A dollar bill is crisp and thin. While its value isn’t classy whatsoever, the feeling of a bill most definitely is—at least when it is compared with a coin. The jingle of coins is mostly associated with beggars and people below the poverty line. Due to such psycho-social reasons, the switch to the dollar coin is currently ineffective.
A staggering amount of $1.4 billion in dollar coins sits in the vaults of the U.S. Federal Government, according to a recent Wall Street Journal article. Why? Because switching to the dollar coin would help the United States take a step out of its gloomy economy. The rough estimates are nothing to joke about either.
Taxpayers would save an estimated $13 billion over a period of 30 years if such a method were implemented, as the switch requires virtually no change in taxes or spending on federal programs. But no. People cannot bear the thought of carrying around annoying, noisy coins that could fall out of their pockets and never be seen again. As if dollar notes didn’t do that already—you would never hear a bill slip out of your pocket!
If you think that this money will be saved because coins are cheaper to produce, then, like most of the general U.S. population, you are sorely mistaken. In fact, the billions of dollars saved will come from the process of seigniorage, which is basically the difference in the face value of the coin and the cost of production and distribution. Why would this happen? Psycho-social reasons of course!
People are much more likely to hold on to coins that they are to bills. Check your wallet right now. What is the ratio of bills to coins? The answer is something you’ll know before you even reach for your wallet, without consulting a single study. So where are most of the coins? Piled up in fancy structures, given to the children, or saved in pink piggy banks and cookie jars? The fact of the matter is that people are much more likely to store and keep coins than bills. This is how taxpayers would save billions, and the government would avoid cutting spending on programs and raising taxes.
So what exactly is the actual solution to this dilemma? Well, let’s recall the problem: the annoyance of carrying around coins and handing them out in purchases. If you’ve ever visited a public school cafeteria or a dollar pizza place, you’ve seen the lowered heads and shameful looks that a lot of people give when handing over coins. If you’ve ever paid a friend back in coins, you know that it can be seen as an insult—it leaves the person either with tedious job of counting them or the doubt that you never paid them back fully.
But all such problems have clear answers. The switch to the dollar coin is an opportunity to make more money for everyone. Our economy would improve, as the federal government would gain revenue through seigniorage and the general population would save billions in taxes and revenue collection. Retailers and inventors could design new wallets and containers to house coins in your pockets or at home. Since everyone would be using coins, the shame of using them would be obliterated from the only place it exists: our minds.
