Is It Time For the US To Ditch the Dollar Bill? 943
coondoggie writes "It seems well past time that the U.S. ditch its $1 bill — considering such a move could save the country somewhere in the neighborhood of $4 billion. But there is much resistance, or perhaps a lack of real consideration of the issue from most people. Watchdogs at the Government Accountability Office this week testified before a Congressional hearing on the topic, and said dollar coins could save $4.4 billion over 30 years (PDF), or an average of about $146 million per year."
Not yet... (Score:5, Insightful)
Dollar Bill? (Score:2, Insightful)
How about the penny first.
Re:I'll be the first to say... (Score:5, Insightful)
That will just bump the tips up to higher denominations.
Re:Allowance (Score:5, Insightful)
With dollar coins?
Familiarity (Score:5, Insightful)
Wait, they're saying we can save potentially billions of dollars, by simply changing our expectations and habits in a very slight and non-destructive fashion? Unless we can declare war on it as some kind of abstract ideological concept, nobody's going to go for that. This is America, dude, where we turn off the lights when we leave the bathroom to save the environment while we let petroleum producers dump thousands of tonnes of oil into the water because they half-assed the construction and bypassed most of the safety procedures. We come in peace, ignore the Predator drones.
The only sensible way to do this is to shove it down the average person's throat with them screaming bloody murder... only to find out a few years later that they actually like it better the new way. It's how things have always been done here. Don't ask me why, I don't know whether it's human nature, or there's something in the water that makes people this resistant to beneficial change, but will happily make useless changes to everything...
Man, I hate coins. Hate 'em. (Score:5, Insightful)
That's all there is to this comment. I throw away pennies. The only coins I save are quarters, and I only do that out of frustration. I don't carry a coin pouch. Seriously.
Re:Not yet... (Score:5, Insightful)
This will not happen until Americans can let go of their irrational attachment to dollar bills and pennies.
In Australia we ditched $1 and $2 notes for coins in 1984 and 1988. 1c and 2c coins were dropped in 1992.
End fiat currency! End THE FEDERAL RESERVE!!! (Score:0, Insightful)
I saw this insightful comment and will post it here.
How about this! If we took the power away from a bunch of secret bank mobsters to PRINT MONEY and instead backed it with gold or some other finite, precious commodity, the dollar would retain its value.
I'm sick and tired of this implicit tax that I have just because I *HOLD* a dollar. Read Greenspan's "Gold and Economic Freedom" essay. Once it's started, that money which is printed out can only be repaid by printing more money. This is the shabby key to the (corporate/social) welfare state that exists today.
The reference is here: http://www.321gold.com/fed/greenspan/1966.html [321gold.com]
Re:Not yet... (Score:5, Insightful)
Yeah, my wife bitches when I say we should get rid of pennies and just have purchase totals rounded up or down to the nearest five cents.
Her: "But the retailers will price everything so it gets rounded up!"
Me: "No, multiple item purchases will make it just as likely to round down, and that's only for cash transactions."
Her: "But I still may pay more when I go to the store!"
Me: "Uh yeah, If you make 10 CASH transactions per week you might pay about 30 cents more per week, or about $15/year."
Her: "It's a way to rip me off!"
She makes over $100K/year. People like her are why we will always be stuck with pennies.
Value of $1 (Score:5, Insightful)
Dollar coins already exist (Score:4, Insightful)
We've tried several. The big problem is that the Treasury won't simply ditch the dollar bill in favor of coins. They try to issue the coins along with dollar bills, so of course people treat the coins as collectibles instead of currency and they never catch on.
The right way to do it is to just do it: issue the coins and stop issuing dollar bills. Bills would still be in circulation and accepted, but no new $1 bills would be issued to banks. If a bank orders $1s, it'd receive them in coins. Any dollar bills received by the Federal Reserve banks or the Treasury would be destroyed, and any replacement would be done with coins. I figure within a year we'd be on coins completely, most dollar bills would've been returned as worn and destroyed and with no new bills being issued coins would become so prevalent that they wouldn't be collectibles anymore.
Re:I'll be the first to say... (Score:5, Insightful)
Sweet!!!
You mean we'd get an immediate price drop for the usual $1.25+ it costs in the machines nowdays?!?!
Re:Not again (Score:5, Insightful)
It doesn't matter if anybody wants them or not, the solution is simple. Start making one dollar coins. Stop making one dollar bills. Very quickly, your entire economy has switched.
That's what happened in Canada. What, you think there wasn't resistance when we eliminated our one dollar bill or two dollar bill (which was far more commonly used than in the US)? Of course there was. And it didn't matter, because people didn't get a choice. The government decided they wanted to save money, so they did. It's not an election-level issue, so they could do that sort of thing.
