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The Mint should give up on the dollar coin; MOST coins don't circulate.
nycounsel
Posts: 1,229 ✭✭
Another thread talks about the U.S. Mint's plan to try to kick start the dollar program.
Rather than accept facts, they're probably going to pay some marketing company hundreds of thousands to figure out that other than a few coin collectors, people DO NOT LIKE THE DOLLAR COIN.
Change the dollar coin, or just give up on it
The Mint tried and failed with the SBA. It tried and failed with the Sac. It tried and failed with the presidential dollars.
If they want to really make the program work, they need to stand up to the vending machine lobby and change the dimensions of the dollar.
Make it smaller and thicker than a quarter; and a different composition entirely; something like the 1 pound coin used by Britain. I think dollar coins COULD work if they were more convenient to carry.
Most coins don't circulate
The fact is, EXCEPT for maybe the quarter, most of our coins don't actually circulate. They follow this cycle:
1. Bank gives to Merchant.
2. Merchant gives to consumer.
3. Consumer puts coins in a coin jar (except for quarters, which are sometimes useful to pay parking meters or, for apartment dwellers, for the laundromat, or maybe to buy a newspaper).
4. Once every year or so, consumer brings coins to bank and the process starts over.
Most of the time, people pay with credit card now. Go to the grocery store, the gas station, the drug store-- most people are paying with plastic.
When people do pay cash, they use bills.
example: McDonalds
For instance, someone goes to McDonalds and the bill is $6.36. Something like 19 times out of 20, the cashier will be handed a $10, or a $20 and make change. Consumers rarely try to pay with exact change; the people who do tend to be the very young, the very old or the very poor.
Those who DO try to pick through their pockets for exact change tend to receive impatient grumblings from the people in line or the cashier, reinforcing the decision to just pay with paper money.
People typically don't use cents, dimes or nickels -- the only exception is if the amount is just a little over a round number -- for instance, $10.02 -- most people might dig around for 2 cents, but the motivation in doing so is to AVOID receiving more change. (though this may be less true for collectors, since we are at least interested in looking at the change).
Paper money actually does circulate.
Small bills, on the other hand, DO pass from person to person multiple times before reaching the bank. People don't have paper money jars at home.
In the McDonald's example above, say you pay with $10. That note goes in the drawer. The next person pays with a $20. He gets your $10 in change. Maybe he uses the $10 later on at Starbucks. The $10 bill is likely to be passed from person to merchant and back again numerous times, only reaching the bank when the merchant needs, for safety reasons, to make a cash deposit.
The numbers don't lie -- billions of coins minted each year for 300 million people
Look at it this way: Our population is about 300 million.
That figure includes people who don't need coins -- like kids under 3, who only eat coins; or people in nursing homes (who might collect them
)
So why do we churn out billions of cents, nickels, dimes and quarters every year?
If coins were actually circulating, how many coins per person would be required to support commerce? I would guess that 25 cents, 10 nickels, 20 dimes and 100 quarters would be sufficient (again, more quarters since they are most apt to actually be used). So why are we making billions of cents a year?
Simple-- we make SO many cents each year NOT because they circulate, but because they DON'T circulate.
Some people just leave them on the counter, in the need-a-penny cup, or toss them on the sidewalk rather than carry them.
Most of us bring them home and put them in a jar; it's money so you don't want to throw them away, but they just aren't worth carrying around. When the jar is full, you roll them and bring them back to the bank (or, if you're lucky, you have a Commerce bank or some other bank with a free coin counting machine).
How about public interest ads encouraging people to empty their penny jars?
It might be interesting to try something -- take the money that is going to be wasted trying to market the dollar coin, and instead use it to encourage people to empty their penny jars. Set up collection points with free counting machines to encourage people to turn in their change. Based on mintage figures each year, there are billions of non-circulating coins sitting in penny jars in homes across the country.
Don't get me wrong. I'm not saying that small denomination coins aren't useful in commerce, and I'm not advocating for their elimination. I'm just pointing out that they really don't circulate.
