Every year the government produces billions of new coins. The population isn't growing particularly quickly and people use cash and change less than they used to. So how does this system operate? Are they taking old and damaged coins off the market, or do we just have more and more coins sitting in a vault somewhere? In other words, are new coins replacements or supplements? And if they're supplements, why do we as a nation need so many coins?
yes and yes... they do take old coins out of the market and they also have many of them setting around in vaults.
Excluding dollar coins, you can eliminate the vault issue. For other coins, what happens is in good times many, (especially cents), just accumulate around the house nationwide. When times get tough, many of these are cashed in. This is the real explanation why mintages go down so severely during recessions. Other than that, some are turned in damaged but very few. Most are either collected since they become old, or lost. There is a pretty sizable disappearance of coinage every year due to these two factors. Chris
I wouldn't think loss or collection would make much of a dent. I'm not saying you're wrong, just that it's not what I would expect. Think of the percentage of the population that is collectors, and then how many of those set these coins aside? I'm a collector but I'm not saving 1986 pennies. And while some get lost, many are found by someone else later - I find coins literally every week. It's hard to imagine 1 billion cents, for example, disappearing by these reasons every year. The recession idea makes a lot of sense.
Well, I see cents especially on the ground about every day. I think you would be surprised by how many are thrown in the trash accidentally, lost on the ground, etc etc. As for "collecting" I am not referring so much to actual coin collectors. I mean junk drawers, which I think every house in America has and things like bicentennail coins, wheat cents, buffalo nickels, etc etc are thrown into. I could be wrong, but I know that almost no coins come back for remelting, and the US only coins for orders from the Fed, so they have to be going somewhere. Again, I am exempting from that statement the current mess with dollar coins brought on by our lack of political backbone in this nation.
Be that as it may, he is correct. There are a huge number of coins of all denominations lost to attrition every year. Attrition covers everything from just plain getting lost whether that be in furniture cushions, out in the yard, a parking lot, in a river, stream, lake or other body of water, in house fires, vehicle fires, and commercial bldg fires. Then you have huge number that lay around in fountains and wishing wells all over the country. And don't forget the change jar and kid's piggy banks. Just about every home there is in America has at least 1 of them and often both. Most people tend to save change for years before every cashing it in. More than you would think. But in the large scheme of things the number is small compared to all other reason for a coin being removed, even if temporarily, from circulation. And circulation is where the vast majority of all coins are at any given time. Every bank and credit union, every store of every kind, all businesses, - all of them combined have a huge number of coins in their hands at any given moment. And then there are all the coins that are in transit at any given moment, being shipped from a store or business to the bank, from one bank to another, from a bank to the Fed, and from the Fed to a bank (via an armored car company). One way or another there are millions of dollars worth of coins simply in transit every day. Yeah they go back into circulation, but they are replaced the next day by millions more. And yes, even coin collectors have an impact. How many rolls of State Quarters do you suppose all the collectors combined have sitting around their homes ? Or rolls of cents, or nickels, or dimes ? The number of coins sitting around in rolls is in the millions if not billions. When you add all these things up, it's a wonder they don't have to produce more than they do.
Thanks for the info. I think most people probably never really think about how the whole cycle works.
I once wrote an article looking at it from the other point of view, "Where are all these coins coming from". My point was that it was so surprising that coins for change were so available. From all appearances we know that most people do not like carrying coins around with them. So most people have a change drawer, can, bucket whatever that they toss their change into at the end of the day. Now do the math. If there are 350 million people in this country and the average household size is four people that is 87.5 million households. If each household manages to lose, hoard, destroy, whatever ONE coin per week that is a loss of 87.5 MILLION coins each week. With 52 weeks in a year that amounts to 4.55 BILLION coins per year or pretty much the entire annual production of the mint. And that is at a loss rate of just one coin per household per week! How many of you toss aside just one coin per week? And what if each person in that household tossed back one coin per week? It would consume four times the mints annual coin production. And what about collectors who stash coins away by the roll? You put back ONE roll of cents, and that is your households "coin allowance" for an entire year! Since the mints entire annual production can be consumed with such a tiny hoarding rate it brings me back to the question Why is it so easy to get change?
