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replacing the dollar note with a coin would save $5.5 billion over 30years
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#2
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replacing the dollar note with a coin would save $5.5 billionover 30 years
On 10/13/2011 9:57 AM, Frank Galikanokus wrote:
http://latimesblogs.latimes.com/nati...-printing.html The only thing that's news about this is the dollar amount in the estimate. Similar reports in the past have predicted much _higher_ savings. For example, in 1995 from the GAO and the Federal Reserve estimated almost three times the savings -- $456 million a year: http://archive.gao.gov/t2pbat1/154661.pdf This more recent GAO report can be read he http://www.gao.gov/new.items/d11281.pdf Among the nuggets in the report are that it'll take until 2020 for the government to break even on the switch. Whether the current Congress is willing to pass legislation which adds to the deficit now for hoped-for savings down the road is left as an exercise for the reader. Then there's this little gem buried in a footnote on page 10: "We recognize that societal costs—such as the costs to banks, retailers, and other extensive users of cash—exist in addition to the cost to government, but we could not quantify them adequately to add to our analysis." I submit to you that a change which puts money into government coffers at a cost to society is indistinguishable from a tax. I suppose there could be societal benefits that help offset those costs, until someone _can_ quantify those net costs, in effect the GAO is asking us to write a blank check. -- Mike Benveniste -- (Clarification Required) Its name is Public opinion. It is held in reverence. It settles everything. Some think it is the voice of God. -- Mark Twain |
#3
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replacing the dollar note with a coin would save $5.5 billion over 30 years
Mike Benveniste wrote:
Among the nuggets in the report are that it'll take until 2020 for the government to break even on the switch. That seems overly pessimistic. At the time the toonie was introduced in Canada, the loonie was already a major success, having produced a saving of about half a billion dollars over nine years. And that didn't include the gains from the 180 million or so dollar bills that people stashed away. Whether the current Congress is willing to pass legislation which adds to the deficit now for hoped-for savings down the road is left as an exercise for the reader. They already have nearly enough coins minted for a good start at phasing out the dollar bill, so a decent portion of the initial cost has already been spent. Then there's this little gem buried in a footnote on page 10: "We recognize that societal costs?such as the costs to banks, retailers, and other extensive users of cash?exist in addition to the cost to government, but we could not quantify them adequately to add to our analysis." I've talked to Canadian retailers, and there are very few who would like to go back to notes for the one and two dollar denominations. I expect that if you phased out the dollar bill, there would be few American retailers who would want to go back after the first decade. I submit to you that a change which puts money into government coffers at a cost to society is indistinguishable from a tax. I think it will bring a net social benefit, so I'm not buying the idea that it has a cost to society. There will be people who save stacks (and possible commemorative sheets) of dollar bills and that will amount to a sort of tax, but it will be purely voluntary. I suppose there could be societal benefits that help offset those costs, until someone _can_ quantify those net costs, in effect the GAO is asking us to write a blank check. Unless the US experience turns out very differently from the Canadian one, it will be seen as a net benefit. I see no reason to expect the US to be that different. Peter. -- |
#4
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replacing the dollar note with a coin would save $5.5 billion over 30 years
I don't see any reason why we should stop at a $1 coin. Lets replace both
the $2 and $5 bills with coins also. We are about the only major economy in the world that still uses paper for its basic currency value. At least I can't think of another. We can continue the Presibux format for the $1 until it runs its course. However I would move the date to the reverse, keeping the presidential theme intact on the obverse. And we could use bimetallics for the $2 and $5 coin. I wouldn't be in favor of putting dead presidents on any of the coins.after the presibux format ends. I wouldn't mind using the 1916 designs: Winged Liberty for the $1; Standing Liberty for the $5; and Walking liberty for the $5, or some variation thereof. I wouldn't be displeased with an Indian Head/Buffalo motif either. -- Richard http://www.richlh.com Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. - John Kenneth Galbraith - "Frank Galikanokus" wrote in message ... http://latimesblogs.latimes.com/nati...-printing.html JAM |
