Energy Efficiency

When I was a kid, my Mum (who emigrated from war-torn Europe) showed me a 50,000 Deutschmark note, of course hyperinflation and the subsequent reprinting of a new currency to replace the old made the note worthless.

In Australia – when we went decimal – we had 1 and 2 cent coins and part silver 50 cent pieces as well as $1 and $2 notes.

Not long after, the 50 cent pieces were worth more as ‘scrap metal’ than the face value and the cost and intrinsic value of 1 and 2 cent pieces made it unviable making them, so the rounding up and or down was implemented to accommodate the withdrawal of these coins.

Now in America, they continued to mint a full range of coins; however, something has changed, harking back to those years where the face value of currency was more than the coin, we now see a shift which begs the question … is the USA positioning itself for a significant write down in the value of their currency?

We know that China as well as other major holders of the US$ are cutting back on their potential exposure to a falling US$, so has someone decided not to proceed with the manufacturing of coins ?

In the site http://news.goldseek.com/GoldSeek/1241366400.php the story is about the U.S. Mint not telling its workers in Philadelphia and Denver to take a six-month vacation, but it could judging from the coin demand target it is aiming for in 2009.

The Federal Reserve System has placed orders for just 3 billion coins in 2009, down over 70 percent from the 2008 production level of 10.1 billion.  With approximately 1.2 billion coins struck already in the first three months of the year, that leaves eight months into which to divide production of just 1.8 billion coins.

In the year 2000 the Mint was striking more than that per month.

The Mint says it will build a coin inventory, but unless the Treasury plans to stockpile the current commemorative Lincoln cents as it once did Morgan silver dollars, with its current business approach, it is hard to envisage the Mint going too far beyond projected coin needs.

Current workers, though, will embark on a six-month productivity maintenance effort that will assure future capacity.

The Mint will also undertake capital improvements and maintenance that would be difficult to do with presses operating at a more normal pace.

A hiring freeze also has been imposed. Although there is a scramble by collectors to acquire 2009 pieces because of their perceived scarcity, one wonders if the ‘investment’ in 2009 coins will ever pay a dividend.

At this point, there appears little movement by the Australian Mint to make less of the smaller coins, but this sort of information is not usually made available to the public.