Dollar coins: Or, in other words, a new tax

“You need 75 more cents!” the woman at our favorite burger joint, Little Big Burger, said brightly after I sent my 9-year-old to order another serving of truffle oil fries with all the change I could find in my bag. Thankfully, I knew I'd sent enough money: I'd stashed a dollar coin in my bag, saving the Abraham Lincoln because, well, Lincoln. These fries were just good enough to let Lincoln go.

Dollar Coins are Not That Popular

I'm used to this. I love the dollar coins and always have; they're so close in size and, if you leave them in your bag long enough, color to the quarters, all but the most discerning cashier will count them as 25 cents' worth. And you rarely see them, as the dollar coins have not exactly flown out of bank coffers. They're just not that popular.

Over the past few years, there has been something of a kerfuffle (in the small world of economics and coin geeks) over the politics of the dollar coin. A well-meaning bill passed by Congress several years ago has meant the U.S. Mint has been legally forced to make dollar coins by the hundreds of millions — more than a billion in coins is stuck in a vault somewhere in Baltimore. They've been piling up and, though the Treasury Department made steps to reduce production considerably after the news broke, there's still the problem of the coins just… sitting there. Gathering dust and no interest and lots of expense to guard them.

Dollar Coins are Sturdy: We'll Give Them That

The background is that dollar coins last a lot longer than bills, for obvious reasons: a coin can stay in circulation for 30 years or more (remember my story about coins older than me?), whereas a dollar bill lasts only a few years.

U.S. bills are sturdy too, with their high-tech design and exclusive cotton-linen blend paper. U.S. one-dollar bills last 22 months, a little longer than five-dollar and 10-dollar bills (16 and 18 months, respectively) and far longer than Euros or other note currencies. Douglas Crane of Crane & Co., the company responsible for making the paper that backs greenbacks, told NPR, “U.S. currency: It's some of the most durable banknotes on the planet.” Other currencies, like the Canadian dollar when it was replaced in 1987, will fall apart or need to be taken out of circulation in as little as three months.

Supporters of coins (and promoters of copper mines) say it's about tax dollars, and saving them.
It's totally a coincidence, right? That the promoters of the bill to replace dollar bills with the coins — Tom Harkin, a Democrat from Iowa, and John McCain, a Republican from Arizona — also happen to be from states where coins are big business? Arizona is lush with copper mines, and Iowa is home to a producer of the metal plates the U.S. Mint uses to make coins.

OK, obviously: these politicians are quite probably interested in the issue because it's good for their big business constituents. But at first look the deal seems like a good one. It's a small amount of difference, but it's a difference indeed: the variable cost of dollar bills is 2.7 cents and the variable cost of coins is 15 cents. When you amortize the cost of bills vs. coins over the General Accounting Office's assumed lifespan (40 months vs. 34 years), coins come out cheaper. Simple, right?

And Then There's the Seigniorage!

If it wasn't awesome enough saving all those tax dollars, then there's the seigniorage. That's the interest the government makes on bonds that it sells in exchange for new currency. You see, when you replace bills with coins, people do this: take them home and set them on the dresser. Fish them out of their pockets and put them in a jar. Toss them in a receptacle in the car. Fail to carry them around. Don't spend them.

ERRRRTTTT. (That's the Sound of Something Screeching to a Halt.)

What looks like a mild amount of savings to the people like me who are always rooting around in the bottom of a bag or back of a drawer for a few quarters for truffle oil fries or a thermos of coffee looks like an extra tax to other people. That's right: you're paying the government for the privilege of issuing you super durable coins that you don't really want to begin with.

The GAO decided that it would be better to switch to coins, but not because of production costs — for the seigniorage benefits alone. And an update to the report in February 2012 pointed out that, thanks to the long-lasting U.S. dollar (which just keeps on aging better as new technology and better paper is developed), and because so many assumptions were made, it's altogether possible that the result could be quite different.

It's Not so Good For You and Me

The net result might be good for the government. (Or it might not. There is definitely much disagreement here — there's a whole keep-the-bill movement that is supported by, among others, most vending machine companies, bars, taxi companies, Crane & Co., and coin-operated laundries, all of which would theoretically have expenses associated with the switch. And then there is the tip situation — presumably, when we tossed our coins out of our pocket we'd only be left with fivers, which we'd be too stingy to use as tips.) But everyone can agree that it's not good for us.

Switching to dollar coins effectively taxes us. And it taxes us because of our stubborn, trenchant, unavoidable dislike for the jingling.

Planet Money's in-depth report on the subject — which inspired me to think more deeply about this — came to the conclusion that bills are better. “It's effectively a tax on people who hold coins in jars at home,” said David Kestenbaum. The professor they consulted, Robert Whaples of Wake Forest University, said skeptically, “the government can make profits in all sorts of bad ways. People are going to be putting them on top of their bureaus instead of spending them for transactions and that seems like a big waste of resources to me. This does not seem like a good way to raise money.”

Got Coins? At Least be Thoughtful About It.

Maybe you're weird like me and you just think the dollar coins rock. (I think it's the Portland-native in me: hell-bent on being different, setting a trend even if no one will ever follow.) Maybe you're the sort who runs out of money from time to time, like me, and you like that bottom-of-the-bag cushion. And maybe you're not going to get to choose: McCain and Harkin and their metallurgical constituents might win out in Congress and the dollar coin will become the law of the land.

When it comes, though, think about it: don't let them pile up. Use them. Put them back in the bank to earn interest. Don't let the government get its taxes in these silly, quite literally nickle-ing and dime-ing ways. Or look at them in a jar on your dresser and, at the very least, recognize them for what they are: a little, tiny, tax.

How about you? Do you like or avoid the dollar coins? What do you think the government should do?

Note: I edited the post to reflect that Canadian currency was not replaced “recently.” — Sarah

More about...Taxes, Economics

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Shannon
Shannon
8 years ago

The Canadian dollar bill was replaced with a coin in 1987, not recently. Interesting discussion about how people treat coins and bills differently – I wonder if anyone has looked at the effect it had in Canada since we’ve had $1 and $2 coins for many years?

