Contact: By: John Greenwald

Washington | August 10, 2010 - I have coveted those 50 state quarters with nifty designs ever since I received an official U.S. Mint quarter holder as a gift several years ago. Who knew that I, along with more than 140 million other collectors, would become part of one of the most effective — and least painful — efforts to trim the national debt? No services were cut and no new taxes levied. But the Treasury has nearly $6.3 billion less debt on its books. The fact is that the government makes money on the coins it mints — thanks to a fiscal sleight of hand called seigniorage. This is the difference between the cost of striking a coin and its face value. And it’s pure profit.

It works like this: The more such coins the U.S. Mint makes, the more profit goes into Uncle Sam’s pocket — and that’s where we quarter collectors come in. By hoarding the coins and pulling them out of circulation, we force the Mint to strike more to meet the demand for change when shoppers buy things. That’s why the Mint produced nearly 35 billion quarters during the 50 State Quarters program — more than twice as many as usual.

From 1999 to 2008, this program took a bite out of the national debt — far more than the $3.4 billion that Rep. Mike Castle (R-Del.) predicted when he introduced the bill in 1996. Given this success, Congress extended the program to include 2009 quarters for six additional U.S. locales — including D.C. and Puerto Rico.

Castle hasn’t stopped there. His America’s Beautiful National Parks Quarter Dollar Coin Act brings a new set this year. The Mint is striking 56 coins through 2021, featuring national parks and other sites. Quarters for Yellowstone, Yosemite and Hot Springs national parks have already appeared.

My family is doing its part to attack the national debt. We have the Official U.S. Mint State Quarters book, with space for 100 coins. We have collected all 50 quarters minted in Philadelphia and lack only six minted in Denver. (See the tiny “P” or “D” stamped under “In God We Trust.”) Since a quarter costs 11.31 cents to mint, each new one adds 13.69 cents to the Treasury.

The Mint doesn’t make money from all coins. Pennies and nickels cost more than their face value, for example. But dimes cost between 5 cents and 6 cents to mint, leaving plenty of room for profit.

More than twice as many quarters were struck for less populous states — such as New Hampshire (1.2 billion coins) and South Carolina (1.3 billion) — than for giants like Texas (541 million) and California (520 million). That’s because the coins were minted based on economic conditions, and the economy was stronger in the program’s first years — when the designs for the 13 original states came out — than later on, when the Texas and California quarters appeared.

The fewest quarters were minted for 2003 Maine (448,000) and 2004 Wisconsin (453,000), which might explain why both are missing from our collection.

If minting coins is profitable, doesn’t the profit have to come out of somebody’s pocket? Not at all. This is where the fiscal sleight of hand comes in.

The Federal Reserve buys the coins from the Mint at face value and sells them to commercial banks for a like dollar amount. These banks sell the coins to their customers, and voilà! you get a quarter back for that $1.75 cup of coffee you just bought with two $1 bills. So the Mint and the Treasury become richer without making anyone else poorer.

Perhaps the only people disappointed are those collectors who thought the state quarters might increase sharply in value. Some hoarded coins are now back in circulation because experts say that too many were struck to give them much scarcity value.

Except, that is, for coins with design flaws — such as the few thousand Wisconsin quarters that have an extra leaf on the ear of corn next to the cheese wheel.

But those of us who love the coins for their beauty are keeping them — and doing our small part to ease the national debt.

So when you see a state quarter, keep it. And keep an eye out for the new national parks series. Let’s all encourage Uncle Sam to make more money by minting more money.

John Greenwald is a former senior writer for Time magazine.