Thursday, October 13, 2011

Dollar Coins, Dollar Coins Everywhere But No One Wants to Use Them

The Baltimore Sun: Dollar coins piling up at Baltimore reserve bank

a dimly lit underground vault a block from Camden Yards, the Federal Reserve is holding millions of dollars in cash that nobody wants.

The money — stored in cloth and plastic sacks piled high on metal shelving units — is in the unloved form of dollar coins, some of them never used. But a 2005 law requires the reserve bank to keep ordering coins regardless of its stockpile, and so vaults in Baltimore and around the country are filling up.

Americans just don't appreciate dollar coins, even if they do cost less to make and last longer, not to mention actually make the US Treasury profit.
The nonpartisan Government Accountability Office reported in March that switching from paper to metal would save taxpayers $5.5 billion over 30 years.
It costs 30 cents to make a $1 coin, but the Fed purchases it for face value — and the U.S. Treasury pockets the difference. In 2010, the Mint put about 400 million $1 coins into circulation, which means the government made a profit of about $280 million.

We prefer greenbacks to the coins as they're lighter to carry and more convenient, and the shiny golden coins slightly bigger than a quarter don't feel like dollars to people.

Until the government makes a law and ends production of the $1 banknotes,as occurred in Canada when the loonie was rolled out, you're going to see this problem continue as people choose not to use them. From the Susan B. Anthony, to the Sacajawea, and now we're looking at a surplus of Rutherford B. Hayes dollars as people stick to paper.

Beck, who has worked at the Baltimore branch for 27 years, would not say how many coins are stored in Baltimore, but the Fed's board of governors told Congress in June that the reserve system is holding more than $1.2 billion in dollar coins at 28 cash offices across the country.

Officials expect the number of dollar coins sitting in storage to grow to $2 billion by 2016.
I, for one, would certainly be willing to take some off their hands if space is a concern.

Heck, I'd even promise to carry and spend them, and thus further stimulate the economy rather than let them tarnish sitting in a vault.

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