The E-Sylum:  Volume 9, Number 28, July 9, 2006, Article 4

BOOK: THE BIG PROBLEM OF SMALL CHANGE

On Friday July 7 USA Today published another article on the
problem of the U.S. cent, but what caught my eye was the mention
of a book on the historical problems of small change:

"When the government loses money on making a coin that for many
people holds little value, it's time to turn off the presses,
argue some prominent economists.

"It's really becoming completely pointless," says Francois Velde,
senior economist at the Federal Reserve Bank of Chicago and co-author
of The Big Problem of Small Change. He argues that the metal in money
must be worth less than a coin's face value, because otherwise people
will hoard coins, melt them down and sell them for cash, which
happened in the 1960s when quarters were made partly of silver."

To read the complete USA Today article, see: Full Story

"The Big Problem of Small Change" is a 2002 book by Thomas J. Sargent
and François R. Velde.  Published by the Princeton University Press,
a paperback version came out in 2003.

"The Big Problem of Small Change offers the first credible and
analytically sound explanation of how a problem that dogged monetary
authorities for hundreds of years was finally solved... -- the
recurring scarcity and depreciation of small change. Through
penetrating and clearly worded analysis, they tell the story of how
monetary technologies, doctrines, and practices evolved from 1300 to
1850; of how the "standard formula" was devised to address an age-old
dilemma without causing inflation."

"This fascinating new history of money shows that the key ingredients
of a sound currency were identified in Europe hundreds of years ago.
The mystery is why, even today, so many governments fail to put this
knowledge to work."--The Economist"

To read more on the book at the Princeton University Press site:
Full Story

To view the table of contents on Google Book Search: Google Book Search

George Fuld adds: "Nationally syndicated columnist Jay Hancock
(in the Baltimore Sun for Sunday, July 9th) makes a very good case
for the abolition of the penny.  He's undoubtedly right, but odds
are we'll see the 2009 Lincoln and then penny abolition."

To read the complete article, see: Full Story

  Wayne Homren, Editor

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