Amid a national discussion about how the United States should tackle a growing budget deficit, some believe it’s time to drop the paper dollar. Replacing the US one-dollar bill with a coin of equal value would save the government some $5.5 billion over the next thirty years, or roughly $183 million per year, according to a new report from the GAO.
In order to see how that affects the budget, I’ve created this chart:
I am not one to reject a money-saving idea just because it doesn’t save “enough money.” When you need to cut back, you need to cut back; I don’t really care how it is done–and nothing should be left off the table because it saves “only $183 million per year.” Still, this is “only $183 million per year” and it will be a hard fought for $183 million.
In the past, Americans have been coin haters. The GAO contends that this is because government is giving us too much choice; either we use dollar coins (Sacagawea or Susan B Anthony coins, for example) or the quintessential Washington $1 bill. The report suggests that in order to get over this coin-hate, the government should stop giving us a choice. One unit coins in the UK and Canada were not popular until the alternative (the paper note) was eliminated. Three years later the public accepted the coins as a viable alternative.
Coins are Too Flippin’ Heavy!
Stan Collender at Capital Gains and Games wrote a post about his experience in working to promote the Sacagawea US $1 coin. He said the coin was popular with users but not with businesses because ordering a literal ton of coins isn’t nearly as attractive as ordering maybe a pound of notes. I hadn’t even begun to consider that. And without the power of the retail cash register, consumers won’t spend much time using the dollar coin. That is unless they’re frequent fliers at the Post Office.
Because visualizing area is difficult, and because I needed to open a new checking account, I took the time to make a stop at my friendly credit union. While I was there, I withdrew $100 in $1 bills and $100 in $1 coins to see how I felt about the size/weight issue.
Anyway, the dollar bills weigh 100 grams, whereas the coins weigh 810 grams. Huge difference. Roughly 3.5 ounces vs 28 ounces.
If I were the GAO, I’d want coins. If I were a retailer, I would want paper dollars. If I were a Brink’s delivery man who had to deliver dollars, I’d want paper dollars. As a taxpayer who is concerned about government spending, I want us to tackle Social Security. Err, I’m really agnostic to the whole thing.
Two other supporters and dissenters, according to Capital Gains and Games:
- Vending companies favored the switch to dollar coins, but only if they received a $50 subsidy for converting their machines
- The company that sells paper to the Treasury hated the idea, as you can imagine.
Too many people care about dollars; I’ll think smaller.
Changing the US Nickel
Given that structural problems persist in making the change to dollar coins, I think there are far better savings to be found elsewhere, with less stupidity and debate over what we use for money. Actually, I can think of a very easy way to save money right now with coins—let’s overhaul the nickel!
According to coinflation.com, each nickel has a melt value of 7.4 cents each, meaning that we quite literally spend 7.4 cents to make 5 cents, and that does not include all the etching, sketching, machining, and actual production of the nickels themselves. Each year, some 1 billion nickels are produced at a cost of $74 million per year in nickel and copper. Why not use something cheaper? How about aluminum?
Introducing the Aluminickel! How much would it cost to make a nickel with aluminum? About half a cent. Actually, we’ve tried making an aluminum penny before in 1974, but several special interests said, “No go.” Among one of the most whacky reasons was aluminum’s low radiodensity which means that it won’t show up on an X-ray when your stupid child/dog/cat/significant other eats it. Bummer.
So why not a zinckel? The current US Penny weighs 2.5 grams and is comprised primarily of zinc, with some copper thrown in for good measure. The penny has volume of 360 cubic mm compared to 688 cubic mm for the nickel. So to make a zinckel of the same weight of a penny would require 91% more materials. At a cost of .63 cents to make a current US penny, the zinckel would cost only 1.2 cents each, for a savings of 6.2 cents per nickel.
If the new nickel costs just 1.2 cents to make, we could shave roughly 6.2 cents per nickel, or $62 million per year! No hard work, no politicking, just pure and simple mathematics.
Changing the composition of the US Nickel makes sense because:
- No one company supplies all the world’s zinc and copper, but apparently only one company supplies paper to make dollars.
- The size, shape, nor design of nickels need to change
- No one cares about nickels
- We could save $62 million per year by switching to zinckels
- According to the 33rd slide in this story-telling thing from the US Mint, Nickel requires the most heat (energy) to be used in coins. You with me environmentalists?
Sure, $62 million is not $183 million, but there are far fewer interests at stake. As for the initial investment to make the transition? Recall the current nickel supplies, melt them down, sell the metals and buy cheaper materials, then get to work!
So, where’s my Zinckel?
Tell the US Mint!
The US Mint is accepting input until April 4, 2011 about using new metals in coins. Perfect timing. If you want to give them a piece of your mind, you can do so with the following contact information:
Fax: (202) 756-6500
Mail: New Coin Materials Comments
Mail Stop: Manufacturing 6 North
United States Mint
801 Ninth Street, N.W.
Washington D.C. 20220
If you want to send them an email, I made you a super-friendly contact form that goes right to the US Treasury email above:
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