Audrey
Audrey
8 years ago
Reply to  Shannon

Ha, don’t get Americans started on the two dollar bill. Was it a comment here somewhere that talked about someone who didn’t think it was legal tender. I’d say the dollar coins get used more than $2 bills. Here is Houston, the train ticket machines give dollar coins as change (never pay for a $1.25 ticket with a $20!), but I’ve never seen anyone give out a $2 bill as change. They usually just go straight back to the bank.

stacy
stacy
8 years ago
Reply to  Audrey

When we recycle cans a few times a year, the recycling place gives us brand new $2 bills. Some people look at them a little funny when we try to use them to pay. Mostly we just give them to all the little kids we know.

Amanda
Amanda
8 years ago
Reply to  Audrey

My husband isn’t American and the first time I showed him a $2 bill, he thought it was a joke. Interestingly, shortly after they became popular in his home country as a lucky talisman!

Christiana
Christiana
8 years ago
Reply to  Shannon

Not to mention 1 pound and 2 pound coins in the United Kingdom. If coins are the only option instead of dollars then people will spend them. I’m not even sure I understand the point of this post. England has been doing this before I was born!

Meaghan
Meaghan
8 years ago
Reply to  Shannon

As many others have pointed out, we’ve had $1 coins in Canada since the year I was born – hardly a recent change! And they certainly last longer than 3 months.

As well, the point about a “hidden tax” makes no sense, unless it’s meant to be a tax on stupidity for thinking that the value of legal tender somehow changes based on whether it’s in the form of coin or bill.

spiralingsnails
spiralingsnails
8 years ago
Reply to  Meaghan

I think they’re referring to the change in the material the bills are made of, from paper to polymer.

Stephen
Stephen
8 years ago
Reply to  Meaghan

Seigniorage is an odd concept, but what it boils down to is: either you put the money into a savings account or invest it, or the government earns interest on the money that sits on in your jar not being used.

If you compare the value of the money sitting in that jar, it’s depreciating when you factor in inflation.

Steve
Steve
8 years ago
Reply to  Meaghan

There seem to have been two points to this: The major point (what’s in the title) is that if people get coins, they will supposedly store them in piggy banks forever. Every time someone does that, the government makes 85 cents. It’s like a tax on people too lazy to drive to their bank every now and then I guess? Without some numbers, even a guess, as to what percentage of quarters are sitting in piggy banks, I am dubious. The second claim is that the only reason any dollar coins were made was because of a bill sponsored by… Read more »

Marianne
Marianne
8 years ago
Reply to  Shannon

I was confused about the mention at first too but then realized perhaps she’s talking about the recent change to the polymer bills? They’re so freaky looking. 🙂

Jacq
Jacq
8 years ago
Reply to  Marianne

They’re cool! And they don’t rip – we tried…

Moneywisdomtips
Moneywisdomtips
8 years ago

Good i am reading this now.Quite instructive and informative

Evan
Evan
8 years ago

I find the article’s premise absurd.

Lower (lifetime) cost of production acts as a tax break for taxpayers, as government expenditure is reduced.

…meanwhile the author blames the government because they chose not to put their money in the bank!

Stephen
Stephen
8 years ago
Reply to  Evan

Except it’s more costly to produce U.S. dollar coins than paper bills when you factor in their expected life span.

Matt
Matt
8 years ago
Reply to  Stephen

You must have misread –

“When you amortize the cost of bills vs. coins over the General Accounting Office’s assumed lifespan (40 months vs. 34 years), coins come out cheaper.”

Given the figures provided in the article, it costs (at PRESENT cost, no inflation of anything factored in) 15 cents to make a coin dollar that will last – on average – 34 years. Given the average lifespan of paper money, it will cost 27.5 cents to have 10.2 paper dollars made instead.

Stephen
Stephen
8 years ago
Reply to  Stephen

Matt laid out numbers. I forgot to include the fact that the GAO (Govt Accountability Office) reports that in order to replace bills with coins, they would have to produce 50% more coins than there are bills in circulation (that is, replace every two $1 bills with 3 $1 coins) to account for people leaving them in jars.

That negates whatever cost-savings coins would bring.

GAO Report: http://www.gao.gov/products/GAO-11-281

Evan
Evan
8 years ago
Reply to  Stephen

Let’s humor coin only (we were comparing marginal cost of production); I fear you are still wrong.

From the GAO site that you cited:

“According to GAO’s analysis, replacing the $1 note with a $1 coin could save the government approximately $5.5 billion over 30 years. ”

Did you read it? They are all for it!

Stephen
Stephen
8 years ago
Reply to  Stephen

Evan: Did _you_ read the entire report? The vast majority of the money earned during that 30-year period is from seigniorage, or the “hidden tax”.

monsterzero
monsterzero
8 years ago

I hate the jingling. Hate it.

I’m not all that fond of one-dollar bills, either. When can I start paying for things with my thumbprint?

Scott M
Scott M
8 years ago

As a Canadian over 40, I have lived through a transition from dollar bills (and $2 bills) to coins. Recently our government also announced that it would be phasing out the penny, which I have been wishing for for ages. I can recall that having $1 coins was weird, but once the $2 coin was introduced, the ease of use was vastly improved. If the American dollar coin is easily mistaken for a quarter, that’s a design issue. Our quarters look like yours but our dollar coin is significantly larger with squared edges and a kind of light-orange colour. The… Read more »

Maureen
Maureen
8 years ago
Reply to  Scott M

I’m also Canadian. We think nothing of using our $1 and $2 coins. It’s second nature now. I think I will miss pennies, though.

Sheryl
Sheryl
8 years ago
Reply to  Maureen

I’m a little sad at this post. To start with, please get your facts straight. The idea that people *choosing* to hoard currency rather than spend it is a “hidden tax” is absurd. It’s a choice. Taxes are not voluntary, keeping your coins is. While US $1 bills may have a longer lifespan than other forms of currency, a huge environmental issue is being completely disregarded here. They still have to be replaced, and considering the number of trees it takes to completely replace all the dollar bills in circulation every four years or so it does take a heavy… Read more »

Marie
Marie
8 years ago
Reply to  Sheryl

Uhhh…mining for metals to mint coins is generally far more damaging to the environment than cutting down farmed trees and harvesting farmed linen and cotton grown for the purpose of making bills.

