« Wage compression | Main | Boudreaux v. Rodrik »
All monies are commodity monies
Millions of Indian coins are being smuggled into neighbouring Bangladesh and turned into razor blades. And that's creating an acute shortage of coins in many parts of India, officials say.
Police in Calcutta say that the recent arrest of a grocer highlights the extent of the problem. They seized what they said was a huge coin-melting unit which he was operating in a run-down shack...
"Our one rupee coin is in fact worth 35 rupees, because we make five to seven blades out of them," the grocer allegedly told the police.
In some cases the temporary solution is a private money:
To deal with the coin shortage, some tea gardens in the north-eastern state of Assam have resorted to issuing cardboard coin-slips to their workers.
The denomination is marked on these slips and they are used for buying and selling within the gardens.
Here is the story. The pointer is from www.geekpress.com.
Posted by Tyler Cowen on July 13, 2007 at 12:24 PM in Economics | Permalink
Comments
The story is so poorly written that it is impossible to know (1) whether the coins are melted only to produce razor blades to be sold in Bangladesh, and (2) what is going on in Bangladesh and in particular in the razor blade market. BBC's standards of reporting have declined so much that reading BBC online news is a waste of time.
Posted by: Edgardo at Jul 13, 2007 1:22:59 PM
Well, this is what happens when you devalue your money- eventually the material it is made from is more valuable than the denominations stamped on it. Even the US is having this problem with the penny. I predict we will have coins made of dirt within 2 decades.
Posted by: Yancey Ward at Jul 13, 2007 3:20:19 PM
Oh, by the way, is it just me or are the confirmation codes comments getting ever more difficult to see with the human eye? Lately, I have had to look two or three times to be sure I was typing the correct number or letter.
Posted by: Yancey Ward at Jul 13, 2007 3:22:57 PM
The US banned exporting pennies and nickels last year to prevent this from happening here: http://www.usatoday.com/money/2006-12-14-melting-ban-usat_x.htm?csp=34
USA Today reported that it's now illegal for a citizen to leave the country with three nickel rolls. Oddly, it's legal to ship $99 in nickels--but you can only hand-carry $5 without risking five years in prison.
The US Department of justice reports median sentencing of 4 years for rapists, 3 years for robbers, and 9 months for assault. Carrying too many pennies is more like assault than like raping/robbing, so the five years sentence will probably be unusual and reserved for the really hardened nickel exporters.
Posted by: Ed Snible at Jul 13, 2007 5:33:56 PM
Ed Snible: please post more often
Yancey: yes
Posted by: Bill at Jul 13, 2007 6:58:48 PM
I wonder if they enforce this any better than they do the antiterrorism stuff.
*is now tempted to bring a bag 'o change on my next overseas jaunt*
Posted by: jb at Jul 13, 2007 7:39:20 PM
Actually, in the US, I believe it's more profitable to simply dug up, vandalize, and otherwise destroy property to get at the copper wiring on site...
Posted by: agm at Jul 14, 2007 3:19:20 AM
http://www.coinflation.com/ tracks day by day the bullion value of American coins. The old penny is worth about 2.4c, and the nickel about 7c. As of friday, the zinc penny isn't quite worth 1c in zinc.
The gold bugs should be happy - we now have a coinage backed by a metal (zinc).
Posted by: Anthony at Jul 14, 2007 3:49:25 PM
How can the Mint create a law without going through Congress first? Do we really want to make arbitrage illegal? Isn't the cost of creating criminal behavior where there was none before larger than the cost of remaking the currency to reflect reality? Or does the Mint value American's rights and freedom at $0? I know, silly questions all.
Posted by: DCPI at Jul 15, 2007 9:08:35 AM
The value of a coin can be seen as the sum of its metallic content and a perpetual put option with
exercise price equal to the face value. See Steve Easton, Global Finance Journal, vol 17, March 2007
Posted by: vic at Jul 16, 2007 3:20:04 AM
The value of a coin can be seen as the sum of its metallic content and a perpetual put option with
exercise price equal to the face value. See Steve Easton, Global Finance Journal, vol 17, March 2007
Posted by: vic at Jul 16, 2007 3:20:39 AM
I come from asia, injoy 室內設計,work in a 搬家公司,other enjoy isecosway和科士威,good see U。
Thanks.
Posted by: jack at Jan 6, 2008 9:42:39 PM
We are professional cheap kids shoes online store .We provide Nike shoes cheap ,Nike air jordan,cheap kids clothing
cheap womens clothing,Nike shoes online store,Nike shoes cheap,Nike shoes for kids,air jordan sneakers,nike air jordan,air jordans,brand shoe,shoes brand, dropship Nike shoes , brand clothes,brand clothes ,shoes brand,cheap kids clothing for cheap wholesale Air Jordans shoes for kids & women.
Posted by: air jordan sneakers at Jul 10, 2009 1:49:34 AM