Rather than accept facts, they're probably going to pay some marketing company hundreds of thousands to figure out that other than a few coin collectors, people DO NOT LIKE THE DOLLAR COIN.
Change the dollar coin, or just give up on it
The Mint tried and failed with the SBA. It tried and failed with the Sac. It tried and failed with the presidential dollars.
If they want to really make the program work, they need to stand up to the vending machine lobby and change the dimensions of the dollar.
Make it smaller and thicker than a quarter; and a different composition entirely; something like the 1 pound coin used by Britain. I think dollar coins COULD work if they were more convenient to carry.
Most coins don't circulate
The fact is, EXCEPT for maybe the quarter, most of our coins don't actually circulate. They follow this cycle:
1. Bank gives to Merchant.
2. Merchant gives to consumer.
3. Consumer puts coins in a coin jar (except for quarters, which are sometimes useful to pay parking meters or, for apartment dwellers, for the laundromat, or maybe to buy a newspaper).
4. Once every year or so, consumer brings coins to bank and the process starts over.
Most of the time, people pay with credit card now. Go to the grocery store, the gas station, the drug store-- most people are paying with plastic.
When people do pay cash, they use bills.
example: McDonalds
For instance, someone goes to McDonalds and the bill is $6.36. Something like 19 times out of 20, the cashier will be handed a $10, or a $20 and make change. Consumers rarely try to pay with exact change; the people who do tend to be the very young, the very old or the very poor.
Those who DO try to pick through their pockets for exact change tend to receive impatient grumblings from the people in line or the cashier, reinforcing the decision to just pay with paper money.
People typically don't use cents, dimes or nickels -- the only exception is if the amount is just a little over a round number -- for instance, $10.02 -- most people might dig around for 2 cents, but the motivation in doing so is to AVOID receiving more change. (though this may be less true for collectors, since we are at least interested in looking at the change).
Paper money actually does circulate.
Small bills, on the other hand, DO pass from person to person multiple times before reaching the bank. People don't have paper money jars at home.
In the McDonald's example above, say you pay with $10. That note goes in the drawer. The next person pays with a $20. He gets your $10 in change. Maybe he uses the $10 later on at Starbucks. The $10 bill is likely to be passed from person to merchant and back again numerous times, only reaching the bank when the merchant needs, for safety reasons, to make a cash deposit.
The numbers don't lie -- billions of coins minted each year for 300 million people
Look at it this way: Our population is about 300 million.
That figure includes people who don't need coins -- like kids under 3, who only eat coins; or people in nursing homes (who might collect them
) So why do we churn out billions of cents, nickels, dimes and quarters every year?
If coins were actually circulating, how many coins per person would be required to support commerce? I would guess that 25 cents, 10 nickels, 20 dimes and 100 quarters would be sufficient (again, more quarters since they are most apt to actually be used). So why are we making billions of cents a year?
Simple-- we make SO many cents each year NOT because they circulate, but because they DON'T circulate.
Some people just leave them on the counter, in the need-a-penny cup, or toss them on the sidewalk rather than carry them.
Most of us bring them home and put them in a jar; it's money so you don't want to throw them away, but they just aren't worth carrying around. When the jar is full, you roll them and bring them back to the bank (or, if you're lucky, you have a Commerce bank or some other bank with a free coin counting machine).
How about public interest ads encouraging people to empty their penny jars?
It might be interesting to try something -- take the money that is going to be wasted trying to market the dollar coin, and instead use it to encourage people to empty their penny jars. Set up collection points with free counting machines to encourage people to turn in their change. Based on mintage figures each year, there are billions of non-circulating coins sitting in penny jars in homes across the country.
Don't get me wrong. I'm not saying that small denomination coins aren't useful in commerce, and I'm not advocating for their elimination. I'm just pointing out that they really don't circulate.
Dan
0
Comments
<< <i>The paper dollar is on the way out... that is the reason for the incredible quantity of dollar coins being minted. It has just not yet been announced. Cheers, RickO >>
You could be, and I hope you are, right RickO!
