A billion dollar coins sitting around in vaults, with more being minted every day.

[randomness]

There have been a number of articles recently, like this one from NPR's Planet Money about the billion or so dollar coins that are being held in government vaults around the country. In the ones I've seen there's only oblique reference to the fact that the objections to withdrawing the dollar bill--which is just about the only proven way to make the transition from paper to coin happen--was blocked last time around by Senator Kennedy from Massachusetts and Senator Lott from Mississippi. Nicely bipartisan, that.

Kennedy objected because Crane & Co., the only source of the cotton-based paper for American paper money, did not want to lose the half of its currency paper business represented by dollar bills. Lott objected because the cotton that goes into that paper is from Mississippi.

That explains why the paper dollar is still around, but why is the Mint cranking out more dollar coins if there's no demand for the ones that exist? That is also because of legislators. Planet Money:

In 2005, Congress decided that a new series of dollar coins should be minted to engage the public. These coins would bear the likeness of every former president, starting with George Washington. There would be a new one every quarter. So, far, the Mint has produced coins through the 18th president, Ulysses S. Grant.

Members of Congress reasoned that a coin series that changed frequently and had educational appeal would make dollar coins more popular. The idea came from the successful program that put each of the 50 states on the backs of quarters.

But as the new presidential dollar coins rolled out, the greenback lost none of its dominance in Americans' hearts and wallets.

If the mandate to make presidential coins wasn't enough to generate a growing heap of unwanted coins, a political deal ensured that even more unwanted coins would be produced.

It was easier for the bill's sponsor, then-Rep. Mike Castle (R-DE), to move the presidential coin bill forward if it didn't displace other dollar coins honoring Sacagawea, the teenage Native American guide to Lewis and Clark.

The deal: The mint would be required to make a quota of Sacagawea coins. Currently, the law says 20 percent of dollar coins made must have Sacagawea on them.

So, there are now about 1.2 billion dollar-coin "assets" chilling in Federal Reserve vaults, unloved and bearing no interest. By the time the presidential coin series finishes, and there are coins honoring all past presidents, there could be 2 billion.

Several congressional leaders contacted by NPR declined to comment for this story.

My modest proposal? Give them all away. Every person in America would get four; seven if you keep handing them out until the presidential coin series ends. Warehousing problem solved. If no one wants to use them, so be it.

Then the Federal government doesn't incur the expense of keeping and guarding them for however many years it will take to get rid of them all, or worse yet, melt them back down. Which probably means money will be saved in the long term.

Comments

[redbird]

A billion dollars, and people don't even know it's there. Adrian is tutoring a grade-school student in math, and wanted to use coins for decimals. She asked if I had any loonies left; I said I wasn't sure, but that she could just go to the bank and ask for American dollar coins. She'd forgotten those are still out there, perhaps because the only places they tend to be put into circulation are as change from post office and subway vending machines.

[plumtreeblossom.livejournal.com]

I don't use dollar coins because they're a pain to carry around. I, like most people (read, women) who use a purse, don't carry coins in my pants pocket. Coins go in a coin zip that is part of my wallet, which rides in my purse. Ergo, I don't have room for very many coins, especially not large and heavy ones. I've watched numerous dollar coins fail -- the Susan B, Sacagawea, the gold George -- and I tbelieve it was because of a presumption that everyone carries their coins in their pants pockets. True for many men. Not so for many women, methinks. I prefer paper dollars that fold flat in my wallet.

[mizkit.livejournal.com]

If the bloody government wants people to use dollar coins they need to start taking dollar bills in at the banks and not giving them out again.

"Oh no!" say all the businesses. "The expense of replacing the cash registers!" Evidently it would come as a great shock to them that dollar coins will *also* fit into the dollar slots in a cash registers. Just not in a stack. But somehow they've gotten by all these decades with pennies, nickels, dimes and quarters that don't stack in the register, so I bet they could manage with dollars.

It was weird and annoying at first, over here, to have dollar (euro) coins (and 2 euro!), but I adapted very fast and now it's annoying to have that many more bills in my pocket (because unlike plumtree up above, I don't carry a purse unless I happen to be wearing something with no pockets :)).

