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Message:: [QUOTE="Numbers, post: 1914731, member: 11668"]Notice that the Fed paper I linked explicitly makes that assumption--that none of the coins will need to be replaced during the 30-year period under consideration.  It *still* finds the coin to be less economical than the bill.  In a footnote, it points out that if a longer period were considered, the eventual need to replace the coins would make the coin even *less* economical, compared to the bill. Your statement that "the coin never comes back" is unrealistic.  There are proposals around to cull the SBA dollars from circulation--those would "come back" to the tune of nearly a billion dollars of reverse seigniorage.  Similarly when the UK replaces all of its counterfeit-prone 1-pound coins with more advanced 1-pound coins. Even absent such a large redemption of coinage, coins of all denominations routinely come back to the Fed, just as bills of all denominations do.  Due to accounting quirks of the U.S. currency system, bills are taken off the books when they're back in the Fed's vaults, while coins are not.  But it'd be silly to call that an advantage of the coin.  At this moment, there are about 2 billion unwanted Presidential dollars sitting in Fed vaults, and they're accounted as $2 billion in profit to the Treasury--obviously this is unrealistic.  That $2 billion is a transfer from the Fed to the Treasury; since both of these are parts of the U.S. government, that $2 billion cancels itself out. When the government as a whole is considered, we only need to compute the total cost over time of maintaining an adequate supply of $1 objects in circulation--never mind whether that cost is paid by the Treasury or the Fed.  As the Fed working paper shows, the lifespan of the $1 bill is now long enough that, over time, it's cheaper to replace $1 bills repeatedly than to mint and transport heavy, costly $1 coins.[/QUOTE]

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