To blindly continue minting these appears to be insane! Literally!
But then, considering that the $1.00 bill is the ONLY bill to have NOT been redesigned may also mean something!
I forgot to add: A lot more folks use coins to pay for stuff than what the OP has presented. Granted, few people will pay for $200 in groceries using cash but lots and lots of folks pay for those $5.00 or less items with bills and change. I just cannot see whipping out my debit card for a $1.79 purchase and if I have a pocket full of quarters, you can sure bet that I'll spend them!
The name is LEE!
You've obviously never waited in line behind my wife
Those who DO try to pick through their pockets for exact change tend to receive impatient grumblings from the people in line or the cashier, reinforcing the decision to just pay with paper money.
Oh, I guess you have!
Congress would never support eliminating the dollar bill.
Here's one reason:
If they did, they and the millions of voters who go to strip clubs would be forced to tip with $5 bills.
As devalued as the dollar is right now, we're not there yet.
<< <i>However, if they eliminated the $1 note and reintroduced the $2 note, that might work. >>
The $2 bill doens't need to be "re-introduced", it never went away. People just don't spend them either.
And, as I am sure you all know, I use dollar coins all the time and prefer them to the dollar bill. So there!
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>I guess I must be an outlier because I use coins to buy things on a routine basis.
And, as I am sure you all know, I use dollar coins all the time and prefer them to the dollar bill. So there! >>
I do the same thing, I have a medium sized change purse fill it with golden dollars and that is what I use. Plastic for larger purchases
<< <i>... other than a few coin collectors, people DO NOT LIKE THE DOLLAR COIN. >>
In my case, that is totally false. I hate dollar bills. I use dollar coins everywhere. I've spent 40 at a time.
If you want to do some good for your country, start using dollar coins and stop using dollar bills. Dollar bills are the product of the corporate-owned Federal Reserve Bank. Dollar coins are the product of the US Treasury (US Government).
Wondercoin
my early American coins & currency: -- http://yankeedoodlecoins.com/
It is a matter of public desire and demand.
The thread/poll here shows that many dont have that many one dollar bills on them in the first place.
With credit/debit card useage ever increasing this may only promote more electronic exchanges and fewer paper/coin transactions by the general public.
Many people find change inconvient hence one reason why it so much of it ends up in jars. There is a high likelyhood that these coins would in general have the same fate.
Couple this with most people obtaining the intial cash in their pocket from ATMs which are distributing $20's, overall inflation where there are fewer and fewer transactions below $5 and $10, it just may be a doomed effort regardless of the tract taken.
The government did not try hard enough.
It worked in Canada, Great Britain and other countries. All you have to do is stop printing 1 unit bills. Canada actually copied the dimensions of our SBA but changed the color and edge. They could then use the same equipment that was developed for the SBA.
<< <i>The problem here is that the Mint (and the BEP) is not in charge, the US Congress is. Any decision to eliminate the $1 Bill (or the Lincoln Cent, for that matter) would require a vote from that bunch of inept politicians, who would not like to wake up sleepy voters to the reality of the inflation (or devaluation, if you prefer) caused by the same politicians. .... >>
The Acts of Congress authorizing the Golden Dollar and Presidential dollar coins only mandate that the coins be strcuk. Next year both coinage series will be required to be struck for circulation with 1/5 of the total being the Golden "Sacagawea" dollar. However, the Acts do not tell the Mint how many to produce. This is pretty much up to how the Secretary of the Treasury sees fit.
ubl145.109.pdf">Presidential Dollar Coin Act
<< <i>‘‘(B) NUMBER OF 4 CIRCULATING COIN DESIGNS IN EACH
YEAR.—The Secretary shall prescribe, on the basis of such
factors as the Secretary determines to be appropriate, the
number of $1 coins that shall be issued with each of the
designs selected for each year of the period referred to
in paragraph (1). >>
I don't know how the BEP works, but it is also headed by the Secretary of the Treasury. And if the same rules apply, I suppose if the Secretary decides to mint more $1 coins and print fewer dollar bills he could do so without an Act of Congress. The FED needs about a Trillion $1 in FRNs but they don't necessarily have to have $-billion $1-notes. So when the worn-out ones get turned in maybe they can be replaced with $5s and $10s and let the dollar coin circulate.
