Owen is dead on in his take regarding the recent announcement of new commemorative $1 coins. Well, he's partly right. Watching the U.S. Mint parade these absurd commemorative dollars out is embarrassingly stupid.
What the federal government needs to do is what every other country that has made a switch has done. Do it clean. Give retailers time to prepare. And for heaven's sake, yank the paper currency off the market.
Yes America, there are better uses for your tax dollars than printing dollar bills.
A dollar bill wears out in about 18 months, and at a production cost of approximately four cents per bill, it's not exactly a cheap replacement. Over the course of 10 years, it costs us 27 cents to keep a dollar bill circulating. Think about that. A full quarter of its value is blown in production and reproduction.
The Federal Reserve Bank of Cleveland released a paper in 2004 that indicated an annual savings of $450-500 million by switching to one dollar coins. Pardon the pun, but in the bigger picture, that's not small change. On the high end, not adjusting for inflation, that's $5 billion every ten years.
Canada switched to the dollar coin in 1987 and the two-dollar coin in 1996. Back then, Canadians grumbled a little (politely, of course!). Today, nobody even notices or cares. Okay, maybe they notice when they visit the U.S. and spend thirty seconds trying to get the vending machine to accept that disgusting, crumpled up dollar bill they got earlier from the clerk at Wal-Mart.
Also interesting is the following note from the Congressional Budget Office in a 1997 report that analyzed ways to reduce the deficit. It suggests that there's also a significant savings on debt servicing:
Rallying behind one and two-dollar coins is a simple way to drastically reduce our cost of currency production. It's an easy concept that any fiscal conservative should be encouraging their Representatives and Senators to take seriously. The more simple things we can do to save tax dollars, the easier the difficult decisions become.
The only thing the dollar bill symbolizes today is that Americans are stupid when it comes to saving money while making their money. It's time for... um... change.
What the federal government needs to do is what every other country that has made a switch has done. Do it clean. Give retailers time to prepare. And for heaven's sake, yank the paper currency off the market.
Yes America, there are better uses for your tax dollars than printing dollar bills.
A dollar bill wears out in about 18 months, and at a production cost of approximately four cents per bill, it's not exactly a cheap replacement. Over the course of 10 years, it costs us 27 cents to keep a dollar bill circulating. Think about that. A full quarter of its value is blown in production and reproduction.
The Federal Reserve Bank of Cleveland released a paper in 2004 that indicated an annual savings of $450-500 million by switching to one dollar coins. Pardon the pun, but in the bigger picture, that's not small change. On the high end, not adjusting for inflation, that's $5 billion every ten years.
Canada switched to the dollar coin in 1987 and the two-dollar coin in 1996. Back then, Canadians grumbled a little (politely, of course!). Today, nobody even notices or cares. Okay, maybe they notice when they visit the U.S. and spend thirty seconds trying to get the vending machine to accept that disgusting, crumpled up dollar bill they got earlier from the clerk at Wal-Mart.
Also interesting is the following note from the Congressional Budget Office in a 1997 report that analyzed ways to reduce the deficit. It suggests that there's also a significant savings on debt servicing:
... replacing one-dollar notes with coins would reduce the cost of financing the federal deficit, which would lead to long-run savings far greater than the direct savings to the government through 2002. Such long-run savings would be generated only if the public was willing to hold more than a single dollar coin for each one-dollar note. In fact, the experience of other countries strongly suggests that the public would hold a larger amount of non-interest-bearing coin and currency after the conversion is complete. For example, the Federal Reserve and the General Accounting Office estimate that the public would hold $9 billion in one-dollar coins and $1.5 billion in additional notes for the $6 billion in one-dollar bills that is currently held. That would permit the government to finance $4.5 billion of federal debt by issuing non-interest-bearing coins and currency instead of interest-bearing Treasury securities.
With interest rates at 6 percent, the government would save $270 million in interest per year. Because interest costs would be reduced in the first year, borrowing from the public would be lower in all subsequent years, resulting in additional savings. However, the effects on federal borrowing are not included in the estimate for any option because they constitute an indirect or second-order budgetary impact.
Rallying behind one and two-dollar coins is a simple way to drastically reduce our cost of currency production. It's an easy concept that any fiscal conservative should be encouraging their Representatives and Senators to take seriously. The more simple things we can do to save tax dollars, the easier the difficult decisions become.
The only thing the dollar bill symbolizes today is that Americans are stupid when it comes to saving money while making their money. It's time for... um... change.
2 comments:
Also, we need to shelve the penny.
And print one trillion dollar bill, in case of emergency.
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