Also, the change jar fills up really fast with big money when you're throwing dollars in at the end of the day. :)

[r-ness.livejournal.com]

If the bloody government wants people to use dollar coins they need to start taking dollar bills in at the banks and not giving them out again.

As I said, it's the only proven way to make it happen. Too bad our government is roadblocked.

I really like the euro and two euro coins because I like bimetallic coinage. It's fun to collect all the designs.

[cerridwynn.livejournal.com]

I'm not sure i've ever understood the benefit of dollar coins over dollar bills. They're heavier and take up more space! Are they somehow cheaper to make? I'd guess they're more expensive!

Plus I'm more likely to lose coins in the bottom of my purse (or in my couch or under my bed or under the seats in my car... etc...). They don't feel as much like real money so i'm less likely to count/save them. Or is that the point -- will people spend dollars more freely if they're in coins rather than in bills?

Or is it really all about vending machines?

[gee-tar.livejournal.com]

They are more expensive to make (about 2.5 times), but they last much longer (about 10 times), so in the long term, they're 4 times cheaper than the bill.

[cerridwynn.livejournal.com]

Ah, okay, that makes sense.

Still, they're a lot less convenient. See -- I'm part of the problem. I have several (maybe 10?) in a change jar at home, but i'm unlikely to grab them and spend them because they're heavy!

[digitalemur.livejournal.com]

I used dollar coins a lot when I took NJTransit. They feel more real the more you get them and use them. And yes, they do facilitate higher-value vending machine transactions.

Someone above notes that they are heavy for a coin purse and awkward for those who don't carry change in their pockets, and I should note that I do know some men who keep a small coin holder in their pockets to stop the jangling. Mostly, I just demand pants pockets. (She says, wearing her dress pants that have none....)

[digitalemur.livejournal.com]

By the way, my coin loss prevention strategy is the bank of r_ness, because he is a coin magpie and he will gather and sort the change from my pockets, bags, floors and sofa cushions. I have a wooden bowl for unsorted change, and a quart jar for sorted change, and he often buys back change for bills.

[r-ness.livejournal.com]

I offer this service to one and all. bercilakslady handed me a small bag of change. After sorting and counting that turned out to be around $100. She was very surprised when I gave her five twenties.

[r-ness.livejournal.com]

I'll buy them from you if you like.

[gee-tar.livejournal.com]

There's a theory I heard once (I'm trying to track down the name, but my Google-fu is weak today) that it's because the coins are actually desirable that they aren't used. That is, they are considered rare so people like to keep them as souvenirs and take them out of circulation, while getting rid of their common dollar bills since they're a dime a dozen (er, or something like that).

Of course, the solution to this is the same: take out the dollar bills so there isn't an alternative currency pass along.

[gee-tar.livejournal.com]

Okay, it took me awhile, but I believe I was thinking of Gresham's Law.

[sarakate.livejournal.com]

I agree with this, and I think the presidential series is likely to backfire for this reason -- the novelty factor will make them go into collections, not into circulation. I know people who've never collected a thing in their lives who collected the state quarters (my dad is one of these; I was amused at his chagrin when he said he only needed two-states-I-forget-now, and I said, "Oh, of which mint?" and he said, "WHAT?" and then I pointed out the mint marks and he realized he was about 2/3 done with the Denver series and after mining his pile of "extras" still only about half done with the Philadelphia series).

I like the Sacagawea dollars -- I think the size, color, and texture adequately distinguish them from a quarter -- but the efforts to distribute them were abysmal; even when the distribution was in full swing it was rare to get them as change (except at the post office! I used to regularly buy stamps at the stamp machine, a few at a time using a much larger bill than needed, because the change was all coins, including dollar coins, but alas, they did away with the stamp machines in favor of the APS, which only takes credit cards) and not particularly easy to get them even from banks on request. Now I make a point of requesting them a week in advance at the bank before I head to Ren Faire, as coinage is much more authentic in feel than bills. :)

[r-ness.livejournal.com]

I was amused at his chagrin when he said he only needed two-states-I-forget-now, and I said, "Oh, of which mint?" and he said, "WHAT?" and then I pointed out the mint marks and he realized he was about 2/3 done with the Denver series and after mining his pile of "extras" still only about half done with the Philadelphia series

Ha ha!

