Question for our "Money/Financial Experts" out there....

[sutz12]

Two things over the past few years have been a concern for me.

First up is the fact that they no longer report the M3, which IIRC is the report of the amount of hard currency in circulation. In and of itself, this may not be a problem. But I think there may be something hidden here.

For the past 10 years or so, they have been minting literally billions of dollars in "collectible" coins. It seems to me that a substantial percentage of these coins went, not into circulation per se, but into peoples' closets and drawers. I know personally dozens of people (or at least it seems like it) who save these, to the point that they keep nearly ALL of the new state quarters that pass through their hands.

Now the question......what happens as the economy continues to go south, and people start to realize they have 'hidden assets' and decide "Let's cash in the quarter collection to buy the kid some milk"? It would seem to me that we have a built in inflation generator if millions of people start cashing in their coin collections due to hard times.

Since we don't get that M3 report, could it be that there is more money out there than is healthy for the economy, and we are currently being saved simply by the fact that the money isn't in active circulation, but could be?

Is this a real vulnerability, or should I put down the crack pipe? :)

[CountAllVotes]

1. those "new" state quarters are worth very little

they are no longer made of silver. If people are purchasing silver proof sets, that could be a very good investment.

Old coin collections could be worth quite a bit depending on the dates on the coins.

However, most coins out there today aren't made of precious metals sadly.

:dem:

[BridgeTheGap]

2. What's the difference between a coin collection

and a savings account - assuming there is no value to the collection? I don't think it's enough to drive the value of currency down.

[Fresh_Start]

3. Currency is only about 10% of M3.

I wouldn't worry about the quarters.

[TreasonousBastard]

4. Currency is in M1, M2 is M1 plus some time deposits, and...

M3 is all that plus some external debt and Eurodollars.

Coin collectors probably don't have any more effect on the money supply than stamp collectors do on postage.