Please, No More Coins

Chicklet-currency As election day approaches, I thought this would a good time to discuss a bloated federal program that wastes taxpayer dollars, annoys the citizenry, and uses up our precious natural resources. I am talking about the minting of coins.

I was reminded of this continuing national tragedy by a post at The Consumerist about a brave grass-roots effort to address this issue. Apparently, there is Dunkin Donuts shop somewhere (for obvious reasons of safety its location was not disclosed) that now rounds all purchases to the nearest nickel. If a customer for some reason actually wants the pennies (the mind boggles) the shop will provide them.

I think this is an excellent first step and one that I hope more courageous shop managers will employ. I am sure this must be a violation of federal law (why else has it taken so long?) but if all stores do it the feds will be overwhelmed. I think the Secret Service must be in charge of enforcing the penny laws.

Anti-penny feeling has been floating in the background of American consciousness for a while now. See, for example, one of my all time favorite video rants, Pennies Are "Bacteria-Ridden Disks Of Suck." I am not so sure that they are any more bacteria ridden than other things in my pockets, but I appreciate the sentiment.

But pennies are just the beginning. I am not even sure they are the worst offenders. Yes, they cost the government around two cents each to make, and as a percentage of face value that is a nasty loss. But nickels set the mint back nine cents each, which is an even larger loss in absolute terms.

And just because the government manages to turn a profit on dimes and quarters does not mean they are a good idea. Firstly, the government does not really profit by selling a metal disk that cost it ten cents for 25 cents. That quarter will come back to the mint someday and will have to be redeemed for face value. It is more like spending ten cents to get a 25 cent loan.

Furthermore, consider the costs borne by the rest of society in handling these metallic anachronisms. Cashiers have to count them out. Store patrons have to wait, not only for their own portion of pocket litter, but for those in front of them on line to get theirs. Retailers and banks spend countless dollars counting coins, rolling them, and unrolling them.

And for what? Consumers don’t really like coins. Is there anything left that you can buy for less than a dollar? When was the last time you bought something with metal, other than a short-term parking space rental? Once in a while I will pay for something with exact change. This gets me an ins’t-that-old-guy-adorable look from the cashier. Mostly coins make their way to a jar on my dresser, which periodically makes a trip to the supermarket where CoinStar charges me to turn it into actual money.

Permit me to make one of my infrequent improve-the-world suggestions. Ditch the coins. They have had a nice 2500 year run, but it is time to put that particular monetary technology to rest. Those who insist on it can still use the relatively newfangled paper money system, but all charges will from now on be rounded to the nearest dollar. (With a $1 minimum. Stuff costing less that 50 cents, assuming it exists, will not be free.)

Bills paid by check or with plastic will still be priced, as necessary, in hundredths of a dollar. Heck, true OCD sufferers can use thousandths if they like. Come to think of it, gasoline has long been priced in thousandths. How come I only get charged in hundredths? Just another way Big Oil is out to get me. Alas, I digress.

It is not just the direct costs of coinage that my proposal would save. Consider the impact on the environment. Minting all those coins consumes zinc, copper, and nickel. Those are minerals that must be mined at great cost to the environment. Paper money, on the other hand, grows on trees and is recyclable.

Why does the federal government continue this terrible waste? I can only assume that there is a sinister pro-coin lobby working behind the scenes, possibly in concert with a powerful mint workers union. If the Tea Party really exists (I am still not convinced) I think this would be an excellent next great cause for them to take up, starting Wednesday.

No Comments

  • By Don't Ditch Coins, October 29, 2010 @ 12:16 pm

    Actually, if you’re doing this in the interests of saving money, it’s the paper that you should be ditching: It costs slightly more to mint a coin, but the coin lasts about 20x longer than a bill does. Ditching pennies is one thing; but trying to get rid of all coins seems like a silly way to go.

    http://www.farmersalmanac.com/blog/2008/10/26/dollar-coin-vs-the-dollar-bill-a-controversy/

  • By Adam, October 29, 2010 @ 12:28 pm

    Pennies first. Then nickels and dimes in one swoop. Eventually, quarters.

