Plans to end the dollar bill is being pushed

I've heard of this group and they just seem so inactive. If they actually did something, list congressman for or against the coin, take out ads online, send emails to the mailing list, advise people to do different things. They just seem like a very stagnant group.

 

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"The dollar coin costs 15 cents to produce and lasts 30 years; the dollar bill costs about 3 cents to produce and lasts 4.7 years, the GAO's Lorelei St. James said."

This statement proves to me that this decision to abandon $1 bills makes sense. Although I would refute the contention that the dollar coin ONLY last 30 years! Who says so?...I see coins all the time over 30 years old.

C'mon, they've apparently got over $1 BILLION of these Golden Presidential coins sitting in a vault. What a waste!

It's all politics. Heck, they'll be talking about this for another ten years. If they truely want to introduce the dollar coins, THEY WOULD STOP MAKING THE DOLLAR BILL! Simple.

Read more here: http://www.kansasc
ity.com/2012/08/15/3763856/small-change-lawm"akers-push"-dollar.html#storylink=cpy​

 

Well yes that's assuming they want to. The government is a good example of multiple personality disorder, it wants and doesn't want the dollar coin to take over.

 

Your assumptions are wrong.

The government doesn't "borrow" Federal Reserve Notes. Rather, the Federal Reserve buys up government bonds to use as backing for its issues of Federal Reserve Notes; the bonds would exist regardless of whether the FRNs existed. As long as the Fed owns those bonds, the interest that the government pays on them becomes part of the Fed's operating profit, which is deposited in the U.S. Treasury.

So if we issue $1 FRNs, then the Fed has to hold on to about $10 billion in Treasury bonds to back those FRNs, and the Treasury winds up paying interest on those bonds to *itself*, rather than to China or somebody.

If we got rid of the $1 FRNs and replaced them with $1 coins, then the Fed would sell off that $10 billion in Treasury bonds, and so the interest on those bonds would start leaving the Treasury for good, rather than being paid back into the Treasury in a circle. Compensating for this added expense would be the seigniorage produced by the issue of the $1 coins.

It'd basically be a wash, except for one thing. Coins circulate more slowly than bills--people tend to accumulate their coins in a change jar for a long time before cashing them in, and coins also spend longer periods of time sitting in vending machine hoppers and the like. So if we used $1 coins instead of $1 bills, we'd need *more* $1 coins than we currently need $1 bills. To replace the existing 10 billion $1 bills, we'd need somewhere between 15 and 25 billion $1 coins, depending on whose estimates you believe.

Therefore, the seigniorage produced by using $1 coins would be larger than the interest savings produced by using $1 FRNs. That's the source of the $5.5 billion savings that keeps getting quoted. (Note that the cheaper production cost of the $1 coin is *not* the source of that savings--the $1 coin *is* slightly cheaper to produce in the long run, due to its longer lifespan, but the difference is so small that it doesn't even pay for the up-front cost of minting the initial supply of 15+ billion $1 coins.)

Basically, the only reason the $1 coin looks like a money-saver for the government is that extra seigniorage that results from the increase in the number of $1-denomination-objects in circulation. And that seigniorage is, if you think about it, simply an interest-free loan to the government by the people who hold government-issued coins.

So a switch from the $1 bill to the $1 coin wouldn't actually *save* the government any money. It'd make the government better off by a few billion dollars, but only because the government would receive a few billion more dollars from the people. It's like raising taxes to reduce the deficit: raising taxes *does* reduce the deficit, but it doesn't address the reasons we've got a deficit in the first place. Switching to $1 coins does the same thing: it reduces the deficit but doesn't actually reduce the amount that the government spends to keep an adequate supply of currency in circulation.

For that reason, by the way, neither the Treasury nor the Fed nor the Congressional Budget Office considers the $1 coin to be a cost-saver. They don't include seigniorage in their budget calculations, for the reasons I've just explained. So when the CBO scores this $1 coin proposal, they'll say that it *increases* projected government spending. Which isn't going to look good in the present political climate.

So, yeah, this one's a non-starter, pretty much.

(Before somebody asks: What about that huge pile of unwanted $1 coins that we've already got in storage? The trouble is, the pile isn't huge enough: about 2 billion coins. We'd need to mint another 13+ billion to replace all the $1 bills. The Mint would be working overtime for several years.)

 

They ought to end it. Its only worth about 7 cents these days anyway.

 

Numbers, very informetive post .. I had to look up the meaning of Seigniorage

 

Every time they have issued a new dollar since 1971 and especially since 1979 there has been discussion of the dollar coin replacing the dollar note but this year is the FIRST time anyone has actually submitted legislation to actually discontinue the paper note. I know legislation was submitted earlier this year. This article does not reference the actual legislation so I don't know if this is new legislation or if they are just referring to the earlier bill.

If the legislation they are referring to calls for a new dollar coin I would oppose it. If it just calls for the elimination of the dollar note I would support it.