I suppose it would be too cruel to tell him about the proof quarters from San Francisco.

Now I make a point of requesting them a week in advance at the bank before I head to Ren Faire, as coinage is much more authentic in feel than bills. :)

I like having some dollar coins and half dollars handy myself so I'll occasionally go in to the bank and ask for them. Around here they're only too eager to get rid of them. $2 bills, too. But I like spending what I think of as orphaned money.

There's a lunch place up in Northeastern CT that hands out half dollars in change, which always confuses newcomers.

[digitalemur.livejournal.com]

Yeah, people who don't otherwise collect stuff do those quarters. Someone at the coffee shop at work was helping her mom collect them, and I can remember loading up on P state quarters before a visit to friends in California who were heavy on D quarters for obvious reasons.

[r-ness.livejournal.com]

Of course, the solution to this is the same: take out the dollar bills so there isn't an alternative currency pass along.

Yup. If only our government didn't deadlock on this sort of thing.

[digitalemur.livejournal.com]

As much as I love wheresgeorge.com, I would be so happy to get rid of the dollar bill, and I just don't get dollar coins now that I don't take NJTransit. I wish the US dollar coin was lighter, but I also wish we had a $2 coin because they're freakin handy. It's a little awkward to adjust to more and heavier coinage in my pockets but I still love to use higher value coins.

Now I'm getting excited to go to Canada in a month....

[hammercock.livejournal.com]

I wish we had both $1 and $2 coins as well. I also wish we rounded to the nearest 5 cents like they do in Australia.

[ladybird97.livejournal.com]

So, living in a country where there are not only dollar coins, but two-dollar coins, I have to say that I don't mind them at all. Yes, they're heavy, and they weigh down my purse a bit, but for a lot of things, they're much more convenient than bills. Paying bus fare is the biggest one for me - instead of fiddling with trying to feed bills into the machine or hoarding quarters, I just drop in one or two coins. Ditto for parking meters. Plus, it's a pleasant surprise when you're out of bills and think 'oh, I'm broke because all I have is change' and then realize 'wait a sec, I've got three toonies, and that's real money!' :)

So, yeah, I'm a fan of the coins.

[digitalemur.livejournal.com]

Oooh, I love realizing I still have toonies, too! Also, the bimetallic thing still makes me really happy, as does the name.

Do you find that the larger coins keep you from carrying so much weight around in quarters? I tend to break bills just because I love the coins, because I'm only in Canada for short periods, but I'm wondering if for longer periods of use you find you're saving weight because you don't need the quarters as much.

[ladybird97.livejournal.com]

Yeah, they do, actually. It's much harder for me to accumulate laundry quarters than it was in the US!

Also, to play devil's advocate to myself, I've got a couple Canadian friends who don't like toonies - they think they're a pain, and too big, and not useful. So it may just be a factor of the novelty that I like them so much. But I really do find them useful!

[digitalemur.livejournal.com]

I've heard that too. I think I might have to be there for a while to find the toonie annoying. My trip to the maritimes this summer will be my longest trip yet. And I'll get to use euro, for like 18 hours!

[r-ness.livejournal.com]

Well, you can hand me all the toonies. I need a few more toonies in my life.

[nihilistic-kid.livejournal.com]

I'll always remember the time I went to a grocery store and tried to pay for my one little item with two one-dollar coins (Sacs) and the numbskull at the register looked at them suspiciously and said, "I don't think we take those." I was annoyed enough to not even argue; I just said, "Get your manager here right now."

She came over—and she was all of one year older than the kiddie cashier—and looked at my coins and frowned and said, "We do take those. We have to; some people consider them real money."

[r-ness.livejournal.com]

"We do take those. We have to; some people consider them real money."

Hah!

It's the reason I like spending half-dollars, dollar coins, and $2 bills.

[agrimony.livejournal.com]

I like the novelty of $1 coins and $2 bills, but I hate them at the store because they make my morning deposit way more complicated since we're not equipped to store them and no one wants them back as change.