That being said, I love dollar coins. 🙂

Lindsay
Lindsay
8 years ago
Reply to  Sheryl

Sheryl, her whole point is that people aren’t *consciously* choosing to hoard the coins. They’re just doing it because heavy pockets are annoying and coins don’t sort easily and cleanly in a wallet. If they *were* making a choice to hoard the coins, you’d be right, but that’s why she says at the end that people *should* consciously examine the choice to hold onto coins. If they don’t, it’s a tax.

Donna Freedman
Donna Freedman
8 years ago
Reply to  Sheryl

Just FYI: U.S. paper currency is made of a blend of cotton and linen.

BethR
BethR
8 years ago
Reply to  Scott M

Not to mention the different textures on the rims so you can tell them apart by feel. I love that our notes have Braille on them too.

eemusings
eemusings
8 years ago

So you have dollar coins as well as dollar bills? That seems like some unnecessary doubling up 😉

andrea
andrea
8 years ago
Reply to  eemusings

Who said that? Canada REPLACED bills with coins 25 years ago. It seems really ‘retro’ to the rest of us in the developed world that the USA still has dollar bills. Canada won’t even have pennies soon.

AJ
AJ
8 years ago
Reply to  andrea

No, it’s the United States that has both coins and bills, at least in theory. Aside from vending machines, I don’t think I’ve ever seen a dollar coin circulated intentionally.

(Also, the reason our dollar coin is so similar in size/shape to the quarter is again a concession to the vending industry…every dollar coin minted since the Susan B Anthony coins has had to be accepted in the same machines as the Anthony model, so one design mistake continues to haunt us to this day.)

Paul
Paul
8 years ago

People don’t like change. In this case, people doubly don’t like change. They don’t like to change their ways by using coins rather than bills, and they also don’t like change in their pockets or purses. I have lived in Europe and visited Canada. England no longer has a 1 pound note and the smallest denomination of the Euro is a 5. In Canada, they had to make a law barring stores, etc. from accepting bills in order to get the people to use the coins. Economically coins make sense from the government’s point of view, but psychologically people don’t… Read more »

Caitlin
Caitlin
8 years ago
Reply to  Paul

Speaking as a Canadian, we had no such law passed. They were simply removed from circulation and replaced with the coins.
Coins which are much easier to deal with than stacks of worn-out paper bills, I might add.

BethR
BethR
8 years ago
Reply to  Caitlin

Having been a cashier, I’d rather count coins than bills anytime!

Xenocles
Xenocles
8 years ago
Reply to  BethR

As a customer, I’d much rather carry around bills than coins.

Ru
Ru
8 years ago
Reply to  Paul

I’d prefer to have $1 coins over bills. As a tourist in the USA I always get annoyed when I look in my purse and see loads of $1 bills- oh boy, loads of money, I think because in the UK bills are for £5 and up. Then I realise that it’s like $7 instead of $35 and feel cheated. For people concerned about carrying around heavy coins, suck it up! It doesn’t do you much harm to carry an extra 200 grams around. The only good thing with the $1 bill is the Where’s George game where you try… Read more »

Kay
Kay
8 years ago
Reply to  Ru

Jesus, why so hostile??

Ru
Ru
8 years ago
Reply to  Kay

Damn, I’m sorry if I came across as hostile, that wasn’t my intention. Every time I read an article on the dollar coin I hear people whinging about the weight of them, like they will literally die of exhaustion if they have to sling around some coinage day to day. Where did I say that only my opinion mattered? Of course the opinion of people who use US currency every day matters, but it can be good to get an outsider’s perspective occasionally. US paper money isn’t as distinct as notes in other countries, and it can be harder to… Read more »

Eric
Eric
8 years ago
Reply to  Kay

Technically failure to use CONSISTENT units killed the orbiter. It didn’t fail because they were using english units. It failed because someone used english units and the other one used SI units. BTW I prefer SI units.

Marie
Marie
8 years ago
Reply to  Ru

So…people preferring the $1 bills are just whiners, and only your opinion counts in this matter? Actually, your opinion of the currency of a country you don’t even live in? I mean, that’s like me visting the UK and bitching about how they don’t have any one pound paper notes for my own comfort and convenience.

Andrew
Andrew
8 years ago
Reply to  Marie

Or complaining because in the U.K. they feel the need to plaster that old woman’s face on absolutely everything…

Josh
Josh
8 years ago
Reply to  Ru

what’s a “gram” ?

TB at BlueCollarWorkman
TB at BlueCollarWorkman
8 years ago

I like the dollar coins… a lot. I can wash them in my jeans pockets and they’re still good to go. If they’d unleash all those dollar coins holed up in Baltimore and force them upon us, we’d get used to them pretty fast. But when we’re given the option and allowed to be stubborn, of course we stick with what we know! No one likes new versions of facebook, twitter, firefox…but they’re forced on us and we learn to adjust. ““It’s effectively a tax on people who hold coins in jars at home” –> No, it’s not; no one… Read more »

Dan M53
Dan M53
8 years ago

“we’d get used to them pretty fast”

That the key. If the dollar bills were removed, the coins would take off and in a year or two, nobody’d give them a second thought.

Eliminate The Penny!!!!!

