Good Dollar Coin News?

On Mon, Jim Seymour wrote:

Joe Fischer wrote:
In the average year since 1980, about 4 Billion
dollar bills were printed, and at 3 cents each, that is
about 120 million dollars, which is only a fraction of
the 500 million the coin coalition claimed could be
saved.

But you're comparing annual numbers with the coalition's "lifetime" numbers.

I interpreted the coalition's numbers as yearly, it was
Chris who did use lifetime numbers.

If a bill costs 3 cents and lasts a year and a half (which is the
duration I hear most often), while the coin lasts 20 years (some say 30,
but 20 makes the point safely), then the production cost over the 20
years would be 12 cents for ONE coin and 40 cents for about 13 bills.

I am sure it will cost the users (who are also the taxpayers)
a lot more to recirculate coins than bills, eight times the weight
can get problematic for merchants who need a thousand at a time.

$500 million in savings is probably an exaggeration, but it's not
complete fantasy.

There is also the possibility of an expensive replacement
if the coins will not work in vending machines.

Having said all that, the point is moot since the dollar coin's cost
advantages don't mean anything unless the public uses it - and the
public won't use it unless forced.

And who has the power to force the public to do anything,
the biggest lobby is public opinion.

I have suggested before that it costs nothing to print
replacement dollar bills, simply because a certain percentage
of the bills in circulation never come back to be singled out
for shredding.
The exact percentage is hard to come by, but if it is
anywhere near ten percent, that would be 300 million
per year.

More than the cost of production needs to be considered.
Merchants could easily convert over to all dollar coins in a few
years, and the public would not resist too much, but merchants
obviously are affected by the additional weight and the need
to change storage and security.

I see the $25 rolls as a big mistake, any errors by clerks
of selling a roll for $20 would cause hard feelings.
A general change from bills to coins has the potential
for problems, the clad quarters and dimes are great because
they look the same after 35 years of use, but the SAC does
not look shiny after even 4 years.
So rather than argue for the change on production cost
alone, a few years of circulation under present conditions
will be a good thing.

I see another 20 or 30 percent accumulative inflation
needed before the SAC will have the same utility as the
looney Canadian dollar.
By then any problem with the coin will be evident.

I just wanted to point out that none of the numbers
and costs posted before were correct, and good numbers
are needed to make good decisions.

Joe Fischer

Or how about a $19.95 bill that could be used for buying those TV
gadgets. (plus a $6.95 bill that would be handy for paying shipping
charges)
Bruce
We have them Bruce, they are called checks, cheques and come in all
denominations. :-)))
Doris

F B wrote:

Or how about a $19.95 bill that could be used for buying those TV
gadgets. (plus a $6.95 bill that would be handy for paying shipping
charges)
Bruce
We have them Bruce, they are called checks, cheques and come in all
denominations. :-)))
Doris


I like 'em! Like turning sheets of paper ripped from a pad into cash!
You can even write how much you want it to be worth on the paper. No
need for change either. Still not as handy as phone calls or web site
mouse clicks. Who needs coins or bills? What'll they come up with next?

Bruce

If htey would charge say 75 cents for a soda in a vending machine that takes
$1 coins,they would have less change to contend with

And even moreso less if they equip them to accept ATMs.

8-l


Coin Saver

I assume you mean accept debit cards since inserting an ATM into a soda machine would be
quite a feat!

Adding a phone line and a phone number and a phone bill to every vending machine PLUS the
transaction fees will increase the cost of soda or candy quite a bit. And then you will
also need to add area codes since all the phone numbers will be used up faster.

-Fred Shecter

--
"""Remove "zorch" from address (2 places) to reply.
"Coin Saver" wrote in message
...
If htey would charge say 75 cents for a soda in a vending machine that takes
$1 coins,they would have less change to contend with

And even moreso less if they equip them to accept ATMs.

8-l


Coin Saver

"Joe Fischer" wrote:
Show your figures, please.

