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<p>[QUOTE=&quot;Troodon, post: 94491, member: 4626&quot;]Minting of coins itself has no effect on the money supply, since until they are in the hands of the general public they are not yet part of the money supply.&nbsp; Coins still held by the mint, or in bank vaults, are essentially not in the money supply, and arguably, any coin a collector is holding on to with no intention of spending it effectively is removed from the money supply.</p><p><br /></p><p>It gets complicated explaining past that... but the money supply is not that affected by the amount of actual paper money and coinage out there unless there&#039;s a very significant increase or decrease.&nbsp; Estimates I&#039;ve seen is that the total money supply of US dollars thatr is currently in coin and paper form (and freely circulated, not held by the Treasury or banks) is about $650 billion.&nbsp; That may sound like a big number... but not when you figure out the GDP... it&#039;s less than 10% of the total US money supply, which is mostly numbers on a computer somwhere these days.&nbsp; Before the computer age the majority of US money actually existed in physical form, and amount of currency outstanding had a bigger effect on inflation than it currently does.</p><p><br /></p><p>As for what coinage does to inflation... actually not much.&nbsp; The mint mints the coins, they are not in the money supply yet.&nbsp; Banks order these coins for face value, the difference between the face value and what it actually cost to mint them becomes part of the Treasury&#039;s account.&nbsp; Theoretically when the government spends that money, it can heat up the economy and thus increase inflation a bit.&nbsp; Any coins the banks don&#039;t order have no effect on inflation at all.&nbsp; Coins the banks have ordered, received, and are sitting in their vaults are not part of the money supply until they are issued to customers.&nbsp; But they don&#039;t actually increase the money supply... because in order for customers to receive the coins, they have to either exchange face value for them, or receive them as payment from their accounts from interest, or wherever they received their account money.&nbsp; So... the money supply has already increased before they even get their coins, and actually issuing the coins has no real effect on the money supply or inflation.</p><p><br /></p><p>If this makes sense to anyone or anyone wants to correct me on the particulars, feel free, this is the best I can explain it, lol.&nbsp; But the basic concept I&#039;m trying to get across is that money, either paper or coin, si not part of the money supply until it is in circulation.&nbsp; The mere process of minting coins does not directly effect the actualy money supply.[/QUOTE]</p><p><br /></p>

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