[nathanjw]

All at once, for a nice $3.50 meal at the food trucks?

[r-ness.livejournal.com]

That would be funny! Hasn't happened that way yet, though.

[fin9901.livejournal.com]

Definitely. I used to go to the bank semi-regularly and get $50 or so worth of half-dollar coins or $2 bills and have fun spending them.

[contrariety.livejournal.com]

I will NEVER understand why the government thinks putting historically significant or pretty pictures on coins will make it easier for the public to accept them. In my experience, it merely increases the perception of them as a novelty play item. If they really want people to treat dollar coins as money, they should make them very Serious and Boring, which is the way proper American money ought to look anyway. (Peach-colored $20s, feh.)

But then, I hate large-denomination coins. Every time I go to Europe I end up weighed down by pocketfuls of them. Using currency should not require me to carry a coin-pouch, says I. :)

[r-ness.livejournal.com]

I will NEVER understand why the government thinks putting historically significant or pretty pictures on coins will make it easier for the public to accept them. In my experience, it merely increases the perception of them as a novelty play item.

It is counterproductive, definitely.

Using currency should not require me to carry a coin-pouch, says I.

As I've said in the past, you should visit Cambodia, where all the money is a litter of paper, or even China or Vietnam, where most of it is. You haven't lived until you've handled paper money worth under a dime on a regular basis. :)

[karakara98.livejournal.com]

My solution to the problem? Get rid of pennies and dollar bills at the same time. That way, everything in the coin drawer at the register moves one slot left, and there's a place for dollar coins. I think the biggest reason people don't use dollar coins is because stores don't hand them out as change, and I think the biggest obstacle is operational.

Precisely

[fin9901.livejournal.com]

Stop printing $1 bills and print $2s instead. Get rid of the penny and let businesses round to the nearest $0.05.

And most importantly, stop making dollar coins that are basically the same damn size as a quarter. Start making them the size of a half-dollar (the US hasn't minted any new half-dollars since 2003); the vending machine companies will cope if given enough advance warning.

Personally, I love the old Eisenhower dollar coins; I still carry one around with me to this day. But I think I'm in the very small minority on that one.

Re: Precisely

[r-ness.livejournal.com]

Get rid of the penny and let businesses round to the nearest $0.05.

Particularly since the penny now costs more to make than it's worth. Worse yet, the nickel's metal content is actually more valuable than its face value. The penny's metal is still worth less than its face value, but when you add in the cost of production, it ends up being more expensive to make one than it's worth.

(I'll bet you can guess why we keep striking pennies made of copper coated zinc, and nickels made of copper-nickel alloy. But that's a different rant of mine.)

I love the old Eisenhower dollar coins; I still carry one around with me to this day. But I think I'm in the very small minority on that one.

I know a guy who carries a Walking Liberty Half Dollar, and another guy who used to walk around with a Maria Theresa Thaler, so if even if you're in a small minority you're not alone on that.

[r-ness.livejournal.com]

Get rid of pennies and dollar bills at the same time.

Alas, getting rid of the penny won't happen either, again because the government is roadblocked. This is particularly stupid because the penny costs more to make than its face value.

New Zealand is an example of what you can accomplish if you actually want and need to do something about your coinage system. Over the last quarter century or so, they went through a whole set of transitions. First, they got rid of their 1 and 2 cent coins. Then, they dropped their dollar and two dollar notes and replaced them with coins. Finally, they removed their 5 cent coins and shrank the 10, 20, and 50 cent coins.

Now what they have is 10, 20, 50 cent, 1, and 2 dollar coins, none of which can be spoofed by coins from other countries. Foreign coins being used in their vending machines had been a real problem because the 5, 10, and 20 cent coins shared sizes and compositions with sixpences, shillings, and florins for backward compatibility, which meant that any coins from any countries which once used British standard size coins--and there were a lot of those all over the Commonwealth--could be used in NZ vending machines.

They also transitioned to plastic notes, but that will also never happen here.

[achinhibitor.livejournal.com]

Kennedy's dead and Lott isn't in the Senate any more...