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

[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.