The only reason that the dollar coin has not succeeded in the US is because the US government doesn't know how to do such transitions.
Re:Inflation beware (Score:5, Insightful)
You have this backward. €1 and €2 are coins because of inflation, not the other way around. You shouldn't think twice about spending €1 on something because it isn't much money.
Re:pace (Score:5, Insightful)
We have a government where powerful politicians can openly claim that significant scientific theories are "lies from the pit of hell", and that came up with the TSA and Gitmo. They're inefficient and slow on purpose, do you really want these people to be able to take significant actions quickly and efficiently?
Re:Not yet... (Score:4, Insightful)
When they got rid of the half-penny, the penny (the newly lowest denomination) was worth $.23 in today's money. There's nothing inherently specially about the $.01 value. If I had it my way I'd get rid of everything up to the dime and replace the dollar bill with a coin. But then, I think spending $.025 on making pennies, and $.11 on nickels is ridiculous. And wasting money on reprinting worn out $1 bills when coins would last much longer equally so.
Re:Man, I hate coins. Hate 'em. (Score:4, Insightful)
You might feel differently if coins were worth something.
Re:Not yet... (Score:5, Insightful)
It was a failure because the US didn't pull the $1 bill out of circulation.
Canada started withdrawing paper $1 bills when the $1 coin was introduced. If you didn't want a $1 coin in your change, within a few weeks all a store could give you instead was quarters or smaller instead. That got rid of a lot of people's resistance. (Mind, we still had $2 bills and they were increased in circulation, but they were withdrawn in the same manner for a $2 coin a few years later.)
Before long no one worries about it anymore. It is what it is and people get used to it.
We've lost 10-cent bus fare, 10-cent payphone calls and 1-cent candy and managed to do just fine. We can live without small bills too.
(Perhaps interestingly, the Canadian paper money in largest circulation is not the $5, it's the $20 bill... because of bank machines.)
Re:Not again (Score:5, Insightful)
Getting rid of $1 bills isn't despotism, it's pragmatism.
Should the US start printing 25-cent bills? 10-cent bills? More choice is better, right?
At a certain point, you have to realize that having unlimited choices is just silly. A $1 coin functions just as well in an economy as a $1 bill (and lasts longer, thus costing society less). If you don't like increasing amounts of change, do what most Americans do and use credit or debit cards.
As a side effect, use cash, save those increasing piles of change and you can put hundreds of dollars into your savings account every year just by rolling it all up.
Re:Inflation beware (Score:4, Insightful)
That must be why the Swiss franc is so weak. They have 1, 2 and 5 franc coins and have for decades. Their smallest paper bill is a 10 franc note.
No, wait... the franc isn't weak. Guess that means these things don't correlate. :)
Re:Not again (Score:5, Insightful)
But this isn't one of those decisions. Removing the $1 bill saves the people money. It doesn't particularly help the government at all. So how is this despotism?
Re:I'll be the first to say... (Score:5, Insightful)
From what I've heard, vending machine manufacturers and operators hate dollar bills. Those scanners are easily faked out, but also have a high false-negative rate, get jammed with damaged bills, frustrate customers whose bills aren't new enough, etc. Vendors only started adding them to machines because they didn't want people to have to feed half a dozen (or more) coins into a machine to get a Pepsi.
A one-time conversion to accept $5 and $1 coins would result in much less hassle for the vending machine folks, because coin-counting devices are fairly difficult to fake out (you can't produce counterfeit metal quarters with a computer and inkjet printer) and much more reliable.
Re:Data? (Score:4, Insightful)
So that's $146,000,000/yr.
No, no. That's not the right way to look at it. It's 4 BILLION being saved. What? Yes, that's over THIRTY years, but so what? Doesn't "4 BILLION" sound so much better than "1 BILLION" or even just "146 MILLION"?
Now we have the latest style of inflation: the number of years a small savings is multiplied by to produce the sensational amount to be reported by the media. With the budget, it's typically been 10 years (so they won't say "this cut to spending will save just 100 million", they report savings of "1 billion". Now it's 30 years. We've automatically saved three times as much as before!
Re:Not yet... (Score:4, Insightful)
You might wanna find out what actually happened in the US before laying on too much sanctimony.
We've tried to replace the dollar with coins three times so far, and it's failed.
Being in the UK where the pound note was replaced by a coin about 15 years ago, amid much moaning from some, I do not understand what is meant by "failed". So what happened? Did people throw them away when given them (in change or payement)? Or did they refuse the transaction entirely (and then do without the business)? Historically, there was great difficulty getting people to accept notes in the first place rather than coin; so what irony!