Production of the $1 FRN at the BEP is half of the total annual output at more than 4-billion notes annually (BEP Annual Production)
Thru July 2008 the Mint produced 1.3 Billion Pres. $1 coins (U.S. Mint Production figures)
If most of that production is for circulation, the bank vaults will be getting full soon! And next year the Sacagawea $1s will be produced for circulation too.
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BONGO HURTLES ALONG THE RAIN SODDEN HIGHWAY OF LIFE ON UNDERINFLATED BALD RETREAD TIRES
I agree.
Even within this numismatic community, only a few people responded that they prefer or regularly use the dollar coins.
The government could certainly force the use of dollar coins by eliminating the bills, but, given the choice, the public at large has shown a strong preference for the bill.
<< <i>Consumers rarely try to pay with exact change;
You've obviously never waited in line behind my wife
Those who DO try to pick through their pockets for exact change tend to receive impatient grumblings from the people in line or the cashier, reinforcing the decision to just pay with paper money.
Oh, I guess you have! >>
<< <i>Just who is "in charge" of our circulating FRN denominations >>
I've searched the web and I believe that the U.S. Congress doesn't have a say as to what denominations the FED requires but rather this is vested in the authority of the Treasury Dept. overseen by the Secretary of the Treasury accountable to the Executive Branch. I found this FAQ on the Dept. of Treasure website. Treasure FAQ.
It seems that if the Secretary of Treasury could "stop distributing currency in denominations of $500, $1,000, $5,000 and $10,000" in 1969 then they can do the same to cease producing the $1 FRN today.
I think this is bolstered by the fact that Congress failed to pass an Act to protect the Greenback in the '90s.Link
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BONGO HURTLES ALONG THE RAIN SODDEN HIGHWAY OF LIFE ON UNDERINFLATED BALD RETREAD TIRES
<< <i>Those who DO try to pick through their pockets for exact change tend to receive impatient grumblings from the people in line or the cashier, reinforcing the decision to just pay with paper money. >>
Nah...!!!...I usually try to pay with a few loose nuts and bolts and an occasional thread or two...!!..
<< Just who is "in charge" of our circulating FRN denominations >>
I've searched the web and I believe that the U.S. Congress doesn't have a say as to what denominations the FED requires but rather this is vested in the authority of the Treasury Dept. overseen by the Secretary of the Treasury accountable to the Executive Branch. I found this FAQ on the Dept. of Treasure website. Treasure FAQ.
It seems that if the Secretary of Treasury could "stop distributing currency in denominations of $500, $1,000, $5,000 and $10,000" in 1969 then they can do the same to cease producing the $1 FRN today.
I think this is bolstered by the fact that Congress failed to pass an Act to protect the Greenback in the '90s.Link
Interesting stuff, thanks!
<< <i>In pursuit of the question
<< <i>Just who is "in charge" of our circulating FRN denominations >>
I've searched the web and I believe that the U.S. Congress doesn't have a say as to what denominations the FED requires but rather this is vested in the authority of the Treasury Dept. overseen by the Secretary of the Treasury accountable to the Executive Branch. I found this FAQ on the Dept. of Treasure website. Treasure FAQ.
It seems that if the Secretary of Treasury could "stop distributing currency in denominations of $500, $1,000, $5,000 and $10,000" in 1969 then they can do the same to cease producing the $1 FRN today.
I think this is bolstered by the fact that Congress failed to pass an Act to protect the Greenback in the '90s.Link >>
So this is all Bush's fault and not Ted Kennedy's?
