Adam Crum – Monaco Rare Coins

Critics Believe Second Round of Quantitative Easing By the Fed Will Further Devalue the Dollar and Create Inflation

Federal Reserve Chairman Ben Bernanke has been quoted as saying he would fly over the United States and drop dollars from a helicopter should it be necessary.

Sans helicopter, for the time being at any rate, the Federal Reserve has announced that it plans to breathe new life into the economy with additional quantitative easing, a series of Treasury purchases starting with $600,000,000 that may ultimately total $1 trillion or more according to some sources. With the U.S. economy expanding at just 2 percent annually in the third quarter of this year and the jobless rate apparently stalled at about 9.6 percent, the Fed was pressured to do something to stimulate the economy.

Bernanke explained to students at Jacksonville University that a second round of easing will enable the Fed to accomplish its two Congressional mandates, ensuring full employment and stable prices while preventing deflation and generating some “good” inflation.

Critics say the dollar will weaken and create inflation

Critics believe that the dollar will weaken as these purchases (accomplished by printing money) increase the Fed’s balance sheet. Inflation is fueled by a weaker dollar as the real price of goods and services becomes more expensive. Using past research and her own models, Goldman Sachs strategist Robin Brooks suggests the dollar will need to drop a great deal more than the Federal Reserve thinks in order to meet the central bank’s inflation target.

“Substantial additional monetary stimulus is needed for the Fed to meet its dual mandate on inflation and employment,” wrote Brooks after the Fed’s announcement. She has raised her estimate for the total size of this second round of quantitative easing from $1 trillion to $2 trillion. “If indeed the Fed sees the dollar as one of its key policy levers for preventing inflation from staying below its mandate for a prolonged period, the dollar needs to fall a lot further from here,” says Brooks.

The big question is when Bernanke discovers that the plan isn’t working, how much farther could the dollar fall? This controversial plan of additional quantitative easing takes the Fed into essentially uncharted waters and puts the dollar at risk of crashing. Frankly, these additional bond purchases could be more destructive than critics even think if inflation is ignited when the economy finally comes around. (more…)

The proof five dollar coinage of 1907 through 1909 provides quite an object lesson in the evolution of Mint technology and consumer tastes. The 1907 Liberty Head proof, last of the series, was produced in a mostly brilliant or “semibrilliant” proof format that was introduced in 1902; as a result, most proof gold from 1902-1907 lacks much cameo contrast–half eagles or otherwise.

The 1908 gold coins of the new Bela Lyon Pratt and Augustus Saint-Gaudens designs were launched with a new “matte” proof format that was all the rage in European mints of the era. The Robert Loewinger reference, Proof Gold Coinage of the United States, offers this:

“The [matte proof] process originally started in Belgium and was popularized in the Paris Mint. The finish was applied after striking and was made by sandblasting the coins at different forces and speeds with different sizes of grains of sand. Also pickling the coins in a weak acid was another technique that was used on these coins after striking.”

We are unsure how widespread the “pickling” was, but the sandblasting was a well-known, widespread Mint technique that produced a granular (sometimes fine, sometimes coarser), usually dark, subdued finish to the product, a function of the lack of normally reflective surfaces. The matte proof coins of 1908 are usually dark, brownish-gold to olive-brown, and they were extremely unpopular with collectors accustomed to a more brilliant finish.

The Mint in 1909 reverted to a lighter Roman or satin finish for proof gold. The updated Akers Handbook offers these thoughts:

“The proof 1909 introduced the Roman Gold proofing method in the Indian Half Eagle series, although at least one specimen was prepared using the dark matte finish of 1908. Despite having brighter, flashier surfaces than the proof 1908, the proof 1909 still failed to gain wide acceptance among the contemporary public The Mint melted many examples at year’s end. Interestingly, even though most survivors present as overall smooth, the issue has the lowest average grade in the entire proof Indian Half Eagle series.”

A  PR67 piece is being offering in the current 2010 October Stamford Coinfest Signature US Coin Auction #1145, and is one of the nicest survivors of the proof 1909 half eagle mintage, recorded as 78 pieces. It is one of six so graded at NGC, with but two coins finer.

This week I was treated to a smorgasbord of views on cultural property from members of the archaeological and collecting communities.

On Tuesday morning, I listened with interest to the presentations of several archaeologists at the U.S. State Department’s Cultural Property Advisory Committee (CPAC) in Washington, DC. This was my fifth appearance at a CPAC hearing in as many years. In every case, the general tenor of oral comments by public presenters has reflected a dichotomy of interests—those of collectors versus those of nationalist governments (defended mainly by the archaeological community). The dividing line has always been clear, and not just in the rhetoric that is entered into the public record at these events. Even the informal assemblage of speakers prior to the event (call them gaggles, if you will) is indicative of the diverse philosophical views. I suppose it’s only natural for like-minded people to congregate, but the atmosphere is and has very much been one of “us and them” . This is not to say that either camp is overtly unfriendly, in fact the opposite is true. I think both camps try very hard to be polite and cordial in a personal sense. But camps there are, and gaggle they do.

The Collector camp is comprised mainly of collector advocacy groups. Occasionally, individual collectors, dealers or concerned citizens have appeared or have been represented by counsel. However, the lion’s share of opposition to Memorandums of Understanding these days has come from the Ancient Coin Collecting community and the Art Museum community. The former is represented by advocacy groups, like the Ancient Coin Collectors Guild (ACCG) and the American Numismatic Association (ANA), along with representatives of the numismatic trade and other non-profit organizations like Ancient Coins for Education. The latter is represented primarily by the Association of Art Museum Directors (AAMD).

The proponents of Memorandums of Understanding (MOUs) are primarily the representatives of governments seeking import restrictions and the archaeological community, including its related museums—most of which are institutional. The advocacy group Saving Antiquities For Everyone (SAFE) has consistently supported import restrictions, but has not appeared before CPAC in the public sessions lately. A rather late attempt by SAFE to compile and introduce a petition in support of the MOU with Greece was apparently aborted when it failed to meet the State Department imposed deadline for public comment. (more…)