Major Cause of the Economic Crisis: Commemorative Coins

Leading economists say that several events led to the current economic crisis—the bursting of the housing bubble, the high default rate on subprime and adjustable rate mortgages, over-leveraging, mortgage backed securities, and predatory lending. However, no economist has mentioned the major cause of the crisis: commemorative coins.  People have been saving commemorative coins as collectibles instead of spending them.  This money could be used to create jobs and stimulate the economy.  Therefore, to get out of this economic crisis the U.S. Mint needs to stop making commemorative coins.

The most popular commemorative coin is the state quarters. The 50 state quarter program began in 1999 and finished in 2008. Every ten weeks the Mint would issue a new state quarter in the order the states entered the union. During these ten years, the Mint did not produce any of the regular eagle quarters[1]. The program has been highly successful. Allen Rosenberg, the president of coinland.com said, “[t]he sheer number of people collecting (these coins) is phenomenal. There certainly is no lack of participants -- there is an enormous amount of interest.” [2]. Furthermore, the Mint only produced 800 million of each of the first three quarters, but in 2001, the Mint produced 1.1 to 1.6 billion of each quarter. The increase in production was due to the rising popularity of the quarters.

There are no statistics available on the number of people collecting these quarters, but from the above facts it is obvious that there are thousands if not millions of people collecting state quarters. I’m one of those people. I have two complete sets of state quarters. These two sets are worth twenty-five dollars. Even though I’m unemployed and don’t have a lot of money, I will not part with my collection, because I worked hard to find each of the quarters and I’m hoping it will be worth more money in the future as a collectible. Now, let’s assume that one out of every ten people is like me and has collected two sets of the quarters (a fair assumption considering the popularity of the quarters). There are approximately 305,529,237 people in the United States. If one out every ten people is hoarding twenty-five dollars in state quarters then there are $763,823,092 not in circulation. 763 million might not seem like a lot, but when consumer spending is low—like it is now—the state quarters program certainly exacerbates the problem.

So far this essay has only dealt with the state quarters program’s effect on the economic crisis. However, the state quarters program is only one of many commemorative coins. The U.S. Mint is or plans on issuing the following commemorative coins: 2010 Quarters Program, D.C. and U.S. Territories Quarters Program, First Spouse Gold coins, Native American Gold coins, Lincoln one cent coins, Presidential Gold coins, and more[3]. All of these programs cause thousands of people to keep their money instead of spending it. Every time someone receives a James K. Polk gold coin, he will not spend it, because the U.S. Mint has tricked him into thinking it’s a collectible that is part of a set.

When will it stop? The Mint needs to stop issuing commemorative coins, especially coins that require someone to get a complete set. The Mint should only issue plain, ugly coins and bills. That way no one will be tempted to collect the coins, and instead will spend the money and jumpstart this economy.

[1]
http://www.usmint.gov/mint_programs/50sq_program/index.cfm?action=factsheet
[2] http://www.stateline.org/live/ViewPage.actionsiteNodeId=136&languageId=1&contentId=14392
[3]
http://www.usmint.gov/mint_programs/