Why don’t Americans like dollar coins?

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From Planet Money, news that dollar coins are piling up inside the Fed. There is apparently $1 billion of them. Why is that a problem? Well, they cost $300 million to make. That looks like pure waste.

The idea was that coins would depict different Presidents and thereby generate some excitement. Let’s be clear, that isn’t a bad idea. Let’s also be clear, coins are better than dollar notes. They are more durable and can be more easily used in vending machines. They would also reduce reliance on the quarter that currently has an exchange rate with the dollar of about 4.5 quarters to one dollar — that is better than the Australian dollar is trading.

In Australia, 20 years ago, the dollar coin was such a success that it changed the demand for money (people liked to save them) and led to the two dollar coin.

Anyhow, the solution to all this is simple. Stop printing dollar notes. Then release the coins instead. No waste and the stockpile gets used. After all, the US Government does have a monopoly on this stuff.

7 Responses to "Why don’t Americans like dollar coins?"
  1. Of course the treasury should do that; but visible, palpable change is not something the ultra-conservative public and especially its representatives react well to.
    Admittedly, the dollar coin and the quarter feel too much alike. A chubby, smaller dollar coin would be easier to distinguish from the quarter with the fingers.
    And while we are at it, how about eliminating the penny.

  2. The argument for eliminating the 5 cent coin in Australia is that they are too expensive to produce and we need to produce a lot of them because they don’t stay in circulation – my car ashtray and a couple of bowls at home are full of them for example. I would thought a better solution than eliminating would be to encourage their use or recirculation, for example, by changin parking meters to accept them.
     

  3. I guess it’s off-topic to address your question, but I don’t like dollar coins because of their size and weight and because I don’t care at all about these things: “They are more durable and can be more easily used in vending machines. They would also reduce reliance on the quarter that currently has an exchange rate with the dollar of about 4.5 quarters to one dollar.” Maybe 20 years ago, in Australia, there were still vending machines…and it’s not like my dollar bill is going to disintegrate before I use it, so durability is the Fed’s problem (along with whatever within-currency exchange rate problems exist).

  4. Nit picking. It is treasury that issues notes and coins in the US not the fed.
     
    It is a lack of political will that prevents the withdrawal of the $1 note. For some reason, people feel that changing to a note for the $1 is areflection on weakness of America.

  5. I’ve wondered whether such a move is resisted in the US because of the more common practice of tipping. If coins replaced $1 note, then people other than the person you are tipping can more easily see the magnitude of your tip.

  6. @Sam – the reason 5c pieces accumulate is that they are too small to be useful – in my neighbourhood it would take 96 5 cent pieces to park for an hour!

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