U.S. Currency (1 Viewer)

[PlaidDragon]

How much money is wasted by the US government minting/printing currency that either is irrelevant (the penny) or doesn't last very long (the $1 bill)?

All I have hypothesis and conjecture but I'm thinking the answer is somewhere between "a lot" and "too much".

Point 1: Our coinage system needs to be altered; eliminating coins of small denominations.

Aside from the removal of gold and silver dollar coins, US coinage hasn't significantly changed since the early 1900s. In that time, those lesser coins were meaningful given their value relative to the products/services they could buy.

But what about now?

How many of us now or in the past have piled change in a bucket or jug until it overflows... necessitating a trip to the bank where, for a fee, we dump it all in a hopper and are issued some paper bills or a check in return? I'm guilty. In fact, as I write this I probably have $100+ in change in my old, high school batting helmet in my bedroom closet.

What purpose doe the penny have now other than to fascinate our children as they feed them into a press at the museum and warp it into a new shape and design?

I'd say, at a minimum, eliminate the penny, nickle and dime.

Banks track money to MANY decimal places below what we currently mint. This wouldn't change. Transactions OUTSIDE of financial institutions would simply be rounded up or down to the nearest quarter instead of the nearest penny.

Point 2: Dollars don't last.

A quick internet search suggests that the average life span of a U.S. $1 bill is 5-6 years. (coincidentally, that is roughly the same life span of the common denom chips in real casinos )

Do we really need to spend so much money printing money?

Coins are more expensive to mint than paper money is to print; however, how much longer do they last? Just at random I pulled a couple of coins out of my pocket. The quarter was 2006. The nickel was 1970. Both looked fine; whereas, a dollar bill from 1970 would probably look terrible... if it could even stay together at all.

In conjunction with point 1, I'd postulate that the $1 bill and even the $5 be replaced by by coins.

Point 3: Poker chip sets have got it right.

Then I thought. If the coin system was revamped, why not emulate the same standards widely accepted for poker chip set denominations? Why do we need a 50¢ coin, a $10 bill, or a $50 bill? There are other denoms close enough that do the same job.

Thus, to bring all three points together, ideally I'd like to see:

0.25¢ - coin
$1 - coin
$5 - coin
$20 - paper (coin?)
$100 - paper
$500 - paper

I'd imagine this would be a very "playable set", with significant reduction in currency production costs for the US Treasury.

 

[crussader]

...I'd say, at a minimum, eliminate the penny, nickle and dime.

I stop by a convenience store. I pick up a 99 cent item. With tax, it rings up at $1.07. With no smaller coins available, I have to pay $1.25 for the item. That won't go over well with the general public.

Or force everyone to use debit cards?. That won't fly with the merchants due to minimum processing fees.

As far as currency production costs go, they are negligible in the grand scheme of things. If you eliminated the cost completely, it would give you enough money to run the government for an extra couple of seconds.

 

[timsta007]

I stop by a convenience store. I pick up a 99 cent item. With tax, it rings up at $1.07. With no smaller coins available, I have to pay $1.25 for the item. That won't go over well with the general public.

Or force everyone to use debit cards?. That won't fly with the merchants due to minimum processing fees.

As far as currency production costs go, they are negligible in the grand scheme of things. If you eliminated the cost completely, it would give you enough money to run the government for an extra couple of seconds.

A compromise measure would be to eliminate the penny and the dime and keep the nickel. No one is going to complain about having a purchase rounded up to the nearest nickel. It also provides the standard 4x or 5x rule for chip denoms.... 5c, 25c, $1, $5, $20 while eliminating the ridiculous penny and the under utilized dime.

 

[Kensco]

Round to even dollar amounts and bump up sales tax rates to 25% to accommodate

 

[moose]

Canada eliminated the penny in 2013. .01 and .02 amounts are rounded down. .03 and .04 round up. It's pretty elementary. We also have plastic bills that last far longer and $1 and $2 coins. Not as much fun for strippers, but hey, sacrifices have to be made.

 

[trever]

Pretty sure your "round to the nearest quarter" idea will bring the return of tar and feathers.

I just cashed in 85 pounds (about 3 gallons) worth of coins this past weekend. But I rolled it myself, so no fee. The teller wasn't happy though.