As mentioned the "golden dollars" ARE copper, or at least 88% copper. If the dollar note is eliminated the dillion coin stockpile will be drawn down and more coins for circulation will have to be struck.

As far as the shipping cost of the coins being higher, yes that is true, but since the coins last longer they won't be constantly having to ship more dollar to the banks. This assumes the coins continue to circulate from the banks to businesses to customers to businesses and back to banks. If customers throw them into hoards like they do cents then you have a problem. But I don't know too many people that throw their dollar bills into a box each night so I would expect them to continue circulating. Dollar bills in a community continually wear out and have to be replaced. Once the community banks have enough dollar coins further shipments should drop off considerably.

 

Nice post, Numbers. Seems logical what you say. So I assume if you sat on some Federal board somewhere and you were asked by congress to recommend changes, you'd simply say "keep everything the same!" Right?

 

Good!

The only reason why the first few attempts at replacing the $1 bill with a coin in the USA have failed is precisely because they didn't stop printing $1 bills. Take a lesson from other countries and stop issuing the bills and in a few years you'll all wonder why you didn't convert to $1 and $2 coins sooner.

 

Aside from real government taxpayer savings as presented in the GAO reports, businesses would benefit for many reasons. The coins can be handled and processed cheaper than notes. They do not stick together. They work in self check stands FAR better than notes (ever try to feed a wrinlkled or dirty bill into a coke machine or self check stand?). Tins of other reasons clearly stated all over the Dollar Coin Alliance website along with links to the GAO reports.

Legislation is:
http://thomas.loc.gov/cgi-bin/bdquery/z?d112:h.r.02977: add colon back to the end if it gets dropped...

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:s.02049:

 

Question:

If they due finally end the paper dollar and switch over to coins, let's say, next year after the election, the mint would have to ramp up production of the presidential dollar coins and Native American dollar coins as the surplus wouldn't be near enough. So, would that make the 2012 presidential coins the key to the series and worth a look into purchasing some rolls since the mintage for this year is significantly lower than all previous years?

Just thinking out loud here....

 

People keep on saying that we are going to need so many tens of billions of dollar coins to replace the $1 bill. Well, why not just ramp up the production of $2 bills, or better yet, get rid of the cent (so that it will have its place in a five slot cash register), and issue a new $2 coin similar to Canada's bimetallic $2 coin, as I have been saying? As I said, there was a time, about a decade ago, where I read that Congress was considering authorizing a U.S. $2 coin, just to speed up the transition to a dollar coin.

 

This is the only part of your statement I take issue with. Ask the treasuries of any country with the equivalent of a $1 coin and they will say the dollar coin circulates faster than the bill. Since the coin is worth as much as a dollar people are more likely to carry it than other coins. (Same reason why many coin jars and filled with nickels, dimes and pennies but not that many quarters.) Then since people view coins as having less value than bills they are less hesitant to spend them.

 

Drago is correct, the number of required coins is not as high as they claim it would be because they WOULD ramp up production of the twos. And there would be time for the ramping up of the twos and the dollar coins because the dollar notes would not disappear overnight. A significant portion of the paper that would have gone to making ones will now be used for twos, so the job losses claimed by Crane paper would either not occur or be much smaller than they claim.

 

Dollar coin is a bad idea. The 1 dollar bill May not be fake proof but is harder to fake than a coin. Fake one pound coins are about 1 in 10 now and only by changing all of them with new coin will stop this from getting to a point where people will not accept them. How much will that cost?

 

I make sure I always have a few dollar coins in my car because I like using them when I go through the tolls.

 

I doubt 2 dollar bill production would increase. Nothing in the proposed bill calls for it...so it would only be public demand that could create that...and I doubt the resistance to the coin will up 2 dollar bill production.

 

That's a good question, bobbeth87! It's a gamble. I was hoping with the drop in 2012 Golden Dollar production, the 2012 Golden coins would be a little more harder to get or would increase in value. But so far, neither has happened. On eBay, the 2012 Presidential mint rolls are selling for $30 to $35 and the individual coins are somewhere between $3 and $4 each, just like the pre-2012 ones were. Go figure.

 

It may not be in in the legislation, but about 15 years ago, when I first started reading about them proposing the end of the $1 bill, there were many public opinion polls done, and of course, the majority if the people opposed the idea of a dollar coin, and even more people in the polls said that, IF the $1 bill is discontinued, the general public will turn to using the $2 bill as their "paper alterantive" to the dollar coin. (At least, until 5 years or so later, when the $2 coin comes :devil: )

 

Kill the dollar bill. Use dollar coins.

There really isn't any other responsible option as the savings is immense (both money and waste; shredded bills are dumped in landfills, coins can be recycled).

You'll never carry large numbers of them on you as much as you'd carry 50 singles at a time so "heavy pockets" arguments are misguided.