.....
In the UK, the pound coins just started appearing to the public in change from shops, and notes just disappeared over a timescale of a few weeks because, when they passed through a bank, the bank withdrew them (as they would withdraw worn-out notes). In fact once the process started people became reluctant to accept a pound note because they did not want to get stuck with it (although banks would accept them for a long time after).
Personally, I always find money very acceptable.. Yes, anyone could "refuse to accept" coins like they can alway "refuse to accept" cars, the Internet, electricity, the sun, rain, whatever
we still don't have metric for chrissake (Score:5, Insightful)
if you hadn't noticed, there's a particularly loud virulent strain of "oppose all common sense progress as evil" in the USA
i know such stubborn blockheadedness isn't unique to the USA. but they seem more powerful here. how do other countries quash this loud ignorant sort?
Re:Not yet... (Score:5, Insightful)
The reason it failed was because the USA didn't actually make the decision to stop printing $1 bills.
Canada initially made a similar error when we introduced the loonie here. The $1 bill was not actually removed from circulation (they only reduced the number of $1 bills printed) for a number of months after the coin's introduction, during which the $1 bills that existed were wearing out faster (because people preferred them to coins and would use them so much more frequently), and this necessitated the mint printing more than initially estimated. The solution, Canada determined, was to discontinue the $1 bill entirely and increase production of the $1 coin to compensate.
It worked.
Re:MOD PARENT UP!!! (Score:0, Insightful)
Obviously, you didn't read the article in the link. The price of gold changes almost entirely because the value of the currency fluctuates. It isn't the other way around.
And to add something to that, what would you rather have: 1., a dollar whose purchasing value is a few PERCENT of what it was a few generations ago, or 2., a currency backed by an element whose true value is never going to fluctuate more than a few percent?
The REASON that the US left the gold standard was because of Keynsian economics. It's much easier to manipulate the economy when you have full control over the supply of a fiat currency. Read about what happened between the England and US in the '20s when there was gold price fixing. This is what led to the Depression!
I NEVER said that I wanted gold or silver-minted coins. I merely want a gold-backed system. Again, read the GP's link.
Re:MOD PARENT UP!!! (Score:4, Insightful)
The problem with the gold standard is that it uses a division principle to adjust for inflation so that the rich get markedly richer while the poor literally starve. The point of fiat currency is that the stronger your GDP is the more money you can print without hurting your economy. Thus the guy who sits on his 100 million at 3% interest will meet inflation but the average worker every time we raise the minimum wage will see a vastly larger benefit. In short we need fiat currency to keep a modern economy working because of the huge surplus labor pool mixed with the insanely large world economy.
Re:we still don't have metric for chrissake (Score:5, Insightful)
how do other countries quash this loud ignorant sort?
Free education.
Re:MOD PARENT UP!!! (Score:2, Insightful)
Re:End fiat currency! End THE FEDERAL RESERVE!!! (Score:5, Insightful)
Re:Not yet... (Score:5, Insightful)
We've tried to replace the dollar with coins three times so far, and it's failed.
We've never been without dollar coins, since 1776. It's the greenback that's new.
The problem is the size and shape of the old dollar coins. They're very close to quarters in size and weight.
Until coins marked 1965 and newer, all reeded US coins (dimes, quarters, halves, dollars) were 0.9 fine silver; the reeding was to discourage filing of the precious metal. The values of the coins were based on their weight in silver, a ratio (though not their original weights) that persists today: a half-dollar weighs as much as two quarters, which weighs as much as five dimes, and any combination of all three that equals $20 weighs 1 lb avoirdupois.
After all circulating coins were reduced to base metals, the Eisenhower dollar coin was introduced in 1971. However, it was the same size as the old (true) silver dollars, weighing as much as four quarters, proving to be an unwieldy size. This large size made sense when they were minted of precious metal, but not so much with base metal. It failed to catch on.
(Meanwhile, the half-dollar fell out of common circulation, because everyone obsessed over JFK.)
The Anthony dollar of 1979 was an effort to fix this. In order to distinguish it from other denominations, it was originally going to be a different shape: a curve of continuous width, with 11 sides (in honor of Apollo 11, whose mission patch was on the reverse). This original feature can be seen in the artwork of the coin, with both the obverse and reverse having a hendecagon inscribed around the edge. However, coin-operated machinery operators were concerned about the reliability of their equipment accepting such an unusual shape at the time, resulting in a last-minute change to a circular coin.
