A version of this ran in the San Antonio Express News.
I have a ‘thing’ about paying for small daily stuff in dollar coins.
Apparently, I am the only person in America with this rare affliction.
“Seriously, what is your deal with dollar coins?” I’m asked twice weekly by whichever coffee barista quenches my addiction and collects my combination of Susan B. Anthonys, Sacajaweas, and Presidentials.
Why do I pay for everything with dollar coins? Would you believe doing my patriotic part via seigniorage?
What is Seigniorage?
My wife had not heard of seigniorage when I mentioned it this morning, so I’m guessing a few of you out there haven’t heard of it either.
Seigniorage most broadly refers to all the extra profit that a government makes by creating its own currency, whether in the form of coins, bills, or bank lending through the Federal Reserve system. It turns out our government makes a lot of money for itself by making money for us.
Governments generate this profit in various ways (I count five ways) but for this discussion of my coin fetish I’m going to focus on just two of them.
1. Currency ‘lost,’ or currency permanently held by collectors, and;
2. The difference between the cost to produce currency and its face value
These two forms of seigniorage underscore a primary reason for both the 50-State Quarters program from 1999 to 2008, and the Presidential Dollar Coin program currently underway.
When people lose currency or collectors take money out of circulation, the US Mint realizes more ‘pure profit’ on its coin issuance. This is because the federal government gets to pay for things with currency that it creates, but then the federal government doesn’t have to provide anything in return, because the currency got squirreled away by collectors.
In issuing dollar coins with different Presidents, the US Mint actively attempted to profit from this numismatic demand.
I know its seems weird that ordinary people ‘losing currency’ and collectors putting away currency forever is a real part of a government’s profit plan with coin issuance, but it’s true.
In addition, the US Treasury earns a reported $0.45 profit per dollar issued, the other form of seigniorage.
Producing dollar coins instead of paper was meant in part to boost this source of profitability. Although paper dollars are cheaper to make, coins last many times longer – an average of less than four years for bills versus thirty years for coins – boosting the long-term profitability for the US Mint issuing dollar coins rather than bills.
Unfortunately, nobody actually uses dollar coins (except, of course, me) so they’re stuck unused and out of circulation, in Federal Reserve warehouses – as many as a reported $1.4 Billion in 2013.
That’s where my one-man patriotism comes in. If everybody used dollar coins, the US Mint would report a higher profit, saving all of us taxpayers money.
I have some other great things to say about dollar coins.
When I inevitably lose money at my weekly poker match with the neighborhood dads, dollar coins provide me over time with a useful, rough, metric of my losses. Whenever I see one of the neighborhood dads paying for things with dollar coins, I know that’s my bluffy check-raise that got called, two weeks prior. Goodbye Sacajaweas! Hasta la vista Benjamin Harrisons! I miss you so much!
Ask any of a dozen coffee baristas in town if their cash registers jangle with dollar coins, and you’ll know with certainty that’s where I hang out. It’s my little calling card. It’s a fun way to track me all over town.
My wife – who used to be a waitress in College Station – abhors my dollar-coin fetish, especially when I try to tip at restaurants with the things. Apparently the heavy jangly coin feeling is a not a great thing when you’re on your feet all day rushing from table to table. But isn’t a Franklin Pierce coin delightful for everyone? No?
The real reason
Ok, would you like to know the real reason I use dollar coins? It’s not really patriotism. Or tracking my losses. It’s pure affectation. My own cheap form of brand building.
Pharrell Williams has his funny hat. Winston Churchill had his cigar.
When I roll up to the Whataburger drive-thru in my dirty Crimson Hyundai Elantra, I’ve got my ‘gold’ coins.
Burger-and-fries-guy is all like: “Whoa, who is that gold coins guy buying the jalapeno and cheese with double meat?”
So that’s basically the reason.
Please see related post: Mint The Gold Dollar Coins
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