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Monday, August 6, 2012

Cage Match: Bill or Coins - NPR PlanetMoney

On April 20, NPR did a podcast on whether or not the U.S. should switch from dollar bills, to dollar coins.

I don't have an opinion on this, I think whatever saves the government the most money ought to win.  However, of the arguments discussed, the last one, which made the journalists opt in favor of the dollar bill, seemed to be based on some specious logic.

Let's recap.

Arguments For the Coin
--Coin lasts longer, fewer printings, cost savings
--Easier to use in dispensing machines.
--Most western nations use them

Arguments For the Bill
--Cheaper, more coins need to be made.
--Seniorage, (government makes money off currency not in circulation, but ends up hurting consumer, as a sort of "tax" on earnings)
--The Coin Jar.

You'll note first of all, that both sides say they're cheaper.  Dollar bills are more expensive to produce, but, the "Coin Jar Effect" means that they will have to manufacture more coins to keep currency circulating since coins get saved in people's pockets and are ultimately transfered to jars where they are never used.

It seems to me that almost all of the points in favor of the bill depend upon this idea of "The Coin Jar" where money goes to die.

But it simply isn't true.  It stays there until the jar fills up, then it gets used.  Or it gets used everyweek in laundomats.  Or you bring your change to the bank in rolled collections and get dollars.  My wife and I do all of these things routinely. Growing up, I knew families that stored coins in upended water jars, the kind that Tina Fey has such difficulty lifting, and they would empty it out after a few years or so and take a vacation.  It isn't a tax at all, its a savings vehicle!

Anyway, I don't really care about coins versus bills, I just thought it wasn't a thoughtful argument and ought to be corrected.

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