Good Dollar Coin News?

Joe Fischer wrote:
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.

Wait. Are you claiming there is no seignorage on dollar coins?

--
Jim Seymour

Jim Seymour wrote:

Joe Fischer wrote:
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.

Wait. Are you claiming there is no seignorage on dollar coins?

Also, isn't the seigniorage from $1 FRNs erased when they return worn
out to be shredded?

--
___________________________________________ ____ _______________
Regards, | |\ ____
| | | | |\
Michael G. Koerner May they | | | | | | rise again!
Appleton, Wisconsin USA | | | | | |
___________________________________________ | | | | | | _______________

"Joe Fischer" wrote:
snip
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.

As I mentioned before, transfer pricing has no substantive impact. The Mint
is part of the government--wholly owned, too.
snip
A bill weighs one gram, so it sounds like the difference is
more like 8 times, or 12 percent.

Maybe, but even if so, that difference accounts for $10 million of the $500
million difference--inconsequential. Also, at 20% the weight of coins, bills
come close to "cubing out" armored cars in the calculations I provided,
meaning they take up more interior space than available, requiring
additional shipments anyway.
snip
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.

Your turn to provide the numbers! You'll be hard pressed to find a factor
that nets anywhere close to production, and many other factors favor coins
rather than bills. The further down the distribution chain, the less
significant the weight difference is. Example: If you weigh 150 lbs but for
the $1 currency you carry, carrying 5 coins instead of bills increases your
weight by a factor of 1.0005.

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.

Don't think that stagnant money is good for the government or the economy.
Seignorage is a one-time benefit; commerce is multiplicative. Roughly a
tenth of every dollar that's spent (GDP) is repaid to the government in
taxes. Large numbers of coins or bills sitting in jars or in mattresses for
long periods hurt the economy.

--Chris




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In article , Jim Seymour wrote:
Joe Fischer wrote:
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.

Wait. Are you claiming there is no seignorage on dollar coins?

Joe can not understand that it matters not if the FRB pays seiniorage or if
the banks pay it. Either way, there is seiniorage, it is just that a
different agency gets to keep it on their books.

Deven Atkinson
--
Penny Lane Numismatic - Categorized Web Links
http://www.bright.net/~deven/pennylane.htm
ANA Member #1197707

On Wed, Jim Seymour wrote:

Joe Fischer wrote:
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.

Wait. Are you claiming there is no seignorage on dollar coins?

No, but it shows up as "mint profits", not FRB "excess
revenue".

The FRB is essentially the "customer" for all money,
and the difference in what they pay for bills or coins should
be corrected before trying to get them to use more dollar
coins.

I am claiming there would not be even 20 percent of
the savings previously claimed here (500 million per year?).

Joe Fischer

On Thu, (Deven Atkinson) wrote:

Jim Seymour wrote:
Joe Fischer wrote:
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.

Wait. Are you claiming there is no seignorage on dollar coins?

Joe can not understand that it matters not if the FRB pays seiniorage or if
the banks pay it. Either way, there is seiniorage, it is just that a
different agency gets to keep it on their books.
Deven Atkinson

I understand perfectly, it isn't the banks that matter, it
is the difference in what the FRB pays for bills and coins, that
obviously must _matter_ to the Federal Reserve Bank.

While I don't want to be forced to carry big copper
coins which have _NO_ utility for me where I shop, because
there are NO dollar machines except a few soft drink machines,
I have always supported dollar coins, for those that _need_ them.

Joe Fischer

In article , Joe Fischer
wrote:

While I don't want to be forced to carry big copper coins which have
_NO_ utility for me where I shop, because there are NO dollar
machines except a few soft drink machines, I have always supported
dollar coins, for those that _need_ them.

Dollar coins are not copper and not big. In fact, they're smaller than
four quarters.

And who says you have to spend dollar coins only in vending machines?

Your support for dollar coins is identical to my support for dollar
bills. I support their use for those that _need_ them. It's just that
most people don't _need_ dollar bills now that a better, cheaper
alternative is available.

Paul

--
Paul Anderson
OpenVMS Engineering
Hewlett-Packard Company

On Thu, Paul Anderson wrote:

Joe Fischer wrote:
While I don't want to be forced to carry big copper coins which have
_NO_ utility for me where I shop, because there are NO dollar
machines except a few soft drink machines, I have always supported
dollar coins, for those that _need_ them.

Dollar coins are not copper and not big. In fact, they're smaller than
four quarters.

I thought the center was pure copper and the overlay
was copper alloy.
A dollar coin will not do what quarters do in most of
the US, because most machines do not accept dollar coins.

And who says you have to spend dollar coins only in vending machines?

