Thursday, March 10, 2011

Is It Time to Retire George?

With the cost of everything going up, you can be glad that there's still at least one bargain out there: you can read this blog for free! Well, you have to pay for your Internet connection, but you were going to do that anyway, right?

Well, anyhow, the cost of everything is going up. Including the cost of money.

I'm not referring to interest rates designed to protect banks and keep you in interest slavery, but the actual cost of your money - how much it takes to produce those bills that used to crowd your wallet, and the coins you look for under the sofa cushions when you need just a little bit more to pay the Domino's Pizza guy at the door.

According to this article from, our cash-strapped government could save an estimated 5.5 billion dollars over the next 30 years by replacing dollar bills (which wear out fairly quickly) with dollar coins (which can last for many years).

Part of the reason for the high cost of money is, oddly enough, the rising cost of cotton. Your paper money is not actually made of paper per se, but of a more durable combination of 25% linen and 75% cotton, and as the cost of cotton goes up, so does the cost of printing money. Each of the 6.4 billion banknotes printed each year costs about 9.6 cents to produce. 6.4 billion multiplied by just under 10 cents is ... well ... quite a bit of money. You don't need to be a mathematical genius to recognize the potential savings involved in moving from paper money to coins.

I don't think anyone has done a study of the effect of electronic funds transfers, credit and debit cards, and other such substitutes on the amount of "hard" currency the government needs to print, but it would probably be an interesting addition to the debate. "E-money" will never replace printed banknotes, of course ... Afghan poppy farmers prefer bricks of hundred dollar bills rather than Visa or Master Card, and poor people without bank accounts can't really use them, anyhow ... but it should be an important part of containing the rising cost of money.

Last September in a post titled "Facelifting George," I wrote about an ongoing project to redesign US currency to make it more secure and more, well, attractive. We all like banknotes, which are a traditional symbol of wealth in a way that coins jingling in pockets are not. But at a time when Congress is looking for every conceivable place to cut costs (whether they make sense or not), it seems like the time has come to cut our fiscal umbilical cord to low-denomination paper money. Replacing the dollar bill ... and perhaps even the five-dollar bill... with coins could save enormous amounts of money that could be applied to more important things. Like not intervening in Libya.

Sounds like a winning plan to me.

Have a good day. Support your local coins. More thoughts tomorrow.



KKTSews said...

That Sacegewea (sp?) coin isn't what is currently being minted. The new dollar coin has presidents on it. I got several in change a week or two ago and they do make sense. But then, Grace got a $2 bill for Girl Scout cookies this week and that is another denomination we really don't need, even if George is retired.

Amanda said...

American money always confused me because they are all the same size and colour!

In Australia, we have coins for $1 and $2. The strange thing is that the $2 coin has a smaller diameter than the $1 coin. I think its because the $1 coin came about first.

As for our notes, they're made of some plastic material....supposed to last longer I suppose.

KKTSews said...

Well, I was wrong. In addition to the Presidential $1 coins (hoping to capture collector interest like the State Quarter program), they also mint $1 coins with Native American engraving. One side of all of them is the Sacegewea design you feature.

KathyA said...

And isn't paper money just dirtier than coins???

I love the design of that coin!!!

The Mistress of the Dark said...

More things to get confused with quarters!! ARGH! Remember the Susan B. Anthony dollar?

The Mistress of the Dark said...

More things to get confused with quarters!! ARGH! Remember the Susan B. Anthony dollar?

Mike said...

The CZ has an overlap of their coin and paper money. If I remember right their paper stared at 10 crowns. But they also had 10, 20 and 50 crown coins.