#5
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replacing the dollar note with a coin would save $5.5 billion over 30 years
"Richard L. Hall" wrote in message ... I don't see any reason why we should stop at a $1 coin. Lets replace both the $2 and $5 bills with coins also. We are about the only major economy in the world that still uses paper for its basic currency value. At least I can't think of another. Brasil is a major economic player and the residents there do not like to use coins. Haven't been there recently, so I don't know if their basic unit is still available as paper. Back in the 80s when Brasil was going through one of its periodic spells of hyper-inflation, it got to the point that the lowest denomination bills wouldn't be picked up off the street by even the most poverty stricken resident. At the same time, they had a subsidiary coinage worth fractions of the lowest denomination bill, which would have made the lowest denomination worth about 1/500 of a US cent. The coins were struck in aluminum and were probably worth more as metal than as currency. |
#6
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replacing the dollar note with a coin would save $5.5 billionover 30 years
On 10/13/2011 11:45 AM, Peter Irwin wrote:
Mike wrote: Among the nuggets in the report are that it'll take until 2020 for the government to break even on the switch. That seems overly pessimistic. The estimate is from the GAO, which is also the source of the $5.5 billion dollar figure. The continue to to _favor_ the switch, so they have little incentive to provide a pessimistic estimate. The GAO did look at the Canadian experience. Among the things it notes is that at the time, Canada's $2 bill circulated. The U.S. $2 bill rarely circulates. People use less cash now than they did in 1987. Also, due to improvements in bill handling machinery, the average lifetime of a dollar bill is now 40 months rather than the 18 month lifetime in 1987 Canada. This in part, explains why the current estimate of savings is lower than in previous studies. So much so, that if you exclude seigniorage from the calculation, there's a net cost to the government over the 30 year period. They already have nearly enough coins minted for a good start at phasing out the dollar bill, so a decent portion of the initial cost has already been spent. The GAO disagrees, stating "For the current analysis, we determined that the Mint would need to make various investments to produce substantially more new coins in relatively few years." The numbers aren't even close, because you need more than one coin to replace one bill. Canada used a ratio of 1.6:1. The GAO wants to use a ratio of 1.5:1 instead of 1.6:1, but even so that means the U.S. will need over 13 billion additional dollar coins over 40 months. I've talked to Canadian retailers, and there are very few who would like to go back to notes for the one and two dollar denominations. I expect that if you phased out the dollar bill, there would be few American retailers who would want to go back after the first decade. Not surprising. Canadians already paid the cost to switch, so why would they want to pay it again? I think it will bring a net social benefit, so I'm not buying the idea that it has a cost to society. No offense, but you aren't thinking like "extensive users of cash." Those costs are very real and out of pocket. While the GAO did not quantify them, they did list them. Some are one-time expenses, such as the need to retool cash registers, retraining, and upgrading armored trucks. Others are recurring. For example, armored carriers such as Brinks charge more to deliver coins to businesses than bills. -- Mike Benveniste -- (Clarification Required) You don't have to sort of enhance reality. There is nothing stranger than truth. -- Annie Leibovitz |
#7
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replacing the dollar note with a coin would save $5.5 billion over 30 years
Mike Benveniste wrote:
Also, due to improvements in bill handling machinery, the average lifetime of a dollar bill is now 40 months rather than the 18 month lifetime in 1987 Canada. That does seem like it would make a difference. No offense, but you aren't thinking like "extensive users of cash." Those costs are very real and out of pocket. While the GAO did not quantify them, they did list them. Some are one-time expenses, such as the need to retool cash registers, There is no such need. We just keep the loonies in the place designed for 50 cent pieces (where people used to keep elastics and paperclips), and put a dish in the one dollar bill slot to take toonies. $5 bills go in the $2 slot and so forth. retraining, If you went to Boston fifty years ago, cashiers actually kept half-dollars in the dish for half-dollars and kept two dollar bills in the two dollar bill slot. Today they keep paperclips and elastics in the half-dollar dish and put five dollar bills into the two dollar slot. How much do you think the merchants of Boston spent on retraining costs to get people to make these changes? Do I hear "absolutely nothing"? The costs of "retraining" for a dollar coin should be comparable. Peter -- |