Rosa
Rosa
8 years ago

I like them a lot too. I always have bus fare in the bottom of my purse, and parking meters here take them too, which is awesome. I do wish they were more gold colored and had fewer designs, though – not only is it too easy to mistake them for quarters (esp. since instead of making them all Sacagawea, they have a variety of faces on them) but I’ve seen a few that have dark spots like they’re rusting or something. Not classy! And the newer dollar coins have “$1” printed on them, which makes them look like fake… Read more »

Will
Will
8 years ago

Seriously? Are things really so cheap in the states that a single dollar is regularly more than loose change? Most other parts of the world use coins far more extensively and for significantly higher values (e.g. the £2 coin here in the Uk ~ $3.25 to save you doing the maths). They are more durable, harder to lose, easier for machines to accept and cost less (per year) to produce. If you are worried about a phantom “hidden tax” and don’t want them jingling in your pocket there is a simple solution – put them in a jar when you… Read more »

Nicole
Nicole
8 years ago

Not spending coins is not a ‘hidden tax’. No one took the money from you. You still have it. You can spend it or save it as you like. If you don’t, that’s still not a tax – that’s personal stupidity.

I wish the US would get over its aversion to coins and start using them like the rest of the world does. It’s hard to get used to, but in the long run it’s often easier and more convenient.

ONEEC
ONEEC
8 years ago
Reply to  Nicole

Thank you. The entire “hiden tax” premise of this article is a little absurd.

I don’t keep my change in the bottom of my purse or my couch. My money, whether paper bills or coins or plastic credit card, is all treated in the same manner.

Elizabeth
Elizabeth
8 years ago
Reply to  Nicole

We’ve had coins so long that I don’t really remember life before the loonie, but they are pretty easy to handle. They’re a lot faster to count and easier to feed to parking meters, laundry machines, public transit, vending machines, etc. When I travel in the U.S., I feel like I’m always fumbling trying to feed one dollar bills into machines. I’d rather have quarters.

Dollar and two dollar coins do weigh down the purse though 😉

slug | sunkcostsareirrelevant.com
slug | sunkcostsareirrelevant.com
8 years ago
Reply to  Nicole

I completely agree. That’s not a tax, it’s a choice. I sincerely hope that the dollar bill is replaced. The sooner the better.

And, if it means the US Mint brings back credit card sales for the direct ship $1 coin program, then all the better.

Audrey
Audrey
8 years ago
Reply to  Nicole

I do like your comment, although I don’t carry change around or spend it. It goes into a jar. Then, after a few months it goes into the coin counter (free at my bank) and deposit it into my savings account. It’s like the “keep the change” credit card but old school 😀

Phyllis
Phyllis
8 years ago
Reply to  Audrey

I also throw my change in a jar and then take it to my bank and run it through the change counter. Except I request the 1$ coins and put them in my emergency storage. For some reason i a not tempted to dip into the coins like I would bills 🙂

Stephen
Stephen
8 years ago
Reply to  Nicole

It’s a “hidden” tax because instead of you earning interest on the money (if it were in a savings account), the government earns interest on the coins being out there but not in circulation. If that doesn’t bother you, then that’s fine. It’s less practical for the U.S. to switch to coins than other countries because our bills last so much longer. The Planet Money podcast actually stated that the U.S. dollar bill lasts up to 4.5 years, whereas other currencies’ are less than a year. That makes a big difference, and actually negates the cost benefit of coins. I… Read more »

Ah
Ah
8 years ago
Reply to  Stephen

I still am having issues with the whole “hidden tax’ part. If you are used to the coins; they are treated as tender in your mind. They are not left to sit around while you use the equivalent bills. Coins quickly become a non issue if the change is committed to whole-heartedly. (So would metric…just saying 😉 The longevity of the us bills compared to other countries is a moot point imho as the coins are much more durable than the hardiest bill. This taste of people scrambling to justify not making what i consider a necessary change. Feels like… Read more »

Stephen
Stephen
8 years ago
Reply to  Ah

The longevity of the US bill is _not_ a moot point, as it actually cancels out the cost benefit of coin vs. paper. Other countries made the switch largely due to the fact that their paper currency needed to be replaced a lot more often.

Dog Lover
Dog Lover
8 years ago
Reply to  Stephen

Stephen, where did you get your information? I’m not sure why you guys think you’re so special. Is it the infamous American arrogance that makes you guys think your bills last so much longer than other currencies?

Despite what Sarah has written here, old (paper) Canadian bank notes have a lifespan of up to 9 years (source: http://www.bankofcanada.ca/wp-content/uploads/2011/04/11-2010-currency_journey.pdf) and the new polymer bank notes last at least 2.5x longer (source: http://www.bankofcanada.ca/banknotes/bank-notes-faq/, see FAQ #9). I’m sure other currencies have similar lifespans.

(Edited to change “JD has written” to “Sarah has written”)

Stephen
Stephen
8 years ago
Reply to  Dog Lover

Federal Reserve’s information on dollar bill life span:
http://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm
Also, Planet Money’s podcast:
http://www.npr.org/blogs/money/2012/04/20/151052399/cage-match-coin-vs-bill

They quote 4.8 years. I’m sure the current life span of Canadian bills is longer now, but at the time when it was replaced, it was shorter, and enough to justify the switch.

KSR
KSR
8 years ago
Reply to  Dog Lover

Infamous American Arrogance? Wow.

Marc
Marc
8 years ago
Reply to  Dog Lover

Infamous American arrogance, wow! I guess I should throw out that all Canadians eat lots of maple syrup while watching hockey, eh?

Marc
Marc
8 years ago
Reply to  Stephen

First off I have no idea how you can say that cost is offset. In any given day if you deal with cash you’ll be hard pressed to find any dollar bill that is older than 1980. Yet almost every tenth coin is older. That alone says that coins last a lot longer. It was even stated in the article that it’s 40 months. Even if it is 48 months that’s still 4 years. A coin can last easily 40 years. So unless coins cost 10 times or more to make we absolutely should switch to a dollar coin. I… Read more »

Stephen
Stephen
8 years ago
Reply to  Marc

Read the GAO’s report:
http://www.gao.gov/assets/320/316331.pdf

When you compare production costs, you have to factor in the ratio of coins produced vs. paper bills. The GAO recommends 1.5 coins for every note replaced. That makes switching to coins more costly.

Their report says it’s worth switching for “seigniorage” alone, which is a pretty dubious way of the gov’t earning money on coins sitting around not being used.

