Why is America Stupid About Coins?



Here is an example of our government's stupidity: they impress us with the money they save while in actual fact they make a decision that costs the American taxpayer 30 times more than the supposed savings.

Here's the story: a few month's ago the White House announced that the federal government will stop minting unwanted $1 coins, a move that's touted as saving an estimated $50 million a year. (1)

However there are two lies in the announcement. The first lie is that Americans do not want to use the dollar coin. However, when asked if they would be willing to give up the paper dollar to save our country money, an overwhelming majority in a poll by ABC News said yes.

The second lie is that the move would save money. In actual fact, eliminating the dollar coin prevents us from saving more than 5 billion dollars over the life of paper dollars (2).

Europe and the United Kingdom have replaced their lowest paper bills with coins and we could too if only Congress had the balls to simply do so.

Until 50 years ago Americans carried large, one-dollar coins in their pockets. They're called Morgan silver dollars. Every day I buy hundreds of them in my business, some of them more than 133 years old. In circulation, they can last for hundreds of years.

The argument that the new dollar coins can be confused with quarters is silly. If there is a confusion, it is because so few dollar coins are in circulation. If we eliminated the one-dollar bill the confusion would disappear in short order.

Congress has failed three times (Susan B. Anthony, Sacagawea, and this last one - the presidential series) to get Americans to use one-dollar coins in everyday commerce. I have no doubt the idiots in Washington will try again in a few years, but again without eliminating the paper version. Unless we remove the Washington bill, the dollar coin is doomed.

If there is one coin that Congress should have eliminated, it's the penny. As I wrote in my 2007 article Time to get rid of the Penny it costs the US Mint about 1.3 cents to produce each penny (it's almost double that now). And where do most of these pennies, a complete and unnecessary waste of money, end up?


a jar of pennies
Flickr Photo Credit: Jon Chambers


That's right - there are tens of billions of pennies sitting in jars, unused, unloved, and uncirculated, yet the bozos at the US Mint still pumped 4.9 billion more of them into circulation in 2011 alone [source: Wikipedia].

We get them in change and put them into jars, hardly ever using them. Why are we still producing them? How stupid can we be?




Postscript:

I should mention that, in an effort to save money, the Obama Administration this week asked Congress for permission to change the mix of metal that goes to make pennies and nickels (3).

While this may seem like a good idea, reducing the production cost of pennies and nickels, it still will not make the penny or the nickel cost less than a penny or a nickel respectively to make. So both coins are rather silly to mint. Many countries have already eliminated their versions of pennies and nickels. In Finland and the Netherlands, for example, purchases are rounded to the nearest 5 cents. Are they smarter than we are?




ENDNOTES


(1):

Bankrate.com, 19 Dec 2011,U.S. stops minting unloved $1 coins

The federal government will stop minting unwanted $1 coins, the White House said Tuesday. The move will save an estimated $50 million a year.

Earlier this year, we reported on the mountain of $1 coins sitting unused in government vaults. The pile-up -- an estimated 1.4 billion coins -- was caused by a 2005 law that ordered the minting of coins honoring each U.S. president.

We calculated that the unwanted coins had cost taxpayers some $300 million dollars to make. There were so many coins piling up that the Federal Reserve was redesigning a vault in Texas to help hold them all.

(2):

USA Today, 25 Oct 2011, Replacing $1 bill with coin could save $5.6 billion

Lobbying interests on both sides are ramping up their efforts in the expectation that Congress could decide the issue after more than 25 years of debate. Mining interests, vending companies and mass transit agencies support the coin. Paper and ink producers and some small retailers oppose it.

"You have this gigantic deficit. You have this supercommittee, and Congress is looking for savings anywhere they can," says former representative Jim Kolbe, R-Ariz., a longtime coin advocate.

The move to a coin would cost money in the short term, but eventually save money because paper currency lasts about 42 months — while coins theoretically last forever. Moving to a coin could save $5.6 billion over 30 years, according to the Government Accountability Office.

(3):

CNN Money, Obama wants cheaper pennies and nickels

The U.S. Mint is facing a problem -- especially during these penny-pinching times. It turns out it costs more to make pennies and nickels than the coins are worth.

And because of that, the Obama administration this week asked Congress for permission to change the mix of metal that goes to make pennies and nickels, an expensive recipe that has remained unchanged for more than 30 years.

To be precise, it cost 2.4 cents to make one penny in 2011 and about 11.2 cents for each nickel.



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