 

[PlaidDragon]

As far as currency production costs go, they are negligible in the grand scheme of things. If you eliminated the cost completely, it would give you enough money to run the government for an extra couple of seconds.

You are absolutely right. The savings of such a change would not be that significant when set next to the total financial outflow of operating the government; but does that mean no action should be taken? Just because the savings would be relatively small does not mean it's not savings.

How many other relatively small sources of waste exist across the whole of the US government? Mirroring what I said previously: I'd wager that answer lies between "a lot" and "too many". So where do we start?

The answer is that we start with "one".

Specifically, identify one source of waste, eliminate it, then move on to the next one... and so on. You're right, that dealing with this problem alone won't have a grand effect, but resolving dozens or hundreds of issues like this WILL ultimately be significant.

Inaction only allows all our problems to pervade and worsen.

Timsta007's nickel-standard compromise would likely be easier to swallow. Any improvement is a good thing.

 

[Jambine]

How much money is wasted by the US government minting/printing currency that either is irrelevant (the penny) or doesn't last very long (the $1 bill)?

All I have hypothesis and conjecture but I'm thinking the answer is somewhere between "a lot" and "too much".

I think the answer is a lot more than "too much"
Just eliminating .10c, .50c, $10 and $50 would save a staggering amount

 

[pedrofisk]

You are also proceeding from the premiss that government is always inefficient. While it can be there are many cases where government is more efficient than private sector or has much less bloat than an equivalent private sector enterprise. This is especially true where one regulated government agency can support a customer base that is otherwise served but overlapping and differentiated private companies offering various levels of service at varies levels of prices. An easy one to use as a case study is the NYC subway system. It used to be several competing lines using differentiated equipment with different prices trying to get the same people to the same places. Naturally low traffic neighborhoods were also undeserved. Eventually the system was taken over and unified by the government which kept costs down, improved efficiency and served a larger number of people.

 

[brains613]

I stop by a convenience store. I pick up a 99 cent item. With tax, it rings up at $1.07. With no smaller coins available, I have to pay $1.25 for the item. That won't go over well with the general public.

Places where they have done similar things in the past would disagree with you here. Even anecdotally, in your scenario, you went to the same store yesterday, but also got a banana. Your total after tax is 1.37, but you only paid 1.25.

Also, I would reasonably assume some price adjustments would be in order to make this a little more seamless.

 

[brains613]

We eliminated the half penny 150(!) years ago because it had become useless. When they did, it had the buying power of a dime today.

https://www.measuringworth.com/uscompare/

 

[crussader]

.. you went to the same store yesterday, but also got a banana. Your total after tax is 1.37, but you only paid 1.25.

No, the merchant would insist on 1.50, or adjust his price up until it rounded to 1.50.

 

[GenghisKhan]

Canada eliminated the penny in 2013. .01 and .02 amounts are rounded down. .03 and .04 round up. It's pretty elementary. We also have plastic bills that last far longer and $1 and $2 coins. Not as much fun for strippers, but hey, sacrifices have to be made.

As Moose said,

With our system eliminating the penny, you win or lose a penny or two on each transaction. With each purchase it evens out. If you're that anal about it, using debit card guarantees exact amount is charged.

They said it would save Canada 11M/year. Cause people just horde pennies amd don't reuse them.

Also all our bills are plastic (polymer) now and last 2 to 5 x as long. They are very hard to wrinkle, cut, break accidently.

If WE can save tens of millions per year just with the pennies, imagine the same done in the US in much larger scale.

I couldn't find a savings estimate on the bills.

http://www.cnn.com/2012/03/30/business/canada-penny/index.html

 

[timsta007]

 

[brains613]

No, the merchant would insist on 1.50, or adjust his price up until it rounded to 1.50.

What are you basing that on? Just assumption? That's not how it works, any more than merchants can determine that now. Rounding is the guideline used when countries do this.

Here's what Canada does? Relevant text - (emphasis mine)

"A rounding guideline that has been adopted in other countries, and that will be adopted by the federal government for cash transactions with the Canadian public, is:"

http://www.mint.ca/store/mint/about-the-mint/rounding-6900008#.WmfewTdG1hG