Coins are for vending machines and making change,
the great majority of the people do not carry dollar denominations
to spend, they carry larger bills, and get dollar bills and coins
in change.

Your support for dollar coins is identical to my support for dollar
bills.

No it isn't, I support dollar coins for valid reasons.

I support their use for those that _need_ them. It's just that
most people don't _need_ dollar bills now that a better, cheaper
alternative is available.
Paul

Which I take to mean you don't support dollar bills,
because nobody _needs_ them, but it seems most people
prefer them.

If there is no possibility of the amount of savings
like was being suggested here in the last 3 years, that
argument should be over, as the savings is the only
argument for discontinuing production of dollar bills.

While dollar bills have been about 40 or 45 percent
of BEP output of _US_ currency, dollar bills probably
only represent about 10 percent of BEP total production,
the rest is large denomination bills, stamps, securities,
and foreign currency..

What bothers me is the 100 Billion in $100 bills
printed in the last year of the Clinton administration,
maybe somebody knows the reason, was that the first
year of the first new design?

Joe Fischer

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

"Joe Fischer" wrote:
snip
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.

As I mentioned before, transfer pricing has no substantive impact.

If the FRB ordered as many dollar coins as dollar bills,
you would be able to support that statement.

The Mint is part of the government--wholly owned, too.

The FRB is not part of the government, even though
the treasury receives all "excess revenues".

I contend that the FRB would be more active in using
dollar coins if they payed the same amount for them as they
pay for dollar bills.
So the proponents of doing away with production
of dollar bills should be very interested in seeing the BEP
and the mint charge the same for the same denomination.

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

Maybe, but even if so, that difference accounts for $10 million of the $500
million difference--inconsequential. Also, at 20% the weight of coins, bills
come close to "cubing out" armored cars in the calculations I provided,
meaning they take up more interior space than available, requiring
additional shipments anyway.

The FRB doesn't order "a truck full" of dollar bills,
and chances are big trucks are used, not the usual armored
cars. The original distribution is trivial compared to
the daily deliveries to banks and merchants.
Inside Federal Reserve Banks the coins and bills
are moved on 4-wheel carts, if dollar coins were used
instead of bills it would just about double the total weight
in the average bank, Walmart or Kroger delivery.

snip
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.

Your turn to provide the numbers!

Ask any merchant that does volume business, it takes
a lot of one dollar denominations to get through a weekend.

You'll be hard pressed to find a factor
that nets anywhere close to production, and many other factors favor coins
rather than bills. The further down the distribution chain, the less
significant the weight difference is. Example: If you weigh 150 lbs but for
the $1 currency you carry, carrying 5 coins instead of bills increases your
weight by a factor of 1.0005.

I weigh 200 lbs, but I still don't care any coins, they either
stay in the car or, on a shelf until I wrap them.

Both coins and bills are re-distributed unevenly, banks
in business districts sell lots of coins and dollar bills, but banks
in residential areas receive lots of coins in deposits.

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.

Don't think that stagnant money is good for the government or the economy.

It doesn't really matter, currency and coins are the "grease"
of the wheels of the economy, the bulk of sales are credit card,
debit cards and checks.

Seignorage is a one-time benefit; commerce is multiplicative.

Right, and seignorage isn't even "profit", it will have
to be reversed sooner or later.

But dollar coins will not have any affect at all on register
sales.

Roughly a
tenth of every dollar that's spent (GDP) is repaid to the government in
taxes. Large numbers of coins or bills sitting in jars or in mattresses for
long periods hurt the economy.
--Chris

I only have about $20 in bills smaller than $20, but I
have uncountable numbers of coins in drawers and hiding
places that only I know, after all, this is a coin collecting
group, not a coin spending group.

I think I have more SACs than I have dollar bills.


I have not said your premise has no merit, I think
most dollar bill opponents are well meaning, but most of
the arguments for replacing dollar bills with SACs in
this forum before I noticed your posts, were invalid,
they claimed 500 million a year savings, and there has
never been a year when it cost 500 million to print
dollar bills.
Some still claim the dollar bill is better for vending
machines, but there are essentially no vending machines
in most of the US that will accept dollar coins and make
change.

So without the savings claimed, and no vending
machines, the number of dollar coins in circulation
is apparently just right.

Joe Fischer

"Michael G. Koerner" wrote:
Also, isn't the seigniorage from $1 FRNs erased when they return worn
out to be shredded?

You're right, and it's an excellent point. During the 30-year life of a
single 12-cent coin, 20 $1 bills must be produced at 3 cents each. Thus the
net seignorage per bill in circulation is 40 cents ($1 minus 20 x 3 cents),
whereas the seignorage for the one coin that supplants those 20 bills is 88
cents ($1 minus 12 cents).

--Chris




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