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Message:: [QUOTE="green18, post: 2296325, member: 10103"]Balancing the books The Mint sometimes likes to call those revenues a profit, but they aren’t, really. Still, they do make running the government cheaper. The Mint does not distribute coins into the monetary system. That’s the job of the Federal Reserve, which has to buy them at full price. Even though a quarter costs the Mint only about 6 cents to make, Fore said, the Fed buys it for 25 cents. The difference — called seigniorage (pronounced SEEN-your-ij) — goes straight into the general fund, where it substitutes for borrowing from the public and lowers the government’s interest costs. It’s not really a profit because, in theory, it should all even out in the long run. Eventually, the excess is supposed to be spent down as the Mint redeems old coins and destroys them. But most old coins are never redeemed, thanks to collectors and forgetful spenders. “Very few coins are turned in,” Fore said. “There is an attrition whether they are in washing machines or in dresser drawers or lost on the beach.” Moreover, coins are “an interest-free loan to the government, a loan that never gets called,” John P. Mitchell, the Mint’s then-deputy director, testified before a House subcommittee in 2000. “Because coins generally last 30 years, the government gets to use the minted billions for a long time.” <a href="http://www.nbcnews.com/id/6620800/ns/us_news/t/making-mint-us-mint/" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.nbcnews.com/id/6620800/ns/us_news/t/making-mint-us-mint/" rel="nofollow">http://www.nbcnews.com/id/6620800/ns/us_news/t/making-mint-us-mint/</a>[/QUOTE]

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