in bad faith, I will walk out. If they treat me like they are doing me a favor, I stand up, shake their hands, thank them for their time, and then will I walk out.
Remember, you can say “no” as often as necessary. You can say “yes” only once. Make it count. Do not let the slick talking sales person sell you something that is not in your best interest. Know what you are buying and know how to just say NO!
Aug 29, 2010 | BEP, cash, commentary, economy, US Mint
“Cash is expensive, we need to be using it less.”
This self-serving quote was made by Steve Perry, executive vice president of Visa Europe, in an article that appeared in the Telegraph in the United Kingdom. To justify this statement Perry says that supermarkets in the UK are introducing cashback, a program to promote the use of credit and debit cards over cash because cash is more expensive to handle.
It may be the case in the UK that cash is more expensive to handle, but in the United States, we are seeing consumers and some small businesses moving in the opposite direction. This past week, credit reporting agencies and the credit card companies reported that the average credit card debt has fallen to its lowest point since 2002. Delinquency rates fell by 17-percent to the lowest point since the start of the current recession. Americans are buying fewer items on credit and using what income they have to pay off credit card debt.
With the economy in a stall, the U.S. Mint exceeded its 2009 output in July 2010. And even before the August Federal Open Market Committee meeting, it was speculated that the Federal Reserve would order more paper notes from the Bureau of Engraving and Printing. Since the FMOC meeting, Federal Reserve Chairman Ben Bernanke said that the Fed will do whatever it takes to stimulate the economy.
Aside from the economy another factor turning people away from credit cards is the environment created by the banks prior to the implementation of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Public Law No. 111-24 [TXT] [PDF]), also know and the Card Act. Between the bill’s passage and recent enactment, the banks have been raising fees on consumers and businesses in order to make up for what they saw as a potential loss of income. Rather than make it better for the consumers in the spirit of the Card Act, the banks showed their bald-faced greed making the using of credit cards more expensive than cash.
Even though Canada is debating on eliminating its 1-cent coin and others are pushing credit card technology onto the smart phone, small businesses are looking to save the cost of credit card handling by offering a discount for paying with cash. Credit card processing costs from three to five percent per transaction plus account fees. Some small businesses are offering their customers a discount of their credit card processing fee if they pay in cash.
Receiving a discount for paying using cash is not a new idea. There was a time, before the Card Act, when gas stations used to offer one price for cash purchases and another for credit card purchases. However, the convenience of using credit cards at the gas pump made this option unattractive. Even though the costs for using credit cards have been added to the price of gas, the elimination of this dual pricing was welcome. Recently, some independently owned stations have been offering a discount for using cash or for using the company’s credit card. The psychology of receiving a discount may make dual pricing more palatable in this environment.
As people are pulling away from credit cards, small businesses are looking to cut costs by offering discounts for paying with cash, and even with the rise in savings rates, it appears that the report of cash’s eventual demise appears to be greatly exaggerated. For numismatists, this means that our hobby will continue to grow with new, fresh material for years to come. And considering the bad economic news, this is good news. Happy collecting!
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