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

[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.