Carla
Carla
8 years ago
Reply to  Nicole

I don’t get it either. I use coins just as if it was paper dollars. The quarters I collect are my laundry money. Dimes and nickles go into a small zip pouch in my purse (I usually save it for coffee out or when I want to pay cash with exact change) and pennies go into a jar that I eventually cash out at a local bank.

Dusty
Dusty
8 years ago
Reply to  Nicole

I agree, it seems like every time the government does something that a citizen doesn’t agree with, they find some way to call it a “tax”.

Get over it, people!

K.B.
K.B.
8 years ago

#4, Paul: Canada didn’t “make a law” barring stores from accepting the $1 and $2 bills – they simply stopped making them once we switched to coins, and withdrew them paper bills from circulation. A heck of a lot easier, no? Our new bills are polymer, rather than paper, and everything I’ve seen so far states they last longer than paper bills. This is the first place I’ve read that they will only last 3 months. Sarah, do you have a source for that? As for using coins rather than bills – really, it’s no big deal. I love grabbing… Read more »

Elizabeth
Elizabeth
8 years ago
Reply to  K.B.

I actually dislike U.S. one dollar bills because I keep thinking I have more money than I actually do when I’m traveling in the U.S. 🙂 No offense intended — it’s just that U.S. money all looks alike to me because I’m not used to it. American tourists used to tease us about our cash looking like “monopoly money”, but I like the colours and the coins.

Kim
Kim
8 years ago

As a listener of the planet money podcast, I find it distasteful that this article is simply a written summary of their work without any additional research or analysis. At least if you are going to piggyback so entirely on their work, make it clear that all you are doing is paraphrasing and that none of it (even the conclusion reached) is original thought. Here is a link to NPR’s podcast: http://www.npr.org/blogs/money/2012/04/20/151052399/cage-match-coin-vs-bill Even the flow of the article mirrors almost exactly the podcast. I don’t think this counts as plagiarism since the words have been changed, but the way it… Read more »

Andrew
Andrew
8 years ago
Reply to  Kim

And a bloated, poorly written summary, as well.

Dog Lover
Dog Lover
8 years ago
Reply to  Kim

And it’s full of misinformation! Very poor fact-checking… I’m really disappointed with this article.

BethR
BethR
8 years ago
Reply to  Dog Lover

I hate to say it, but I think GRS’s strength is posts like yesterday’s which are more anecdotal/experience-based rather than research-based. Tell me about something cool you did to earn money or save money, or a great story about how someone met a goal. (I loved the recent post on getting out of poverty, for example.)

Posts like this one lose me when I find inaccuracies and bias.

Bella
Bella
8 years ago
Reply to  Kim

For me this article was disingenius (fake) because wasn’t it Miss Sarah who recently wrote about saving all her coins in jars. Either saving coins in jars is a ‘great’ way to trick oneself into saving – or it’s falling prey to the ‘hidden tax’. It’s not both…

Billy Bob
Billy Bob
8 years ago

The Canadian one dollar coin (loonie) is in no way ‘recently released.’ Canada has had a one dollar coin since 1987 see http://en.wikipedia.org/wiki/Loonie for more details. Based on my math, this makes 25 years of usage but the dollar bill did overlap the loonie for a couple of years. Note that the dollar bills (and two dollar bills after the introduction of the toonie/two dollar coin in 1996) are still legal tender and will be accepted by most retailers — assuming that someone there is old enough to remember what the bills are supposed to look like…

Elizabeth
Elizabeth
8 years ago
Reply to  Billy Bob

I think the OP meant our new polymer bills, though I have no idea where she got the idea that our currency only lasted about three months. If that’s the case, then polymer bills — which are said to last 2.5-4 times longer than paper currency — won’t last a year.

Marianne
Marianne
8 years ago
Reply to  Elizabeth

he he I’ve had bills in my wallet for longer than 3 months. I wonder if I should check them for decay… 🙂

Procrastamom
Procrastamom
8 years ago
Reply to  Elizabeth

The only evidence I have for noting how long a polymer bill lasts is for the one I used at a casino last Friday on my birthday. My conclusion was it lasts approximately 1 hour.

(don’t worry, I won it back and took the cash home)

(I know gambling is wrong and bad and not a savings/earnings plan)

(I’m counting on a lottery win to fund my retirement)

imelda
imelda
8 years ago
Reply to  Procrastamom

Best comment ever!

Taryn
Taryn
8 years ago

I guess somewhere in the dusty corners of my brain I knew there was a one dollar coin….but I can’t say I’ve ever seen one, used one, stashed one on my bureau, or otherwise touched one. There can’t be many making the rounds, and if they are easy to mistake for a quarter then that’s poor planning. No one wants to accidentally pay $1 when they think they are paying a quarter!

elysia
elysia
8 years ago
Reply to  Taryn

I love old coins, and had a whole stash of Susan B. Anthony’s – one day I used them for a “treat” and cashed them in at my credit union. They had one of those coin counting machines (free for members – love CUs) – BUT it did not count my 1$ coins as dollars. It counted them as quarters. We had to get someone to come over and open the machine, pull them all out and go to a cashier. That’s a bad system – I like the idea of $1 and $2 coins – that are easily distinguishable… Read more »

Derek
Derek
8 years ago
Reply to  Taryn

The U.S. dollar coin is identical to the Canadian Loonie in size and shape. It only looks like a quarter if you’re completely unaware of the existence of a dollar coin.

Rianne
Rianne
8 years ago
Reply to  Derek

according to wikipedia it’s even very slightly bigger and heavier! How does that get confused for a quarter? Even if you don’t know dollar coins exist wouldn’t it stand out as totally the wrong size?

A Sumner
A Sumner
8 years ago
Reply to  Derek

The old “Susan B. Anthony” coins are smaller than the new “Presidential” coins.