#8
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replacing the dollar note with a coin would save $5.5 billionover 30 years
On 10/13/2011 11:45 AM, Peter Irwin wrote:
On Oct 13, 11:08 am, Mike Benveniste wrote, in part: Among the nuggets in the report are that it'll take until 2020 for the government to break even on the switch. On 10/13/2011 11:45 AM, Peter Irwin wrote, in part: They already have nearly enough coins minted for a good start at phasing out the dollar bill, so a decent portion of the initial cost has already been spent. On Oct 13, 7:25 pm, Mike Benveniste wrote, in part: The GAO disagrees, stating "For the current analysis, we determined that the Mint would need to make various investments to produce substantially more new coins in relatively few years." *The numbers aren't even close, because you need more than one coin to replace one bill. *Canada used a ratio of 1.6:1. *The GAO wants to use a ratio of 1.5:1 instead of 1.6:1, but even so that means the U.S. will need over 13 billion additional dollar coins over 40 months. Just for laughs, I put brass buck mintages on a spreadsheet using the Red Book numbers and the Mint's website for circulating coins. There are almost $4 billion ($3,996,931,110.00) in brass bucks right now (through Hayes).just begging to be used. I'd say that's a fair start. Jerry P.S. - There were roughly 888 million Suzies and 682 million clad Ikes struck that haven't been seen in years, either. I won't get into real silver or gold dollar coins. |
#9
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replacing the dollar note with a coin would save $5.5 billionover 30 years
On Oct 14, 8:27*am, Jerry Dennis wrote:
On 10/13/2011 11:45 AM, Peter Irwin wrote: On Oct 13, 11:08 am, Mike Benveniste wrote, in part: Among the nuggets in the report are that it'll take until 2020 for the government to break even on the switch. On 10/13/2011 11:45 AM, Peter Irwin wrote, in part: They already have nearly enough coins minted for a good start at phasing out the dollar bill, so a decent portion of the initial cost has already been spent. On Oct 13, 7:25 pm, Mike Benveniste wrote, in part: The GAO disagrees, stating "For the current analysis, we determined that the Mint would need to make various investments to produce substantially more new coins in relatively few years." *The numbers aren't even close, because you need more than one coin to replace one bill. *Canada used a ratio of 1.6:1. *The GAO wants to use a ratio of 1.5:1 instead of 1.6:1, but even so that means the U.S. will need over 13 billion additional dollar coins over 40 months. Just for laughs, I put brass buck mintages on a spreadsheet using the Red Book numbers and the Mint's website for circulating coins. *There are almost $4 billion ($3,996,931,110.00) in brass bucks right now (through Hayes).just begging to be used. *I'd say that's a fair start. Jerry P.S. - There were roughly 888 million Suzies and 682 million clad Ikes struck that haven't been seen in years, either. *I won't get into real silver or gold dollar coins. I should clarify the brass bucks numbers are for Sacs and Prezibux struck for circulation only (no proofs). Jerry |
#10
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replacing the dollar note with a coin would save $5.5 billion over 30 years
"Peter Irwin" wrote in message ... Mike Benveniste wrote: Also, due to improvements in bill handling machinery, the average lifetime of a dollar bill is now 40 months rather than the 18 month lifetime in 1987 Canada. That does seem like it would make a difference. No offense, but you aren't thinking like "extensive users of cash." Those costs are very real and out of pocket. While the GAO did not quantify them, they did list them. Some are one-time expenses, such as the need to retool cash registers, There is no such need. We just keep the loonies in the place designed for 50 cent pieces (where people used to keep elastics and paperclips), and put a dish in the one dollar bill slot to take toonies. $5 bills go in the $2 slot and so forth. retraining, If you went to Boston fifty years ago, cashiers actually kept half-dollars in the dish for half-dollars and kept two dollar bills in the two dollar bill slot. Today they keep paperclips and elastics in the half-dollar dish and put five dollar bills into the two dollar slot. How much do you think the merchants of Boston spent on retraining costs to get people to make these changes? Do I hear "absolutely nothing"? The costs of "retraining" for a dollar coin should be comparable. Peter -- Things must be different around here because the registers I see don't have a "two dollar bill slot" They have $1, $5, $10, $20 slots.. Deuces, $50 & $100 bills go under the tray. For coins they have 1¢, 5¢, 10¢ and 25¢ plus a spare where they toss the half dollar and dollar coins |
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