Sure. How much does it cost to keep $1 billion of currency in circulation
for 30 years?

Bills cost 3 cents, coins cost 12 cents. Bills last 1.5 years, and coins
last 30 years. Source:
http://abcnews.go.com/sections/wnt/D...oin020404.html. I
assumed dollar coins would remain in circulation as they lose their luster.

I defined "in circulation" as "delivered to the banks one level below the 12
regional Federal Reserve Banks ("FRBs")", presumably to money center banks
("MCBs"). I guessed that each coin travels an average distance of 1,100
round-trip miles (500 miles each direction to and from the 12 FRBs from the
nearest BEP facility or Mint, and 50 miles each direction to and from FRBs
to money center bank). Each coin weighs maybe 0.018 lbs; I assumed a bill
weighs 20% of that. With an average 6-ton payload
(http://www.armored-trucks.com/search/search.htm), the average Mint-to-FRB
shipment would carry some 670,000 coins; it would take about 125 shipments
to each FRB to field the $1B. The 6-ton Mint-to-FRB payload of bills would
be some 3.2 million $1 bills, allowing the $1B of to be delivered in 26
shipments. I estimate an all-in delivery cost of about $2.00 per round-trip
mile (somewhat higher than the cost of commercial heavy transport, due to
higher labor/benefit rates and the need for a trained armed guard).

Now, The Simplified Magic Formula: Cost to Keep in Circulation = (Production
Cost + Distribution Cost) x # Cycles

Cost of $1B of coins for 30 years:

Production: 1,000,000,000 coins x $0.12/coin = $120,000,000
Distribution to FRBs: 12 routes/shipment x 125 shipments x 1,000 miles/route
x $2/mile = $3,000,000
Distribution to MCBs: 144 routes/shipment x 125 shipments x 100 miles/route
x $2/mile = $3,600,000
Cost per Cycle = $126,600,000
x 1 Cycle
-----------------------------------
$126,600,000

Cost of $1B of bills for 30 years:

Production: 1,000,000,000 coins x $0.03/bill = $30,000,000
Distribution to FRBs: 12 routes/shipment x 25 shipments x 1,000 miles/route
x $2/mile = $600,000
Distribution to MCBs: 144 routes/shipment x 25 shipments x 100 miles/route x
$2/mile = $720,000
Cost per Cycle = $31,320,000
x 20 Cycles (30 years / 1.5 years per cycle)
-----------------------------------
$626,400,000

Net Savings over 30 Years: $499,800,000

With some $6 billion of singles in circulation, the savings would eventually
multiply six times--for close to $3 billion each 30 years--once $1 bills
were essentially eliminated. It would likely take 10 to 20 years, which also
makes sense from the perspective of providing transition time.

While admittedly back-of-the envelope, the economic substance is captured
above. I've ignored a number of other, smaller costs associated with
bills--like the inspection, counting, accounting, wrapping, and burning
costs (or do they recycle now?). All these factors favor coins, simply
because you have to do them 20 times for bills each time you do them for
coins.

--Chris




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Bruce Remick wrote in news:3ff9c2a2$0$6771
:

and have yet to receive a dollar coin in change from a merchant.


That's the problem.


Barney

Barney wrote:

Bruce Remick wrote in news:3ff9c2a2$0$6771
:


and have yet to receive a dollar coin in change from a merchant.



That's the problem.



It is for me. I would re-use them if I received them in change in my
daily spending, but I'm not about to make any special effort to acquire
some just to spend as long a $1 bills are in my wallet.

Bruce
'willing but unable'

On Wed, "Chris S" chris(at)imt.xohost.com wrote:

"Joe Fischer" wrote:
Show your figures, please.

Sure. How much does it cost to keep $1 billion of currency in circulation
for 30 years?

Bills cost 3 cents, coins cost 12 cents. Bills last 1.5 years, and coins
last 30 years. Source:
http://abcnews.go.com/sections/wnt/D...oin020404.html. I
assumed dollar coins would remain in circulation as they lose their luster.

