Question about the number of coins minted
percyb
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I am wondering why the government mints billions of pennys and other denominations .05 .10 .25 year after year after year. I understand coins are damaged - washed away in streams, lakes, and oceans but is it necessary to mint so many each year?
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They mint enough to fulfill demand. Most people just toss loose change in jars or drawers.
If every person in the US tosses just 3 quarters a year into a coin jar, that’s a BILLION quarters right there.
Nothing is as expensive as free money.
The same rules apply to when coins aren't minted, like the small dollars and even the Kennedy Half. Enough SBAs were minted in 1979 and 1980 to satisfy demand until 1999 and likewise there were enough halves "available" until 2021. The Morgan Dollar too had an oversupply well before the last production run in 1904.
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So maybe if every man, woman and child in the US emptied their drawers or jars (I use a coffee can and empty those also) into a coin star, the mint could shut down general circulation coin minting for several years.
I seldom use coins these days. When I get them, I put them in a plastic coin tube. When I get a roll of them for the denomination, I take them to the bank.
If seen people of buckets of cents. Many of them are minted and don't circulate for years.
It appears that most coins, especially cents, travel in one direction:
Mint --> Fed --> banks --> merchants --> customers (in change) --> coin jar.
A few travel the other way: coin jar --> banks or Coinstar.
The main reason they don't circulate more widely is that circulating coins are nearly worthless. They buy less than 1/30 of what they bought in 1913, when the same denominations circulated. Today's quarter is worth less than a cent in 1913. Pocket change used to be used routinely in everyday transactions, now it's just an inconvenience.
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Thanks all. Perhaps coin jars are a viable subcategory of numismatics such as this jar from Holland
And if every man, woman and child in the US just used credit cards and digital payment apps, they wouldn't have to mint any coins or print any paper money ever again.
This is a great post with great comments.
In this day and age, when the Mint makes a loss on pennies and nickels, it's safe to say that if the Mint didn't "have to" make that many, they wouldn't. It's the Mint's job to make coins, but it's not the Mint's job to maximize its losses while doing so. As I noted in this recent thread on the topic, it's not like these billions of coins are all getting shipped off into a giant vault somewhere - they're all getting issued to the public straight away because people, directly or indirectly, are demanding them. If they suddenly stopped making pennies and nickels, you'd find a coin shortage within a couple of weeks - most shops would be able to reliably give you correct change, forcing you to either provide correct change in the first place, use electronic payment, or to accept rounding.
Dimes and quarters are another story; the mint still makes about 100% profit on those (it currently costs them about 5 cents to make a dime and 11 cents to make a quarter), so the more of those they can make and issue, the more profit the Mint can hand over to the government in seigniorage. But the Mint could double it's profits, just by ceasing production of nickels and pennies.
As the many failed attempts at replacing the dollar note by introducing a circulating dollar coin can attest, the American public doesn't like it when the government tries to stop them from being lazy. Reducing coinage issue in the hopes of "forcing" people to cash in their coin jars would not be a popular move.
Of course, with inflation rapidly increasing, it won't be too much longer now until none of the current circulating coins will be profitable to make; at which point the Mint would become a loss-making entity for the government and a currency reform of some kind would be the only recourse if keeping coins in circulation was still deemed necessary.
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Most people don't realize the total amount of coins held in change jars is very unimportant to mintage of coins. The amount of change in this total is the primary driver of mint production. When times are good or inflation is high the total number increases causing higher mintages and when times are bad or inflation is low the total decreases and mintage tend to go down. Of course there is also "consumption" of the coins caused by wear, loss, and misadventure. There is also more need for coins as the economy grows and less when it does not.
Very few coins stay out of circulation for very long. If they did then a few coins would go from one change jar to another and still exhibit very little wear after half a century. This is simply not seen. If you plot the grades of a 50 year old quarter like the '71-D you'll see a nice neat bell curve at VG+ and dropping off sharply in higher or lower grades. There will be no coins above VF-. There is some attenuation at the low end suggesting the FED is removing a few of the most highly worn coins.
The FED rarely stores any coins longer than 3 years because they se FIFO accounting which requires them to rotate their stocks. There do appear to be some exceptions. Quarters apparently spend more than 80% of their lives actively circulating until they are destroyed by some means. 60% of the oldest quarters have been destroyed over the years. Other denominations spend less of their time circulating but even pennies don't often sit longer than 20 years.
A great number of coins simply end up in the garbage stream or on track to be recycled. It is this loss minus increases in electronic transfers that determine mintages.
FIFO accounting has nothing to do with how long the Fed keeps coinage...
My understanding is that any enterprise that uses FIFO accounting must rotate supplies and products on a first in first out basis.
My knowledge of accounting is highly limited but A Chicago Tribune article in January, 1972 did say that as a result of a switch to FIFO accounting that the mint and FED were to start rotating their coin stocks. I have ample anecdotal evidence that they did exactly this beginning in 1972.
Even 5o years ago press reports were hardly reliable.