<< <i>So this is all Bush's fault and not Ted Kennedy's? >>
Crane & Co. is under the auspices of the two Senators from MASS. From what I can tell, the Prexy has authority over the Sec. of Treas. who can decide which denominations of FRNs will be produced and on the coinage side how many of the Congressionaly mandated coinage issues will be produced.
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BONGO HURTLES ALONG THE RAIN SODDEN HIGHWAY OF LIFE ON UNDERINFLATED BALD RETREAD TIRES
In a "green" environment, we should think efficiently and go to metal.
Would start a thread about The US Government GIVING UP
THIS IS AMERICA!!!!!!!!! We NEVER give up. That is what makes this country GREAT!!!!!
JMHO, GrandAm
Well, Don't I feel stupid now
just completed 3d tour to Iraq and retired after 28+ years in the US Army
<< <i>this is just a sign they need to eliminate the cent and at the very least round to the nearest nickel, if not dime or quarter. It's too bad we have quarters.. it would be much easier to just have a 10 cent piece and 50 cent piece along with one and 5 dollar coins. As it stands I say just round to the nearest quarter... but if they did phase out the cent, nickel, and dime, they could easily make the quarter much smaller say nickel size but of course all this will not be done, so... >>
I would disagree. If you would round to the the nearest nickel or even the nearest quarter, that would be devastating to the consumer. Say if you go and buy a cheeseburger at McD's and it cost a dollar + tax, that would mean you would pay a $1.25 instead of the 5-10% sales tax that you pay. Another thought would be also if the same item was a $1.01 + tax. That means you round up to the $1.25 and then the $.25 sales tax which is now adds to a $1.50. That is alot of profit for McD's plus the sales tax would be outrages. If you think a penny is not a alot of money, try and take a penny and double your sum everyday until you reach over a million dollars. The answer is 28 days.
First, a cent is not alot of money as you seem to make it out to be. Just about every cash register I have seen has a cent jar next to it, filled with them. Sometimes there are nickels and dimes. This is generally filled by folks that just Don't Care, it is not worth their time. Sometimes the cashier throws one in, sometimes a customer does. When someone comes up short and is fidding through their pockets for the last 4 cents...the cashier grabs them from the jar and moves on. It is just not worth the time.
That's the problem; the amount of time a cent is worth...almost nothing.
Playing the power-of-two game is not fair. Impractical too. It's not an argument about how valuable a cent is at all. It is an argument about logarithms and exponents.
Add one cent to your pile and in a month, you have 30 cents. Big Deal! You are not very close to your cheeseburger after 30 days.
Removing cents and perhaps nickels from coinage would not automatically make it impossible for you to write a check that was fractional to the hundredth. It would not affect debit/credit card purchases at all.
Admittedly, any rounding stands to hurt extremely small transactions paid for with physical currency. This hurt goes both ways if evenly applied. There is such as thing as 'round to nearest'.
One could eliminate cents and even nickels from circulation without rounding all prices, without rounding taxes. The only rounding would be done on the final transaction total and the cash registers could easily be set to "round to nearest" rather than "always round up".
If you want to pay an exact amount, whip out your credit/debit card. Did you know that the business is already getting soaked for 3% when you use one of those? So, the 'loss' due to a change in currency is something I believe we might be able to adjust to.
I am starting to dislike the fiddly little stuff that is not worth the time to deal with any more. Such as cents. If we dropped cents, the largest amount that someone would be 'out' on that cheeseburger transaction is...3 cents. I dislike McDonalds anyway. Therefore, cents must go.
Politically, it is a difficult thing to do. Anything the public gets angry about for any reason is trouble for an elected official. I am not holding my breath.
And I collect lincolns, too.
<< <i>I find it ironic that someone with a US Army Tank as an icon
Would start a thread about The US Government GIVING UP
THIS IS AMERICA!!!!!!!!! We NEVER give up. That is what makes this country GREAT!!!!!
JMHO, GrandAm
No politics here, but just correcting a fact...the OP's avatar is a picture of Tiannamen Square. link
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