The Dollar Coin
Canada long ago abandoned its dollar bill and now has Loonies and Toonies instead. It’s easier to buy a soda from a vending machine or feed a meter with coins in larger denominations than a Quarter. Our neighbors across the river are now in the process of eliminating a coin – the penny is being phased out of circulation in Canada, and transactions will hitherto be rounded up or down, as appropriate. In Canada, it costs 1.6 cents to make each penny, so money will be saved.
Here in the US, recent efforts to introduce dollar coins (Susan B. Anthony, Sacajawea) have failed because we did not concomitantly withdraw dollar bills from circulation. The Dollar Coin Alliance argues that doing so would save the government billions. The Government Accountability Office (GAO) concluded,
We estimate that replacing the $1 note with a $1 coin would provide a net benefit to the government of approximately $5.5 billion over 30 years, amounting to an average yearly discounted net benefit of about $184 million. However, this benefit would not be achieved evenly over the 30 years. In fact, as shown in figure 3, the federal government would incur a net loss during the first 4 years. Yearly net benefits begin to accrue in the fifth year of our analysis, and in the tenth year (2020), the initial start-up costs are paid back and overall net benefits begin to accrue.
And that estimate might be low. Consider,
In 1985, for example, the Canadian House of Commons estimated that the conversion to a $1 coin would save the government $175 million (Canadian) in total over 20 years because it would no longer have to regularly replace worn out $1 notes. Canadian officials later determined that the Canadian government saved $450 million (Canadian) between 1987 and 1991.
Dollar bills have a short shelf life – they remain in circulation for about 22 months before they are shredded and recycled or sent to landfills. Coins can be melted down and recycled indefinitely. Dollar coins don’t jam in the vending machine. The GAO has recommended this switch consistently for 22 years, and Washington hasn’t yet gotten with the program.
Eliminating dollar bills and pennies would save billions and reflect economic reality; we don’t have 5-and-dimes anymore.
An extremely simple step that would save the government billions of dollars at no additional cost. The only question is why it hasn’t been done already. Write your Federal Representatives via this link.
Highly unlikely the dollar bill will go away anytime soon, but if it does, my heavy investment in the “grampa-style” coin purse industry will really take off. That said, why not the penny? Nobody wants to carry these around, and any polling that says Americans want to keep the penny probably doesn’t take into account for the “sentimental” factor.
Not my idea (though I can’t place the source): eliminate the penny. Also, to prevent hoarding: 1.) set an expiration date on it’s acceptance (if that’s even legal) and 2.) Instant stimulus that will help lower and middle class people: you make the penny now worth five cents. Once collected, government can extract whatever value they can on the penny’s destruction.
Hasn’t Canada been practicing with plastic based bills? If you can make a dollar bill cheaper to make and last longer, that could be a decent compromise.
If we eliminate both the penny and the dollar bill, the average person will have LESS weight in their pocket from coins than they do now. There wouldn’t be a reason to carry more than a few dollar coins at a time, even if you didn’t use $2 bills.
Eliminate the penny and prices/various taxes go up…business and all other receivers of cash would never round down if they can help it.
In Australia, prices at the register are rounded up or down to the nearest five cents, so it evens out. Sometimes you pay a cent or two more, sometimes less.
How granular should we get with our currency, anyhow? Where’s the rage against gas stations that keep that extra tenth of a cent (technically, a “mill”) when we buy a gallon og gas?
I was thinking primary of the tizzy people go into when it is suggested that sales tax go up a fraction of a penny (which admittedly amounts to a bunch of pennies in the long run, )
If we eliminate the penny, the total cost of your purchase (not each individual item) will be rounded to the NEAREST nickel, by law. Everyone saves the hassle of dealing with the useless things and it all turns out even in the end.
The dollar’s a goner when the Chinese and Saudis decide it’s no longer the world’s reserve currency.
When Ted Kennedy was in office, he lobbied for preservation of the dollar bill because Crane Paper, who manufactures the linen-based paper the dollar bill is printed on, is located in Massachusetts. Basically, we still have dollar bills because it preserves a few jobs in Pittsfield.
Hey pal.
http://www.vidlers.com
No 5 & 10’s my ass. 🙂
I’m all in favor of this, fwiw (not even $0.02…)
We had a choice and chose the dollar bill. That should count for something.
No, we did not choose the bill over the coin. The coin was never made easily available. You have to find a bank that has them and then wait while the teller goes to the vault to get them. People use what they get in change or at the bank, so the coin never had a chance. I wonder how many people in the US use dollar coins on a regular basis.
Get rid of the inefficient and wasteful dollar bill and people will use the coin. Simple as that. Faster coin transactions and taxpayer savings.
Not even our government should always have to run every little thing by “the people”. History teaches us that opinions of “the people” can be very wrong, even when held by the majority. We didn’t vote for anything or anyone that resulted in the coins we have now, and we don’t need to vote for any changes going forward.
Those who would have hysterics over eliminating the penny or substituting a coin for the dollar bill might want to focus on issues that really matter, for example by becoming better informed about their local, state, and national leaders and being informed, knowledgeable voters.
It’s a measure of how dysfunctional a country we are that neither the proposal to eliminate the penny nor the paper dollar has any real chance of succeeding.