The E-Sylum:  Volume 10, Number 4, January 28, 2007, Article 11

FEDERAL RESERVE ECONOMIST SUGGESTS REBASING THE CENT

Stephen G. Searle, Jeff Reichenberger and others forwarded the
following Reuters article about melt value of U.S. coins and the
recent U.S. Mint prohibitions on melting.  An economist from the
Federal Reserve proposes revaluing all cent coins to a higher
denomination.

"Francois Velde, senior economist at the Chicago Fed, argued in a
recent research note that prohibitions by the Mint would unlikely
deter serious speculators who already have piled up the coinage.

The best solution, Velde said, would be to "rebase" the penny by
making it worth five cents rather than one cent. Doing so would
increase the amount of five-cent coins in circulation and do away
with the almost worthless one cent coin.

"History shows that when coins are worth melting, they disappear,"
Velde wrote.

 To read the complete Reuters article, see: Full Story

 To read the original Velde February Chicago Fed Letter, see:
 February Chicago Fed Letter

[Is there an echo in here?? You read it here first in The E-Sylum
(September 25, 2006), when Dick Johnson suggested rebasing as a
solution to the melting problem.  See the link below to read his
original article.  -Editor]

  DICK JOHNSON'S DRAMATIC SOLUTION TO THE RISING COST OF CENTS
  esylum_v09n39a13.html

Jeff Reichenberger adds: "He theorizes the Treasury standing ready
to exchange a dollar for every twenty pennies turned in. Can you
imagine the lines! All of our hoards turned in all at once! What
about that guy in Minneapolis with the giant penny mural? Hope he
didn't use epoxy."

[Not quite. The idea of revaluing the cent is to KEEP them in
circulation.  Sure, a lot of people might "cash in" their hoards,
but there would be no pressing need to.  With the Treasury willing
to accept them at the new value, banks and merchants would also accept
them at the new rate.  By fiat, everyone's old pennies would become
worth five cents apiece in commerce anywhere - no need to convert
them into anything else.  -Editor]

  Wayne Homren, Editor

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