A quick search did yield this;
"The FIFO method follows the logic that to avoid obsolescence, a company would sell the oldest inventory items first and maintain the newest items in inventory. Although the actual inventory valuation method used does not need to follow the actual flow of inventory through a company, an entity must be able to support why it selected the use of a particular inventory valuation method."
https://www.investopedia.com/terms/f/fifo.asp
It may not be necessarily required that old inventory is moved first but since 1975 I have never once seen old coins released by the FED and this was common practice back before 1975 and the FED had rotated their entire stock. Indeed, in 1975 it was not uncommon to get rolls of BU 1965 or 1969-D dimes from the Chicago FED. Other dates showed up in circulation as well. I have not seen this occur since 1975. I did however see some '96 to '98 quarters that were released a little late but I believe this was because the FED tried to rush the new states coins to the public and extra eagle reverse quarters had been made in case of shortages that never materialized. There are a few other instances of late releases as well including coins that had apparently been in storage for years after 2008.
The Federal Reserve System has a de facto obligation to deliver coins ordered by member banks and/or licensed coin depots unless and until any particular denomination is cancelled by Congress. The Fed can reissue used coins in good condition that it gets back from member banks, but if this supply is inadequate it must therefore order new coins from the Mint, which must produce them to demand even if it does so at a loss (on the cents and nickels at least).
If people would recycle their cents and nickels through the banking system the Mint could strike fewer coins and lose less money on them, but nobody cares.
Actually, the flow is
Mint --> Fed's Contracted Coin Terminals --> banks --> merchants --> customers (in change) --> coin jar
Plus the more modest coin-op business flows in the reverse (that make the big circle giving you the boxes of prior year mixed coins)
Contracted Coin Terminals <-- banks <-- merchants <-- customers
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Thanks for the reminder. I've gotta start spending half dollars! Most kids have never used them. Yikes.
I knew it would happen.
While the statement is true the fact is that change has so little value it's not worth a special trip to the bank for redemption.
I keep mine in a box that I haul off when it gets to about 25 lbs which is the heaviest one of the clerks at my bank can handle without help. Taking it in more frequently would just be more work for me and the bank and could even entail a special trip which would not be justified by the ~250 dollars worth of coins. In the long ruin it would just be more work and have no effect on mintages.
Most people do pretty much the same thing; when they have too much money tied up in their change jar they take it to the bank. Each of us defines "too much" differently which ranges from the amount needed to buy a cheap bottle of wine to the amount that fits in a pick up truck.
The factors that drive redemption are highly complex but inflation always seems to cause the nation's change jar to swell. It is the change in the aggregate amount in this change jar plus the loss from misadventure minus increases in electronic transfers that determine mintage. This is what the mint tries to predict in order to plan but actual drawdown of inventories is manifested through the demand of banks (Fed districts). The mint plans based on future projections and operates based on current demand. Production is highly flexible so errors simply result in layoffs or longer hours.
One has to suspect that given current conditions and trends that mintages could drop significantly and penny production plunge. Pennies are so dirty and worth less than the air they displace that it's a wonder Americans tolerate their existence. They just weight down the nations piggy banks, litter parking lots, and foul the garbage stream.
Yes, but I personally love to collect them. (Penny's)
Yes. They are grossly underappreciated numismatically but those struck in modern times aren't worth the air they displace. They are toxic dirty little slugs that can't even be counted economically because they aren't worth the time it takes to count them. They are just toxic garbage and an albatross for the commonweal.
They aren't worth the small fraction of a second they take to be stamped since all the presses have to run full speed meaning all our coins have to be low relief.
Back when 1971-D quarters were minted, small change circulated much more extensively than it does today. The reasons were twofold: The quarter had seven times the purchasing power that it does now, and credit cards saw very limited use in everyday transactions. Most of the wear you describe probably took place well before recent times. If 2023 quarters are still in circulation 50 years from now, I doubt that very many will have been worn down to VG+ or lower.
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I really don't understand is those small dollar coins that mint is still minting. No one wants those small dollar coins. Every time I use them the merchants dislike them. One merchant even told me that he will refuse to take it next time.
Yes. The nature and rapidity of the wear have changed since 1971. As the velocity of the quarters in circulation has slowed they encounter far more vending and counting machines and far less handling in pockets and purses. People used to jingle when they moved or worked but this is not at commonplace any longer. The old type of wear was nice and smooth and the new type leaves tiny little scratches all over the coins that doesn't have a chance to wear off like it used to. Most '71-D quarters in F or lower will be covered with scratches but then most of the coins are now. Quarters have only about half of the velocity they once did so the wear is slower also.
Even the ten and twenty year old quarters rarely look really nice though. In less than ten years there may be no collectible eagle reverse quarters left in circulation in any grade at all and the few left will all be culls.
All these changes over the years have occurred in tiny little incremental steps that go unseen until you look at them. As a very wise man (John Prine) once said; "Time don't fly, it bounds and leaps". Many collectors won't even notice that the times have changed until all the old coins are gone. Even then they'll miss it if they use credit cards and never actually look.
If we got rid of the penny there'd be a place in the cash register for them. The government wants cash to be obsolete so they keep making pennies and multi-trillion dollar deficits.
I'd have said "good to know, so I can go spend it somewhere else instead of coming back here".
Inconceiveable now, but in 1971 the Denver Mint struck more halves than quarters (302M vs 258m).
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Halves were still a circulating coin back then. 1971 was the first year for "silverless" halves, and the high mintage was partially because no halves had been struck for circulation the previous year. The 1970-D half (40% silver) was available only in mint sets, and was considered to be the key Kennedy half at the time, fetching upwards of $10 each (or $75 in today's money).
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