It should be noted that Canada essentially copied the Anthony dollar's original design in their current "loonie," only changing the color. The number 11 doesn't hold the historical significance to Canada as it does to the US, but the loonie has 11 sides just the same.
So when it came time for serious attempt #2 (Sacagawea dollar) the coin still had to be the same size and shape or every vending machine would have to be replaced.
As noted above, the loonie is the same thickness and diameter as the Anthony dollar. In addition to this, Canadian pennies, nickels, dimes and quarters are also the same size and shape (and color) as US coins of the same denomination. (Half-dollars are different, but are rarely seen in either country regardless.)
Because of this, coin-sorting equipment can be made to easily switch between US and Canadian coins, which only really differ in weight and metallurgy (i. e. magnetic signature). Keeping the newer golden dollars the same size and shape as the Anthony dollars wasn't just a matter of backwards-compatibility but cross-compatibility as well. The yellow color of the golden US dollars also continues the trend of using the same colors for the same denominations.
The real issue for the golden dollar was maintaining the same magnetic signature as the Anthony dollar, in spite of using a different color alloy.
And it still felt like a quarter in your pocket.
Until you feel the smooth edge. It doesn't have the loonie's corners, but it's still easily distinguished from quarters by touch, just as you can distinguish between quarters and nickels, and between dimes and pennies.
We're trying again with the Presidential Dollar Coins.
Past tense. Production was halted prematurely this year, with Grover Cleveland's first term.
Besides, they were always intended as a limited issue, much like the "50 State Quarters" program. Sacagawea dollars were minted alongside them, along with some special, limited-issue reverses reflecting "Native American heritage." The only permanent change is moving "In God We Trust" from the edge-printing to the obverse, after a certain well-publicized snafu with the Presidential dollars.
Re:I'll be the first to say... (Score:2, Insightful)
Yeah, cos that method worked well for IPv6
Re:MOD PARENT UP!!! (Score:5, Insightful)
No, it causes deflation.
Gold is basically fixed in quantity. Mining has little effect on the overall supply.
As the economy grows and the money supply is fixed, the value of money increases.
This shifts wealth to those people who hold cash, a non-productive asset.
This increase real interest rates, deterring investments in productive assets.
It is a horrible, horrible thing.
See “A Monetary History of the United States “ by Milton Friedman
Re:MOD PARENT UP!!! (Score:4, Insightful)
That is nonsense. Money is is divisible. If your gold coin is worth too much to by a pair of boots, you exchange it for a smaller denomination. Deflation doesn't matter.
The requirement to use smaller denominations, mean the higher denominations are worth more. It seems that you are admitting deflation happens, but hand waving it away with a suggestion that it "doesn't matter". There is a lot of literature out there that says otherwise, and it is quite unlikely that deflation doesn't matter, so if you want to say deflation doesn't matter or is better than the current situation, then, the burden of proof is on you to show that.
Deflation has tangible negative effects on folks that are not rich -- when you borrow some money, the deflationary effect essentially means that you might never be able to pay back the loan, because the value of the gold in real terms that you have to pay back is increasing, on top of the actual interest charges; you can't know the economic growth in advance....
If the economic growth doesn't happen, there's no job for you to get to repay your loan or buy a house. If the economic growth does happen, and you owe money, then your debt becomes as much more burdensome as the rate of inflation caused by that growth, with a non-fiat currency.
It also means, that as the economy grows, wages will continuously go down -- a certain amount of gold becomes worth more over time, therefore, to be paying the same rate, the employers have to continuously decrease the amount of gold paid, and employers who hold large quantities of money have the advantage, since they receive money from the revenue making activities of their business, and there is a delay before they pay employees; whereas, in an inflationary environment, wages continuously increase, and this works to the disadvantage of the employer who has large quantities of cash, and to the advantage of the lower/middle-class laborers .
You can not increase the wealth and quality of life by inducing inflation.
Sure you can... inflation acts as a stimulus, encouraging new investment and revenue generating activities; just leaving your money in the bank is marginally penalized, due to the gradual decrease in value.
Investment is rewarded, with inflation and economic growth -- resulting in more productive use of the money, then sticking it in a bank account.
Non-inflationary currency rewards stagnation --- leave your money in safe keeping. It will just continuously be worth more and more over time, and you will need smaller and smaller denominations to pay for products and services with.
This means the other businesses you are buying products from, and laborers you are buying services from are at a disadvantage, because over time they are receiving smaller and smaller denominations of gold for their services.
E.g. You get just an artificial reward for holding onto the currency you obtained, before demand increased, instead of investing in profitable activities.
Not that there is a problem with saving money -- but it is nothing to base a system of trade on, at least not one that is expected to excel.