    Canada pisses me off. They went from Loonies to Two-nies way too quickly, the 2 dollar bill had a ton of life in it. Now you get so much freaking coinage in your hand it’s ridiculous. I f*cking hate the $2 coin, its heavy and bulky and needless.

  • By Steve, October 29, 2010 @ 2:25 pm

    I agree with Don’t Ditch Coins. I have a friend that agrees with Frank and Adam. Whenever I try to give him one or more dollar coins, he tries to refuse them.

    I don’t think we can get rid of coins without getting rid of paper money at the same time. Electronic money!

    I have found that other first-world countries tend to have more coins than we do. Other third-world countries tend to have more paper. Maybe the latter is due to the up-front capital costs of minting coins? Also, when traveling I have found that touristy places round to the nearest “nickel” but grocery stores still have prices and give change including “pennies.”

  • By jim, October 29, 2010 @ 3:08 pm

    I say keep em. They will gradually get used less and less so eventually they will become mostly obsolete. I’m certainly fine with retailers rounding off to nickels or even dimes.

    Another reason to keep coins is the revenue and income generated from numismatic sales of coins. The mint makes a profit from coin collectors and if you abolish coins that profit disappears.

    A detail: It doesn’t cost 2¢ to make a penny. In FY 2009 cost of making a penny was 1.6¢ and a nickel was 6¢. Costs vary year to year based on raw metal costs. In 2008 it was 1.4 for a penny and 9 for a nickel and in 2007 it was 1.6 and 9. Pennies didn’t hit 2.

  • By Lance, October 29, 2010 @ 4:55 pm

    You’re failing to factor in the disastrous economic consequences if we lack a convenient metal disc to flip to resolve disputes. I can’t count how many times that’s allowed me to resolve an issue and go forward. I can’t be the only one. Therefore, phasing out coins could easily destroy western civilization as we know it. Let’s not risk it.

  • By Stagflationary Mark, October 29, 2010 @ 4:59 pm

    For what it is worth…

    I would definitely support moving to a cashless society, just so long as the kids on my block can sell lemonade in the summer without requiring a credit card processing machine.

  • By mwarden, October 29, 2010 @ 5:07 pm

    Simple. We’ll admit we are already on an electronic money system with a paper facade, and we’ll switch from flipping a coin to rock-paper-scissors to settle disputes. Lower overhead costs on transactions and easier to settle three-way disputes.

    For my next trick I shall solve world hunger.

  • By Chris, October 29, 2010 @ 11:51 pm

    Just a thought: I still periodically have to pay for parking with coins, and I’ll be damned if I buy an hour’s worth of time just to run in to Starbuck’s for eight minutes. I’ll keep my quarters, please.

    And then there are taxes to think of – sales tax, for example, that reasonably operates without rounding to the nearest dollar. If you tax 10% (I’m from Chicago) on a $3 cup of coffee, do you round up to the next dollar, or remove the shop’s entire profit margin?

    Naw, I say we keep our fractional dollars for the time being.

  • By Dasha, October 30, 2010 @ 2:21 pm

    I pay with exact change all the time and I’m a 25 year old female. People do look at me funny, but who cares? Also, TD bank has machines that will count your coins for free (you don’t have to have an account there).

  • By Patrick, October 30, 2010 @ 9:10 pm

    All money should be coins, and all purchases should be rounded to the nearest dime. The quarter should be replaced with a 20¢ piece.

    I don’t see why the Canadian $2 piece is any more objectionable than the 5¢ piece. Yes, it’s larger, but you need correspondingly fewer of them, and you’d need even fewer if they’d get on with it and start making the $5 and $10 coins already.

    I’m convinced it’s entirely because we’re trained to think of coins as worthless. I swear, if the large denominations were all coins, and bills were relegated to the sub-$1 denominations, everyone would hate bills. “If they’d just get rid of these stupid bills, my wallet would be so much smaller! I just end up tossing the bills in a jar at home anyway.”