Tom
Tom
8 years ago

I’m sorry, I’m not following the tax argument. If the government is selling bonds, how is it collecting interest? Why is it really a tax? I don’t have a problem with the government making money by means other than direct taxation. By doing this, they would be reducing spending and increasing revenue, right? A bi-partisan solution! Also, do you think by leaving coins around, the consumer is probably more affected by inflation than they are with this theoretical tax? I’d have no problem with switching to dollar coins, though I don’t like the idea of $2 coins. I rarely have… Read more »

Dan
Dan
8 years ago

Your “burger joint” serves truffle fries? Yum!

Erin N.
Erin N.
8 years ago

I think I’m going to start to make an effort to ask for and use dollar coins. They really do seem a lot more resource-friendly.

Laura in ATL
Laura in ATL
8 years ago

I have a good friend who lives in Canada. When the change from $1 bills to $1 coins happened, everyone hated it . . . for about two months. And then, they got used to it and really embraced it. Canadians are now fiercely protective and proud of their Loonies and Twoonies!

I vote to change to the $1 coins if they save money in the big picture of our economy. People can adapt.

Shawn G
Shawn G
8 years ago

I would love for the US to get rid of the dollar bill and the penny. It will make things so much easier.

For people who say that the dollar coins will collect, I disagree. I’ve been to England, several European countries, and Australia and they use coins extensively. In fact, people are more likely to spend them because they are so much heavier than the typical change. You want to get them out of your pocket, but they are worth too much to put on your dresser.

BethR
BethR
8 years ago
Reply to  Shawn G

They work really well in piggy banks 🙂 My dad used to always put his change in an opaque bank on his dresser and then use it for something fun or for extra savings when it got full.

You can imagine how much more he saved when loonies came along… 🙂

Lynn
Lynn
8 years ago
Reply to  Shawn G

After living in Australia the past few months, I can say the coins certainly don’t get put in jar – they’re worth too much. I absolutely hate having a pocketful of them, though. The weight, the noise, the falling out sometimes when I sit down … I won’t miss them when this trip is over, that’s for sure.

Michael
Michael
8 years ago

You are not being fair to this issue of public policy. Americans for George is an interest group set up by the paper manufacturer that makes dollar bills. You’re just giving a recycled press release from them. By your logic, the added cost of reprinting bills every year when we could have used coins for four or five times as long is also a hidden tax.

smirktastic
smirktastic
8 years ago

Here in the US, the dollar coin is the equivalent of the metric system -embraced by the rest of the world, but scorned here for no apparent reason other than a fierce unwillingness to change. I definitely support switching to coins. Money is money and currency that lasts longer just makes sense to me.

Owen
Owen
8 years ago

I imagine the same people against switching to coins are those who don’t want to switch to the metric system. Live outside the U.S. for a few months and you’ll see coins are often better. There’s a reason the smallest bill of any other developed nation is around the worth of our $5 bill. Also, bills just don’t work in vending machines.

And, I love the penny’s new design, but it’s time for it to go too.

Doug
Doug
8 years ago

I think this article was published a month too late. Given the number of factual errors and other fallacies, it really should have been an April Fools article.

Bill
Bill
8 years ago

I would gladly give up the $1 Bill, as well as the penny. I go out of my way to use the $1 coin.

A couple of restaurants I have visited go out of their way to give you $2 bills in change. Ted’s Montana Grill used to do it, although I don’t know that they still do.

Kate
Kate
8 years ago

I would love to spend dollar coins, but they never enter my life.

partgypsy
partgypsy
8 years ago

I actually bought some dollar coins (the ones with Lincoln on them), we use them for things like the tooth fairy. I would use dollar coins more but I had to buy these from the US Mint (so you pay a premium) and I never get dollar coins for change.

sjw
sjw
8 years ago

Or the US could skip over the Cdn and UK approach of using high denomination coins (the NZers have dropped their low denomination coins too and just round to the nearest nickel), and just move to a digital cash approach (http://techcrunch.com/2012/04/04/royal-canadian-mints-mintchip-looks-to-officially-digitize-cash/). Can you imagine the outcry then?

(Similar to how a lot of countries that didn’t have the $ to set up ubiquitous phone systems are skipping landline and going straight to cell phones for everyone.)

Ana
Ana
8 years ago
Reply to  sjw

In Australia we dropped the one and two cent coins years ago and round transactions to the nearest five (unless you’re paying by credit or debit card in which case it’s exactly). I used to work in a supermarket and on about $600K of sales the rounding amount – sometimes in the store’s favour, sometimes now – was rarely more than about $15. Only on really small transactions did it matter. For example, I once served two little kids buying chocolates for 52 cents each. They’d obviously made their choice very carefully on account of their limited resources and were… Read more »

PB
PB
8 years ago

I work with young adults and am constantly amazed at how often they have NO money on them at all — they are very used to simply swiping their debit cards for everything and seem physically pained by the idea of coming up with little bits of metal or paper. In another 10 – 15 years, the whole idea of money in any format other than electronic may be moot.

Kate
Kate
8 years ago
Reply to  PB

Funny you should mention that. I am in my mid-20s and the oft-repeated advice from PF blogs to pay for everything in cash so it “feels like you’re spending real money” has never resonated with me. For me, cash feels like Monopoly money. Paying with debit or credit is much more closely associated with my bank account. Gail Vaz-Oxlade, who has the show Til Debt Do Us Part and who has been a guest blogger here on occasion, usually advises cash in jars, but there was one episode, with young folks like myself, where she advised using debit only. One… Read more »

Liz
Liz
8 years ago
Reply to  Kate

What did she recommend the waitress do, deposit all her tips in her checking account? I’m trying to get my boyfriend to start tracking his income and spending, but he hangs onto his cash so he can make change quickly, so it’s been difficult to find a system that works.

If I could find Gail’s show online in the US, I’d totally make him watch that episode!

Kate
Kate
8 years ago
Reply to  Liz

I’m not sure what she had them do long-term. In the short-term, she had her deposit the cash directly into a sealed can (you know, like a homemade piggy bank) and open it up at the end of the month. Old-fashioned but effective in terms of the surprise value.

Long-term, I would presume it went into either savings or chequing.

