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<p>[QUOTE=&quot;Numbers, post: 1512724, member: 11668&quot;]Yes, read <a href="http://www.gao.gov/new.items/d11281.pdf" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.gao.gov/new.items/d11281.pdf" rel="nofollow">the GAO report</a>.&nbsp; But actually *read* it; don&#039;t just look at the title and the summary.&nbsp; That report is where I got the information in my previous post: that the only reason the $1 coin &quot;saves&quot; money is that the GAO included seigniorage in its calculations--even though the Treasury and Fed both object to such accounting in their comments at the end of the report, and the report itself acknowledges that the CBO doesn&#039;t count seigniorage either!</p><p><br /></p><p><br /></p><p><br /></p><p>The GAO report considered this option (see pages 14-15).&nbsp; It makes the &quot;savings&quot; less, because it results in less seigniorage, because fewer $1 coins are issued.</p><p><br /></p><p><br /></p><p><br /></p><p>See pages 11 and 12 of the GAO report, where they note that both Canada and the UK found that, in order to replace a coin by a bill, they needed substantially more coins than bills--because coins &quot;circulate with less frequency than notes&quot;.&nbsp; Some other countries needed as many as 4 coins for every 1 note removed from circulation!</p><p><br /></p><p>By the way, a chart on pages 7-8 of the GAO report lists a whole bunch of countries that have replaced low-value notes by coins.&nbsp; If you look at that chart, one thing stands out: nearly all of those replacements took place in the 1980s, with very few happening more recently.&nbsp; There&#039;s a reason for this pattern: Since the &#039;80s, the prices of base metals have increased greatly (so that coins aren&#039;t as cheap to mint as they used to be), while the lifespan of banknotes has also increased due to improvements in automated processing (so that notes aren&#039;t as expensive to replace as they used to be).&nbsp; If the U.S. had switched to a $1 coin in the &#039;80s or even &#039;90s, then there *would* have been substantial cost savings, as the reduction in the ongoing cost of maintaining a sufficient supply of $1-denomination-objects in circulation would have more than paid for the up-front cost of minting billions of $1 coins.&nbsp; But today, that&#039;s no longer the case.&nbsp; There&#039;s no economic justification for making the switch *now*, even though it would have been a good idea twenty years ago.</p><p><br /></p><p><br /></p><p><br /></p><p>The Fed and the Treasury are separate entities, but they&#039;re both part of the U.S. government; the Fed is not &quot;privately held&quot;.&nbsp; By law, the Fed&#039;s annual operating profit is transferred into the U.S. Treasury as &quot;miscellaneous receipts&quot;.&nbsp; Therefore, for purposes of the present anaylsis, we can ignore the distinction between the Fed and the Treasury, since the profit from issuing currency and the profit from issuing coins both wind up in the Treasury eventually (though by different routes).[/QUOTE]</p><p><br /></p>

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