  • By Chris, October 31, 2010 @ 5:01 pm

    @Steve
    You said “I have found that other first-world countries tend to have more coins than we do. Other third-world countries tend to have more paper.”

    What nonsense – what was your sample for this observation? I don’t know of any “first world” countries with more coins than the USA. Here in New Zealand our smallest coin is 10c, and it’s laughable to think of having 1c coins. WTF am I going to buy with 1c? Mind you, our electronic banking is far more advanced than the USA, so electronic transactions (not ticket-clipped by credit card companies) are by far the most common form of payment.

  • By Lara, October 31, 2010 @ 8:23 pm

    Actually, I do vaguely recall reading somewhere (Wall Street Journal?) that the main lobbying force behind keeping the penny was from the zinc mining industry. Apparently the US mint is their biggest customer these days.

  • By bex, October 31, 2010 @ 11:59 pm

    As a point of comparison, the most recent coin to be taken out of circulation (do to it’s small value) is the half penny, over 150 years ago:

    http://en.wikipedia.org/wiki/Half_cent_%28United_States_coin%29

    Using the standard e^rt formula, assuming a 1% rate of inflation over the past 150 years, that would mean the half penny was made obsolete when it was worth 4.5 cents.

    If we assume a more reasonable 2% rate of inflation, that would mean the half-penny was made obsolete when it was worth 10 cents.

    I say, skip the pain of tolerating nickles and dimes… round to the nearest quarter and let’s move on!!!

  • By bex, November 1, 2010 @ 12:06 am

    BTW, I do love coins… so I’d be fine with shifting all this to $1 and $5 coins. They do indeed last longer than paper money, and if folks don’t like the extra weight, they can use plastic.

    There is one practical consideration: it’s going to cost a hell of a lot of money to re-tool existing vending machines to accept new coins and reject old ones… most don’t accept pennies anyway, but if we reject nickles and dimes and allow new coins there’s gonna be a fight.

    Best to do it in one fell swoop…

  • By Chris, November 1, 2010 @ 2:38 pm

    Here’s another point – you guys are talking about how coins outlast “paper money” – why is the USA still using that weak paper money? The rest of the world, including here in New Zealand, shifted long ago to polycarbonate notes that hugely outlast paper notes.

  • By Aaron, November 1, 2010 @ 5:37 pm

    Chris, bills for the British Pound, Euro, and Yen are still paper, last I knew. If those don’t count as “the rest of the world” I don’t know what does.

    Back to coins, I think we should stop using everything below the dime for cash transactions. It’s probably a good idea to be able to accommodate one decimal division of the dollar. Dimes, modified (smaller) 50 cent coins, and dollar coins, plus widely used two dollar bills, would get the job done.

  • By mc, November 2, 2010 @ 9:06 pm

    (1) Most vending machines already take dollar coins — you just don’t realize it if you haven’t tried it.
    (2) Instead of *eliminating* pennies, nickels, dimes, and dollar bills, just create a deliberate *shortage* of them. Keep them around as souvenirs, keepsakes, etc., but make the supply inadequate for constant use. That seems to be how Thailand got rid of the coins smaller than 1 Baht in the 1970s when I was there.

  • By Karenin, November 6, 2010 @ 2:23 am

    Dasha,

    You rock! Not many 25 y.o. women have your confidence.

    Regarding the coins.. they will not be around much longer as the competition for natural resources will continue to increase over the years. The human population grows logarithmically while the amount of natural resources is static.

  • By Rob, November 9, 2010 @ 3:31 pm

    How about we make our currency ALL COINS and make them from gold and silver. That way the government will be forced to stop debasing our currency, as they currently do. We need to STOP the fed’s systematic destruction of our wealth.

Other Links to this Post

RSS feed for comments on this post. TrackBack URI

Leave a comment

WordPress Themes