PB
PB
8 years ago
Reply to  Kate

I love that show! It puts people back in touch with the link between physical resources and physical needs. My youngest child messed up her finances severely and went completely off banks and credit for three years. She only recently opened a new bank account, because she is moving away from home in the fall, and she is somewhat worried about it. I like to use cash because I seriously dislike the idea of data mining software linking what I purchase to my identity. Everything I buy is completely mundane, but it is a privacy issue for me. Using a… Read more »

imelda
imelda
8 years ago
Reply to  PB

Which is a shame, because some of us don’t want our purchasing history tracked, studied, recorded, used to improve a mega-corporation’s bottom line, or used to target us with more insidious advertising!

I’m 26, and I’ll take cash, please!

Ellen
Ellen
8 years ago

Just a point – the Canadian dollar wasn’t that recently replaced. We’ve had coins for several years now!

Kevin
Kevin
8 years ago

I’m Canadian and I vastly prefer the $1 and $2 coins over the old bills. I can’t remember the last time I stood in front of a vending machine, cursing at it for refusing to recognize my wrinkled old $1 bill. Oh wait – yes I do – it was during my last trip to the US.

So much nicer to just plonk in a Loonie ($1 coin) and have the machine accept it every time.

Sara
Sara
8 years ago
Reply to  Kevin

A funny thing about vending machines in the US… They don’t like the new quarters either, with the states on the back. Where I work, the vending machines take credit cards (sometimes), but will reject newer quarters. Must be something about the weight.

Andrew
Andrew
8 years ago

Of all the non-issues….

Matt
Matt
8 years ago

WHY are the dollar coins just sitting in Baltimore? Surely they could be put in circulation just like everything else?

I agree with other commenters on the (lack of) flow and logic of this article – it’s hard to follow, and the “hidden tax” argument doesn’t make much sense to begin with. If the article started out somewhere else and is mostly a repetition that’s even more disappointing… and surprising for GRS.

Also, I’d think GRS staff and readers would be SUPPORTIVE of something that encourages extra saving!

Stephen
Stephen
8 years ago
Reply to  Matt

True saving would mean investing those extra coins or putting them in a savings account where they’d earn interest. By storing them in a jar, their value is depreciating due to inflation. Doesn’t sound like saving to me.

Matt
Matt
8 years ago
Reply to  Stephen

Stephen – Your point would have more merit if there were higher inflation and higher rates of return in bank accounts – but right now inflation isn’t terribly high and account interest is near zero. Whatever fit in even a large jar probably wouldn’t be earning more than a few pennies a year. Also, what I meant by “extra saving” was that the money set aside in a jar can be used for something later on that a person might not otherwise have funds for. We’ve talked about all sorts of strategies to “hide” money from yourself – automatic withdrawals… Read more »

Stephen
Stephen
8 years ago
Reply to  Matt

Good points, thanks.

Becka
Becka
8 years ago
Reply to  Matt

My understanding is that almost all the dollar coins that have been put into circulation come right back to the banks, and since no one wants them, the banks aren’t going to keep them on hand, so they go back into storage.

Rail
Rail
8 years ago

I could go on a LOOONG screed on young adults and them wanting to use a card for EVERYTHING, but I digress. I love Dollar coins and get them at the bank every time I cash my paycheck. Nobody can use them if they dont get out of the bank vault and into circulation! The presidental series is fun to collect also.

Kate
Kate
8 years ago

When the author touches upon the politization of dollar coin vs. dollar bill she should mention that the Crane Paper is staunchly defended by Senator John Kerry as Edward Kennedy did before him. Just as the Virginia delegation held up the nickel re-design for the Jefferson anniversaries, the Massachusetts delegation has stonewalled any attempts to solely mint dollar coins. The result of this is that Ecuador receives part of its foreign aid in dollar coins. The US dollar coin is accepted there and the people don’t mind using coins instead of paper money. Seignorage has existed as long as money… Read more »

Amanda
Amanda
8 years ago

I think this article is irrelevant and not that interesting, however I’ll add my two cents.

We don’t use cash often. However, DH went to a restaurant that only accepts cash. His change was $1 something. To try to even out the cash and get rid of it I put it in the self serve cashier at the grocery. It wouldn’t take my dollar as it was too torn. I wish I’d had a $1 coin!

Ruth
Ruth
8 years ago

The author hit the real problem with the dollar coin very early in the article – it is too easily confused with the quarter. As long as you have to pull it out of your pocket and actually study it before you can be sure which coin you are holding, the US dollar coin is not going to fly. I’ve never been able to figure out why the Mint can’t figure this one out – the old silver dollars were much larger than quarters. I got to be a big fan of 1 and 2 dollar coins when I was… Read more »

Dan M53
Dan M53
8 years ago
Reply to  Ruth

Dollar coins too easily confused??? Heck, our bills all look alike and we cope with that. It’s easier to distinguish a dollar from a quarter than it is to distinguish a buck from a fiver. And actually neither activity requires too much effort.

chacha1
chacha1
8 years ago

Hoarding dollar coins is a pretty good example of government waste. So is continuing to mint pennies. I think the dollar coins ought to be released and the penny ought to be discontinued.

That said, it’s clear that the dollar coin needs to be redesigned.

abby
abby
8 years ago

i hate having cash in general. in fact i can’t remember the last time i had cash. and i hate having loose change. i personally would much rather have bills than coins, but it isn’t up to me. if the dollar coin looks just like a quarter i would hate to have to double check my change all the time….or fight with cashiers about how it wasn’t a quarter.

BethR
BethR
8 years ago
Reply to  abby

I’ve been thinking about why I prefer coins over bills and it really depends on how we use them. My preference is based on my experience: cashing out the till at the end of the night, coin laundry, parking meters, bus fare and vending machines. For people who don’t handle money much, I can see why bills might not make much difference in the days of debit cards and online shopping.

Twoonies and loonies are pretty distinctive, so they don’t get mistaken for quarters 🙂

Joe
Joe
8 years ago

If you’re talking about dollar coins in Canada, they’re struck by the Royal Cdn Mint and are WAYYYYY cheaper than US dollar bills on an annualized basis.