Which is an issue in itself, quarters and dimes rarely lose
their lustre, it is the cent and SAC that seem to get ugly.

But your cost analysis is too simplistic, it only addresses
base cost and distribution.

I will repeat it again, the FRB only pays 3 cents for a
dollar bill (it may pay 5 cents now because the BEP may average
costs for all bills), and "sells" them for one dollar, and deposits
the gain in the treasury at the end of each year.

The FRB pays $1.00 each for dollar coins, and sells them
for one dollar, with no possible gain to the government.

First, bills are easy and cheap to recirculate, even by
U.S. Mail, coins would cost far too much to use the mails for
distribution or redistribution.

But the important factor is the number of bills or coins
that will never be "redeemed", the government will retain
the "gain" forever, and dollar bills circulate more widely
than coins, by tourists, by mail payments and gifts, and
by bank requests.

I defined "in circulation" as "delivered to the banks one level below the 12
regional Federal Reserve Banks ("FRBs")", presumably to money center banks
("MCBs"). I guessed that each coin travels an average distance of 1,100
round-trip miles (500 miles each direction to and from the 12 FRBs from the
nearest BEP facility or Mint, and 50 miles each direction to and from FRBs
to money center bank). Each coin weighs maybe 0.018 lbs; I assumed a bill
weighs 20% of that.

A bill weighs one gram, so it sounds like the difference is
more like 8 times, or 12 percent.

[snip]
With some $6 billion of singles in circulation, the savings would eventually
multiply six times--for close to $3 billion each 30 years--once $1 bills
were essentially eliminated. It would likely take 10 to 20 years, which also
makes sense from the perspective of providing transition time.

While admittedly back-of-the envelope, the economic substance is captured
above. I've ignored a number of other, smaller costs associated with
bills--like the inspection, counting, accounting, wrapping, and burning
costs (or do they recycle now?). All these factors favor coins, simply
because you have to do them 20 times for bills each time you do them for
coins.
--Chris

I have to consider the whole picture, not just the raw
production and delivery cost.

Do you realize the FRB would have to "buy" all dollar
bills it removes from circulation?
That would reduce the "excess revenue" they deposit
in the treasury each year.
So the original direct cost of the dollar coins would be
much greater than the 12 or 15 cents.

But the bad thing about the coins is how much it costs
merchants and the public, in time, money and extra work
related to the 8 times greater weight of coins.

Look at it this way, the actual cost of printing dollar bills
runs about 100 million per year, which is about 50 cents per
person using them, per year.
If dollar bills were not printed, the cost of other bills,
stamps, and other security paper would be more because
some expenses of the department of the BEP would still
remain the same.


I would like to suggest you obtain a copy of the
current federal budget and see how many non-essential
items being eliminated could save 50 cents per person.

For the cost of one soft drink per year, 200 million
people can use the currency of their choice, not have
the government intruding in their personal decisions,
and save a lot of labor carrying or hauling thousands
of tons of copper around.


But my claim is that it costs the government _nothing_
to print dollar bills, because the government makes 97 cents
"profit" on each dollar bill, and many millions of those bills
will never be returned.
Anybody looking for a project can obtain the data
and figure out how many dollar bills were printed and
how many were replaced, and there should be a large
number of bills that have apparently just vanished.

Joe Fischer

Chris S wrote:

"Joe Fischer" wrote:
Show your figures, please.

Sure. How much does it cost to keep $1 billion of currency in circulation
for 30 years?

Bills cost 3 cents, coins cost 12 cents. Bills last 1.5 years, and coins
last 30 years. Source:
http://abcnews.go.com/sections/wnt/D...oin020404.html. I
assumed dollar coins would remain in circulation as they lose their luster.

All I can say is that I got a 1998 $1 bill today and it is one sorry
piece of pulp.

Alan
'circulatory system doesn't begin to explain it'