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My friend David told me about the novel The Toy Collector, about a guy who deals drugs to get money to buy his favorite childhood toys. (You can read an excerpt.) The book refers to a toy called Scrunch 'Em Grow 'Em Dinosaurs. The toy is real, but it was really called Strange Change and was made by Mattel. Here's a page with some pictures of the Strange Change, and here's another with a good description of the toy.