If you’re saying that the new Cdn polymer notes (Bank of Canada) are less sturdy or less secured against counterfeiting than American bills, then you’re just lying. Your ill-researched article is a complete straw man. New coins shouldn’t even use copper, and the penny should definitely be done away with in America as the Cdns have done.

Audrey
Audrey
8 years ago
Reply to  Joe

And as I learned back in middle school, pennies are only coated in copper, they are mostly zinc.

J
J
8 years ago

Got through about 50 comments and only 1 of them mentioned a debit/credit card! I’m 26 and I never pay anything with cash or coins, unless forced to (laundry machine, parking meter; both of which are real pains in the butt because I never have any change with me). I can’t remember the last time my wallet had cash in it. If the US switches to $1 coins, I’ll still be paying with my card. **Perhaps this is the new generational gap emerging: we complain about grandmas writing checks, in a few years we’ll be complaining about moms digging through… Read more »

thad
thad
8 years ago

This article is ridiculous. Around the world, people use coins for small denominations. Having lived and travelled throughout the world, coins are so much easier!

Jonathan
Jonathan
8 years ago

Any time I have to use paper money, coin, or check, I feel like I’m living in the stone age. Yes, I know credit debt it bad, and I know that the debit fees for retailers can be excessive, but remember we are constantly being taxed to pay for the manufacture of currency. The more “cashless” we become, the less tax money we need to spend to replace that currency.

Jane
Jane
8 years ago

I was listening to NPR recently, and they had a segment on the penny. Listeners were calling in and sharing their various uses for the largely useless currency. One person said that they actually throw them away. I was appalled by this. Is it actually common to throw away pennies? That seems like the ultimate waste, since the penny is already a losing proposition for the government. If that is really going on in any significant numbers, that would certainly sway me towards getting rid of it.

jim
jim
8 years ago
Reply to  Jane

I don’t know of anyone who throws away pennies. I’ve never heard of anyone doing so. I am sure its not common.

BethR
BethR
8 years ago
Reply to  Jane

I throw them in fountains.. does that count? 🙂

Dan M53
Dan M53
8 years ago
Reply to  Jane

I always leave pennies that I get back as change. If it’s at a self check-out, I just leave them in the change cup. If there’s not a “take a penny” cup at a manned register, then I leave them somewhere on the counter.

I don’t throw them away, but I don’t usually take them either. And I’m pretty darn cheap, so it’s not like I’m flaunting my wealth or anything! :^D

A Sumner
A Sumner
8 years ago
Reply to  Jane

I keep pennies with all the other change and every once in a while roll them like every other coin. I used to keep a roll of pennies with me for people who beg for money. The looks on their faces was worth the 50 cents in entertainment value.

Andrew
Andrew
8 years ago
Reply to  A Sumner

How charming.

A Sumner
A Sumner
8 years ago
Reply to  Andrew

If they needed it, it wouldn’t matter what form it came in, but most of the time they’re specifically asking for change for a coffee or some other luxury.

jim
jim
8 years ago

The ‘hidden tax’ argument makes no sense.

I don’t see how people can mistake dollar coins for quarters, they’re larger, thicker and completely different color.

I think the only way to get the dollar coin to work is to get rid of the dollar bills first. I think they should switch over and it makes good sense to do so. But it would also make sense for America to use the metric system…

Jenna, Adaptu Community Manager
Jenna, Adaptu Community Manager
8 years ago

I like the $1 coin, especially when you buy a T ticket in Boston with a $20 bill and you get a whole bunch of $1 coins back!

Paul N
Paul N
8 years ago

“Recently replaced Canadian dollar” ???

Is 1987 considered “recent” ? Wow I guess I better go sweep out my igloo now…..

It’s simple… stop producing the $1 notes and naturally force people to use the coins as they run out. People will adapt quickly when they have to.

Monique Rio
Monique Rio
8 years ago

I’m also a fan of the dollar coin. I get them at the bank when we need more coins for the car. Great for the parking meters. One coin gets me a decent amount of time. Also great at the farmer’s market.

J.H.
J.H.
8 years ago

Your hidden tax argument hinges on people not wanting to use coins but the solution is obvious: don’t give them a choice. Stop making paper dollar bills. They will gradually fade from circulation and then people will be forced to use dollar coins. Or not – if you can’t deal with a few coins jingling in your pocket, choose to pay with credit/debit cards or checks. Some businesses might not accept those but being free doesn’t mean freedom from consequences. In essence, your argument boils down to “people are lazy gits who can’t deal with a little change clinking around… Read more »

Marla
Marla
8 years ago
Reply to  J.H.

In that case, Timmy’s needs to round their coffee cost to the nearest 0.25.

rg
rg
6 years ago
Reply to  J.H.

<<<but I have a simple litmus test: if it takes more than five coins of a given denomination to buy a can of cola, it needs to go.

So you want quarters to e eliminated also?

Since it takes more than five quarters to purchase a can of cola.

The Antichick
The Antichick
8 years ago

I actually really like the coins. I get my stamps from a machine with a $20 every time so I can get more. I keep 30 or so in a pill bottle in my glove box for emergencies. I have another pill bottle full somewhere from when I used them for tooth fairy currency. 🙂

John
John
8 years ago

Yeah, it’s a tax. So is the lottery and numerous other things the various government bodies do to We The People. These are taxes on the stupid. I don’t play the lottery and, while I have a jar I stash lose change in, I spend it. As long as we are forewarned we are fore-armed. If dollar coins come out, I’ll use them and bank them. If the stupid want to pay the hidden tax, great! Less tax for me to pay

Jessica
Jessica
8 years ago

Hi, just a NZer popping in to add my 10 cents worth. The reason I say 10 cents is because not only did our government phase out the 1 and 2 cent coins in the late 80s, but also the 5 cent coin in 2005. We also replaced our 1 and 2 dollar bills with coins in 1991. I just wanted to say that all of the above changes were weird to us at first (oddly enough, especially the redesign of our remaining coins to make them lighter and cheaper to manufacture that accompanied the phasing out of the 5c… Read more »

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